Evans v Evans

Court of Appeal (NSW)|2011-03-01|Before: Giles JA, Campbell JA

orth Sydney Council [2007] NSWCA 164 Costa v The Public Trustee of NSW [2008] NSWCA 223 Customs and Excise Commissioners v A [2003] EWCA Civ 1039; [2003] 2 All ER 736 Deltaforce v Simpson-Cook [2010] NSWCA 84 Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 Evans v Evans [2010] NSWSC 170 Flinn v Flinn [1999] 3 VR 712 Forbes v Selleys Pty Limited [2004] NSWCA 149 Galaxidis v Galaxidis [2004] NSWCA 111 Giumelli v Giumelli (1999) 196 CLR 101 Grant v Edwards (1986) Ch 638 Green v Green (1989) 17 NSWLR 343 Hall v van der Poel [2009] NSWCA 436 Jennings v Ric [2002] EWCA Civ 159 Rebenta Pty Ltd v Wise [2009] NSWCA 212 Ryan v Nominal Defendant [2005] NSWCA 59; 62 NSWLR 192 Sullivan v Sullivan [2006] NSWCA 312 Thorner v Major [2009] 1 WLR 776 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178 Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unreported) Texts Cited: J D Heydon & M J Leeming, Jacobs Laws of Trust in Australia, (2006) 7th Ed J D Heydon, Cross on Evidence (2010), 8th Aust Ed Category: Principal judgment Parties: Sophie Anastasia Evans (First Appellant) Peter Evans (Second Appellant) Robert Charles Evans (Respondent) Representation: Counsel: Mr J Stoljar SC, Ms J K Taylor (Appellants) Mr W G Muddle SC (Respondent) Solicitors: Michael Rogers & Co (Appellants) Boyd House & Partners (Respondent) File Number(s): 2007/256721 Decision under appeal Citation: Evans v Evans [2010] NSWSC 170 Date of Decision: 2010-02-11 00:00:00 Before: Brereton J File Number(s): 2007/256721

Applicable Legal Principles 12The version of the judgment contained in the Court's Caselaw website has somewhat different paragraph numbering to that in the version of the judgment in the Appeal Book. I have used the paragraph numbering of the Caselaw version. 13The judge stated at [37]-[38]: First , as to the conduct of the plaintiff, that the plaintiff acted, or abstained from acting, in reliance upon an assumption or expectation that a particular legal relationship existed or would exist between the plaintiff and the defendant or that the plaintiff had or would acquire some interest in the defendant's property. Secondly , as to the conduct of the defendant, that the defendant induced the plaintiff to adopt the assumption or expectation and encouraged the reliant activity of the plaintiff, or at least failed to deny the assumption or expectation with knowledge that the plaintiff was relying on it to the plaintiff's potential detriment, and that the expectation could be fulfilled only by transfer of the defendant's property, a diminution of the defendant's rights or an increase in the defendant's obligations. Thirdly , as to the subject matter, that the assumption or expectation in respect of it was one that the defendant could lawfully satisfy. Ordinarily the relevant conduct of the plaintiff (assumption or expectation) and that of the defendant (encouragement or acquiescence) will be factually interrelated and interwoven." "... at least generally speaking, the matters that a plaintiff must establish to found such an equitable estoppel may be characterised as comprising certain conduct of the plaintiff, certain conduct of the defendant, and certain qualities of the subject matter, which for present purposes, may be sufficiently summarised as follows. 14The judge also observed at [40]-[41] that in some circumstances an equity that arises by estoppel may be conditional upon the performance by the plaintiff of certain obligations, and that a plaintiff "will not be able to enforce an equitable interest by way of proprietary estoppel so long as he or she is in default of a condition attached to the enjoyment of the equity ...". (The judge recognised a qualification to that principle, but the qualification is not relevant in the facts of the present case.) 15There was no dispute on the appeal about the correctness of these statements of principle.

The Pleading 16The Amended Statement of Claim pleaded the representations relied on as: "Shortly after 3 April 1990, the defendant represented to the plaintiffs that he had bought them the Colson Crescent Property, and that the Colson Crescent Property would be their home ("the Representations"). 17It pleaded that from the time of making those Representations until July 2007 Robert knew that Peter and Sophie were living in the property, paying $200 per week (and $230 per week from December 2003), paying the rates, water bills and expenses from July 1990 to about 1994, taking no steps to acquire any other home for themselves, and maintaining and improving the property, yet Robert did not qualify, modify or retract the Representations. The pleading also asserted: "On, from and induced by the Representations and [that the defendant knew of and acquiesced in the matters above], the plaintiffs assumed and believed that they had or would acquire the title to the Colson Crescent Property."

The Representations and their Context 18Peter was born in December 1957, and thus at the time of the conversations in April, May or July 1990 was aged 32. He had left school after obtaining the School Certificate, and completed an apprenticeship in carpentry. He worked for Robert's business for around seven or eight years starting in 1979. Since then he has worked in the building industry, first as an employee, and later operating on his own account. 19Robert was born in 1934, and thus in 1990 was about 56 years old. He and Doreen had no children until they adopted Peter and Peter's older brother. Robert had established a business involving fuel transportation, which he sold in 1986. By 1990 he had not only the home in which he and Doreen lived, but also two investment properties that were tenanted, and the Colson Crescent property. He had purchased the Colson Crescent property towards the end of 1989 without requiring a mortgage to finance the purchase. In addition, in 1983 Robert had arranged for the purchase, in Peter's name, of the property at Walmer Street, Ramsgate. At all relevant times it was occupied by a lady friend of Robert. At Robert's request, Peter transferred that property back to Robert in 2002 without payment. 20The evidence discloses little concerning Sophie's training or experience. It shows that in August 1990, when she was off work and receiving workers compensation, she had been working for a suburban accountant and her pay was that of a Grade 4 clerk, $351.50 per week less tax. It also shows that by 2008 she was working as the director of a child care centre with a total taxable income of $45,902 gross. After deduction of tax the amount remaining was $38,550. 21Until they married, Peter was living at his parents' house, and Sophie was living at her parents' house. 22Peter's St George Bank savings account shows that by the end of March 1990 he had a balance of a little over $33,000. 23Sophie gave evidence that when she and Robert were planning to get married "we decided to buy a house to use as our family home". She said that in late 1989 she and Peter approached Westpac at Berala in relation to obtaining a loan to fund the purchase of their home. The evidence included a letter dated 17 November 1989 and headed "to whom it may concern", that she obtained from Centacom Tempstaff, her then employer. It confirmed that she was employed, was likely to continue to be employed, and that her current salary was $24,570. She gave evidence that she and Peter intended to use approximately $30,000 from Peter's savings as a deposit on buying a house, and to borrow $100,000 plus expenses. She gave evidence that "an employee of Westpac at Berala advised us that a $100,000 loan would amount to approximately $200 per week in repayments." That evidence was admitted as evidence only of the advice allegedly given, and not the accuracy or correctness of that advice. 24Sophie continued, in evidence admitted without restriction: "We did not take the matter any further, as my husband's father, Robert Evans, told us he had bought us a house, which is discussed below." 25A receipt fixed 3 April 1990 as the date that Peter and Sophie put a holding deposit on the Dunbar Avenue property, and confirmed that they had made an offer of $130,000 concerning it. 26On Peter and Sophie's evidence, Robert would have been well aware that they were looking for a house in late 1989 and early 1990. Sophie's evidence was that in late 1989 or early 1990 Robert and his wife came with Peter and Sophie to inspect properties in the St George area "for my husband and I to purchase". She gave evidence of visiting one specific house at Margate Street, which they called the "Doll's House" . On Sophie's evidence, Robert pointed out reasons why he did not think the " Doll's House " was suitable as a family home. 27Robert denies that he ever inspected any properties for purchase with either of Peter or Sophie. He specifically denies ever visiting the Dolls House, or discussing its suitability as a family home. He denies that they ever mentioned to him inspection of properties for purchase, or that they were looking for a property to purchase as a family home. 28However, Robert gave evidence in cross-examination: "Q: To your knowledge, the plaintiffs wish [wished?] to secure the future of themselves and their family? A: I cannot answer that, sir. Q: Well, you understood that they wished to own their own home for their own benefit? A: Well, I would imagine that, sir. Q: You imagine that? A: Well, I would imagine that, that's everybody's - it is every married couple's ambition. Q: It is every married couple's ambition? A: Yes. Q: You knew that as at 1990? A: Yes, I would have known that yes. 29Peter's affidavit evidence-in-chief also stated that before their wedding Sophie and he "were looking for a property to purchase as our family home" . He described finding the property at Dunbar Avenue, paying the preliminary deposit, described the house, and said that he and Sophie "intended to purchase it in joint names." His evidence continued: "18. Shortly afterwards, I said to my father words to the effect, 'We've found a place at Regents Park. I've got a holding deposit on it.' 19. A short time later, my father took my mother and my wife and me to the Colson Crescent Property. He said to me and my wife words to the effect, 'I've bought you a house. This is your house.' 20. I was happy. I thanked him very much. Then he said to me word to the effect, 'I've only got a couple of years to live. In a couple of years the house will be yours.' 21. As a result of this conversation, my wife and I cancelled the cheque that we had paid for the preliminary deposit for the property at ... Dunbar Avenue ..." 30Sophie's evidence-in-chief included a passage which was admitted under s 64 Evidence Act 1995 . Section 64 provides that first-hand hearsay is admissible when the maker of the representation involved will be called, and does not place any restriction on the use that can be made of the evidence. That passage of Sophie's evidence was: "We did not purchase this property because the night that we paid the preliminary deposit, Robert Evans told my husband not to go ahead. I was not present when Robert Evans first told my husband about this, but my husband said to me words to the effect: 'Dad has bought us a house'." 31She went on to give evidence about a visit to the Colson Crescent property: "Robert Evans, his wife, my husband, and I all went together. We stood on the front lawn together, and Robert Evans said to my husband and me words to the effect: 'This is your house.' My husband and I thanked him." Her oral evidence placed that visit as happening at "the time of the receipt". 32In cross-examination Sophie said that on the initial visit to the Colson Crescent property Robert had not said in her presence "I've only got a couple of years to live, in a couple of years the house will be yours". Her evidence was to the effect that he had never said any such thing in her presence, but that he had said it to Peter. Her evidence did not elucidate when Peter had told her about having such a conversation or when according to Peter the conversation had occurred. 33Robert's evidence-in-chief was that he purchased the Colson Crescent property at auction on 28 September 1989, and settled the purchase on 26 October 1989. He said that he purchased the property as an investment, and that he planned to carry out some upgrading work on it himself. He said that both he and his friend Brian Coleman did renovation works on the property over the period from December 1989 to May 1990. Mr Coleman gave corroborative evidence to the effect that Robert told him his intention in buying the property was to have it as an investment and refurbish it and that he helped Robert do work at the property from the end of 1989 to about 1990. 34In cross-examination Robert denied that it was his intention, when he bought the house, that Peter and Sophie would move into it as their home. 35On Robert's evidence, the first time he mentioned the property to Peter and Sophie was after they had returned from their honeymoon when he said: "'I have recently bought a house in Colson Crescent which I'm renovating. If you want to, I'll allow you to live there for reduced rent until you sort yourselves out financially.' Both the Plaintiffs responded in words to the effect of: 'That sounds good'." Robert said that they moved into the property the next day. As it is clear that they moved into the property on 30 July 1990, Robert's evidence would have the conversation taking place on 29 July 1990. 36There was evidence from Mr John Pike, who has lived in the house next door to the Colson Crescent property for many years. He says that before Peter and Sophie moved into the house, he saw Robert Evans from time to time at the property. On one of those occasions he saw Robert painting the house, and Robert told him "I'm doing the place up for Pete and Soph." He said that after that conversation the house was empty "for a few weeks or a few months" before Peter and Sophie moved in. 37In cross-examination Mr Pike said that this was the first conversation he had had with Robert, and "you sort of remember the first words sort of thing, to make a point of meeting the fellow ..." 38In cross-examination Robert denied that he had had that conversation with Mr Pike. 39When Peter and Sophie returned from their honeymoon on 25 June 1990 they lived with Sophie's mother. They both gave evidence that the reason why they did not move into the Colson Crescent property immediately on their return from their honeymoon was because the house needed work done on it. Peter said that at that time "there was no blinds or anything, it had to be fixed up, the walls, light switches, power points they were all in need of repair." Peter said he started doing some of those things upon returning from honeymoon. Sophie's cross-examination on the topic was very brief, but she also said that the reasons why she and Peter did not move into the property either in April or when they returned from their honeymoon was "because the house needed work" .

