Galaxidis v Galaxidis - [2004] NSWCA 111 - NSWCA 2004 case summary — Zoe

NSWNSWCA

Galaxidis v Galaxidis

[2004] NSWCA 111

Court of Appeal (NSW)|2004-03-18|Before: Giles JA, Hodgson JA, Tobias JA, Austin J

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Source facts

Court

Court of Appeal (NSW)

Decision date

2004-03-18

Before

Giles JA, Hodgson JA, Tobias JA, Austin J

Source

Original judgment source is linked above.

Judgment (54 paragraphs)

[1]

CITATION : Galaxidis v Galaxidis [2004] NSWCA 111 HEARING DATE(S) : 18 March 2004 19 March 2004 JUDGMENT DATE : 20 May 2004

[2]

JUDGMENT OF : Giles JA at 1; Hodgson JA at 2; Tobias JA at 14 DECISION : The appeal is allowed in part, the cross-appeal dismissed with costs and the declaration and orders made by Austin J on 20 December 2002 to be set aside; The parties to bring in short minutes.

[3]

CATCHWORDS : ESTOPPEL - general principles - promissory estoppel - propriety estoppel - whether representation sufficiently clear and unambiguous - whether a representation insufficiently clear to found a contractual relationship can instead found a promissory estoppel - whether representation gave rise to an expectation - whether detrimental reliance - whether detrimental reliance is necessary for grant of relief - appropriate relief for detriment. - EQUITY - laches - whether plaintiff acquiesced in seeking redress after realising violation of rights. - REAL PROPERTY - whether representation founding estoppel gave rise to proprietary beneficial interest or indefinite licence. - PRACTICE & PROCEDURE - whether a party who has not asked for relief ought to be granted relief - where no controversy exists between party and respondent LEGISLATION CITED : Supreme Court Act 1970 (NSW) Supreme Court Rules 1970 (NSW) Austotel Pty Limited v Franklins Self Serve Pty Limited (1989) 16 NSWLR 582 Australian Crime Commission v Gray [2003] NSWCA 318 Blair v Curran (1939) 62 CLR 464 Flinn v Flinn [1999] 3 VR 712 Giumelli v Giumelli (1988) 196 CLR 101 CASES CITED : Legione v Hateley (1983) 152 CLR 406 Morris v Morris [1982] NSWLR 61 Riches v Hogben [1985] 2 Qd R 292 Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Woodhouse A.C. Israel Cocoa Ltd S.A. v Nigerian Produce Manufacturing Co Ltd [1971] 2 QB 23 Athanasios Galaxidis Georgia Galaxidis PARTIES : Antonios Galaxidis John Galaxidis Nikolaos Galaxidis FILE NUMBER(S) : CA 40078/03 COUNSEL : 1A, 2A & 3A:J E Thomson / M J Watts 1R: D A Smallbone 1A, 2A & 3A: Colin Biggers & Paisley SOLICITORS : 1R: M J Woods & Co, Sydney 2R: G B Fernie & Co, Sydney

[7]

