Flinn v Flinn [1999] VSCA 109

Flinn v Flinn [1999] VSCA 109 | Case summary | Zoe

[35]

Daniel's account of the conversation at Bill's farmhouse in Bairnsdale in July 1993 is as follows: The four of them were in the kitchen. Bill said he had some changes to make in his will. He telephoned Peter Tovey and asked him to come over. Before Tovey arrived, Bill said that Robbie was just about due to trade again and was in a bit of trouble again and that he, Bill, would have to alter his will to suit that. Tovey arrived with Bill's current will and Bill asked him to read it out. Tovey said that it was not the done thing to read the will out in front of Daniel and Bronwyn, but Bill said "Well, that's the whole idea of it". Tovey started to read out the will and Bill said, "Skip all the bloody rot. We'll get down to the bit where the farm is." Bill said "It's already discussed" and said to Tovey, who made a note of what he said, that Daniel would receive half the farm and Robbie would receive the other half. Tovey said that that would be an unworkable position, because Daniel and his wife would not have a controlling interest in the farm. He further said that Bill had helped Robbie out a number of times and that he should give Daniel the whole farm. Bill said he was not able to do that and that Robbie was his son. Mary had become upset by this stage and said that it was just other people's fault that Robbie was in the predicament he was in. Tovey suggested to Bill that Daniel and Bronwyn pay Robbie a sum of money and take on the farm debt. No particular sum of money was mentioned, just a reasonable sum. Bill said he thought that was a good idea, since it could put bread and butter on the table for Robbie if he got back into trouble again. Bill said that he would leave Daniel and Bronwyn the whole farm in his will and that they would pay Robbie a sum of money and that they would have to take on the farm debt. There was also discussion about the gifts to Mary's two children, Bing (Philip) and Gary, who were each to receive $40,000 under the current will. Bill said, "The pot's running a bit dry; the circumstances have changed; we'll have to cut that back to twenty." Mary expressed her agreement with that. When Tovey was leaving he said that if Mary was not well enough to come over and sign the will he would be quite willing to bring the documents back to the house. After Tovey left, Bill told Daniel and Bronwyn to use the farm bank account to keep the farm going after his death. Daniel's evidence on the last point - which the judge accepted - was supported by that of Bronwyn.

[37]

The evidence of Tovey was as follows: In July 1993 Bill telephoned him, saying that he and Mary wanted to discuss with him the contents of their current wills. He went at once to the farmhouse, taking with him copies of the two "mirror" wills of 29 August 1990. He was introduced to Daniel and Bronwyn. He expressed concern that Bill and Mary wanted to discuss the contents of their wills in the presence of some of the beneficiaries but was told that was perfectly all right and that they wanted to do so. He then read out such parts of one of the wills as appointed executors and contained dispositions. They then went back to the clause containing the gift to Danny and Bronwyn, and Bill suggested that he should leave the other half of the farm to Robbie. He (Tovey) then said that, as Danny and Bronwyn had been operating the farm for some time and Bill wished to make a gift to them, there might be some difficulty in their running the farm in partnership with Robbie. He suggested that since Bill had already provided a great deal of money to Robbie in his lifetime it might be more appropriate to leave the farm wholly to Danny and Bronwyn. Bill said that he did want to benefit Robbie but conceded that there might be difficulty in having a partnership. There was then some discussion of how Bill and Mary would benefit Robbie by their wills, but Tovey could not recall what was said. It was said that if the Rural Finance Corporation debt still existed by the date of the death of Bill and Mary, Danny and Bronwyn would assume that debt. Although the discussion was led by Bill, Mary took an active part in it. It was specifically said that the farm would be inherited in due course by Danny and Bronwyn. It was said that if there was any of the debt to Rural Finance Corporation left at the time the property passed to them they would be responsible for it. No instructions were given for the preparation of the new wills. Bill and Mary wanted to consider the contents of their new wills further before they were drawn. In cross-examination Tovey said that Bill made no final decision about what he might do in his intended new will. The judge accepted Tovey's evidence.

