Judgment
1These proceedings concern matters arising from the Will of the late James Robinson ("the deceased") made on 14 January 2009 ("Will") and, in particular, issues concerning the occupation of the "Old Homestead" on the "Homestead block" which is part of a property known as the "Rosewood" situated at Boggabilla NSW ("Rosewood property"). The Plaintiffs are one of the deceased's sons, Mr Robinson ("Mr Robinson"), and Aballa Pty Limited ("Aballa"). The Defendants are one of the deceased's daughters, Mrs Genevieve Gollan, and her husband, Mr Malcolm Gollan. They contend that Mrs Gollan is entitled to occupy the Old Homestead under clause 6.1 of the Will and alternatively rely on the matters pleaded in a Cross-Claim filed in the proceedings.
2The Rosewood property comprises approximately 15.7 hectares and the improvements on the property comprise the Old Homestead occupied by Mr and Mrs Gollan, a cottage occupied by Mr Robinson, his wife and family and various farm sheds. Mrs Gollan has lived in the Old Homestead since 1987 and Mr Gollan since approximately 1992.
3Mr Robinson is the registered proprietor of a two-thirds share in the Rosewood property. Mr Robinson acquired that interest from the deceased on 4 February 2003, when the deceased transferred that interest to him for a stated consideration of $1 million (CB 55). Mr Robinson conceded in cross-examination that that consideration was not paid (T116).
4Aballa is the registered proprietor of the remaining one-third interest in the Rosewood property. Aballa acquired that interest from Mr Hector Robinson by a transfer dated 22 May 1979 (CB 57, Cross-Claimant's tender bundle ("TB") 1). The issued share capital of Aballa comprises two A class shares, one held by the deceased and one held by his solicitor, Mr Ormonde Roger Butler, three ordinary shares held by Mr Butler as trustee of the J.F. and M.E. Robinson Family Trust and 2,070 non-cumulative preference shares held by the deceased. At the time of his death, the deceased and Mr Robinson were directors of Aballa and the directors of Aballa are presently Mr Robinson and Ms Sally Robinson (appointed 11 May 2010). The principal activity of Aballa is land holding and acting as trustee of the J.F. and M.E. Robinson Family Trust.
5The deceased died on 21 July 2009. Mr Robinson and Ms Sally Robinson obtained a grant of probate in respect of the Will on 28 January 2010.
Claim for possession
6The Plaintiffs initially sought an order for possession of the Homestead block, leave to issue a writ of possession and damages for mesne profits and for waste. It appears to be common ground that the Plaintiffs would be entitled to an order for possession unless the Defendants could establish a defence arising from clause 6.1 of the Will or a right to occupy the Homestead block arising from the matters pleaded in the Cross-Claim.
7In closing submissions, the Plaintiffs indicated that they did not press the order for possession sought in the Statement of Claim and, subject to their being given appropriate rights to inspect the Old Homestead to fulfil their obligations as executors of the estate, sought only that the Cross-Claim be dismissed with costs. Obviously, the relief sought in the proceedings cannot be left open to depend on future conduct in respect of inspections of the Old Homestead which is not itself the subject of any application for relief. I will proceed on the basis that the plaintiffs do not abandon their claim to an order for possession (which would have amounted, in substance, to a discontinuance of the Plaintiffs' case for which leave was not sought and would have potentially rendered the Cross-Claim moot) but do not presently seek such an order. The Plaintiffs made no submissions in respect of the claims for damages for mesne profits or waste and I assume those claims are no longer pressed.
Mr and Mrs Gollan's claim in respect of clause 6.1 of the Will
8By the Cross-Claim, Mr and Mrs Gollan seek a declaration that, on the true construction of the Will, Mr Robinson and Ms Sally Robinson as executors of the deceased's estate are obliged to do all things necessary and convenient to cause Aballa to permit Mrs Gollan to reside at the Old Homestead.
9Clause 6.1 of the deceased's Will dealt with the residue of the deceased's estate and provided for it to pass on trust to Mr Robinson subject to the prior condition that:
"6.1 If the undermentioned arrangements or something similar thereto have not already been implemented during my lifetime to permit my daughters GENEVIEVE NANCY GOLLAN [sic] to reside on that part of "Rosewood" Homestead Block, Newell Highway, Boggabilla New South Wales as comprises the old "Rosewood" homestead and gardens and its curtilage provided she shall be occupying at the time of my death or as I shall have directed, during my lifetime, she shall respectively be entitled to occupy but subject to their that is to say my said daughter paying all rates taxes and outgoings applicable to the land occupied by them and maintaining the same in good order and condition having regard to the condition thereof as [at] the date of my death ...
AND I DIRECT that provided my said son shall enter into a binding deed of covenant with his sisters and his mother to give effect to the provisions of clause 6.1 and 6.2 supra then my trust estate may be transferred to and vested in my said son."