Thursday 20 May 2004 ATHANASIOS GALAXIDIS & ORS v JOHN GALAXIDIS & ANOR Judgment 1 GILES JA: I agree with Tobias JA. 2 HODGSON JA: I agree with the orders proposed by Tobias JA and with his reasons, except in relation to two matters, namely the amount of compensation and the question whether any order should be made in favour of Nikolaos. 3 On the first matter, in my opinion it is desirable in the extreme that these proceedings should be brought to finality as soon as possible and with as little room as possible for further dispute. In my opinion, it would be appropriate to award to John, in addition to a share of an occupation fee, compensation of one-ninth of $897,000.00 plus interest at Supreme Court rates from 19 April 2002. I accept that this will give somewhat lower compensation than if the property were to be re-valued now. However, I think this is appropriate, because in my opinion there should be a small allowance for vicissitudes. John is being compensated for the loss of entitlement to use, together with Nikolaos and Antonios, the southern third of the property indefinitely; and in my opinion the value of this to John alone is slightly less than one-third of the full value of the southern third of the property, if only because possible lack of agreement between the three brothers could have prevented each individual receiving a full one-third of the rental value of the relevant property. 4 On the second matter, in my opinion an order for the same compensation should be made in favour of Nikolaos, subject to Nikolaos filing and serving a notice stating that he seeks such an order. 5 In this case, the promise relied on was a promise made to the three sons, which in my opinion was made to them jointly. Had the case been one in contract, then Pt.8 r.5 of the Supreme Court Rules would have required that any promisee who did not consent to being joined as a plaintiff be joined as a defendant; and then the Court would have been required by s 63 of the Supreme Court Act so far as possible to determine all matters in controversy between the parties. I have not been referred to or located any case that explicitly deals with the form of order to be made in such a case; but in my opinion, if a plaintiff were successful in such a case, the appropriate order would give effect to the rights of all co-contractors, while making provision to ensure that the benefit of the order is appropriately received by the co-contractors who are defendants as well as those who are plaintiffs, whether by partition or by undertakings or orders binding the plaintiffs, or by some other means. 6 In this case, the cause of action was based on estoppel, and even though the promise was made to the sons jointly, the factors giving rise to estoppel could (and in fact did) vary, at least as between John and Nikolaos on the one hand and Antonios on the other, so that the relief claimed by John based on estoppel was certainly not relief to which Antonios was jointly entitled. However, the relief claimed by John in estoppel could possibly still be considered relief to which Nikolaos was jointly entitled; and if John had established entitlement to have the property transferred, it would almost certainly have been transferred, as John sought, to all three. However, the Court has found John is entitled to compensation, not a transfer of property, and the question is whether there should be an order for compensation to be paid to Nikolaos as well. In my opinion, there should, for the following reasons. 7 In the first place, as I have noted, in substance the relief is relief to which John and Nikolaos are jointly entitled: the promise was to the three sons jointly, and the reliance on this promise by John and Nikolaos and the conduct of the promisor to his sons was not such as to in any way differentiate between the cases of John and Nikolaos. 8 Secondly, courts can and do give relief in favour of persons other than plaintiffs. This is so, in my opinion, in the case of joint contracting parties, as mentioned above. It is certainly so where it is considered appropriate to give specific performance of a contract to give a benefit to a third party, as discussed in Coulls v. Bagot's Executor & Trustee Co. Limited (1967) 119 CLR 460, Beswick v. Beswick [1968] AC 58, and Woodar Investment Developments Limited v. Wimpey Construction UK Limited [1980] 1 WLR 277. There is also the case of representative actions, as discussed in Carnie v. Esanda Corporation Limited (1995) 182 CLR 398, and (1996) 38 NSWLR 465. 9 Thirdly, Nikolaos' entitlement to relief was in my opinion squarely made an issue in this case. John's claim was for the transfer of property to Nikolaos and Antonios as well as to himself; and Nikolaos' entitlement was pleaded and advanced by John, and was directly relevant to whether a transfer as sought by John should be ordered. I do not accept the contrary submission of the appellants. I accept the submission of the respondents that the conduct of the trial, in particular the cross-examination of Nikolaos and the submissions, showed that the appellants appreciated that they were confronting a claim for orders benefiting Nikolaos. 10 Fourthly, if no order is made in favour of Nikolaos, there would in my opinion be no estoppel in his favour on the issue of his reliance on the relevant promises or action by him to his detriment or what would be the appropriate remedy in his favour; because the primary judge's findings on these questions would not be necessary to support the remaining orders in favour of John alone: see Blair v. Curran (1939) 62 CLR 464 at 531-2. Thus, if Nikolaos subsequently sought to enforce an estoppel in his favour, he would have to litigate these questions again. 11 Fifthly, there is the possibility that Nikolaos would be precluded from obtaining relief on the basis of estoppel by reason of the principle in Port of Melbourne Authority v. Anshun Pty. Limited (1981) 147 CLR 589. The appellants have conceded that this would not be precluded, if Nikolaos' reasons for not pursuing his claim in these proceedings were his difficult financial position and concern at the risk of being made liable for costs: cf. Running Pigmy Productions Pty. Limited v. AMP General Insurance Co. Limited [2001] NSWSC 431. However, in my opinion that does not altogether exclude the possibility. 12 Sixthly, in all the circumstances, in my opinion such an order in favour of Nikolaos is required by s 63 of the Supreme Court Act 1970, which provides as follows: 63 Final determination The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided. 13 I would not propose that the order be unconditional. It is possible that Nikolaos may prefer not to obtain an order against his father, because he may take the view that this would further damage his relationship with his father. So I would propose that an order be made to the effect that, provided Nikolaos within 28 days file and serve a notice that he seeks such an order, the appellants pay the same compensation to Nikolaos as to John. 14 TOBIAS JA: I can do no better than to commence this judgment by expressing my agreement with the opening remarks of the primary judge, Austin J, in his judgment when, sadly I suspect, he described the dispute between the parties as: "an unfortunate case in which two sons are in a bitter dispute with their father and mother and, perhaps worse still, with their younger brother. It is a case about a father, committed to Greek traditions, seeking to control the social and financial lives of his sons in a way that young people in today's Australia would find repugnant. The two eldest sons rebelled against his domineering attitude, and consequently the family has broken apart. What makes the case distinctive is that the father sought to bolster his control by promising his sons that he would give them property, and now the two eldest sons are calling him to account." 15 Before the primary judge the two oldest sons made good their case that their father had promised them property and that they had acted to their detriment in the expectation that he would not resile from that promise. But resile he did. Accordingly, on 20 December 2002, his Honour made a declaration that the parents held the property on trust for the sons and consequent orders to give effect to that trust and otherwise to relieve the sons of their father's unconscionable conduct were made. The parents now appeal to this Court from that decision. 16 Like the primary judge, and without any disrespect, for ease of identification I shall refer to the three brothers by their first names: John (the plaintiff and first respondent), Nikolaos (the third defendant and second respondent) and Antonios (the fourth defendant and third appellant). I shall refer to their father and mother (the first and second defendants and now the first and second appellants respectively) as Mr Galaxidis and Mrs Galaxidis. 17 Although Nikolaos was originally a joint plaintiff with John, he later (with consent) discontinued his action because, having a wife and young family, he wished to avoid the risk of any liability for costs. Although he was joined as a defendant, he has at all times supported John's claim against Antonios and his parents. Antonios was joined as a defendant at the same time as Nikolaos ceased to be a plaintiff and became a defendant. However, Antonios has always supported his parents in these proceedings. On the appeal to this Court, Antonios became an appellant with his parents and was represented by counsel who appeared for them jointly. Nikolaos did not participate in either the hearing at first instance or the appeal but filed in each a submitting appearance except as to costs. Nonetheless, in the proceedings before the primary judge, John successfully obtained relief against his parents and Antonios on behalf of himself and Nikolaos. John seeks to maintain that relief on his and his brother's behalf in the appeal. I mention this matter because, as will appear later in these reasons, a real question arises as to whether Nikolaos is entitled to relief when he was not a plaintiff in the court below and, therefore, was never at any relevant time a claimant for relief.

[9]

John and Nikolaos work for their father 21 John and Nikolaos assisted their father in the A G Motors business after school hours and on weekends and holidays from 1977 to 1982. They did not receive any wages or remuneration from their parents during this period even though they worked extensive hours. Their parents provided them with food and clothing and their mother gave them small amounts of pocket money on a regular basis. However, they made frequent requests of their father for spending money, which were refused and this led to many family discussions and arguments. 22 From 1982 to 1984 John and Nikolaos continued to work for their father in the A G Motors business. Again, no wages were paid to them and there were frequent quarrels between the sons and their father about financial arrangements. The primary judge found that by the time they commenced attending TAFE in 1982, John and Nikolaos each worked seven days per week exclusively in their father's business. Furthermore, during the time they attended TAFE, his Honour found that they continued to work substantial hours, part-time, in the business. 23 Although Mr and Mrs Galaxidis permitted John and Nikolaos some use of cars during this period and provided them with pocket money, food and board, again they received no wages for their efforts in the business. Furthermore, for some of the time between 1983 and 1988 John and Nikolaos received unemployment benefits even though they were working long hours for their father. The primary judge found that they gave at least part of these benefits to their parents. 24 During 1985 John, who had been studying real estate as part of his TAFE course, was offered a full time job as a property manager with an agency in Kiama provided he had his own motor vehicle. His father refused to provide the vehicle and he and his wife objected to the idea of John working outside the family business. Accordingly, John continued to work with his father. In mid-1985 Mr Galaxidis leased premises at 74 Flinders Street, North Wollongong and moved the second-hand car business of A G Motors to that address. It would appear that Flinders Street was in an area where there were many motor industry businesses and was a prime location for the sale of second-hand motor vehicles. During the ten months that A G Motors operated from that address, the retail sales division of the A G Motors business flourished. Again, John and Nikolaos worked in that part of the business but received no wages for their efforts. 25 The primary judge found that between December 1985 and August 1987 John and Nikolaos worked full-time in the A G Motors business for an average of 70 to 80 hours per week. Nikolaos continued to receive unemployment benefits that were paid into an account, the passbook for which was held by his mother, and from which he withdrew only small amounts.