The "We Will Fix" List 40Robert gave evidence that, the day after Peter and Sophie had moved into the Colson Crescent property he said to Peter: "'Peter, we need to discuss the rental payments for the house. I will accept $200 per week, with you paying the council and water rates and insurance on the property. I don't know how long you are going to be here, and we obviously don't need any formal lease, but I think it would be fair if there was a CPI increase if you are still living here after four years.' The First Plaintiff replied in words to the effect: 'That sounds fine, Dad.' " 41All parties agree that, in mid 1990, they saw a document, headed "We will fix" . Its text now reads: "Paint rear 2 rooms complete (Peter) Replace all old electric switch switches (Peter) Relace all missing skirting boards & timbers Replace light fitting on No 2 Bedroom (Peter) Complete outside shower, toilet & laundry & paint including cementing ledge to stop water. (Peter) Replace rear door and door lock (Peter) Replace front door lock & Door (Peter) To renovate bath room, & tiles at medium price range to be advised Recarpet all rooms & carpet at medium price range to be advised (Dad) Linoleum in kitchen & lino at medium price range to be advised (new kitchen - Peter) You have: The choice of tiles, carpet & lino and pay the difference between medium price & your choice - if any. You pay $200 per week + council, water & insurance + CPI after 4 years" 42Apart from the words appearing in brackets, this document is written in Robert's hand. It was common ground that the words in brackets on the "we will fix" document were not written by Robert; Robert said that he recognised them as being in Peter's handwriting, while both Peter and Sophie said it was Sophie's handwriting. The substance of Peter's evidence was that Sophie "wrote down who would be responsible for the work in brackets next to the tasks" , at an imprecisely fixed time, but around the time he first saw the document. Sophie says she does not recall when she wrote on the document, but "I wrote the words 'Peter' next to the things that we had done" - ie, after the work had been performed. 43Robert's evidence was that at the time he showed this list to Peter he said: "As you can see Peter, there are still lots of renovations to be done to the house, but it should be fine to live in regardless. Doreen and I have discussed the matter and we have decided that we are prepared to do some renovation work at the property. As this is to be an investment property, we are only prepared to pay for mid-range quality materials for some items. Since you and Sophie are staying here at the moment, if you want better quality then you can pay the difference. I have made a list of the work that we are prepared to do." Thus, on Robert's evidence the "we" who "will fix" were himself and Doreen. 44Peter's account of the creation of this list, in his affidavit evidence, occurred immediately after the evidence I have set out at [29] above. He said: "Shortly after this conversation, my father and my wife and I talked about what we needed to do on the house. My father wrote a document listing the work that needed to be done on the house. My wife wrote down who would be responsible for the work in brackets next to the tasks. ... At the bottom, my father wrote, 'You pay $200 per week + council water, Insurance + CPI after 4 years.'" Another of Peter's affidavits added: "The list was written by my father. My father and I walked around the house and I noted the things that needed to be done. For example, I said words to the effect: 'The rear rooms need to be painted'." 45On that account, the "we" is not clear, but might well be Robert and Peter (and possibly Sophie) collectively. 46Sophie's evidence about creation of the list was: "I do not recall whether I was present when the list was made. My husband told me that he and Robert Evans had agreed that my husband was going to do most of the work. He said that they had agreed that Robert Evans was going to pay for the tiles in the bathroom, carpet in the rooms, and linoleum in the kitchen, unless we chose more expensive than average materials. This is why the document refers to the price range of tiles, carpet and lino. We have done most of the work." 47It is common ground that in fact Robert did not physically carry out any of the work referred to in the list. His explanation for carrying out none of the work is that about a week after the list was prepared (which on his evidence would put it in August 1990) he returned to the Colson Crescent property during daytime to carry out some of the work on the list, and found the front and back door locks had been changed. His evidence continues: "I rang the First Plaintiff that evening and said to him words to the effect of: 'I came around today to do some of the work and found that I couldn't get in because the locks have been changed. What's going on?' The First Plaintiff relied in words to the effect of: 'Sophie wants security and privacy in the place.' I said: 'Well I can understand that but I need to get access to do the work.' The First Plaintiff replied in words to the effect of: 'Sophie and I have decided to do the work ourselves, Mum and you won't have to worry about it. I'm a builder and I will be able to do the work and with less trouble than you.' I replied words to the effect of: 'Ok, well if that's how you want it, fine.'" 48Peter and Sophie both put the time they changed the locks as being in around October 1990, when Sophie had returned to work after having a period at home following an accident. A contemporaneous letter from Sophie's employer ([20] above) shows that in August 1990 she had had an accident and was away from work. 49Peter denied Robert's evidence about the conversations. Peter said that they never discussed a lease arrangement, and Robert never referred to rental payments.