10The condition that Mrs Gollan was occupying the Old Homestead at the time of the deceased's death was satisfied.
11Clause 6.1 of the deceased's Will cannot, and does not seek to, impose an obligation on Mr Robinson to give the covenant. The consequence of his failing to do is that the gift of the residue to him fails. Mr and Mrs Gollan have not established that the Will gave rise to the obligation pleaded in the Cross-Claim and this aspect of the Cross-Claim must therefore fail.
12Alternatively, Mr and Mrs Gollan seek declarations that the gift of residue under cl 6.1 of the Will has failed and the residue of the estate of the deceased passes on intestacy to Ms Margaret Ellen Robinson (now deceased). The declarations sought raise the question whether Mr Robinson has made an election not to give the Deed of Covenant contemplated by cl 6.1 of the Will.
13It is common ground that Mr Robinson has not entered into the binding Deed of Covenant with Mrs Gollan which would give effect to cl 6.1 of the Will. In written submissions prior to the hearing, Mr Robinson contended that his rejection of the gift of residue was evident from the fact that he commenced these proceedings and that it could therefore be concluded that the gift of the residue to him had failed. Mr Raphael, who appears for Mr Robinson, sought to qualify that position in his oral opening and contended that Mr Robinson had not yet made an election as to that matter and did not have sufficient information to do so. Mr Robinson's evidence was that he has not been in a position to fully administer the estate for reasons including Succession Act proceedings brought by, inter alia, Mrs Gollan; her refusal to allow him to inspect the property; and her refusal to allow a valuation of furniture which formed part of the deceased's estate and which would have to be disclosed in a further affidavit of executors filed in the Probate Office.
14A right of election arises when a state of affairs comes into existence which enables a person to exercise alternative and inconsistent rights against another, for example, the right to terminate a contract for breach or repudiation and the right to insist on performance of the contract: Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 655. Before a person can be said to be confronted with such a choice, that person must at least be aware of the circumstances giving rise to the choice: Sargent's case , at 656-658; Khoury v Government Insurance Office (NSW) [1984] HCA 55; (1984) 165 CLR 622 at 635. An election takes place "when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other": Sargent's case at 656; that is, when that conduct "is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other": GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1 at [356]ff.
15In my view, consistent with the position which Mr Robinson initially adopted in his written submissions prior to the hearing, his commencement and continuance of these proceedings is prima facie an election not to give the covenant contemplated by cl 6.1 of the Will, since the order for possession which he sought (and has not unequivocally abandoned) is plainly inconsistent with the giving of the covenant contemplated by that clause. Conversely, Mr Robinson could have had no right to the orders sought in the proceedings unless he had made that election, even if he had chosen to do so on the basis of incomplete information. I consider that Mrs Gollan is prima facie entitled to a declaration that the gift of residue under cl 6.1 of the Will has failed, although I will allow the parties an opportunity to make short further submissions as to whether that position is affected by the change in the Plaintiffs' position to which I referred in paragraph 7 above.
16Mr Robinson contends that, on the failure of the condition contained in cl 6.1 of the Will, the amount of the residue that was conditionally bequeathed to him would fall to be administered in accordance with the rules of intestacy. Mr and Mrs Gollan contend that, on failure of the condition, the executors would hold the residue for the widow of the deceased. I do not consider that I should seek to determine this matter where other persons whose interests would be affected by such a determination are not party to the proceedings and have not had an opportunity to be heard as to this matter.
Mr and Mrs Gollan's claim in respect of shares in Aballa
17Mr and Mrs Gollan seek a declaration that Mr Robinson and Ms Sally Robinson as executors and trustees hold their shares in Aballa on trust for Mr and Mrs Gollan. No basis for such a declaration was identified in submissions and I assume the claim for this declaration is not pressed. In any event, I cannot see any basis for it.
Mr and Mrs Gollan's claim for estoppel and equitable compensation
18Mr and Mrs Gollan contend that, by reason of the representations alleged to have been made by the deceased, Mr Robinson and Ms Sally Robinson are estopped from denying that Mr and Mrs Gollan have an interest in the Rosewood property sufficient to entitle them to reside at the Old Homestead for the life of Mrs Gollan. Mr and Mrs Gollan also claim equitable compensation. The Cross-Defendants do not admit the alleged representations and, if they were made by the deceased, deny that he was authorised by the registered proprietors to make those representations. Mr Robinson and Aballa also rely upon s 23C of the Conveyancing Act 1919 (NSW) in answer to several pleaded representations. However, that section will not prevent the creation or operation of a constructive trust: Conveyancing Act s 23C(2).
19Mr and Mrs Gollan's claims are put by reference to equitable estoppel. In Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 at 428, Brennan J observed that to establish an equitable estoppel the first thing it was necessary for the plaintiff to prove was that (at 428):
"... the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship."