[41]

When Bill died on 23 January 1994 he was aged 79. He left his will of 26 October 1993 unrevoked. For years it had been expected by the family that his wife would die first, in view of her long-standing illness. The day after Bill's funeral Daniel called in to see Mary. She said to him that Bill wanted him to have the farm but that he would have to wait, adding that after her father died her mother lived only for 18 months. Shortly after Bill's funeral, so Daniel swore, in conversation with Robbie he mentioned the promise that had been made to leave the farm by will and Robbie replied, "We do things my way now. Me father's not alive and what agreements you had, well, yes it doesn't exist." Elsewhere he swore that Robbie's words were "Well, Bill's not here now and things are different, that's it. Whatever agreement you had with Bill no longer exists." Late in February 1994 Bronwyn telephoned Tovey and asked him who was controlling the farm, and was told that Bill's entire estate had been left to Mary. Both plaintiffs were, according to them, shocked by this news. They had worked so hard for so long and all they had accumulated was about $1,000 in the bank. Events moved swiftly after Bill's death, and uniformly to the disadvantage of the plaintiffs. Very soon after her husband's death - it was on 19 February 1994 - Mary granted a power of attorney to Robbie. (According to Daniel, Mary had often said to him, before Bill died, "If anything happens to Bill, they'll put the power of attorney over me and take everything away.") It is clear that, both before and after this litigation began, the firm of solicitors representing both Mary and the estate of Bill (not being Mr Engel's firm) has been receiving its instructions from Robbie. On 7 October 1994 that firm wrote to the plaintiffs' solicitors requiring the plaintiffs to vacate the farm within fourteen days. The plaintiffs in fact left on 23 October 1994. The judge found that within four weeks of her husband's death Mary handed the control of her property and affairs to Robbie; that Mary probably had no idea of what the litigation was about; and that beyond doubt it was Robbie who was conducting the litigation. On 3 March 1995, when she was in a nursing home, Mary made a new will, in which she departed radically from the provisions of her will made on 26 October 1993. She had gone into a nursing home about a year earlier - before Robbie moved to Glenthompson, which he did shortly after Bill's death. She had taken Bill's entire estate under his will and her whole estate is now to go to Robbie, subject to legacies of $25,000 to each of her sons by her first marriage and subject to some further minor pecuniary and other legacies. Mary gave evidence at the trial of the action. It was common ground that her evidence should be disregarded. The judge described her as of unsound mind, noting that she thought her husband was still alive. In the course of her evidence Mary Flinn said that Danny and Bronwyn had not left the farm at Tongala and that they were still looking after it. She said that the court case was about "our disappointment" at the way in which the farm had been neglected. She believed that Bill was paying every month for her to stay in the nursing home.

[44]

I shall very considerably oversimplify the pleadings to reduce the length of what must be in any event a very long judgment. By their statement of claim indorsed on the writ the plaintiffs alleged, in paragraph 8, an agreement made in 1988 between the four Flinns whereby the plaintiffs were to manage Eulandool for a nominal remuneration to cover their living expenses and William Flinn was to leave them the farm by will so that they would inherit it on his death. A cause of action was then alleged under the Fair Trading Act 1985 in consequence of representations made to the plaintiffs, but this claim was abandoned at the trial and need not be further mentioned. In paragraph 17 the plaintiffs alleged the making, in or about July 1993, of "the variation agreement" by the plaintiffs, the deceased and the defendant. This was pleaded as an agreement whereby the plaintiffs were to pay Robbie $150,000 by ten annual instalments of $15,000, together with interest and to assume liabilities in respect of Eulandool, including the Rural Finance Corporation debt, and the plaintiffs were to inherit from Bill Eulandool and all its plant, equipment and livestock. The statement of claim complained that the provisions of Bill's last will were in breach of the 1988 agreement and the variation agreement in so far as the will left the entire estate to Mary and in so far as, by way of substitutional gift, it left the farm to the plaintiffs subject to their paying $150,000 to Robbie by instalments. The prayer for relief sought specific performance of the variation agreement, although the body of the statement of claim suggests that it was desired to obtain specific performance not only of the variation agreement but also of the 1988 agreement. The pleading contained an alternative claim for reasonable remuneration "in quantum meruit or by reason of the principles of unjust enrichment". It was in addition alleged that at all material times Bill and Mary held Eulandool on trust for the plaintiffs by reason of the facts alleged in paragraph 8-12. Paragraphs 8, 9 and 10 alleged the 1988 agreement and the plaintiffs' performance of it. Paragraph 11 alleged a number of statements made by Bill and Mary to the plaintiffs before the making of the 1988 agreement concerning the leaving of Eulandool to the plaintiffs on the death of Bill. Paragraph 12 may be ignored. In paragraph 28 it was alleged that the defendant was estopped from denying the existence of the 1988 agreement and the variation agreement.