[15]

Mr Galaxidis proposes to retire from the A G Motors business 32 In May 1988 John obtained employment with Strathfield Car Radios. However, his Honour found that John continued to do some work for his father after hours although it was not substantial. 33 In June/July 1988 Nikolaos moved his business "Nick's Cars" to a rented workshop at Fairy Meadow as his father had asked him to leave the Flinders Street property. 34 Some time during the period from November 1989 to June 1990, Mr Galaxidis told Nikolaos that he and his wife intended to travel to Greece and Canada and would be gone for four to six months. Mr Galaxidis asked Nikolaos to manage the A G Motors business in his absence. He informed Nikolaos that he could draw $150 per week out of the business for living expenses. Nikolaos agreed but said it would be very difficult to run the business on his own. 35 Subsequently, Mr Galaxidis invited John to help Nikolaos run the A G Motors business while he was away. John initially refused on the basis that he had a responsible job with Strathfield Car Radios. 36 The primary judge found ([73]-[74]) that the following conversation then took place between John and Mr Galaxidis at which Nikolaos, Mrs Galaxidis (and possibly Antonios) were present: "… Mr Galaxidis: As you are aware, Nick's going to leave his business to run AG Motors. John: Well, if Nick's going to leave his business, I gather that I have to as well. I can't leave my job, come and run your business for 3, 4, 5 or 6 months and then expect to go back to my job, because someone else will fill my position. Therefore I want to know what your intentions are as far as the family business is concerned. Mr Galaxidis: I'll make you and Nick signatories on the chequebook. I am retiring. I want you and Nick to take over the [A G Motors] business, so you'll have no more problems as far as going back and trying to start again from the bottom of the ladder. John: Well, since it's going to be mine and Nick's business, we're going to run it the way we want. We're going to renovate the yard, paint the fences with a new colour scheme for the yard. We're going to landscape the yard. We'll put in new floodlights, new awning lights and signs, etc. Mr Galaxidis: It's your business. Do what you like. Don't go overboard and spend money where it is not needed. I'm going to Greece because I'm very tired. I don't want to work anymore. I'm too old." 37 The primary judge further found ([75]) that when Mr Galaxidis told his sons that he was retiring, he meant that his retirement would take effect when he stopped working in the A G Motors business prior to his departure overseas which occurred on 8 June 1990. According to his Honour ([77]), Mr Galaxidis' retirement prior to his overseas departure satisfied the condition he had placed upon his earlier promises about the Stafford and Flinders Street properties, but nothing was done to transfer them to his sons. One of the reasons attributed by his Honour to this lack of implementation was that Mr Galaxidis was averse to legal formalities and, in particular, keen to avoid documentation that might lead to an obligation to pay stamp duty. 38 After the conversation referred to in [36] above, John and Nikolaos left their respective jobs and started running the A G Motors business. The primary judge accepted ([78]) their evidence that they would not have done so but for the specific inducement held out to them by their father that the business was theirs to run and that he would retire from it. 39 During the time their parents were overseas, John and Nikolaos operated the business profitably, spending the profits on the Flinders Street property by renovating the yard and purchasing equipment. Furthermore, they supported their parents and Antonios from the revenue of the business, sending a total of $32,000 to their parents while they were overseas. On his return, Mr Galaxidis, according to John and Nikolaos, saw what they had done to the premises and approved the improvements they had made. However, he complained that the cost of the changes to the business had been borne by him out of his cheque account (which was the business cheque account) and that he had not received any income from a new car detailing business which John and Nikolaos had commenced.

[16]

Mr Galaxidis comes out of retirement and reclaims the business 40 Either immediately upon or shortly after returning from overseas, Mr Galaxidis informed his sons that he had decided to take over the business again. He set out terms upon which the business would be run in the future and the conditions upon which money could be withdrawn from it. John and Nikolaos rejected these terms. However, they did not seek to prevent their father from returning to the business on the ground that he had given it to them, apparently because they believed it would be pointless to do so. Instead, according to the primary judge ([85]), they proposed to open a separate business to be run by themselves in partnership trading as "Nick's Cars" while at the same time looking after the car yard on the Flinders Street property and selling motor vehicles for their father. His Honour found that by agreeing, reluctantly, to return the business to Mr Galaxidis, they gave up the rights to the business that their father had given to them prior to his departure overseas. 41 John and Nikolaos continued to work in their father's business until 1994. However, eventually, Mr Galaxidis refused to let them carry on the separate business of "Nick's Cars" from the Flinders Street property, which resulted in that business eventually petering out. During this time (1990-1994) Antonios was studying for a university degree and was providing some limited assistance to his father in the business. In August or September 1991 Mr and Mrs Galaxidis acquired some vacant land at Balgownie and, about a year or so later, commenced the construction thereon of a significant house (referred to by John and Nikolaos as "a mansion"). According to the primary judge ([89]), the house became something of an obsession with Mr Galaxidis and he needed to find money to make progress with its construction. He did so by extracting significant amounts from the business between 1991 and February 1994. Furthermore, in order to fund the building works, he borrowed $150,000 by way of commercial bills from the National Australia Bank on the security of the Stafford Street property. 42 In 1993 and 1994 Mr Galaxidis rented No. 8A (being the northern third of the Flinders Street property) to Budget Rent-a-Car for about $50,000 per annum. That lease (and renewals thereof) has remained in place up to and including the present time.

[17]

The 1994 deal 43 Some time prior to 14 April 1994 there was a family conference in which, as found by the primary judge ([91]), an agreement was reached with respect to the Stafford Street property and other matters. Although there was a dispute between the parties as to what was said, his Honour accepted the version advanced by John and Nikolaos. John's version of the exchange between he and his father was as follows: "He said: I want to retire and I need funds to finish my house. I want to retire and spend time in my house. I'm too old to work anymore. I've had enough. At that time he had a $150,000 loan secured over the 7 Stafford Street premises. He said: For me to finish my mansion, I have to get this debt off my shoulders and since it's such a good property and makes good money, the panel shop here, I would rather it stay within the family. I would like to transfer the land and the loan to yours, Nick's and Tony's name. I won't need the [A G Motors] business, you'll have to take over the $50,000 overdraft and $10,000 worth of bills, which the stock covers. I said: You want us to buy Stafford Street, when you promised that you'd give it to us for nothing because of all this work we did. You said that one day it would be ours, and now we have to buy it? You're giving us a debt, we're buying it. He said: I know I promised you Stafford Street, but I'm going to make up for it with Flinders Street. I said: You told us you were going to give us Flinders Street anyway. Now it's going to come at a price where I have to hock myself, to help you move into your mansion. He said: Well, the mansion's going to be yours one day as well. I'm not going to take it 6 foot under with me. … Nikolaos and Antonios said: We'll go ahead with it. I said: No. He said: If it's not all three of you, it's no deal. I said: As long as we don't get stuffed up and you guarantee us that we get a third of the 8 Flinders Street yard to retail our motor vehicles to service such a large debt. Put it in writing that you're going to give us this third. He said: Don't you trust me, I'm your father. It's all going to be yours anyway. Why pay extra money for solicitors and stamp duty? I said: I'll do it."