20In Silovi v Barbero (1988) 13 NSWLR 466, Priestley JA (with whom Hope and McHugh JJA agreed) summarised the principle arising from Waltons Stores v Maher (at 472) as requiring, relevantly:
"the creation or encouragement by the defendant in the plaintiff of an assumption that ... a promise be performed, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable".
In Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582 at 610, the elements of an equitable estoppel were formulated by Priestley JA (with whom Kirby P agreed), as requiring:
"the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable."
In Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394, Deane J observed (at 444) that the law does not permit an unconscientious departure by one party:
"from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party's detriment if the assumption be not adhered to for the purposes of the litigation."
21In order to establish an estoppel Mr and Mrs Gollan must establish that the deceased (or, possibly, Mr Robinson and Aballa) had played such a part in the adoption by Mrs Gollan (or both Cross-Claimants) of an assumption, which formed the basis of her or their action or inaction, where she or they will suffer substantial detriment if the assumption be not adhered to, that it would be unconscientious for the deceased or his estate to deny the assumption. In Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at 121, the majority in the High Court noted that equity's intervention is justified by a plaintiff's conduct in acting upon an expectation created by an unperformed promise.
22An estoppel may be found, in a familial and personal context, notwithstanding that the parties did not contemplate entering into a formal contract as to the ownership of the property, where one party makes clear assurances of his or her intentions as to the property and the other reasonably relies on, and reasonably acts to his or her detriment on the basis of, those assurances: Thorner v Major [2009] 1 WLR 776 at [97]. In Delaforce v Simpson-Cook [2010] NSWCA 84, Handley AJA observed (at [21]) that an estoppel by encouragement:
"... comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part."
23In Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2010] NSWSC 776 at [42]ff, Pembroke J identified three key elements of an estoppel as being that the defendant's words or conduct must be clear and unambiguous; the defendant's conduct in relying to its detriment on those words or conduct must be reasonable; and the defendant must know or intend that the plaintiff will act or abstain from acting in reliance on those words or that conduct or, in effect, have some reasonable expectation that its words or conduct will induce some detrimental reliance by the plaintiff.
24In determining whether the conduct is unconscionable, equity will look at all the relevant circumstances "that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made": Delaforce v Simpson-Cook at [3], [6]; DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348 at [73].
Whether the pleaded representations are established
25In order to obtain relief under estoppel principles, Mr and Mrs Gollan must first establish the alleged representations were made. That question is to be determined having regard to the case law relating to claims based on assurances alleged to have been made by deceased persons, which was helpfully summarised by Ward J in Varma v Varma [2010] NSWSC 786 at [418]-[425]. A plaintiff bears a comparatively difficult task in seeking to persuade the Court on the balance of probabilities of the making of the alleged representations where the deceased is not alive to give his version of events. Careful scrutiny is required and the Court will generally require corroboration of the claims: Vukic v Luca Grbin & Ors ; Estate of Zvonko Grbin [2006] NSWSC 41; Weeks v Hrubala [2008] NSWSC 162 at [20]; Joseph Saliba & Anor v Thomas Tarmo [2009] NSWSC 581; Varma v Varma at [418]. It is also important to have regard to the fallibility of human memory, which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41] and Varma v Varma at [424]-[425].
26Mr and Mrs Gollan plead that several representations were made orally to Mrs Gollan in respect of her entitlement to reside at the Old Homestead on which she has acted to her detriment. By her affidavit dated 9 June 2011, Mrs Gollan gave evidence of the terms of the representations and the circumstances in which they were made, in terms consistent with the pleading in the Cross-Claim.
27Mrs Gollan's evidence is that, in or about September 1987, the deceased represented orally to Mrs Gollan that she could stay at the Old Homestead as long as she wanted ("First Representation"). Mrs Gollan contends that, in reliance on the First Representation, she began to undertake work and repairs to the Old Homestead. Mrs Gollan's evidence is that, after September 1987, the deceased represented orally to Mrs Gollan that she could go ahead with whatever work she wanted to and could live in the Old Homestead as long as she wanted ("Second Representation"). Mrs Gollan's evidence is that, in about 1988, the deceased represented orally to Mrs Gollan that if she wished to spend the money necessary to re-stump the Old Homestead, she could have the house and live there as long as she wanted to ("Third Representation"). Mrs Gollan contends that, in 1989, in reliance on the Third Representation, she and her husband undertook re-stumping work on the Old Homestead at a total cost of $24,000.