[53]

His Honour found for the plaintiffs on the issue of the making of the variation agreement which they alleged had been made in July 1993. He found that in that month Bill and Mary had put a proposition to the plaintiffs that if they continued to operate the farm as they had in the past, on the same terms as had been agreed upon in the past, then the testators would leave the farm and the dairy business to the plaintiffs upon the death of the survivor of them, subject to two conditions, namely, that the plaintiffs would pay a sum of money to Robbie, and that they would assume the liabilities over the farm. The judge was satisfied that this proposition had been accepted by the plaintiffs. He went on to reject the contention that the alleged contract was uncertain or illusory by reason of the failure to agree on the amount to be paid to Robbie, being of opinion that it was enough that the parties to the suggested contract had agreed that it would be left to the testators to decide how much should be paid to him. The judge found that Mary was under a contractual obligation to the plaintiffs to leave the farm to them and that she had broken this obligation by the execution of her will dated 3 March 1995. He rejected the defence of the statute of frauds, determining that the wills executed by the testators on 26 October 1993 constituted a sufficient note or memorandum to satisfy s.126 of the Instruments Act 1958. He went on to hold that in any event there had been sufficient acts of part performance by the plaintiffs. Then his Honour considered a number of other arguments advanced against the grant of specific performance of the variation agreement. The defendant said that the plaintiffs had not performed their obligations under the alleged variation agreement and were not ready and willing to perform it; that there was a want of mutuality; that the court was being asked to, and should not, compel the performance of personal services or the maintenance of a personal relationship; that there had been laches; and that the grant of specific performance would require the court to exercise ongoing supervision of the relationship between the parties. His Honour rejected each of these defences. He went on to reject the defendant's contention that if specific performance was granted the court should require the plaintiffs to pay compensation to the defendant.

[63]

I turn now to the question what findings the judge made about what was said by way of promise or representation to the plaintiffs in 1988. There are at least three questions here. They concern the identity of the donee - Daniel alone or both plaintiffs; the identity of the donor or donors - Bill alone or Bill and his wife; and the nature and extent of the promised provision. As regards the second question, it is clear from the judge's reasons that he found that the plaintiffs were told in 1988 that provision would be made in the wills of both Bill and Mary. As regards the first question - the identity of the donee or donees - Daniel's evidence was that in 1988 Bill had spoken of a gift by will to both him and his wife, while Bronwyn's evidence was that Bill had spoken of a gift by will to Danny. The judge was well aware of this conflict of evidence. It seems to me that his Honour did resolve it and that he did so by finding that Bill had spoken of a gift to both the plaintiff and his wife. Having dealt with a number of preliminary matters, his Honour expressly set out to find the facts and proceeded to find that Bill had stated that if the plaintiffs agreed to manage the farm on the basis suggested he and his wife would make provision for "the plaintiffs" in their wills. Consistently with this finding of a statement that provision would be made for both plaintiffs, his Honour, in dealing with what I have called the third question - the nature and extent of the promised provision - asked himself how likely it was that a promise would have been made in 1988 "to give them [my emphasis] the whole farm at the beginning of the farming venture". It is true that his Honour found that an expectation had been created in the minds of the plaintiffs that Daniel would benefit in some way under the will of the deceased and his wife. But, having regard to the judge's reasons as a whole, this must, I think, be viewed as elliptical, the notion being that it was a desire to benefit Daniel that was the motivation, or primary motivation, and that that desire was to be fulfilled by a gift to Daniel and his wife. I do not overlook the fact that his Honour said, in dealing with what I have called the third question, that it was unlikely that Bill would promise to leave the whole farm "to Danny and maybe Bronwyn" and then execute a will some seven months later leaving only a one-third share of the farm to Danny. The phrase I have quoted might be thought to suggest an inability on the part of the judge to decide whose evidence to prefer, or a finding by him on the whole of the evidence that Bill did not make it sufficiently clear whether the gifts by will would be to Danny or to both plaintiffs. But the judge's reasons as a whole, including further passages about to be mentioned, lead me to the view that he found that Bill spoke of a gift by will to both plaintiffs.