[18]

Again, the statements by Mr Galaxidis in the above exchange between John and himself form part of the factual foundation for the relief sought by John. I shall hereafter refer to them, as did the primary judge, as the "third conversation". 44 Nikolaos' version of the conversation supported that of John. However, he went a little further, saying that at one stage John raised the "need for legal documents to set out the agreement" to which his mother responded as follows: "Don't you trust your own parents? We are doing all of this for your own good, and mainly for John and Tony so that they can settle down." 45 Although not referred to in his Honour's judgment, it is relevant to set out the paragraph in Nikolaos' affidavit immediately following his version of the conversation referred to in [44] above: "After a lot of deliberating we also came to an agreement in relation to occupation of the yard [ie the Flinders Street property], that, 'You will have 1/3 of the yard to sell cars and run A G Motors while Budget has use of 1/3 and the other 1/3 will be rented out in the future to assist in my house'. The conditions were that: 'because you are taking over all my debts so as I can build my house, you won't pay rent for your 1/3 of the yard'. The total debt was $200,000 which was transferred into all the brothers' and my wife's names." 46 Objection was taken to the word "agreement" in the above passage but it was admitted by his Honour as evidence of Nikolaos' understanding. It is not clear, however, whether the words in the first person apparently attributed by Nikolaos to his father were admitted as direct evidence of what was said or whether they also were encompassed in his Honour's ruling as to the use to be made of the word "agreement". In the end, I do not think it matters as, even on the latter basis, the evidence establishes that Mr Galaxidis made statements which led to Nikolaos' understanding in the terms deposed to. The relevance of this understanding of Nikolaos will appear later in these reasons when considering what interest, if any, Mr Galaxidis promised his sons in the Flinders Street property. 47 The three brothers agreed to proceed with the deal. They took over the A G Motors business, the panel shop and, according to his Honour ([97]), "one-third of the Flinders Street yard" being that part of the Flinders Street property known as No. 8C. The Stafford Street property was transferred into the names of the three brothers and Nikolaos' wife. John and Antonios each took a one-third share as tenants in common and Nikolaos and his wife took the other one-third share, holding it as joint tenants. The transfer of the property acknowledged receipt of a consideration of $170,000 which was the valuation placed upon the property by a real estate agent at John's request and which he had procured, according to his Honour, for the National Australia Bank which was effectively transferring the parents' loan secured upon the Stafford Street property to himself, his brothers and Nikolaos' wife. 48 The three brothers and Nikolaos' wife thereafter signed a registered mortgage over the Stafford Street property in favour of the National Australia Bank securing an amount of $200,000. Mr and Mrs Galaxidis guaranteed the loan. The previous mortgage of $150,000 over the Stafford Street property was discharged. That loan together with the fully drawn $50,000 overdraft of A G Motors was transferred into the names of the three brothers and they thereupon took responsibility for the outstanding debts of the business. They continued to operate the business until July 1996. At about that time (at the request of Mr Galaxidis) the National Australia Bank discharged the guarantee given by Mr and Mrs Galaxidis for the loans taken over by their sons upon Nikolaos giving security to the Bank over his house.

[20]

John and Nikolaos are ejected from the Flinders Street property 51 At about the same time there were arguments amongst the brothers concerning a demand by Antonios to draw more money out of the business. He objected to Nikolaos withdrawing substantially more than himself even though he (unlike his brother who had a family to support) was living at home without paying board. This dispute led to the termination of the partnership between the brothers. In July/August 1996 Antonios froze the A G Motors overdraft with the National Australia Bank and left the business. Mr Galaxidis then locked his sons out of the Flinders Street property and ordered them to take their stock of motor vehicles and leave. That was effectively the end of the A G Motors business as John and Nikolaos did not have a motor dealers licence, which would have enabled them to continue the business at a different location. 52 Some months later Mr Galaxidis, together with Antonios, commenced a new business from the Flinders Street property called "Compact Car Rentals". He executed a mortgage over the Flinders Street property to obtain finance for the business without, according to the primary judge ([120]), informing Nikolaos or John. At that time the Flinders Street property was valued at $650,000. According to his Honour, the evidence indicated that Compact Car Rentals became a successful business operating at a high profit. 53 As John and Nikolaos had no business income with which to service their loans from the National Australia Bank, it was necessary to sell the Stafford Street property, which they did in September 1997 for the sum of $182,000. In March 1998 John lodged a caveat over the Flinders Street property and, in September 1998, commenced the proceedings. By June 2000 the Flinders Street property was valued at $900,000. At that time No. 8A was still leased to Budget Car Rentals, No. 8C was used by Compact Car Rentals and No. 8B (previously vacant) was leased as a car sales yard known as "Tony's Car World".

[22]