$200 Payments 50From 30 July 1990 until the end of 1994 Sophie recorded the payments of $200 per week in an exercise book that had "House Payments" written on its cover. The format of the book was that it recorded the date of each payment, recorded that the payment was for the "week ending" on a particular date, and recorded the amount paid. At the foot of each page a progressive total of amounts paid was recorded, such that after the payment made on 4 December 1994 a progressive total of $45,800 was shown as having been paid. Sophie's unchallenged evidence is that thereafter she continued recording the weekly payments in a computerised record that was lost when the computer crashed. 51Robert never included the payments of $200 per week in his income tax return. He had two other investment properties, the rental income of which was included in his tax return. In cross-examination he gave an explanation for the payments not being accounted as rent in his records as: "That was paid to my wife and it was just one of those things, it just disappeared. I believe that the money, that rent was taken care of with council rates, water rates and the main one, land tax." 52When questioned further about his failure to include the rent in his income tax returns, he claimed privilege against self-incrimination. No adverse inference can be drawn from the fact that he claimed the privilege (J D Heydon, Cross on Evidence (2010) , 8 th Australian Edition, para [25040]). However, his claiming the privilege has the effect, possibly relevant in the drawing of inferences from the circumstantial material, that his failure to include the payment in his income tax return is unexplained. That Doreen was the physical recipient of the payments would not be of significance for the proper treatment of the payments for income tax purposes if the payments were an income stream generated by property which belonged beneficially to Robert. A calculation on the basis of the support schedule to Robert's land tax assessment for the 1994 tax year shows that $2,353.14 of the land tax bill was attributable to Colson Crescent. In 1994 the council rates were $1,000.90, and in 1994 the quarterly water rates for two quarters were $198.40 and $178.25 (which would, presumably, include a component of fee for water usage). However, even taking the higher figure for water rates, and ignoring any water usage component, the water rates would approximate $793.60 per annum. Thus, the total water rates, land rates and land tax attributable to the property would be $4,147.64, which equates to $79.76 per week. Thus the part of his explanation, that the payments were consumed by rates and taxes, was incorrect as at 1994/95. His explanation for raising the payment to $230 in December 2003 was that the Colson Crescent property was costing him about $150 in outgoings per week. Thus it seems that the periodical payments were not fully expended on rates and taxes in 2003 either. Even if the outgoings were more or less equal to the income stream from the property, any income that was in truth rental should have been included in Robert's assessable income.

Peter and Sophie's Work on the House 53As mentioned earlier, at some time in the period August to about October 1990 Peter and Sophie had the locks changed on the Colson Crescent property. Robert was aware of that change. 54From 1990 onwards, Peter and Sophie carried out various other items of repairs and renovations at the Colson Crescent property. Some of the work was the sort of work that might not be readily noticed by a visitor, such an electrical rewiring and installing window locks. However, there were also more readily visible items. In 1990 they installed vertical blinds throughout the house, removed the linen closet and changed the location of the doorway to the bathroom, and installed a carport and a back awning on the back patio. In 1992 Peter and Sophie converted what had been the kitchen into a nursery, and installed a new kitchen in another part of the house, installed a bay window in the new kitchen and tiled the kitchen floor. In 1992 they also removed the carpet from the dining area and laid tiles on the floor there. In 1993 they removed the back fence and installed a new fence, and laid slate on the back paths and patio area. In 1997 they enclosed the back patio. 55The judge evidently accepted evidence of Peter that they had expended money and labour to the value of about $75,000 in maintaining and improving the property. However, he also found at [53]: "... the impact of their efforts has been to add perhaps $12,000 at best to the value of the property; much of what they did was of a depreciating nature." All the renovation work that Peter and Sophie did was carried out without first asking Robert's permission. 56There is a difference in the evidence concerning Robert's knowledge of the building work that was being done. Peter's evidence was that his father and mother visited the Colson Crescent property from time to time while the work was being carried out and subsequently, and that Robert never made any objection to his carrying out the work. 57Robert says that in April 1992 he and Doreen came to the Colson Crescent property for Sophie's birthday, and saw the new kitchen. He says he asked why they had installed a new kitchen, and on being told that the old one was not good enough said "Well I guess it has been done now, but I do really think that you should have spoken to me first before you made any changes here." Peter denies any such conversation occurred. 58Sophie's evidence about Robert's visit immediately after the kitchen being installed was that he asked what was wrong with the old one, she explained, and he said words to the effect: "Well, it's your house". 59Robert says that he never referred to the property as "your house" to Peter and Sophie. 60Robert says that he visited the Colson Crescent property approximately once every six months in the period to 1997, and: "... the only building work I noticed that had been undertaken by the Plaintiffs was the changing of the locks, the installation of a different kitchen and of a new patio. I was not concerned about the addition of the patio to the Colson Crescent Property as it did not seem to add any disadvantage to the Property." In an earlier affidavit Robert had said that he was "not aware of the majority of the alleged improvements to the Colson Crescent property". 61It is common ground that from about 1997 to 2003 Robert had only limited contact with Peter and Sophie. Robert says that he visited the property on "a couple of occasions during that period, usually for birthday celebrations for my grandchildren." 62Peter gave evidence: "My mother visited the Colson Crescent Property approximately every 2 weeks from around the time we moved in until around 2006. She always used to come for family birthdays. My father visited less often but prior to around 2003 or 2004 he visited for some family birthdays and other significant occasions, a few times a year. When my father and mother visited, the improvements we had done to the house were easy to see."

Other Acts Relevant to Beneficial Ownership 63The judge found at [45] that Peter and Sophie: "... also paid the council and water rates for some years, until Robert had them redirected to him and he paid them himself; Robert says that he did this at their request. In any event, whether with their agreement, at their request, or whether unilaterally by him, it was the type of action by a defendant which relieved the plaintiffs from the need to comply with that particular obligation as a condition of any equity that they otherwise might have." 64Robert's unchallenged evidence is that he paid land tax on the Colson Crescent property from the time of the assessment based on his land holdings as at 31 December 1993. He says that he has never asked Peter or Sophie to pay any land tax on that property, and has never mentioned to them the fact that he paid land tax on it. 65Apart from one mention of Robert including insurance in a calculation of expenses in December 2003, the evidence is silent about who, if anyone, paid insurance on the property. At least prior to December 2003, Robert made no attempt to have the payments increased by the CPI, and Peter and Sophie did not offer to pay any such increase.

The Increase to $230 Per Week 66Peter gave two somewhat different accounts in his affidavit evidence of the circumstances in which the weekly payment went from $200 to $230. In his first affidavit he said: "In or around December 2003, my father said to me words to the effect, 'I am putting your rent up to $230 per week.' This was the first time I had ever heard our payments described as 'rent'. I said to him words to the effect, 'It's not rent, it's house payments.' I was surprised and upset, and an argument broke out between us." 67The other account, in a later affidavit, was: "In late 2003 I said to my mother words to the effect: 'I had a phone call from one of Dad's friends the other night. He said, 'Your father's out to get you. Get out of the house.'" Later, one Sunday in December 2003 I was at my mother's and father's house at Clarkes Road and at around midday my mother said to me words to the effect, 'Your Dad wants you to go for a walk around the block with him.' When my father came home around an hour later, he asked me to go for a walk. While we were out we had a conversation in words to the following effect: My father: 'This thing about the phone call.' I said: 'It was one of your friends.' He said: 'Who was it?' I said: 'I couldn't tell you. Most of your friends sound the same on the phone.' He said: 'You're a fucking liar.' He then said: 'I am increasing your rent from $200 to $230 per week'. This was the first time that he had referred to our payments as rent. I was upset and angry. I said to him words to the effect: 'Whatever you fucking reckon.' I quickly went inside the house, collected my wife and children, and we left." 68Robert's account of that conversation was: "One Sunday evening in December 2003, the First Plaintiff came over to 12 Clarkes Road to visit his mother. At that time, I asked him if he would take a short walk around the block with me to discuss my proposal to increase the rental payments. I said to the First Plaintiff words to the following effect: 'Peter, I have been looking over the outgoings of the property and I will have to raise the rent to $230 a week.' I could tell immediately that the First Plaintiff was angry at my suggestion to increase the rent. The First Plaintiff responded to me with words to the effect of: 'Fine, if you want $230 rent a week, I'll pay you your fucking $230 a week.' I was disappointed at the First Plaintiff's reaction, but also slightly exasperated as I had been and was still willing to allow the First and Second Plaintiffs to reside at the Colson Crescent Property for what I considered to still be a reduced rental rate." 69Peter's evidence was that as far as he knew the December 2003 increase was a CPI increase. Robert's evidence was that he sought the increase after calculating his expenses on the property. Sophie gave no evidence on that topic. 70Robert denied that he had ever referred to the payments as " house payments" and said "on such occasions as there was a reference to those payments made they were always referred to as 'rent'." 71Sophie's evidence was that December 2003 "was the first time that he had used the word 'rent'". 72Peter and Sophie paid the $230 per week until about July 2007. At that time Robert asked them to sign a residential tenancy agreement that he had already prepared in draft. It made provision for them to have a tenancy for two years commencing 1 August 2007, at a rental of $230 per week. 73Peter gave evidence, that Robert did not deny, that later on the evening on which the Residential Tenancy Agreement was handed over, Robert telephoned him, and said, "sign the lease or I'll sell the house." It was shortly after that conversation that Peter and Sophie lodged a caveat over the property, and commenced the proceedings from which this appeal is brought. 74In total, Peter and Sophie had paid Robert $181,750 by the time the payments ceased.