[67]

My conclusion is, then, that the judge found that in 1988 Bill and Mary promised that they would by their wills make a gift to Daniel and Bronwyn of an unspecified interest in the farm property. There was abundant evidence of promises by Bill in 1988 that the farm would be left by will to Daniel and Bronwyn. There was no express evidence of a promise of a gift by will of an unspecified interest in the farm although there was evidence of a conversation in about May 1988, when the valuation of the plant and machinery and the milk statements were being discussed, in which, according to Bronwyn, Bill said that, if the plaintiffs were paid one third of the milk cheque, they could afford to pay for part of the farm as they went along, but that this would require too much paperwork. It is possible to derive from Bronwyn's account of this conversation a promise that if the plaintiffs did not take one third of the milk cheque but instead kept their income to a minimum, the gift that would ultimately be made to them would be of an unspecified interest in the farm. Daniel said, of the Tongala farm, "Well, if we weren't going to be left an interest in the farm we wouldn't be there in the first place. That was the whole agreement from the word go". (Transcript corrected.) It was open to the judge, on the evidence as a whole, to conclude that, while he was not satisfied that a gift of the farm as a whole had been promised, there had been a promise of a gift by will of some unspecified interest in it. The evidence was of words spoken by Bill, but I have already mentioned the findings that he spoke for Mary as well as himself. In fact they owned the farm as tenants in common in equal shares, and it is hard to see how the plaintiffs cannot have been aware that they were co-owners of it. I see no reason for differing from the judge's conclusion that what Bill said to the plaintiffs was intended by Bill and Mary to be, and was understood by the plaintiffs as, a promise that by their wills they would leave an interest in the farm to the plaintiffs.

[78]

Reference to a number of authorities was made in the course of argument, including in particular Placer Development Ltd. v. Commonwealth [1969] HCA 29; (1969) 121 C.L.R. 353. I find it unnecessary to say anything about the decided cases. I have a clear view that the point taken by the defendant and now under consideration is a good one and that a contract could not spring up from a promise of the kind found by the judge here, that is, a promise to leave property by will on condition that the donee pay a reasonable sum to a third person, whether or not there is imported into the promise some such words as "to put food on his table" or "not a token sum". In my view a promise to leave property by will on condition that the donee pays a third person a reasonable sum, or a sum to be fixed by the testator, or a reasonable sum to be fixed by the testator, cannot give rise to a contract, whether the proper label to be applied to it is "illusory" or some other expression. If the sum is to be a reasonable sum, or a reasonable sum determined by the promisor, there is no satisfactory criterion by which what is reasonable can be determined. It is one thing to ask what is a reasonable price for goods, land or services. It is altogether another to ask what is a reasonable sum to be paid to a person by way of indirect testamentary benefaction. How is the appropriate extent of the bounty to be arrived at? Even if it is permissible to have regard to the words used by the testator, "to put bread and butter on the table for Robert" or "to provide food on his table if he got into further financial trouble", no measuring rod appears. Obviously the reference to food was not to be taken literally. But how liberal was the level of support to be? Was the intention that subsidies should be provided by way of sustenance; or would it be "reasonable", if a farm or other business venture of Robbie's failed, or if he had none, to provide him with a substantial capital sum to buy a farm or set up a business? For the view might be taken that the best way of putting food on Robbie's table was to put him in a position where he could earn money by working in his own business. What if the suggestion was that he should receive both a periodic subsidy and a sum sufficient to buy him an extremely expensive truck, so that he could run his own haulage business? The plaintiffs accept that it was open to the testators to impose a condition requiring the payment by instalments. Would it have been a breach of contract if the testators had imposed a condition requiring a large lump sum payment, and a periodic payment much in excess of the $15,000 mentioned in the will, to be paid not for ten but for twenty years? In July 1993 Robbie was only 51. He had a wife and four children. The two youngest children were in July 1993 Luke, aged 12 or 13 and Kelli, aged between 18 and 19. Shortly after Bill's death, Robbie moved to a farm at Glenthompson which his wife said "they" had bought in about September 1993. These transactions show that it is not an idle speculation to consider the possibility that Bill and Mary might, in and after July 1993, have turned their minds to whether a reasonable sum to be provided to Robbie should include an amount which might assist him to buy a farm.