The primary judge's findings in his judgment of 6 December 2001 57 As I have observed, John's claims were founded on what I have referred to as the first, second and third conversations. The primary judge summarised them in the following paragraphs of his judgment: " The first conversation 128. In the first conversation, repeated constantly during the period from 1978 to 1988, Mr Galaxidis said in the presence of Mrs Galaxidis, to John and Nikolaos, 'one of these days, this property and this business will be yours', and 'when I retire, I'll give it to you'. These statements were made in response to requests by John and Nikolaos to be paid pocket money, and later wages, for their work in the A G Motors business. After Mr Galaxidis made these statements, on each occasion that he did so, his sons continued to work for him in the A G Motors business, knowing their father's attitude to the payment of wages, and in fact not receiving wages. The second conversation 129. Just before John went to work for Strathfield Car Radios and Nikolaos was married, in May 1988, there was a single conversation between John and his father in which Mr Galaxidis said 'when the properties are eventually paid off, then everything will be passed on to you'. The conversation took place when John told his father that he needed an income. After the conversation, in which his father made it clear that he would not satisfy that need, John left the [A G Motors] business and went to work for Strathfield Car Radios. The third conversation 130. This is the conversation, in or prior to April 1994, in which the three brothers and their parents reached an arrangement for the transfer to the sons and Maria of the Stafford Street property, the transfer of the [A G Motors] business to the sons, and the conferral on the sons of an equitable interest in the Flinders Street property. In return, the sons and Maria accepted responsibility for [the debts of the A G Motors business]... Mr Galaxidis, on behalf of himself and his wife, promised his sons that the Flinders Street property was to be theirs, subject to the parents retaining an entitlement to receive rental income from the property other than the one third where the [A G Motors] business was conducted. After the third conversation, the Stafford Street property was transferred to the sons and Maria, and the [A G Motors] business was taken over by the sons and was conducted in the Stafford Street and Flinders Street properties." 58 The primary judge held that none of the conversations gave rise to an enforceable contract between Mr and Mrs Galaxidis and their sons. He further rejected John's claims based on a constructive trust and wrongful exclusion from the use of land. It is unnecessary to consider these claims further as there is no appeal against his Honour's findings with respect to them. However, his Honour, in the context of his findings with respect to the contract claim, considered that the promises of Mr Galaxidis, made in the first and second conversations, although evincing an intention to create a binding obligation, were both incomplete and uncertain in that in neither case was there any specific consideration expressed or implied. As to the third conversation, his Honour was of the view that ([139]): "…the representations and arrangements with respect to the Flinders Street property arising from that conversation cannot be treated as terms of the contract, because they were too vague and uncertain. Mr Galaxidis said that he would 'make up for it' with Flinders Street, but he did not say precisely how he would do so. John demanded a guarantee that the sons would get one-third of Flinders Street, but he demanded it 'to retail our motor vehicles', while insisting that his father 'put in writing' that he would 'give' the sons one-third. The demand is ambiguous as to whether it was a demand for a proprietary interest or just for a licence to use the property for business purposes. The response by Mr Galaxidis, who said 'it's all going to be yours anyway', is even more ambiguous. …" 59 Notwithstanding the ambiguity referred to by the primary judge in the passage cited above, his Honour was able to resolve that ambiguity for the purpose of the estoppel claim, by holding that it was a promise of a proprietary interest in the whole of the Flinders Street property. 60 When dealing with the disputed evidence with respect to the terms of the third conversation (and after concluding that he preferred the evidence of John and Nikolaos with respect thereto), the primary judge held that the arrangements so reached were substantially less beneficial to the brothers than what their father had previously promised them in the first and second conversations. He then observed ([103]): "They acquired the Stafford Street property and the [A G Motors] business burdened with debt. They did not receive the use of the whole of the Flinders Street property, but only one-third of it" 61 Having then held that his findings as to the arrangements made in 1994 pursuant to the third conversation implied that those arrangements were in substitution for the previous promises made by Mr Galaxidis in the first and second conversations, his Honour continued ([105]): "The critical question of fact is how the 1994 arrangement treated the ownership of the Flinders Street property. It was a part of the arrangement that the three sons would have the use of one-third of the Flinders Street property for the purpose of conducting the business of A G Motors there. In my view, on the evidence, this use of the property was to be indefinite and not merely limited to two years, as Mr Galaxidis subsequently claimed. On the other hand, I accept (as John acknowledged in cross-examination) that the parties to the arrangement agreed that Mr and Mrs Galaxidis would be entitled to receive the rent paid by Budget Rent-a-Car for their occupation of one-third of the Flinders Street site, as the rental was to provide them with a retirement income." 62 The primary judge then considered ([106]) that there were two competing interpretations of the arrangement founded on the third conversation. The first was that Mr and Mrs Galaxidis promised or represented to their sons that they were granting to them an indefinite right or licence to occupy one third of the Flinders Street property which did not confer any proprietary interest therein because Mr and Mrs Galaxidis retained the right to rent the other parts of the property and to enjoy the rental income therefrom. The second was that the parents promised or represented to their sons that they would make them the beneficial owners of the Flinders Street property, subject to the sons allowing them to receive the rental from the portion of property that was "externally rented" (later varied by his Honour in his supplementary judgment of 19 November 2002 to refer to the rental from the northern one-third of the Flinders Street (No. 8A) property which was leased at the time to Budget Rent-a-Car). 63 The primary judge resolved this issue of interpretation in the following terms: "107. Weighing up all the evidence, I prefer the latter interpretation to the former. I take into account the fact that before the arrangement was entered into, the sons had the benefit of previous promises that their parents would give them the Stafford and Flinders Street properties when their father retired. The previous promises indicate the probability that proprietary ownership of the properties was on the minds of everyone concerned when they came to make the new arrangement in 1994. On the version of the discussion which I accept, Mr Galaxidis said in response to John's complaint that he had promised to give his sons the Stafford Street property, that he was "going to make up for it with Flinders Street". Later John demanded that his father "put in writing" that he was going to give his sons one-third of Flinders Street and that his father should "guarantee" that the sons would get one-third of that property, and Mr Galaxidis replied by asking his sons to trust him and by saying he did not want to pay extra money for solicitors and stamp duty. This part of the conversation strongly suggests that Mr Galaxidis, on behalf of himself and his wife, intended that the arrangement would give his sons a proprietary interest in the Flinders Street property, although in other respects is very vague. 108. Although part of the conversation refers to giving the sons one-third of the Flinders Street property, in all the circumstances I take that to mean that the sons were to receive the beneficial ownership of the whole property subject to Mr and Mrs Galaxidis retaining their right to receive the rental income from the two thirds of the property that were not designated for use by A G Motors." 64 The primary judge then turned to the proper legal analysis of John's proprietary estoppel claim. After citing from the judgment of Priestley JA in Austotel Pty Limited v Franklins Self Serve Pty Limited (1989) 16 NSWLR 582, 610, his Honour noted that the equitable doctrine identified three ingredients, namely, encouraged assumption, reliance and unconscionability. 65 Under the heading "Encouraged Assumption", the primary judge posed for himself the question of whether his finding that none of the conversations gave rise to contractual promises prevented John from making good his claim to relief under the doctrine of equitable estoppel. In response to a submission on behalf of Mr and Mrs Galaxidis and Antonios that a representation or a promise will not found an estoppel unless it has been made in clear and unambiguous terms, his Honour cited a passage from the judgment of McPherson J in Riches v Hogben [1985] 2 Qd R 292, 300-301 which had been cited with approval by the High Court in Giumelli v Giumelli (1988) 196 CLR 101, 121 [135]. 66 After citing from the judgment of Brooking JA (with whom Charles and Batt JJA agreed) in Flinn v Flinn [1999] 3 VR 712, 738 [80]-[81], the primary judge observed that a proprietary estoppel may give rise to an equity even though the interest to be taken is unclear or the promise or expected interest is uncertain. 67 In the foregoing context, the primary judge then observed ([151]): "It seems to me that in the present case the three conversations should be considered as a series, to be evaluated together in order to ascertain the intention of Mr and Mrs Galaxidis and the meaning of the words that Mr Galaxidis used. In the first conversation he established an intention to give his property and business to his sons when he retired, the property at that stage being only the Stafford Street property. When Mr and Mrs Galaxidis acquired the Flinders Street property, Mr Galaxidis conveyed to John, in the second conversation, their intention that their gift would be extended to the Flinders Street property as well as the Stafford Street property and the [A G Motors] business. In the second conversation the intended gift was not tied to the retirement of Mr Galaxidis, but rather to when the properties were paid off. …" 68 Having reiterated that the circumstances were changed by the third conversation and that the arrangements to which it referred were intended by all parties to replace the promises made in the first and second conversations, the primary judge held that Mr and Mrs Galaxidis were no longer promising to do something in the distant future when Mr Galaxidis retired because he was in fact retiring from the business of A G Motors then and there as was evidenced by his transfer of the Stafford Street property and the business to his sons. He continued ([152]): "…In that context, the statement by Mr Galaxidis that he was 'going to make up for it' with Flinders Street, and John's demand that his father 'put in writing that you're going to give us this third' were not references to the conferral of a beneficial interest at some future time conditional upon the happening of some further events. The language that they used meant that upon the implementation of the arrangement reached in the third conversation, Mr and Mrs Galaxidis would thereupon hold an interest in the Flinders Street property for their sons, who would be permitted forthwith to take over the [A G Motors] business and continue it in operation there. " 69 His Honour then concluded the issue of "encouraged assumption" in the following passage ([153]): "My finding of fact at paragraph 108 above is that the promise or representation by the parents was that they would make their sons the beneficial owners of the Flinders Street property, subject to the sons allowing them to receive the rental from the portion of the property that was externally rented. By participating as they did in the third conversation, Mr and Mrs Galaxidis encouraged in their sons the assumption that they would become the beneficial owners of the Flinders Street property, subject to that qualification with respect to rental income."