Evidence About the Expectation or Assumption 75Peter's affidavit evidence was that he always called the payments "house payments" and that he "believed that we were making payments to purchase the house". In another portion of his affidavit evidence he said: "I always considered that the weekly $200 payments were house payments and that eventually the Colson Crescent Property would be transferred into our names." In other affidavit evidence Peter said "I have always believed that it was our house, and that we were making house payments and not paying rent ." He also said: "Because he referred to the house as 'your house' and said comments such as 'I have bought you a house' and 'This is your house', I believed that we were making payments to purchase the house." 76Some confirmation of their belief that they were paying off the house comes from the title of the "House Payments" book, coupled with the format in which the book was kept. No explanation has been given to us of why there was any point in keeping a record of the progressive total of amounts paid, if the payments were not towards the purchase price of the house. 77Peter gave evidence that if for some reason he had not been able to purchase the property at Dunbar Avenue, he would have looked for another property to purchase with Sophie. Sophie's evidence was that if she had thought that the payments being made to Robert were rent, she would not have moved into the property, but would have bought the Dunbar Avenue property instead. 78Sophie's evidence was that " I always assumed that the house was ours " after Robert took them to the house for the first time and said: " This is your house " ([31] above). 79Perhaps not altogether consistently, she also gave evidence that on the basis of Robert's statements: "I believed that once my husband and I had paid back the amount for which the house was purchased, the house would be ours. If I had not held that belief, I would have purchased the property at ... Dunbar Avenue, or another property. I would not have paid Robert Evans $200 per week and, later, $230 per week. I would not have done work with my husband, on improving the Colson Crescent Property." 80Sophie gave evidence (admitted on the basis that it was evidence only of her assertion and not the truth of the underlying matters) that: "Robert Evans had given interest free loans to my husband's Aunt to buy half of her property when she was divorced and to purchase a car. I thought that we were receiving something similar." 81She gave evidence (likewise admitted as evidence only of the fact of the statement asserted and not the truth of the underlying assertion) of the source of that belief: "... prior to moving into the Colson Crescent Property Doreen Evans told me that Robert Evans had given his sister-in-law, Valerie, a loan to buy half of her property when she was divorced and to purchase a family car. She told me that the loan was interest-free" 82She also gave the following evidence, admitted without restriction: "I thought he was doing something kind for us because my husband was his son. However, I did not think that we would receive the house for free. We never really discussed the terms of the purchase of the Property. However, because Robert Evans had made comments like 'I've bought you a house' and 'This is your house', I have always proceeded on the basis that once we had paid him back the amount for which the house was purchased, the house would be ours." 83Sophie also gave affidavit evidence, admitted on the basis that it was evidence only of her state of mind and not of the truth of the underlying assertion, that she: "... thought that he was giving us an interest-free loan for the Colson Crescent Property because we were family. I thought once we had paid back $190,000 (the purchase price of the Colson Crescent Property) he would give us a transfer so that the Colson Crescent Property could be transferred into my husband's and my names. I thought this because he had said from the time he showed us the house, 'This is yours' and 'It's your house' and my husband and I had always treated it as our house." 84Peter gave evidence in cross-examination that when his father said to him "I've bought you a house, this is your house" , Peter believed that the house "was [his] absolutely at that time". He denied that: "you thought nothing more than this was a house in which you would be permitted to live in". His cross-examination also included: "Q. You accept don't you that the words 'in a couple of years the house would be yours' indicate clearly that it wasn't then presently yours? A. Yes. Q. And rather indicated that at some future time it might become yours? A. Yes. ... Q. You also say that your father said he only had a couple of years to live and 'it would be your house'? A. Yes. Q. You accept don't you, that that latter expression referred to him leaving it to you in his Will? Q. Yes. Q. So that is how you expected to get the house, isn't it? A. Yes." 85Peter accepted that there had been no conversation with his father concerning the price of the house, concerning the interest rate, or that there would be no interest. He accepted that there was nothing in the affidavit concerning a conversation with Robert as to how many payments he would have to make, and that the only communication he had with Robert was the one in the last line of the "we will fix" document. 86Peter accepted that when rate notices arrived at the Colson Crescent property during the first four or so years after he moved in, they were addressed to Robert, and Peter understood that to indicate that Robert was the legal owner of the property. 87In cross-examination Sophie said that, after the April 1990 conversation she was not sure whether Robert was giving the house to them for free, because nothing had been said at the time, and she did not make any assumption either way at that point of time. Even so, in that state of knowledge, she participated in cancelling the cheque for the holding deposit on the Dunbar Street property. She accepted that there was nothing in her affidavits about any conversation between her and Robert about the price he had paid for the property, the price that they were to pay to Robert, whether there was a rate of interest or no interest, the number of payments, or the amount of payments. However Sophie was clearly aware of the condition requiring payment of $200 per week, and the itemised outgoings, at the time of moving into the house, because the first payment that she recorded in the exercise book entitled "House Payments" was made on 30 July 1990. 88In cross-examination Peter accepted that if he was making instalment payments to Robert to reimburse him for the price that he had paid for the property, it would have made no sense to refer to a CPI adjustment, as the "we will fix" document did. He accepted that "it would make no sense because if you were simply paying off a fixed purchase price without interest there would be nothing to adjust by CPI". Sophie's evidence on the topic was: "Q. If you were making payments to reimburse Robert Evans for the purchase price which he had paid there would have been nothing which could sensibly be adjusted by CPI, would there? A. I don't suppose." 89Peter's evidence in one affidavit about reliance in making the alterations to the property was: "I would not have carried out these improvements to the Colson Crescent Property had I thought that we were only renting it." In another affidavit he said: "My wife and I would not have done the work we did on the Colson Crescent Property if we had not thought that we were renting it. I thought that it was our house. I have always proceeded on that basis." Though it was not corrected in evidence, it is fairly clear that the second "not" in that passage is unintentional. 90The only cross-examination of either Peter or Sophie about whether they could have afforded an alternative property was when Sophie agreed that if they borrowed $100,000 at an interest rate of 16.5%, that would cost $16,500 per annum for interest alone. That sum equates to $317 per week. The evidence included a listing of the "F05 indicator lending rate" of the Reserve Bank for each month from June 1989 to July 2008. In a column with headings indicating it related to a standard variable rate of banks for housing loans, it showed that in May to August 1990 the rate was 16.5%. In the period from June 1989 to and including March 1990 the same rate had been 17%.