28Mrs Gollan's evidence is that, in early 1993, the deceased represented orally to Mrs Gollan that, if she stayed at the Old Homestead rather than moving to Queensland, he would endeavour to procure additional land in order to give Mrs Gollan her own home at Rosewood ("Fourth Representation"). Mrs Gollan contends that, in reliance on the Fourth Representation, she and her husband thereafter continued to reside at the Old Homestead and did not take advantage of an opportunity to purchase an interest in the family home of Mr Gollan in Queensland. In my view, it was not established that the deceased did not act in accordance with the Fourth Representation. In particular, there is no evidence that the deceased did not endeavour to procure such additional land and there is evidence that the deceased did seek to secure Mrs Gollan's right to occupy the Old Homestead to which I will refer below.
29Mrs Gollan's evidence is that, about 2005, after she proposed to the deceased that she and her husband would undertake further renovations to the Old Homestead, he represented to her that Rosewood was her home and that it would always be hers if that was what she wanted ("Fifth Representation"). Mrs Gollan contends that, in reliance on the Fifth Representation, she and her husband undertook work on the Old Homestead including replacing the old bathroom and undertaking other work.
30Mrs Gollan's evidence is that, in or about April 2006, the deceased represented orally to her that he had prepared a Will leaving Rosewood to her and Mr Robinson in equal shares and that this would see her home secure ("Sixth Representation"). There are difficulties with the evidence supporting the Sixth Representation. The first is that, in order to accept that representation, it would be necessary to find that the deceased had misrepresented the contents of the Will to Mrs Gollan in circumstances that there was no obvious reason for him to do so. The second is that Mrs Gollan retreated from her evidence supporting a critical part of that representation, that Rosewood would be left to Mr Robinson and her in equal shares, during cross-examination. Mrs Gollan sought to maintain a claim that the deceased had said "if you take half ownership of Rosewood you must agree that you have no further call on anything else". However, in my view, it is highly unlikely that the second statement would have been made in the absence of any suggestion that Mrs Gollan would in fact take half ownership of Rosewood. I do not accept that the Sixth Representation was made.
31Mrs Gollan's evidence is that, after she became aware in mid-2006 that Mr Robinson was the registered proprietor of a two-thirds share of Rosewood, the deceased represented orally to her that he would arrange for her and Ms Sally Robinson to have a one-sixth share each in Rosewood, as he still controlled Aballa ("Seventh Representation"). Mr Robinson's affidavit also referred to a conversation with the deceased in 2006 when the deceased said to him words to the effect:
"I want you to have two-thirds of the land and Sally and Genevieve can have the equivalent of one-sixth each so that she can have her own house block and go to the bank and show it that she has an interest that she can build on. I don't want the property mortgaged or actually split up."
32I should interpose that steps were taken during 2006 to prepare a plan to subdivide the Old Homestead and another part of Rosewood. By letter dated 18 August 2006, solicitors for the deceased and Aballa advised a surveyor of the deceased's and Aballa's intention that Mrs Gollan "can have an interest in the land on which she presently resides" and of the intention to enter into a landowner's agreement reciting that Mrs Gollan:
"will be entitled to be treated as the beneficial owner of the improvements on nominated parcels of land and to be entitled to the exclusive use and occupation of [that parcel] of land".
The surveyor was requested to draw a survey plan representing that area so that, if future subdivision became possible, it could become the plan of subdivision.
33It appears that the deceased sought to revise his earlier will to implement these arrangements in the latter part of 2006. By letter dated 9 October 2006, the deceased's solicitors wrote to him referring to a copy of his 2002 Will on which he had made handwritten amendments and advising that assets owned by Aballa could not be disposed of by will and that the deceased did not own the Rosewood property, two-thirds of which were owned by Mr Robinson and one-third by Aballa. The letter referred to the proposed arrangement set out in the letter dated 18 August 2006 to the surveyor and observed that, if the Old Homestead was to be dealt with by will rather than by those arrangements:
"...then we can attempt to achieve the outcome proposed in your instructions by making any benefits which Ben [Robinson] is to receive under your will conditional upon his complying with an obligation to allow his sisters occupancy rights in respect of part of the 'Rosewood' homestead property."
That letter makes clear that the deceased's intent at that time was to secure Mrs Gollan's right to occupy the Old Homestead so far as it was possible for him to do so.
34Mrs Gollan's evidence is that, after the Moree Plains Shire Council refused a proposal to subdivide Rosewood so as to provide a separate block for the Old Homestead in June or July 2007, the deceased represented orally to her that the Old Homestead was her home and no-one would deny it to her ("Eighth Representation").
35The Plaintiffs challenge the credit of Mr and Mrs Gollan and place particular reliance on issues which arose in respect of their evidence as to the quantum of their expenditure in respect of the Old Homestead. Mrs Gollan was cross-examined at some length as to items included in the initial claim for compensation which, it appears, related to work done at her and her husband's office premises and which were subsequently not pressed by her. A disturbing feature which emerged from that cross-examination was that information which would have suggested that the work was associated with Mr and Mrs Gollan's office premises had been whited out on several of the invoices before copies of them had been provided to the plaintiffs. That conduct was plainly inappropriate. However, Mrs Gollan denied that she had been involved in it and there is no basis for me not to accept that denial. I do not treat this as a matter which adversely impacts on her credit generally.