[23]

As already observed, in his supplementary judgment of 19 November 2002, his Honour substituted for the words " externally rented " in the above paragraph the words " leased to Budget Rent-a-Car ". 70 The primary judge then turned to the issue of "reliance". He referred to John specifically asking his father about putting his promise concerning the Flinders Street property in writing and Mr Galaxidis inviting his sons to trust him: which his Honour interpreted as an invitation to ([154]): "alter their positions by implementing the transaction, in reliance of his representation in the third conversation" 71 His Honour then held ([155]) that the brothers and Nikolaos' wife implemented the arrangements with respect to the Stafford Street property and the brothers implemented them for the A G Motors business in both cases relying on what their father had said. 72 An issue then arose as to whether it was necessary that the brothers' reliance upon Mr Galaxidis' assurances was required, as a matter of law, to be to their detriment. His Honour considered ([157]) that Priestley JA in Austotel had held (as he understood it) that reliance must be proved but that it was unnecessary for the plaintiff to prove detriment in order to make out an entitlement to relief. However, he considered that "detriment" was a wide concept encompassing the loss of the property that the plaintiff was encouraged to expect. Accordingly, he found that detriment in this sense had been sustained. 73 Under the heading "Unconscionable departure from assumption", the primary judge considered whether Mr and Mrs Galaxidis had unconscionably departed from the assumption which they had encouraged in their sons to the effect that they would receive the beneficial ownership of the Flinders Street property once the transfer of the Stafford Street property and the A G Motors business had been completed. His Honour had no difficulty in holding that both they and Antonios had subsequently departed from that assumption by bringing the A G Motors business to an end and excluding John and Nikolaos from the Flinders Street property. He accordingly held that all three elements of the equitable doctrine of estoppel had been made out. 74 The primary judge then turned to the appropriate remedy or relief that he considered John and Nikolaos were entitled to. He considered ([162]) that the majority judgment in Giumelli established that where the ingredients of the equitable doctrine are satisfied, the plaintiff's equity is more than a "defensive equity". He thus held that it was open to the court to satisfy the equity by going beyond the minimum relief necessary to reverse the plaintiff's detriment. The plaintiff should receive what he expected. Accordingly, his Honour considered that the appropriate relief in the present case was an order that Mr and Mrs Galaxidis transfer the Flinders Street property to their three sons as tenants in common in equal shares subject to the existing leases. Because Mr and Mrs Galaxidis were entitled to receive the rent from No. 8A (which was leased to Budget Rent-a-Car) as part of the arrangement, his Honour considered that there should be an order charging the Flinders Street property (in the hands of the sons) with the obligation to pay Mr and Mrs Galaxidis an amount equivalent to the net rent being received. 75 Finally, the primary judge considered that John and Nikolaos should have the benefit of an order requiring Mr and Mrs Galaxidis and Antonios to pay them two-thirds of an appropriate occupation fee for the use of the one-third of the Flinders Street property that A G Motors would otherwise have occupied for the period commencing upon their exclusion from the site in July 1996 to the date of the court's orders. 76 Mr and Mrs Galaxidis and Antonios had resisted the granting of any relief upon the basis that John had delayed in asserting his interest in the Stafford Street property and then the Flinders Street property and that by the time he acted (by lodging a caveat against the title on the Flinders Street property in March 1998), Mr Galaxidis had changed his financial and business interests. The primary judge held ([178]) that although John was guilty of some delay in lodging a caveat and commencing proceedings, it did not cause prejudice to Mr and Mrs Galaxidis of a kind that would prevent the granting of relief. Accordingly, this defence was rejected. 77 Having published his substantive judgment on 6 December 2001, further disputes and consequent delay then ensued with respect to the formulation of the final declarations and orders. Ultimately, in a supplementary judgment delivered on 19 November 2002, the primary judge confirmed his findings with respect to the assurance by which Mr and Mrs Galaxidis had encouraged their sons' belief that they were to receive a proprietary interest in the whole of the Flinders Street property. In particular, as already noted, his Honour considered that he had been mistaken when he had found that Mr and Mrs Galaxidis had reserved for themselves a right to the income from the rental of Nos 8A and 8B Flinders Street and that that right should be limited to income measured by the net rental income of No. 8A which at all material times had been leased to Budget Rent-a-Car, this being the only portion of the property which was leased at the time of the third conversation. His Honour ultimately held that Mr and Mrs Galaxidis should receive an amount of $38,282.77 per annum, which was to be indexed and secured by way of a charge covenant against the title of the Flinders Street property. 78 Although his Honour recognised the advantage of orders that would permit a clean financial break between John and Nikolaos on the one hand and his parents and Antonios on the other, he rejected the practicality of capitalising the parents' continued income right to which he had held that they were entitled in order to cater for the possibility of the Flinders Street property being sold. He was then forced to fashion a series of complex orders. They included an order that Mr and Mrs Galaxidis and Antonios pay John and Nikolaos compensation by way of an occupation fee in respect of their exclusion from the southern one-third of the Flinders Street (No. 8C) property since July 1996. Based on the valuation evidence of a Mr Ryan, he ordered the payment to John and Nikolaos of $194,042.78 inclusive of interest. 79 Finally, the primary judge dealt with a claim by John for indemnity costs in respect of the period subsequent to 3 October 2000 based upon a Calderbank letter of offer of that date. His Honour considered that the terms of that offer were "categorically different" from the relief which John had sought in the various versions of the Statement of Claim and which the court proposed to grant. Those differences were such that his Honour considered it not unreasonable for Mr and Mrs Galaxidis to refuse the offer. Accordingly, he rejected the claim for indemnity costs.