The Judgment Below 91The judgment below was delivered ex tempore at the end of a four-day hearing. At the outset, the judge considered the credit of the various witnesses. He largely rejected an attack that was made on Robert's credit, saying that his impression was: "... his recollection of most of the material events was quite good - although he frankly conceded uncertainty, or that he was guessing, in one or two respects relating to events long ago which it is quite understandable that he would not recall in detail now." [5]. 92The judge accepted that Robert's failure to disclose the payments he received in his income tax returns told somewhat against his credit, but the judge did not "see it as a matter which seriously undermines his credit on the essential issues." 93Going wider than Robert's credit, the judge said at [18]: "[w]hether or not the actual word 'rent' was used, seems to me something that neither party is likely to recall accurately twenty years later." 94Doreen was not called to give evidence. Robert made an affidavit about six months before the hearing began giving reasons why he had not sought to adduce any evidence from her. At [22] the judge summarised those reasons as: "... although separated, they still had a close relationship; that calling her to give evidence would be distressful to her; and that he believed her to be unwell." The judge accepted that they were "human considerations, which might well reasonably explain a decision not to call a witness" , and declined the invitation to draw a Jones v Dunkel inference. 95The judge's remarks concerning the credit of Peter and Sophie were (at [24]-[25]): "It was also submitted that the court should be all the readier to accept the plaintiffs' version, because Sophie was cross-examined only for a short time, during which she gave clear and unwavering answers. I completely agree that Sophie gave her evidence in an impressive and entirely credible manner. The question is not so much whether she should be believed, but what was the effect of her evidence. In particular, she did not corroborate Peter's evidence that at the initial conversation at Colson Crescent, Robert had said something to the effect, 'I've only got a couple of years to live. In a couple of years, the house will be yours.' Indeed, she said that that had never been said in her presence, but apparently on some other occasion to Peter; the evidence did not explain when Peter had told her of that conversation, and, in particular, whether it was approximately contemporaneous, or only very recently. Importantly, Sophie also answered that when Peter and she had cancelled a preliminary deposit paid on another property, a matter which was heavily relied on as going to reliance, she was not sure whether Robert was giving them the property free, as nothing had been said on that topic at that time, and she made no assumption either way at that point. In the light of the answers she gave in cross-examination, her evidence does not compel acceptance that statements to the effect deposed to by Peter were made as and when he said they were. That is not to say that I conclude that they were not; we shall come to that in due course." 96The judge began his consideration of the facts by saying, at [42]: "The first question then, in this part of the case, is whether the plaintiffs have established that they entertained the expectation or assumption that the property was or would be beneficially their own. Closely associated with this is whether that expectation was, in the circumstances, a reasonable one." 97After adverting to the evidence of the parties about what was said between them before Peter and Sophie moved into the house, the judge said at [44]: "The statements, 'I've bought you a house' and 'This is your house' admit of many meanings. 'Your house' does not necessarily convey a house to which you are beneficially entitled. It may mean a place in which you live temporarily or permanently as a licensee, a lessee or a life tenant. There are many possibilities. I accept, as Mr Stoljar submitted, that the Court looks primarily to whether the expectation is one that is actually held by the plaintiff, and is reasonably capable of being borne or engendered by the words used. That has to be judged not in isolation, but in all the contextual circumstances." 98The judge referred to the "we will fix" document. He found at [44] that it was "prepared by Robert shortly after the conversation in question and before Peter and Sophie moved into the property." Concerning it, he said (at [46]-[48]): "... First of all, on any view, it is entirely inconsistent with the plaintiffs having an absolute beneficial interest. They were to pay an amount for the right to live in the property, and they were to pay that amount on a periodical basis. The plaintiffs' evidence, at least in their affidavits, seemed to be that they assumed that Robert had made them an interest-free loan equivalent to the purchase price of the property, and that the property would be theirs when they had repaid to him the purchase price. This assumption, when one looks closely at the evidence, seems largely to have arisen from the circumstance that the plaintiffs learnt (not from Robert) that he had made an interest-free loan to his sister-in-law, to assist her in a matrimonial property settlement; but there is no suggestion that Robert said anything to either plaintiff about an interest-free loan. Moreover, as both plaintiffs conceded in cross-examination, the reference in the document to a CPI adjustment makes little if any sense in the context of an arrangement to repay the purchase price of the property. In the whole of the evidence, there is not the slightest suggestion that any reference was ever made in any conversation to a loan, to the purchase price, to the amount of a loan, to the amount of the purchase price, to the amount to be repaid, to whether there would be any interest, to the term of any loan, or to when and in what circumstances any loan would be deemed repaid. There are three possible analyses of the requirement to pay $200 per week, rates, insurance and so on: one is that it was an occupation fee, for a licence to reside in the property; the second is that it was rent, for a lease of the property; and the third - which the plaintiffs' evidence favours - is that it was repayment by instalments of a loan of the purchase price of the property. The difficulty with the last characterisation is, first, as I have said, there was never any reference to loan, purchase price or repayments; secondly, that the concept of $200 per week, rates, insurance and CPI adjustment savours much more of an occupation fee or rent than it does of repayment of a loan or payment by instalments of a purchase price; thirdly, that if the property were beneficially the plaintiffs', insurance would be no concern of the defendant; and fourthly, as the plaintiffs conceded, that the reference to a CPI would, in that context, be practically meaningless." 99Concerning Peter's statement that Robert said he had only a few years to live and in a couple of years "the house will be yours" the judge said (at [49]: "... It is conceivable that a couple of years after the plaintiffs moved in to the property, and when he was ill, Robert might have said something to Peter to that effect, but it is not proved that he did so. I am quite satisfied that he did not say so at or about the time that the plaintiffs moved in, as Peter asserts." 100The judge did not make specific findings that resolved the numerous conflicts of evidence. There were conflicts about:

what was said prior to Peter and Sophie moving into the house;
whether Robert knew that they had been actively looking for a home to purchase;
whether he had gone so far as to inspect properties with them and to actively discourage them from considering a particular property;
whether he knew that they had placed a holding deposit on the Dunbar Avenue property;
whether he knew that they had given up their search for a home to buy;
whether he told Mr Pike, before Peter and Sophie moved into the house, that he was doing the place up for Peter and Sophie;
the extent and timing of his knowledge of the work that Peter and Sophie did on the house;
whether Robert remonstrated with them for not having asked his permission before installing the kitchen;
whether he periodically reassured them that it was their house. Nor was there a specific finding about precisely what understanding Peter and Sophie had about the basis on which they were occupying the house. 101Rather, the judge appears to have treated the case somewhat like the way one would treat a submission of no case to answer, by taking Peter and Sophie's case at its highest (save for the aspect of Peter's evidence that he specifically rejected), and then considering whether the assumption that they said they made was a reasonable assumption. He found against them, so far as the equitable estoppels pleaded were concerned, by finding that their assumption was not reasonable. His reasoning was (at [50]-[55]): "As I said at the outset, ultimately this case is concerned with what the plaintiffs understood from what Robert said, and whether that understanding was reasonable. It is conceivable that even at the outset, the plaintiffs understood what Robert said as being a promise of a beneficial conveyance of the home. The question is whether that was a reasonable assumption. In my view, in light of the document to which I have referred, it was plainly not a reasonable assumption, in the context of the whole of the surrounding circumstances. Put shortly, while it is not necessary for me to disbelieve the plaintiffs' assertion that they entertained that assumption even from the outset, it simply was not a reasonable assumption in circumstances where the defendant had stipulated that they must pay $200 per week, council rates, water and insurance, with a CPI adjustment after 4 years. The plaintiffs pointed to a number of matters said to be consistent with their holding the relevant expectation. The first was the cancellation of the preliminary deposit paid on another property in which they were interested. In my view, that is entirely equivocal. It does not show that they had an expectation of acquiring a beneficial interest in the Colson Crescent property. It is equally consistent with them preparing to occupy the Colson Crescent property on some other basis, such as a leasehold or licence basis. In any event, the evidence of Sophie was to the effect that nothing had been said about the basis upon which they would occupy the Colson Crescent property when the deposit was cancelled. The next matter relied upon was the fact of the plaintiffs' lengthy occupation of the property. Again, that is entirely equivocal as to whether they occupied it on the assumption that they were beneficial owners, or on some other basis. A third matter put forward was that the plaintiffs changed the locks. That too is equivocal; a tenant or occupant might well change the locks if they are entitled to exclusive occupation, even in the absence of any beneficial or proprietary interest in the property. Another matter relied on was the payment of outgoings. That too is completely equivocal. It was a condition of their occupation that they pay the outgoings, as it is a condition of many leases and licences that the tenant or occupant do so. The one matter which, in my view, does tend to show an expectation of something more than a mere lease from month to month is the substantial expenditure by the plaintiffs of money and labour on renovations and improvements to the property. The evidence of Peter, whose is the only relevant evidence on the topic, shows that over the years they have expended money and labour to the value of about $75,000 in maintaining and improving the property. On the other hand, the valuation evidence tends to show that the impact of their efforts has been to add perhaps $12,000 at best to the value of the property; much of what they did was of a depreciating nature. Nonetheless, I accept that it is improbable that the plaintiffs would have undertaken those works had they not entertained an expectation of something more than a monthly tenancy. But I think that expectation arose, not immediately upon occupation of the property, but progressively over the years, with the passage of time as their occupation continued undisturbed and without any suggestion that it would be disturbed. They did not consult Robert about the works they undertook. They did not seek his permission for them, because they did not think that they needed to do so. But one consequence of that is that it can hardly be said that Robert encouraged those works, or that he stood by with knowledge that they were being done upon an expectation that the plaintiffs had anything more than the interest he originally intended to give them. There is nothing to implicate him in the adoption by the plaintiffs, subsequent to their initial occupation of the property, of any assumption that they had an entitlement to remain there in perpetuity, nor to implicate him in encouraging, or dishonestly standing by during, their expenditure. In my view, there is nothing sufficiently [sic] to implicate the defendant in any relevant assumption adopted by the plaintiffs to make it unconscionable for him to insist on his strict legal rights in respect of the subject property. The same matters lead to the conclusion that there was no common assumption of the type that would be necessary to found a conventional estoppel."

The Grounds of Appeal 102The ground upon which Peter and Sophie rely in their Amended Notice of Appeal are: 1 The trial judge erred in finding, at [44], that the statements "I've bought you a house" and "This is your house" admit of many meanings. 2 The trial judge erred in finding, at [50], that the plaintiffs' assumption that the defendant had promised them a beneficial conveyance of the Colson Crescent Property was not a reasonable assumption in the context of the whole of the surrounding circumstances. 3 The trial judge ought to have found: a. That in all of the circumstances, the statements "I've bought you a house" and "This is your house" were unequivocal statements which conveyed that the Colson Crescent was or would be beneficially owned by the plaintiffs; b. As those statements were unequivocal, it was not necessary for the trial judge to find that the plaintiffs' understanding of them was reasonable; and, or alternatively c. If those statements were uncertain, it was reasonable for the plaintiffs to interpret the statements as constituting a promise that the Colson Crescent Property was or would be beneficially owned by the plaintiffs and to act in reliance on that interpretation. 4 The trial judge erred in finding, at [54] and [55], that there was nothing sufficiently [sic] to implicate the defendant in any relevant assumption adopted by the plaintiffs to make it unconscionable for him to insist on his strict legal rights in respect of the Colson Crescent Property or to establish any common assumption for the purposes of conventional estoppel.