36It also appears that Mr and Mrs Gollan may have claimed other expenditures on the Old Homestead as tax deductions, treating them as incurred in respect of their business. The plaintiffs contended that these claims were not properly made and demonstrate that Mr and Mrs Gollan are persons shown to be prepared to falsify matters and that this impugns their evidence to the Court. I do not accept this submission since I do not consider it has been established that the claims for deductions were not properly based, or at least made in good faith, since Mr and Mrs Gollan maintained a home office at the Old Homestead which was in fact used for business purposes.
37It was also plain that Mr Gollan paid little attention to the preparation or content of his affidavit evidence. While that is unfortunate and inappropriate, it is not of particular significance for the outcome of the proceedings, since the relevant representations were alleged to have been made to Mrs Gollan and were the subject of her evidence and the substance of those representations was corroborated by the matters to which I refer below.
38I am satisfied that the deceased made representations to the effect that Mrs Gollan could reside in the Old Homestead over the period since September 1987. The alleged representations are consistent with the evidence that the deceased in fact attempted to give Mrs Gollan the right to reside in the Old Homestead by his Wills made 2 March 2001 (TB 148), 1 July 2002 (TB 152), 6 November 2006 (TB 157) and by the Will (TB 161). Those representations are also consistent with the deceased's intention as set out in the letter dated 18 August 2006 to which I have referred above. Mr Robinson frankly and properly conceded in cross-examination that there was an understanding between the deceased and Mrs Gollan that, as long as she maintained the Old Homestead, she could stay there for as long as she liked (T115.26). In my view, it is highly unlikely that the deceased would not have told Mrs Gollan of his intention in that regard.
39It is also clear that Mr and Mrs Gollan expended substantial monies in improving the Old Homestead over the period and the fact of those improvements was also frankly and properly conceded by Mr Robinson in his cross-examination. It is, in my view, highly unlikely Mr and Mrs Gollan would have undertaken substantial improvements to the Old Homestead in the absence of a reasonably held expectation, induced by the understanding between the deceased and Mrs Gollan and Mr Robinson's and Aballa's silence (to which I will refer below) that they would be able to continue to occupy the Old Homestead.
Whether detriment is established
40Mr and Mrs Gollan contend that, in reliance on the pleaded representations from 1987 onwards, they undertook, at their own expense and with the deceased's knowledge, various works, repairs and improvements to the Old Homestead. As I noted above, it is clear that Mr and Mrs Gollan expended substantial monies in improving the Old Homestead over the period. I will deal with the quantum of this expenditure below.
41The plaintiffs contend that Mr and Mrs Gollan did not act to their detriment where the decisions to make permanent improvements to the Old Homestead were made by Mrs Gollan. Mr Robinson refers to evidence that his father made no comments about the proposed improvements other than to leave them to Mrs Gollan (T29-30). In my view, the fact that the deceased may have left the question whether particular improvements should be undertaken to Mrs Gollan does not exclude the detriment arising from her making those improvements on an assumption that she would be permitted to continue to occupy the Old Homestead in accordance with the representations to which I have referred above, if that assumption is subsequently falsified.
42Mrs Gollan also claimed that she relied upon the representations made by the deceased that she could continue to reside in the Old Homestead and lost the opportunity to purchase other properties in the area on that basis. She acknowledges that she and her husband purchased another property in February 2008, but gives evidence that they are unable to reside at that property as they would need to build a home on it and do not have the funds to do so. I do not think that detriment of this kind is established where Mr and Mrs Gollan had in fact purchased that property.
43Mrs Gollan also identifies detriment arising from the Seventh and Eighth Representations that she and her husband failed to take steps to seek compensation from the deceased in respect of improvements to the Old Homestead or in respect of the loss of opportunity to find alternative accommodation for themselves. It does not seem to me that this detriment adds anything of substance to the first and second detriments identified above, particularly where the attitude which the deceased would have taken to a request for compensation is unknown.
Whether the deceased's conduct was unconscionable
44The pleaded First Representation and Second Representation related to Mrs Gollan's ability to occupy the Old Homestead. The Fifth and Eighth Representation also related to Mrs Gollan's right at least to occupy, and possibly to ownership, of the Old Homestead and the Seventh to an interest in Rosewood. I am not satisfied that the deceased departed from these representations in any manner which could be characterised as unconscionable on his part. Rather, the steps he sought to take to implement his understanding with Mrs Golan appear to have been frustrated by the combination of the transfer of the deceased's interest in the land to Mr Robinson and the events after his death. In these circumstances, I cannot reach a finding of unconscionability as against the deceased or his estate.