[37]

At 436 their Honours held that that requirement was applicable to a promissory estoppel (with which the Court in Legione was concerned). They then explained the nature of this requirement in the following passage (438-439): "The requirement that a representation as to existing fact or future conduct must be clear if it is to found an estoppel in pais or a promissory estoppel does not mean that the representation must be express. Such a clear representation may properly be seen as implied by the words used or to be adduced from either the failure to speak where there was a duty to speak or conduct. Nor is it necessary that a representation be clear in its entirety. It will suffice if so much of the representation as is necessary to found the propounded estoppel satisfies the requirement. Thus, a representation that a particular right will not be asserted for at least x days is not rendered, for the purposes of promissory estoppel, unclear or equivocal merely because the words used are equivocal as to whether the relevant period is x days, x plus one day or x plus two days. If what is said or done amounts to a clear and unequivocal representation that the particular right will not be asserted for a period of at least x days, a representation to that effect can be relied on to found an estoppel." 84 This Court recently considered the requirement that for a claim of promissory estoppel to succeed, the representation on which it was founded must be clear and unambiguous. In Australian Crime Commission v Gray [2003] NSWCA 318, a representation was made by an officer of the Australian Crime Commission to Mr Gray that if he and his wife went into witness protection "Neither you nor your wife will be financially disadvantaged provided you give honest and truthful evidence, you attend for briefings as required, to give statements as required, to give evidence as required, to give debriefings as required." 85 It was contended on behalf of the Commission that the representation that neither Mr Gray nor his wife "will be financially disadvantaged" was ambiguous and, therefore, did not satisfy the requirements for a promissory estoppel. Ipp JA rejected this argument (Mason P and myself agreeing on this point). 86 After noting that the well-established approach to construing contracts (so as to give contractual promises some effect) was inapplicable to representations said to found a promissory estoppel, Ipp JA observed that a representation said to found an estoppel was to be construed by reference to the context in which it was made and by giving it the natural and ordinary meaning that it would convey to a normal person. His Honour then observed this ([184]): "The need to determine how the representation would reasonably be understood by the person to whom it was addressed, was underlined by Isaacs ACJ in Western Australian Insurance Company Limited v Dayton (1924) 35 CLR 355 (when discussing the requirement that a representation must be 'unambiguous' if it is to be found an estoppel in pais). In a statement referred to by Mason and Deane JJ in Legione v Hateley at 435, Isaacs ACJ said at 375: 'The word 'unambiguous' is explained by Kay LJ in Low v Bouverie [1891] 3 Ch 82 at 113, the word and its explanation occurring on the same page. The Lord Justice says: 'It is essential to show that the statement was of such a nature that it would have misled any reasonable man, and that the plaintiff was in fact misled by it'. Bowen LJ says (at 106): 'It must be such as will be reasonably understood in a particular sense by the person to whom it is addressed'. " 87 After reciting the relevant context in which the representations then in issue were made, his Honour held that the circumstances compelled the inference that Mr and Mrs Gray must have understood the representations to mean that the promise that they would suffer no financial disadvantage by entering into a witness protection program was subject to the constraint of reasonableness measured in the context of the particular circumstances. This was so notwithstanding that the Commission had argued that the phrase "you will not suffer any financial disadvantage from going into witness protection" was so imprecise as to defy interpretation to the degree required to sustain an estoppel. 88 His Honour ([190]) then cited the following passage from the judgment of Brooking JA in Flinn (at 738): "The defendant repeatedly contended that to found an estoppel a representation must be 'unambiguous' or 'clear' or 'unequivocal'. But a promise may be definite in the sense that there is a clear promise to do something even though the something promised is not precisely defined, this has always been recognised in the cases." 89 Ipp JA then found ([192]) that "… 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." 90 His Honour then observed that the statement of Mason and Deane JJ in Legione at 436-437 was not intended to be an absolute rule. He continued ([193]): "… While, often, an ambiguous or imprecise representation will not give rise to a promissory estoppel, that could not inevitably be the case. In virtually every statement of existing fact or future intent some ambiguity or imprecision of language may be found." 91 His Honour then referred again to the "illuminating judgment" of Brooking JA in Flinn and to the fact that there had been many instances where representors have not been able to escape responsibility merely because of ambiguity or lack of clarity in the representations they have made and this was so even where it was difficult to resolve uncertainties inherent in them. He cited Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 as such a case where it was difficult to construe with precision the representation relied upon which was capable of more than one reasonable meaning. Having noted that all of the members of the High Court in Walton Stores had stressed that unconscionability was the foundation of estoppel, his Honour continued ([200]): "The underlying reason for the rule that, generally speaking, an ambiguous or unclear representation will not give rise to a promissory estoppel is that the foundation of promissory estoppel is unconscionability. Unconscionability is usually difficult to establish when the representation is ambiguous or unclear." 92 His Honour then considered that Woodhouse was a typical example of ambiguity precluding unconscionability. As his Honour observed, that point was explained by Lord Cross in the House of Lords in Woodhouse as follows ([1972] AC 741, 767): "But it is, to my mind, a fatal objection to this contention that it makes the letter of September 30 bind the respondents as a representation though it would not have bound them had it been an acceptance of a misunderstood offer. Even if one assumes that a man who makes a representation of fact which he reasonably interprets in one way but which the representee reasonably interprets in another may in some circumstances be bound by the interpretation placed on it by the representee, it surely cannot be that a man who in response to a request for an indulgence which he reasonably interprets in one way makes an unenforceable promise as to his future conduct which the other party reasonably interprets in a sense different from that intended can be in a worse position than if the request for an indulgence had been an offer to contract and the granting of the indulgence an acceptance of the offer." 93 In my opinion, the effect of this Court's decision in Gray is that even if a representation is insufficiently precise to give rise to a contract (as in the present case), that fact does not necessarily disqualify the representation from founding a promissory estoppel. Much will depend upon the circumstances in which the representation is made and the context against which it is to be considered. In its context, the representation is sufficiently clear and unambiguous if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely. In these circumstances, it would be unconscionable for the representor to deny responsibility for the detriment that arises because of that reliance. 94 On the other hand, if it is not reasonable for the representee to rely on the meaning he attributes to the representation in that had he acted reasonably he would have attributed an innocent meaning to the representation, then it cannot be unconscionable for the representor to deny responsibility for the detriment that the representee sustains because of that unreasonable reliance. 95 A significant part of both the appellants' and the first respondent's written submissions were directed to asserting on the one hand and denying on the other that the first and second conversations lacked clarity and were ambiguous. However, in my opinion, whether they were sufficient to sustain an estoppel does not matter. What is of importance is that those conversations, as well as the third conversation, should be considered (as the primary judge held ([151])) as a series to be evaluated together in order to ascertain the intention of Mr and Mrs Galaxidis and the reasonable meaning of Mr Galaxidis' words. Furthermore, it is both appropriate and necessary to consider the whole history of the relationship between Mr and Mrs Galaxidis on the one hand and John and Nikolaos on the other in order to provide a context against which the conversations (and in particular the third conversation) are to be understood. I therefore turn to that consideration. 96 Essentially, the appellants submitted that the third conversation, as well as the surrounding circumstances, did not support the primary judge's finding that it contained a representation or assurance by Mr Galaxidis, made on behalf of himself and his wife, that he intended immediately to transfer a proprietary interest in the whole of the Flinders Street property to his three sons. It was submitted that neither John nor Nikolaos understood their father to be promising such an interest. At most, it was contended, Mr Galaxidis was promising a licence to his sons to operate the retail sales part of the A G Motors business upon only one third (No 8C) of the Flinders Street property and then only for so long as the partnership between his three sons continued. 97 The first respondent contended that the primary judge was correct in his interpretation of the assurances the subject of the third conversation. He submitted that that was the basis upon which John and Nikolaos agreed to acquire the Stafford Street property and to take over their father's $200,000 debt with the National Australia Bank. Alternatively, it was submitted that the representation or assurances the subject of the third conversation constituted a promise of a proprietary interest in the one-third of the Flinders Street property on which the A G Motors business was conducted. If that was rejected, it was submitted that the representation or assurances constituted an indefinite licence to conduct the business upon that part of the property, an interpretation accepted by the primary judge as one of the alternatives he himself considered. 98 As I have observed, the primary judge held (at [108] and [153]) that notwithstanding that the third conversation (or at least part of it) referred to Mr Galaxidis giving his sons one-third of the Flinders Street property, in the circumstances his Honour took that to mean that the sons would receive the beneficial ownership of the whole of the property. Given the requirement, as adumbrated in Gray, that in order to found an estoppel the representation relied upon must be reasonably capable of bearing the meaning which it was understood to have by the representee, in my opinion it is, with respect, readily apparent, firstly, that in the third conversation Mr Galaxidis was promising his sons an interest in the Flinders Street property but, secondly, that on no reasonable interpretation of that conversation could that promise have been interpreted as extending to the whole of that property. On the contrary, in my respectful opinion, it extended only to the southern one-third of the property (No. 8C) upon which the A G Motors retail sales business operated. 99 That Mr Galaxidis intended to grant his sons an interest in that one-third of the Flinders Street property is evidenced by the fact that John, with the concurrence of Nikolaos (and possibly Antonios), made it clear to his father that in order to enable the brothers to service their father's considerable debt as they had agreed to do (some $200,000), it was critical that they were able to use the "yard" for the retailing of second-hand motor vehicles. That John was concerned only with that one-third of the Flinders Street property is clear from his statement to his father that he would only agree to the deal (Blue 1/7K): "as long as we don't get stuffed up and you guarantee us that we get a third of the 8 Flinders Street yard to retail our motor vehicles to service such a large debt. Put it in writing that you're going to give us this third."