The Notice of Contention 103Robert seeks to uphold the decision in the court below on grounds set out in a Notice of Contention: 1 The Appellants' [sic] failed to discharge their onus of proving that they could have proceeded with the purchase of an alternate property. 2 On the evidence, the Appellants did not have the financial capacity to purchase the Dunbar Street property or any other property of similar value.

Decision 104If one accepts Peter and Sophie's evidence, save in the one respect in which the judge rejected Peter's evidence, in my view it was reasonable for them to have formed the expectation, well prior to the date of initiation of proceedings, that the house was theirs. 105I would accept that, considered in isolation, the words "I've bought you a house. This is your house", followed by Robert permitting Peter and Sophie to live in the house could cover many situations besides that of Robert making a gift of the house, whether absolutely or subject to a condition (cf Green v Green (1989) 17 NSWLR 343 at 349 per Gleeson CJ, with whom Priestley JA agreed). I would agree that, if the words were isolated from any context, the hearer could not reasonably take them to be conferring a gift. 106However, I respectfully differ from the judge concerning what the words can reasonably mean when taken in their context, as accepted by him or deposed to by Peter and Sophie (on the assumption that their evidence is accepted). That context includes:

Robert knowing that it was every married couple's ambition to own their own home for their own benefit;
that to his knowledge Peter and Sophie had been looking for a house to buy from late 1989 or early 1990;
that Robert and Doreen had accompanied Peter and Sophie inspecting properties in the knowledge that Peter and Sophie were looking for a house to purchase;
that Robert gave active consideration to whether at least one house that they visited would be suitable as a family home, and told them of his reasons why he thought it was not suitable;
that he was told in early April that they found a specific house and put a holding deposit on it; and
there is no account of any conversation between them about not being able to afford to buy a home or about any other reason why they should abandon their conventional ambition to own their own home. It is also easily open to inference that he was aware of their planned wedding date. Both of them were living in their respective parents' houses. It was not as though one of them already had accommodation to which they could return as a married couple. 107The expectation that Peter and Sophie could reasonably derive from Robert's words and actions need not depend on the words of a single conversation, but could arise from conduct over a period of time. The equity involved in proprietary estoppel operates by considering whether it would be contrary to good conscience (measured according to equity's standards) for a defendant to disappoint the expectation that the plaintiffs have. The relevant time for the consideration is the time that the defendant seeks to disappoint that expectation. 108In Delaforce v Simpson-Cook [2010] NSWCA 84 at [81], Handley AJA (Allsop P and Giles JA agreeing) quoted with approval a remark of Hoffmann LJ in an unreported judgment of Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unreported), that had in turn been adopted in Thorner v Major [2009] 1 WLR 776 by Lord Walker at 794 and Lord Neuberger at 805: " ... equitable estoppel [by contrast with contract] ... does not look forward into the future [it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept." 109Similarly, in Green v Green (1989) 17 NSWLR 343 at 355-356 Gleeson CJ (Priestley JA agreeing) pointed with apparent approval to an aspect of the reasoning in Grant v Edwards (1986) Ch 638: "Mustill LJ (at 651) observed that although a number of judgments in this area refer, for simplicity of expression, to intention or conduct 'on acquisition' of the relevant property, in a given case the relevant events leading to a finding of an interest in the claimant may occur after the acquisition, and beneficial interests may change in the course of the relationship between the parties. This observation was expressly approved by the Privy Council in Austen v Keele [(1987) 10 NSWLR 283; 61 ALJR 605; 72 ALR 579] 290; (at 609; 587)." 110That enables all the conduct up to the time of Robert's disappointing or attempting to disappoint the expectation to be taken into account. The expectations that Peter and Sophie show that they had from time to time, and the extent to which Robert knew about them or induced or encouraged them, are relevant to deciding whether it would be contrary to good conscience for Robert to disappoint the expectation that Peter and Sophie had come to have. This is because it is acts done in reliance on the expectations which the plaintiffs have from time to time that generate an equity in their favour. Thus, even if the judge's remark at [54] (quoted at [101] above) that "I think that expectation arose, not immediately upon occupation of the property, but progressively over the years" is regarded as a finding, it does not tell against the existence of an equity arising from proprietary estoppel. 111In the present case, even on Peter's account of the facts there was a slight time gap between Robert saying "I bought you a house. This is your house" and Robert stating, and Peter accepting, the requirement to pay the particular outgoings plus $200 per week with an eventual CPI increase. On Sophie's account, she was in some initial uncertainty about the basis upon which they were being given the house. However even in April 1990, she was nonetheless sufficiently confident that they were being given the house on some basis or other to prompt her to join in cancelling the holding deposit on Dunbar Avenue. Even so, by the time they moved into the house, Peter and Sophie were both well aware of the condition on which the house was given. 112If Peter and Sophie's evidence is accepted, in my view Robert's conduct both before and after they moved into the house could reasonably justify them in believing that the house was theirs, in the sense of ownership, and that they had an obligation to pay the nominated outgoings, and the $200 plus eventual CPI increase, to Robert. However, nothing that Robert said justified them in having as specific an expectation as an expectation that Robert was giving them an interest free loan of the purchase price. 113Peter and Sophie's subsequent conduct was to make no attempt to purchase a house or other dwelling for themselves and to spend significant money on the property over many years. Robert's response (or more accurately, lack of response) to their subsequent conduct is a significant matter adding justification to Peter and Sophie's assumption that the house was theirs. While they did not ask Robert's permission for the work they carried out, there were repeated improvements to the property. On their case, these modifications must have been visible to Robert when he visited, yet he never made a word of complaint about them having effected the alterations without his approval. Indeed according to Sophie he said, concerning the kitchen alteration "Well, it's your house". That conduct, taken in combination with what Peter and Sophie say were the representations made to them before they moved into the property, amount to Robert standing by with knowledge that they were acting in the belief that the house was theirs. 114On Peter and Sophie's case, they have suffered significant detriment by acting on the basis that the house was theirs. There was express evidence to the effect that they would not have moved into the house at all if they thought they were renting, and would not have carried out the improvements if they thought they were renting. There are the objective facts that they made no attempt to acquire a home for themselves, and that Peter is now in his mid-fifties, which is quite an unpromising age at which to be seeking a mortgage to buy a property. 115Mr Stoljar SC, counsel for Peter and Sophie, submits that the judge was mistaken in identifying only three possible analyses of the requirement to pay the $200 per week and nominated outgoings. As well as the alternatives the judge listed at [48] (set out at [98] above), a fourth alternative is that they were given the house and undertook an obligation to pay $200 per week and the outgoings. It is unimportant that Peter and Sophie did not seek to analyse the nature of the $200 per week - what they understood, and what they acted on, was that Robert had given them the house, and at the same time they had undertaken an obligation to pay him the $200 per week and to pay the outgoings. 116This submission has force. While professional training would impel a lawyer to seek to impose a legal categorisation on the $200 per week, Peter was a builder and Sophie was a clerk in an accountant's office - there was no reason to expect them to think like lawyers. Accordingly, their understanding was not in terms that they had been given an "absolute beneficial interest" - that is lawyers' language, and foreign to their way of thinking. The upshot of their evidence is that their understanding was that they had been given the house, and that they had the obligation to make the payments. They organised their lives around that understanding for decades. It would be belittling for a lawyer to denigrate or deny the reality of their understanding on the basis that it did not fit into a lawyer's categories of analysis. An equity concerning proprietary estoppel arises by virtue of the expectations that the plaintiffs actually had, that were induced or encouraged by the defendant and on which the plaintiffs actually acted to their detriment. Those are questions of fact, not of legal analysis. 117However, if a lawyer feels resistance to accepting a matter of fact without fitting that fact into the lawyer's own conceptual scheme, the understanding that Peter and Sophie had is readily susceptible of analysis. Robert giving them the house on the basis that they make payments to him is closely akin to a gift subject to an equitable personal obligation. Such gifts are fairly common within families, though most frequently found when the gift in question is one by will: see J D Heydon & M J Leeming Jacobs Laws of Trust in Australia , (2006) 7 th edition para [234] ff. Though it is always a matter of construction of the particular gift in question, it is possible for there to be a gift of property, where the donee's action in accepting the gift gives rise to an equitable personal obligation to make a particular payment or payments, or to cause or permit some particular state of affairs to exist or cause or permit some particular act to be done. Such an equitable personal obligation does not impose a trust on the property, and does not create a condition, breach of which results in the gift ceasing or reverting to the donor, but still creates an obligation on the donee that is enforceable in equity. Such an obligation might also be one that is suspended for a time, or (depending on the circumstances) permanently, through the operation of a promissory estoppel. 118I do not see any particular significance in both Peter and Sophie being unable, in the witness box, to explain what the purpose would have been of adjusting the payments by reference to the CPI, if the payments had been payments for the purchase price. What matters is that Robert proposed to them that they make payments including a CPI adjustment, and they accepted an obligation to make the payments, including the CPI adjustment, without questioning either Robert or themselves about why the CPI adjustment was appropriate. 119In any event, there is no inherent implausibility in Robert having requested a payment that was CPI adjusted. If the figure of $200 per week had anything to do with Peter and Sophie's capacity to pay, one would expect that if they could afford $200 per week in 1990, the number of dollars that they could afford to pay per week would increase as inflation went on. If Robert was in effect making them an interest-free loan of the purchase price, it would be quite sensible for him to want them to repay it as soon as they could, by instalments of amounts they were likely to be able to afford from time to time. If the figure had anything to do with what Robert wanted from the arrangement, there is nothing unusual about a retired person wanting an indexed income stream if he could get one. 120Nor, if Peter and Sophie's evidence is accepted except as to Robert saying he expected to die soon, is there anything particularly significant about Peter's admission that he expected to get the property by will. If (as their evidence was) they regarded the property as really theirs, they also knew that the property was still in Robert's name, and it is consistent with their understanding for them to expect to get it into their own name under Robert's will, if they had not got it into their own name any earlier.