[81]

"I am satisfied that in the year 1988 the deceased and Mrs Flinn represented to the plaintiffs that if the plaintiffs conducted, operated and managed the farm for the deceased and Mrs Flinn for a small remuneration they would make some provision concerning the farm in their wills in favour of the plaintiffs. However, for reasons which I have already stated I am unable to say at that point in time what interest in the farming property was promised. Based on those representations and encouraged by them I am satisfied that the plaintiffs did incur expenditure and acted to their detriment. By taking a small remuneration they enabled the deceased and Mrs Flinn to pay moneys due under the mortgage over the property and to effect improvements to the property. It also meant there was more income for the deceased and Mrs Flinn. The plaintiffs in so doing indirectly assisted with the financing of the venture. But further, they also suffered a number of detriments. They were prepared to live in sub-standard conditions and take a small remuneration thereby prejudicing their chances of building up their own assets and also living at a lower standard on the basis that they would receive some interest in the property. They suffered these detriments by reason of the promises made by the deceased and Mrs Flinn. The latter were aware of the sacrifices made by the plaintiffs and both knew that the plaintiffs were prepared to sacrifice because of the promises that were made. In my opinion an equity did arise. However, the extent of the equity at that point is difficult to determine. Further, I am satisfied that in 1993 the other promises which I have set out above were made with respect to leaving the farm to the plaintiffs subject to the conditions I have already stated by their wills on the death of the survivor. I am quite satisfied that subsequent to the date of those representations being made, namely, 6 July 1993, the plaintiffs did suffer the detriments which they had suffered in the past, that they suffered the detriments in the expectation that they would get farm and land upon the death of the survivor and they were encouraged in that expectation or belief by the conduct of the deceased and Mrs Flinn. The deceased and Mrs Flinn were well aware that the plaintiffs were sacrificing their interests and in doing so were making a substantial contribution to the farming property and business. I am satisfied that the extent of the equity is that they should receive the farm, together with the stock, plant and equipment subject to the conditions of taking over the mortgage and re-paying [sic] the sums to Robert upon the death of Mr Flinn but subject to the plaintiffs if requested to perform their promise to operate and manage the farm. I reject the defendant's submission that the equity could be met by the provision of a money sum for services rendered. This would not satisfy the equity which was created. That equity is satisfied by Mrs Flinn complying with clause 4(i) of her will dated 26 October 1993. Of course that obligation imposes conditions upon the plaintiffs and is also subject to their performance of their side of the arrangement if required. Accordingly, I find that the plaintiffs have established their cause of action in estoppel."

[98]