45As noted above, I am not satisfied that the deceased departed from the Fourth Representation and he appears to have made continuing attempts to fulfil it. I am not satisfied any unconscionability has been established in that regard. I am not satisfied the Sixth Representation was made.
Whether Mr Robinson's and Aballa's conduct was unconscionable
46It remains to deal with the position in respect of Mr Robinson and Aballa in their personal capacities. Each of them are party to the proceedings both as Plaintiffs and Cross-Defendants. Although the relief sought in the Cross-Claim included declarations against Mr Robinson and Ms Sally Robinson in their capacity as executors, the claims for equitable compensation and damages were not so confined and the relief sought extended to such further or other orders or relief as the Court sought fit. Under Civil Procedure Act 2005 (NSW) s 90(1), the Court is obliged to give judgment or make such order as the nature of the case requires. Under Uniform Civil Procedure Rules 2005 (NSW) r 36.1, the Court may give such judgment or make such order as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion: Farrell v Mulroney [1978] 1 NSWLR 221; NSW Trustee and Guardian v Schneider [2011] NSWSC 424 at [24] . There is no suggestion in the Plaintiffs' submissions that they have been deprived of the opportunity to lead any relevant evidence as to a claim of this character against Mr Robinson and Aballa in their personal capacities.
47An estoppel may be established not only where a defendant makes a promise or representation but also where a defendant encourages a plaintiff to adhere to an assumption or expectation already formed, or acquiesces in an assumption or expectation when, in conscience, objection ought to be stated: Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387 at 423 per Brennan J; Evans v Evans [2010] NSWSC 170 at [36]. (That decision was reversed on appeal, reported as Evans v Evans [2011] NSWCA 92 but there was no suggestion that the first instance judgment did not correctly identify the relevant legal principles.) Such an estoppel may arise where a defendant "failed to deny the assumption or expectation with knowledge that the plaintiff was relying on it to the plaintiff's potential detriment": Evans v Evans at [38].
48Mr and Mrs Gollan contend that the evidence establishes that Mr Robinson was aware from approximately 1989 that Mr and Mrs Gollan occupied the Old Homestead; was aware that they expended money on the renovation and improvement of the property before he became the registered proprietor as to two-thirds of the Rosewood property on 4 February 2003; and acquiesced in the occupancy of the Old Homestead and continued expenditures by Mr and Mrs Gollan to their detriment on the Old Homestead after that date.
49The Plaintiffs respond that Mr Robinson gave no evidence as to what he knew of what his father had allegedly said to Mrs Gollan. As I noted above, Mr Robinson acknowledged in cross-examination that, when he became the owner of two-thirds of Rosewood on 4 February 2003 for no consideration (T116.10), he was aware of the understanding between the deceased and Mrs Gollan that, as long as she maintained the Old Homestead, she could stay there for as long as she liked (T115.25). I should set out his evidence in that regard:
Q. You knew, didn't you, that there was an understanding between your father and Genevieve about The Old Homestead?
A. Yes, I was aware there was an understanding between them, yes.
Q. The understanding was that essentially, if she looked after the place, I am not trying to - looked after the place, cared for it, maintained it, she could stay there for as long as she liked?
A. Yes.
I may more readily infer, from that evidence and the objective probabilities, that Mr Robinson knew of the alleged representations since he did not give evidence denying that he knew of them and that matter was within his own knowledge: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 276 ALR 375 at 393-394. Mr Robinson also accepted in cross-examination that knew that Mr and Mrs Gollan had undertaken substantial works on the Old Homestead.
50The question whether the position now asserted by Mr Robinson, in seeking an order for possession of the Homestead block, is unconscionable is to be determined by reference to all the conduct up to the date on which he took that position, including Mrs Gollan's expectations (or understanding) over the whole period of her occupancy of the Old Homestead and the extent to which Mr Robinson's failure to deny that understanding or his acquiescence in it contributed to it: Thorner v Major [2009] 1 WLR per Lord Walker at 794, per Lord Neuberger at 805; Green v Green (1989) 17 NSWLR 343 at 355-356; Evans v Evans [2011] NSWCA 92 at [110].
51In my view, the position now asserted by Mr Robinson is relevantly unconscionable, where he knew of the understanding between the deceased and Mrs Gollan in respect of her future occupancy of the Old Homestead, knew of the expenditures incurred by Mr and Mrs Gollan on the Old Homestead in the period after he had acquired a two-thirds interest in the property in February 2003, and did not make clear that he did not or would not consider himself bound to abide by that understanding.