Effect of Uncertainty of the Condition? 121There is a measure of uncertainty about the obligation that Peter and Sophie undertook to make the weekly payments, in that it is not specified for how long those payments will last. However, a proprietary estoppel can be established even if the expectation that has been induced in the plaintiff contains elements that would be insufficiently certain to amount to a valid contract: Flinn v Flinn [1999] 3 VR 712 at 738-739 per Brooking CJ (Charles and Batt JJA agreeing); Galaxidis v Galaxidis [2004] NSWCA 111 at [93]-[94] per Tobias JA (Giles and Hodgson JJA agreeing). In Jennings v Rice [2002] EWCA Civ 159 at [44], Robert Walker LJ (Aldous and Mantell LJJ agreeing) observed: "The cases show a wide range of variation in both of the main elements, that is the quality of the assurances which give rise to the claimant's expectations and the extent of the claimant's detrimental reliance on the assurances. The doctrine applies only if these elements, in combination, make it unconscionable for the person giving the assurances ... to go back on them" At [46] his Lordship accepted that "the claimant's expectations may have been formed on the basis of vague and inconsistent assurances." 122Giumelli v Giumelli (1999) 196 CLR 101 provides an illustration of how imprecision in a promise does not prevent a proprietary estoppel arising. In Giumelli , parents were found to have made a promise to their son that a particular rural lot: "... would be subdivided to create a lot on the northern section of the property to include the house and orchard if he agreed to stay on the property and not accept an offer to work for his father-in-law and, if the house and land could be subdivided, he would have the orchard as well." (116). 123The Western Australian Full Court had ordered, on the basis of a proprietary estoppel, that the parents should "do all things reasonably necessary to subdivide the ... property so as to create the promised lot" (111). Though the High Court held that that order was inappropriate, it was because people other than the claimant, in particular the claimant's brother and his family, also had claims to the land that had not been taken into account, and there was a need "to avoid relief which went beyond what was required for conscientious conduct by Mr and Mrs Giumelli." (125). However, their Honours granted some relief on the basis of proprietary estoppel, saying that: "[t]his is a case for the fixing of a money sum to represent the value of the equitable claim of the respondent to the promised lot." (125). The boundaries of the proposed lot were not defined with the precision that would be required for a valid contract for sale, but the imprecision of the promise in that respect was not an obstacle to the granting of the equitable relief. 124Similarly, in Sullivan v Sullivan [2006] NSWCA 312 at [85] Hodgson JA (Handley and McColl JJA agreeing on this point) said: "Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit." 125Although Australian Crime Commission v Gray [2003] NSWCA 318 concerned a promissory estoppel rather than a proprietary estoppel, it illustrates clearly the difference between equity's approach to the degree of certainty required for representation before it can generate a equitable estoppel, and the degree of certainty the common law requires of a promise before it can be contractual. ACC v Gray involved the representation made by a senior police officer to a man who had been involved in the laundering of drug money, and who was contemplating both collecting and giving evidence for the Crown. The representation was that "neither you nor your wife will be financially disadvantaged" if they cooperated with the police and entered the witness protection programme. At [187] Ipp JA (Mason P and Tobias JA agreeing on this point) said that the plaintiffs must have understood the representations to mean that the promise that they would suffer no financial disadvantage "was subject to the constraint of reasonableness" , with that reasonableness judged in the light of certain contextual facts that Ipp JA listed at [185]. It was in that context that Ipp JA concluded, at [192]: "In my opinion, there was no ambiguity in the promise that, subject to the constraint of reasonableness in the sense I have explained, Mr and Mrs Gray would not suffer any financial disadvantage. It might be difficult to work out what was reasonable and what was not, and what constituted financial disadvantage, but this does not give to the promise any element of ambiguity or lack of clarity sufficient to preclude a promissory estoppel arising. The element of 'reasonableness' requires an objective assessment; it is not an ambiguous term. The promise, as a whole, was unambiguous and clear, albeit that the monetary compensation required to satisfy the promise fell within a discretionary range and its determination was by no means a simple matter." 126In the present case, it would be open to the court if relief were eventually granted to Peter and Sophie, to clarify the temporal extent of their obligation and to quantify the obligation by reference to its temporal extent. In this respect I mention that the amount for which judgment was given in the cross-claim below was $31,280. There was no interest component in that sum. Thus, if it ultimately be relevant, the payments of $181,750 that they made prior to ceasing payments, when added to that judgment sum, exceeds the amount that Robert paid for the house. 127For the reasons given above, if Peter and Sophie's evidence is accepted apart from the one aspect of Peter's evidence that was rejected, the judge was mistaken in concluding that their assumption that they had been given the house was not a reasonable one, in all the circumstances.

The Notice of Contention 128I would not uphold either of the grounds set out in the Notice of Contention. 129As to the first ground in the Notice of Contention, it was not necessary, for the appellants ultimately to succeed, for them to prove on the balance of probabilities that they would have been able to purchase another home, if they had not moved into the Colson Crescent property. Delaforce v Simpson-Cook was a case which held that an estoppel arose on the basis of a representation that a particular property would be left to the appellants by will, on the basis of which she gave up application to the Family Court the prospects of success of which were far from certain. Allsop P (with whom Giles JA agreed) said, at [5]: "The importance of keeping a party to a representation or encouragement previously made is all the stronger where, as here, the encouragement or representation has been relied upon by a party to abandon a course of conduct that could possibly have led to a different outcome. This can be described in the language of loss of a chance that is not fanciful or unrealistic, or in the language of proceeding thereafter on the basis of a new or changed convention or conventional basis. Such expression of the matter is not different to how Dixon J put the matter in Grundt v Great Boulder Proprietary Gold Mines Ltd [1937] HCA 58; 59 CLR 641 at 674-675. For instance, if, as here, in reliance upon a representation or encouragement, a court case is abandoned and the representation or encouragement is later sought to be resiled from, the party to whom the representation or encouragement was made and in whom the expectation was raised is left in the position not only of the loss of the entitlement to pursue his or her rights in the case in the past, but also is likely to be in the position of being unable to demonstrate what would, or even may, have happened in the case, it being an alternative, complex and now hypothetical body of human conduct. That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position. Of course, if it is self-evident or can be clearly demonstrated that the case was fanciful or otherwise doomed to fail, there may be no real detriment; but that was not the case here." 130It is far from unrealistic or fanciful that a married couple, both of whom were in the workforce except to the extent that Sophie was out of the workforce for a period connected with having children, would be able to find a way of acquiring a home of their own. I would accept that there is an onus on the person propounding a proprietary estoppel to satisfy the court that the detriment on which they rely is not fanciful or unrealistic, but in my view Peter and Sophie's evidence, if accepted, would satisfy that standard. As well, the detriment on which they relied did not consist solely of giving up their prospects of purchasing an alternative property - it also included expending the money on repairing and improving the Colson Crescent property. 131As to the second ground in the Notice of Contention, the question of the financial capacity of Peter and Sophie was scarcely litigated at the trial. I would not be prepared, from the few scraps of evidence that were presented on that topic, to be satisfied that it was more likely than not that they did not have the financial capacity to purchase the Dunbar Street property or any other property of similar value. 132In any event, their claim of detriment, even insofar as it related to not having their own home, was not limited to giving up the prospect of purchasing the Dunbar Street property or any other property of similar value . The evidence of both Peter and Sophie was that if for some reason they had not been able to purchase the property at Dunbar Avenue, they would have looked for another property to purchase ([77] and [79] above) - they said nothing about that other property being of similar value to the Dunbar Avenue property. There would be nothing unusual about a couple searching for a home, finding they could not afford the sort of house they would prefer, and deciding they would buy something cheaper instead.