I come now to a further point that was taken by the appellant, if at all, only by almost parenthetical reference during the reply. His Honour plainly thought that the promise of "the farm" made to the plaintiffs extended to the associated personal property. The farm was bought by the testators on a "walk in, walk out" basis. The sale included all plant and equipment and all stock, $111,000 being apportioned to these items out of the total price of $605,000. When Bill and Mary spoke of why they were buying the farm, and who was to benefit by their purchase, they obviously meant, and were understood to mean, the whole subject matter of their purchase, augmented as it was to be by stock from the farm at Nicholson. The 1988 promise included plant, equipment and stock. The 1993 promise was made against the background of the 1988 promise and in the light of the reading aloud by Tovey of the clause of the existing wills which left to the plaintiffs "a one-half share of my farm property at Tongala together with a one-half share of all the farm plant farm equipment and livestock thereon between them both equally or the survivor of them absolutely". It is clear that in the ensuing conversation about the farm all concerned were speaking of it as including plant, equipment and livestock. The 1988 promise may well not have extended to the bank account that would be used for the purposes of the farm, but the evidence supports the judge's finding (implicit in the first declaration which he made) that the promise made in 1993 extended to "any farm bank account used by the dairy farm business." This includes the evidence of Daniel, which the judge accepted, that after Tovey left the farmhouse on 6 July Bill told the plaintiffs to use the farm bank account to keep the farm going after his death. Daniel's evidence of what was said was supported by Bronwyn. Then there is the evidence of Engel of the instruction given by Bill to him on 21 September 1993 that the Commonwealth bank account at Kyabram was to be included in the assets to go to the plaintiffs, since this would enable them to continue to operate the farm immediately after the death of the testators. The gift to the plaintiffs made by the wills of 26 October 1993 included the funds in the account with the Commonwealth Bank at Kyabram or any other bank account used by the dairy farm business.

[120]

"In the earlier stages of the argument, I was troubled by the equivocal nature of the promises as so found which, by their nature, would not have been capable of giving rise to a legally binding contract even if supported by a mutual intent to create legal relations and consideration. It appears to be the general rule that to found a promissory estoppel a representation has to be clear and unequivocal, that is to say so expressed that, leaving aside far fetched or strained interpretations, it would be understood in the sense required: see, for example, Woodhouse AC Israel Cocoa SA v. Nigerian Produce Marketing Company [1972] AC 741, [1972] 2 All ER 271; China-Pacific SA v. Food Corporation of India; The Winson [1981] QB 403. However, the learned judge took the view that the equivocal nature of Mr Williams' promises of 1981 and afterwards did not by itself prevent a proprietary estoppel arising, although, as he said, it might affect the remedy if that stage is reached. Mrs Hill, in an admirable argument, by reference to such cases as Inwards v. Baker [1965] EWCA Civ 4; [1965] 2 QR 29, [1965] 1 All ER 446, and Crabb v. Arun District Council [1975] EWCA Civ 7; [1976] Ch. 179, [1975] 3 All ER 865, has demonstrated that on this point the judge was right. At first sight, it may be surprising that a promise to confer an interest in property which is so equivocal in its terms that it would be incapable of giving rise to a binding contract may be capable of conferring on the promisee a right in equity to a transfer of the whole property. However, I think that Mrs Hill must be right in describing this as simply one instance of equity supplementing the law. The equivocal nature of the promises found by the judge is clearly one relevant factor when considering whether or not it would be unconscionable to permit the Administrators to rely on their strict legal title, having regard to any detriment suffered by the plaintiff in reliance on them. Mr Dumont, on behalf of the Administrators, however, did not invite us to hold that it debars a claim based on proprietary estoppel, in limine."

[124]

Nor do I think that the uncertainty of the condition requiring payment of a reasonable sum to Robbie - an uncertainty fatal to the existence of a contract - will prevent the equity from arising. As the review of the authorities over the last 200 years shows, uncertainty preventing the creation of a contract has never been regarded as necessarily preventing the beneficial intervention of equity. Time and again an equity has been held to exist where no contract had arisen, the court often going a long way in giving effect to what the law of contract would ignore as an impossibly loose arrangement. The present case lies within the reach of the long and flexible arm of equity. What the testators did, in making their wills of 26 October 1993, cannot be used to salvage the suggested contract, but it can be used to show - and indeed in a formal and authoritative way - what the donors themselves, as the authors of the condition put forward on 6 July 1993, regarded as appropriate provision for Robbie. Neither Bill's estate nor his mentally incapacitated wife could complain if the condition imposed in their October wills was used by the court to frame a condition in making its order. And the intended beneficiary, Robbie, could not complain, for he would receive the very sum, by the very instalments, which the donors themselves fixed upon in determining the nature and extent of their indirect bounty to him. One of the old cases is particularly instructive here, Laird v. Birkenhead Railway Co. (1859) Johns 500; 70 E.R. 519, where Page-Wood, V.-C., in determining that the plaintiff was entitled to use the railway he had constructed over the defendant's land, considered that the difficulty that might otherwise have arisen in determining the amount of tolls and how the traffic was to be controlled had been resolved by the defendant's conduct in actually taking tolls and exercising control over traffic for a considerable time. This supports the approach I think should be adopted here of treating the determination made by the testators by their wills of 26 October 1993 as establishing what is to be paid by the plaintiffs to Robbie as a condition of the gift to them of the farm.