52The Plaintiffs submit that Mrs Gollan was aware, at least from 2006, that Mr Robinson was the owner of two-thirds of the property. There was a contest in the evidence as to whether Mrs Gollan first became aware that Mr Robinson had become an owner of a two-thirds interest in the property in 2005 or in 2006. Mrs Gollan initially denied becoming aware of the transfer of an interest in the property to Mr Robinson during 2005 (T20-21). It was put to Mrs Gollan that she became aware of this matter by reason of her husband's discussion with Mr Robinson about a water permit which Mr Gollan was seeking with respect to the Old Homestead (T21.24-44) and she maintained her evidence that she was not aware of that matter. The Plaintiffs contended that the Court should not accept that Mr Gollan had not communicated his knowledge of the transfer of an interest in the property to Mr Robinson to Mrs Gollan. I have ultimately not found it necessary to reach a finding as to this matter since the element of unconscionability arises, not from any lack of knowledge of Mr Robinson's ownership of an interest in the property, but from Mr Robinson's failure to make clear that he did not or would not consider himself bound by the understanding between Mrs Gollan and the deceased in the circumstances noted above.
53In circumstances that the deceased and Mr Robinson were, at relevant times, the only directors of Aballa, it should also be treated as also knowing of the understanding between the deceased and Mrs Gollan, and its remaining silent in the face of that understanding and the expenditures incurred by Mr and Mrs Gollan also establishes a claim for unconscionability against it on the same basis as the claim for unconscionability against Mr Robinson.
54Accordingly, I consider that Mrs Gollan has established a claim for relief under estoppel principles against both Mr Robinson and Aballa.
Mr and Mrs Gollan's claims under the Trade Practices Act and the Fair Trading Act
55Mr and Mrs Gollan contend that the deceased had authority to make representations for and on behalf of Aballa as the chairman of directors and the controlling mind of the company. They contend that the Seventh and Eighth Representations made by the deceased were made in trade or commerce within the meaning of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW). They contend that those representations made in 2006 and 2007, after the deceased had transferred the two-thirds interest in the Rosewood property to Robinson, were misleading and deceptive if the Cross-Defendants cannot be required to cause Aballa to permit Mr and Mrs Gollan to continue to reside at the Old Homestead. Mr and Mrs Gollan rely on the reversal of onus under s 51A of the Trade Practices Act and s 41 of the Fair Trading Act to establish that Aballa did not have reasonable grounds for making the representations and Aballa did not seek to establish such grounds.
56The first question which arises in respect of that claim is whether the pleaded representations were made by the deceased for and on behalf of Aballa. In my view, the terms of the pleaded representations indicate that the deceased was referring to his own intentions and does not provide any basis for a finding that he was speaking for or on Aballa's behalf. Even if the deceased had authority to make representations on behalf of Aballa there is, in my view, no basis to find that he in fact did so in respect of the pleaded representations. This finding is sufficient to mean that the claims for misleading and deceptive conduct against Aballa cannot succeed.
57A further question arises as to whether the relevant representations were made in trade or commerce for the purposes of s 52 of the Trade Practices Act or s 41 of the Fair Trading Act . In Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594, the High Court held that no claim under s 52 of the Trade Practices Act was available in respect of an instruction given by a foreman to a construction worker in the workplace, because that section was concerned with the conduct of a corporation towards persons with whom the corporation had dealings in the course of those activities which, of their nature, bore a trading or commercial character. In Firewatch Australia Pty Ltd v Country Fire Authority [1999] FCA 761; (1999) 93 FCR 520 at [62], Goldberg J held that communications of a government entity were not conduct in trade or commerce for the purposes of s 52 of the Act where they were not conduct:
"towards persons ... with whom it has or may have dealings in the course of those activities ... which of their nature bear a trading or commercial character."
Section 42 of the Fair Trading Act has a corresponding scope: Prestia v Aknar (1996) 40 NSWLR 165; Fasold v Roberts (1997) 70 FCR 489; Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553.
58Even if (contrary to my view) the pleaded representations could be treated as made by the deceased for or on behalf of Aballa, they did not have any relevant trading or commercial character and s 52 of the Trade Practices Act and s 41 of the Fair Trading Act had no application to them.
Negligent misrepresentation
59Mr and Mrs Gollan contend that Aballa owed a duty of care not to make false or misleading representations concerning their entitlement to reside at the Old Homestead and that Aballa negligently made the relevant representations in breach of that duty.
60A duty of care can be established where, relevantly, a defendant knows or has the means of knowing that a plaintiff is vulnerable and unable to protect himself or herself from their want of reasonable care; the duty does not unreasonably interfere with the defendants' commercial freedom; and the damage followed from the occurrence of activity within their control: Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515 at [23], [80]. Mr and Mrs Gollan contend that Aballa owed them a duty of care not to make false or misleading representations concerning their entitlement to reside at the Old Homestead, because they were vulnerable by reason that they had lived at the Old Homestead and their authority to continue doing so depended on Aballa's consent as an owner of a one-third share in Rosewood.