Outcome re Judgement Below 133The consequence of the reasoning so far is that the judgment below in relation to the Colson Crescent property cannot stand. 134The order of the court below was that Peter and Sophie's entire claim be dismissed, and that they pay Robert's costs of the proceedings, including of the cross-claim. The proceedings in the court below related not only to the Colson Crescent property but also to the Walmer Street property. When the orders below related collectively to the claims concerning the Colson Crescent property and the Walmer Street property, undoing their effect so far as the Colson Crescent property is concerned will require the orders below to be revoked. However, the effect of the judge's orders concerning the Walmer Street property should not be disturbed as a consequence of the present appeal. That will require this Court to make orders that specifically relate to the Walmer Street property, and that achieve the same purpose as the judge achieved concerning it.

Should this Court Make its Own Findings? 135Mr Stoljar submits that this Court should making findings for itself, and dispose of the matter. However, there are multiple conflicts of evidence that are unresolved. While the judge has given a strong endorsement to Sophie's credibility he has also rejected an attack on Robert's credit. 136In my view, the questions of credibility loom so large in the present case that this Court, acquainted with the evidence only through a transcript, is not in a position to resolve them (cf Hall v van der Poel [2009] NSWCA 436 at [54]-[58] per Basten JA). It will be necessary to remit the matter to the Equity Division for re-trial concerning the Appellants' claim to the Colson Crescent property.

Basis for Remitting 137I see no way of circumscribing the issues that are remitted. 138Mr Stoljar submitted that, if the matter were to be remitted, it should be remitted to a different judge, as the trial judge had formed at least some views concerning credibility of witnesses. 139This Court has power to remit a matter on the basis that a different judicial officer determine it: Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164; (2007) 155 LGERA 52 at [94]-[96] per Tobias JA (Bell J agreeing), [124] per Basten JA; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178 at [119]-[121] per Young JA. In the present case, I would not interfere with the power of the Equity Division to assign the matter as it sees fit. In saying that I do not intend to foreclose Peter and Sophie's ability to make such application to the Equity Division as they might be advised, concerning the appropriate judge to hear the matter.

Suitors' Fund Act 140In the present case the need to remit the matter arises from the judge having omitted to make findings on matters other than those that he saw as essential to dispose of the case. 141It is often enough said that it is a trial judge's duty to find the facts: Forbes v Selleys Pty Limited [2004] NSWCA 149 at [127] per Mason P; Benmax v Austin Motor Co Ltd [1955] AC 370 at 373-374 per Viscount Simonds, a passage quoted with approval by Santow JA in Ryan v Nominal Defendant [2005] NSWCA 59; 62 NSWLR 192 at [64] and by Basten JA in Costa v The Public Trustee of NSW [2008] NSWCA 223 at [61]; Customs and Excise Commissioners v A [2003] EWCA Civ 1039; [2003] 2 All ER 736 at 753-754, [82]-[83] per Schiemann LJ, quoted with approval in Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 by Sheller, Ipp and McColl JJA at [285]. That remark is often made in the context of a judge's duty to provide reasons that explain to the parties why he or she has reached the particular conclusion at which he or she has arrived. For a judge to find the facts for that purpose is a fundamental aspect of a judge's duty. However, in the present case, it is clear enough that the reason why the judge rejected Peter and Sophie's claim concerning the Colson Avenue property was because he regarded the unreasonableness of the expectation that they had concerning the property as being determinative. 142However, there is another factor, more a powerful counsel of prudence than a fundamental judicial duty, that influences the desirability of judges making findings of facts. In Rebenta Pty Ltd v Wise [2009] NSWCA 212 Basten JA (Ipp JA and Sackville AJA agreeing) said at [9]: "It is often desirable in the case of a trial judge, who has heard evidence on a matter, to determine factual questions arising from the evidence, even if they are not necessary on conclusions which have been reached on other issues. That is because some account must always be taken of the possibility of a successful appeal, requiring the further evidence to be assessed, or in all likelihood repeated on a rehearing. The costs which are likely to flow to the parties in such an event will rarely be justified by the savings in judicial time. Further, such an event is more likely where there is a full appeal by way of rehearing, than where there is a more limited right of appeal." It is that counsel of prudence that has not been followed in the present case. It is no fault of any of the parties that the retrial has become necessary, and hence it is appropriate that such protection as the law permits to be given should be afforded them concerning the extra costs that arise from an extra trial being necessary. 143Section 6(1) Suitors Fund Act 1951 enables the court to grant to the respondent to an appeal an indemnity certificate in respect of the appeal, if the appeal succeeds on a question of law or fact. Section 6(2) entitles the respondent to be paid from the Fund, inter alia, an amount equal to the appellant's costs of the appeal in respect of which the certificate was granted. Section 2(1) Suitors Fund Act 1951 includes in the definition of "costs" when a new trial is ordered upon the appeal, the costs of the first trial. 144The practical value of that indemnity is severely limited in practice by there being a maximum amount of $10,000 payable from the Fund concerning any one appeal other than an appeal to the High Court (section 6(2A)). If that $10,000 has not been exceeded by the appellants' costs of the appeal alone, any amount remaining from the $10,000 could extend to any amount that Robert might ultimately be ordered to pay of Peter and Sophie's costs of the first trial. 145In the present case the trial has related to two discrete subject matters, an appeal has been brought concerning the decision of the court below on only one of those subject matters, and a new trial is to be ordered concerning that subject matter. In that situation the proper construction of the definition of "costs" in the Suitors Fund Act requires that the indemnity concerning "costs of the first trial" be those costs of the first trial attributable to the matter concerning which the new trial has been ordered. Thus, an indemnity certificate granted to the respondent in the present case will extend to the amount of the appellants' costs of this appeal. If eventually Robert is ordered to pay any of Peter and Sophie's costs of the first trial that relate to their claimed entitlement to the Colson Crescent property, an indemnity certificate will also extend to those costs.

Mediation 146The Court has power, under s 26 Civil Procedure Act 2005 , to refer any proceedings before it for mediation by a mediator. In the present case, in my view it is desirable for a mediation to occur before there is any retrial in the Equity Division. As a result of the appeal, all parties will have some clarification, though not total clarification, of their prospects in a re-hearing. A mediation is likely to be significantly cheaper for both parties than a re-hearing. As well, a mediation can deal with aspects of the relationship, both past and future, of the parties to a dispute in a way that is not possible for court proceedings. When a dispute involves members of a family, as the present one does, that feature of mediation can make it a particularly useful tool for dispute resolution. 147The Equity Division registry has experienced mediators, available at comparatively short notice. I am informed that currently if the Registrar is approached for a mediation, dates are available approximately five or six weeks from the date of approach. The cost of a court-annexed mediation can be less for the parties than that of a private mediation. Nonetheless, I think it preferable that the parties be given the opportunity to agree on a mediation before a particular private mediator, if that is the course they wish to follow. If they do not agree on mediation before a private mediator, I would order that a mediation occur before the Registrar in Equity or some other person nominated by the Registrar in Equity. 148A stay of the remittal to the Equity Division should be granted until the mediation is complete. Because of the possibility that the orders relating to mediation might not cover all the situations that arise, it is appropriate to grant liberty to apply concerning the mediation. That liberty to apply should be in the first instance to me, though if the nature of the application requires involvement of the other judges on the Bench I shall refer it to them. 149The Colson Crescent property was sold following the judgment in the court below. That might affect any orders made following the re-hearing, or the outcome of the mediation, but does not affect any principle involved in this judgment.

Orders 150I propose the following orders:

Appeal allowed.
Set aside the judgment on the claim and cross-claim in the court below, and in lieu thereof order: (a) the plaintiffs' claim to any relief relating to the property at Walmer Street, Ramsgate be dismissed; (b) the plaintiffs pay the costs of the defendant of the proceedings insofar as those costs relate to the plaintiffs' claim to entitlement concerning the property at Walmer Street, Ramsgate.
Remit the matter to the Equity Division of the Supreme Court for a new trial concerning the claim of the Appellants to the property at Colson Crescent, Monterey.
Respondent to pay costs of the Appellants of the appeal.
Reserve to any judge who conducts the new trial concerning the Appellants' claim to the property at Colson Crescent Monterey, the question of the appropriate costs order to make concerning the first trial insofar as it related to the plaintiffs' claim to the property at Colson Crescent, Monterey.
Respondent to be granted an indemnity certificate under the Suitors Fund Act 1951 in respect of this appeal.
Order that the proceedings concerning the claim of the Appellants to relief in relation to the property at Colson Crescent Monterey be referred for mediation to the Registrar of the Equity Division or some other person nominated by her, PROVIDED THAT if the Appellants and the Respondent notify the Associate to Campbell JA and the Registrar in Equity in writing within 21 days of the date of making these orders that they consent to a mediation of the dispute being held before some other person, the mediation shall be held before that other person.
Stay the operation of order 3 until the conclusion of that mediation.
Grant liberty to apply to Campbell JA on three days notice concerning the operation of these orders, insofar only as they relate to mediation. 151SACKVILLE AJA: I agree with the orders proposed by Campbell JA and with his Honour's reasons.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 April 2011

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Cases Cited (18)