[160]

The defendant submits that no detriment was suffered through reliance on the promise of July 1993. In my view substantial detriment was suffered by the plaintiffs through reliance on the 1988 promise and substantial detriment was suffered by them through reliance on the July 1993 promise. For the defendant it is said that nothing of any importance changed between July 1993 and October 1994: the plaintiffs continued to live in the farmhouse and run the farm: they did not alter their position to their detriment. But this argument ignores the fact that everything the plaintiffs did for the benefit of the farm was done on the faith of expectations created by the legal owners' promises: they came to and remained at the farm because of those promises. In answer to a leading question in cross-examination, Daniel said that he had worked on the farm down to July 1993 on the faith of the promise made in 1988. Perhaps he and his wife did not swear in terms that they continued to work the farm after July 1993 on the faith of the promise made in that month. But it would be remarkable if that promise was not, to say the least, an inducement, and this is all that is necessary: Greasley v. Cooke [1980] 1 W.L.R. 1306; Amalgamated Investment & Property Co. Ltd. v. Texas Commerce International Bank Ltd. [1982] Q.B. 84 at 104-5; Wayling v. Jones (1993) 69 P. & C.R. 170 at 173; compare Gould v. Vaggelas [1984] HCA 68; (1985) 157 C.L.R. 215 at 236 per Wilson, J. (concurred in by Gibbs, C.J. at 219 and by Dawson, J. at 262). Indeed, in the present case it would be remarkable if the promise of July 1993 did not operate most forcefully as an inducement. The judge had no doubt about this. In considering inducement one should not forget the commonsense and rebuttable presumption of fact that may arise from the natural tendency of a promise: Greasley v. Cooke; Cameron v. Murdoch [1983] W.A.R. 321 at 351; Grimison v. Union Fidelity Trustee Co. of Australia Ltd. (1984) 3 B.P.R. 9469 at 9474; Riches v. Hogben [1986] 1 Qd.R. 315 at 319-20; Grant v. Edwards [1986] Ch.638 at 657; Austin v. Keele (1987) 72 A.L.R. 579 at 588-9; Wayling v. Jones at 173-5; compare Gould v. Vaggelas. A number of other authorities are discussed in Pawlowski, The Doctrine of Proprietary Estoppel, pp.44-47.

[167]

The July 1993 promise was found by the judge to be to leave the farm to the plaintiffs on the death of the survivor of Bill and Mary. The possibility that the plaintiffs, or one of them, would die before the survivor of the testators was not discussed. Our order should provide for this contingency, unlikely though it is. The difficulty must not stand in the way of the grant of appropriate proprietary relief. What is to be done to provide for the contingency that Mary outlives one or other or both of the plaintiffs? The possibility was not adverted to at first instance. The judge's reasons and the judgment given proceed upon the basis that the constructive trust to be imposed was one whereby the equitable interest of the plaintiffs was not contingent upon their surviving Mary. The novelty of the present case resides in the fact that we have, not one dead testator, but two testators, one dead and one still alive. It has not been suggested by the defendant, either in her 14 page notice of appeal or in argument, that the death of the plaintiffs or one of them during the lifetime of the defendant should be provided for as a contingency which will defeat their equitable interest. The whole argument has presupposed that under the constructive trust, if one was imposed, the plaintiffs would have a vested interest. The possibility that Mary should have an equitable life interest was discussed. An argument might have been founded on the fact that the promise found to have been made in July 1993 was that the farm would be left to the plaintiffs upon the death of the survivor of the testators. It might have been argued that if the defendant had simply made a will leaving the farm to the plaintiffs the gift would have lapsed in relation to a plaintiff who predeceased her, and that any constructive trust imposed should reflect this. But the whole argument on the appeal has been, as it was before the judge, conducted on the footing that, once it is decided that a constructive trust is the appropriate remedy, the plaintiffs are to be viewed as having equitable interests that have vested in interest and are not liable to be divested. I think we should dispose of the appeal on this footing and in doing so should deal with the contingency of premature death by making explicit what has thus far always been assumed, and accordingly declaring that the constructive trust required by good conscience is one whereby the farm is beneficially owned by the plaintiffs, their interest being a vested one so that they are not required to survive Mary. To make the position clear as between the plaintiffs, I would declare their interest to be as joint tenants.