61It is not necessary for me to determine whether a duty of care could have arisen on the relevant facts. Consistent with my findings above in respect of the allegation of misleading and deceptive conduct, I do not consider that the relevant representations were made by the deceased for and on behalf of Aballa and this claim would fail for this reason.
Relief
62I turn now to the question of the appropriate form of relief. In Commonwealth of Australia v Verwayen [1990] HCA 39; (1990) 170 CLR 394 at 413, Mason CJ observed that:
"There must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption".
It appears that the High Court's decision in Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at [40]-[48] has qualified the principle that the relief to be granted in equitable estoppel cases is a vindication only of the "minimum equity". In Delaforce v Simpson-Cook [2010] NSWCA 84 at [3], Allsop P observed that, in determining the scope of relief that is required:
"Equity will look at the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character."
Handley AJA there noted that the relief would depend on the facts, and the Court must look at the circumstances in each case to decide the way in which the equity can be satisfied, and adopts a principled approach rather than exercising an unfettered discretion. His Honour also noted that relief may be moulded to recognise practical considerations, such as the need for a clean break, and that relief may be limited where the enforcement of the plaintiff's expectation would be out of all proportion to the detriment, particularly where the expectation was not defined and the Court has a broader discretion; but the Court should, prima facie, enforce a reasonable expectation which the party bound created or encouraged. See generally R Kako, "When I die, all this will be yours (unless I change my mind): Proprietary estoppel by Encouragement" (2010) LSJ 57; L Aitken, "The future of the 'minimum equity' and the appropriate 'fault line' in promissory and proprietary estoppel" (2010) 33 ABR 212.
63In the present case, there seem to me to be real practical difficulties in giving effect to the representation made by the deceased in terms that would confer a continuing right to occupy the Old Homestead on Mr and Mrs Gollan, including the fact that it appears not to be possible to subdivide the property or realign the boundaries so as to give effect to such a right and the breakdown in the relationship between the parties since the death of the deceased. In these circumstances, the principle that relief may be moulded to recognise practical considerations has particular weight. In my view, the relief which is appropriate in the present circumstances would not extend beyond compensation for the expenditures incurred by Mr and Mrs Gollan, which will be lost to them (and from which Mr Robinson and Aballa will presumably benefit to some extent) if they are required to vacate the Old Homestead.
64Mr and Mrs Gollan contend that compensation would be at least the value of monies expended by them, together with interest. I do not consider that an order for interest is warranted where Mr and Mrs Gollan have had the benefit of living in the Old Homestead rent free throughout the relevant period. I turn now to the quantum of expenditure which Mr and Mrs Gollan have established.
65Mrs Gollan initially claimed expenditures of $320,000 in respect of the Old Homestead (T63). Mrs Gollan's affidavit dated 9 June 2011 quantified expenditures as $280,000. Mr Gollan also gave evidence in his affidavit dated 10 June 2011 that he and Mrs Gollan had expended $280,000 on repairs, maintenance and renovation of the Old Homestead between 1990 and 2008. Mr and Mrs Gollan each annexed to their affidavits a schedule in identical form setting out those expenditures which supported the lesser amount of $230,400 (T63-64).
66By a subsequent affidavit dated 15 November 2011, Mrs Gollan annexed an amended schedule providing an estimate of the amount spent for works undertaken at the Old Homestead of $194,118. She identified work which had been contained in the earlier schedule which related to Mr and Mrs Gollan's office premises in Goondiwindi in 2003. Mrs Gollan held to that amount under cross-examination (T69). She was challenged as to expenditures to Toowoomba Demolition (T72) and payments to Mr Frost and Toowoomba Recyclers and gave evidence that those payments were expended on the Old Homestead (T73). I do not consider her evidence in that regard was falsified and I accept it. I therefore find that Mrs Gollan has established a right to compensation for her expenditures on the Old Homestead in the amount of $194,118.
67The Plaintiffs fairly accepted, in closing submissions, that although Mr and Mrs Gollan did not claim a lien to the extent of their expenditure, the Court could award such a remedy, where there was evidence of expenditure before the Court. In my view, that concession was properly made. However, the position as to relief is complicated by the Plaintiffs' decision not to seek an order for possession at this point, since it is possible that no occasion for equitable compensation would arise if Mr and Mrs Gollan are to remain in possession of the Old Homestead. It will be necessary for the Plaintiffs to clarify their position and I will allow an opportunity for short further submissions in this regard.
Costs
68The Plaintiffs ultimately did not press for the relief they had initially sought and Mr and Mrs Gollan have had a considerable measure of success in respect of their Cross-Claim. In these circumstances, my preliminary view is that the Plaintiffs should be ordered to pay Mr and Mrs Gollan's costs of the proceedings. However, I will allow the parties an opportunity to make short further submissions as to that matter.