[169]

Mary has already lived much longer than anyone expected. One way of dealing with the interval between the death of Bill and her death would be to declare (as discussed in argument) an equitable life interest in her favour after his death. It would then be necessary to provide for the occupation and management of the farm by the plaintiffs during the remainder of her life, and this would require the making of provision for the remuneration of the plaintiffs for their work on the farm. But the matter could be simplified if the Court determined, in "interpreting the circumstances"(Giumelli at 548), that a just result could be arrived at by imposing a trust which, instead of giving Mary a life interest, required the plaintiffs to maintain her. Rather than contemplate a costly taking of accounts, I would, so to speak, let bygones be bygones, and impose a trust under which the plaintiffs will be beneficial owners from the date of this Court's order with an obligation to maintain Mary from the date of that order. I am emboldened to propose this solution by a number of considerations. One is that it is clear from the evidence and the judge's findings that Bill and Mary wanted to ensure, by means of the farm, that they could secure an income for themselves while providing for the plaintiffs' future. There was evidence from Daniel that he promised Bill, on 6 July 1993, that he would make sure that Mary was looked after if Bill died first. According to the evidence of Robbie himself, since the death of Bill the income received by Mary suffices to support her in the nursing home, including "extras", with a surplus of only about $4,000-$5,000 a year. The plaintiffs have already been excluded from the farm for years by the unconscientious conduct of the defendant. Let bygones, as I say, be bygones, and as to the future let the plaintiffs, as owners in equity, take the income, they being bound, by an obligation secured on the farm, to maintain Mary. If this proposal may be said to exhibit judicial creativity, I can only say that I regard it as authorised by the liberal approach of equity over the last two hundred years in dealing with matters of this kind.

[182]

Two questions then arise. The first is whether an order should be made against Robbie for payment of the costs of the appeal, on the basis that he has conducted and presumably financed all this litigation, at first instance and on appeal, acting throughout in pursuit of his own financial interests. (Mr Garratt has already intimated that the plaintiffs intend to ask us to make such an order and intend in addition to apply to the trial judge for an order that Robbie pay the plaintiffs' costs of the action, invoking if necessary the liberty to apply reserved and giving notice of the application to Robbie.) The second question which arises is whether it is equitable to impose on the plaintiffs a condition that they pay $150,000 to Robbie when he is, it may be argued, the real unsuccessful party in highly expensive litigation where orders for costs obtained by the plaintiffs against the unsuccessful defendant, at first instance or on appeal, are worthless. Even if no order for costs, on appeal or below, is made against Robbie, it is arguable that it would not be equitable to require the plaintiffs to pay him $150,000 when he (so the foreshadowed argument runs) has brought about a situation in which the plaintiffs have been prosecuting an action and resisting an appeal for years, at enormous expense, opposed by a woman and an estate unable to pay the costs if the claim succeeds. If an order for costs was made against Robbie, in relation to the appeal or the action or both, the question would then arise whether this in itself afforded reason for departing from the order that would otherwise be made requiring payment of the $150,000 to Robbie, or made it appropriate to direct a set-off, or something resembling a set-off. These questions were briefly canvassed on the hearing of the appeal, when the Court pointed out that Robbie himself should be given the opportunity of being heard on them and observed that, there might be a conflict of interest between Mary and Robbie.

At a glance

Court

Decision date

Before

Source

Judgment (184 paragraphs)

Parties