[38]

He confirmed in cross-examination (Black 1/151X) that he was only asking his father for a guarantee " that [he] would get one-third of Flinders Street ". 100 Furthermore, Nikolaos' clear understanding was that the interest in the Flinders Street property (that was the subject of the third conversation) extended only to the one-third upon which A G Motors was trading (Blue 1/26 T-V). 101 What, therefore, was the nature of the interest in the southern one-third of the Flinders Street property, the subject of the third conversation? As already observed, the choices are between a proprietary interest of the three brothers in No. 8C or a licence of definite or indefinite duration to use that portion of the property for the purpose of the A G Motors business or otherwise. 102 It is true that the demand by John in the third conversation, that his father provides him with a guarantee, speaks in proprietorial terms. Furthermore, John's answers in cross examination are consistent with such an interest and, on one reading, contemplates an interest extending to the whole property rather than just one-third (Black 1/138-154). His responses to various questions are in terms of his assertion, at least at the time of the hearing, that the brothers were entitled to the whole of the Flinders Street property upon their father's retirement from the A G Motors business. To that extent, there is an inconsistency between those answers and the words used by John to his father in the third conversation. However, as his father was responding to his demand for a guarantee, it follows that that response was in the context of what was being demanded and, relevantly, should be governed by it. On this basis, it is clear (as I have held in [98] above) that Mr Galaxidis' assurances extended only to the southern one-third of the Flinders Street property (No. 8C) and were so understood by both John and Nikolaos at the time. 103 In my opinion, the assurance of Mr Galaxidis conveyed in the third conversation with respect to the southern one-third of the Flinders Street property was intended by him and understood by John and Nikolaos as limited to an irrevocable licence and not an immediate proprietary interest. I am of that view for the following reasons. 104 Firstly, Mr Galaxidis' response to John's demand for a guarantee was as follows: "Don't you trust me? I am your father. It's all going to be yours, anyway. Why pay extra money for solicitors and stamp duty?" 105 The evidence in cross-examination of both John and Nikolaos was that their father was averse to doing anything that would result in the payment of stamp duty or capital gains tax: see, for example, Black 2/305 M-N. The immediate transfer to the brothers of a proprietary interest in the southern one-third of the Flinders Street property was obviously perceived, no doubt correctly, by Mr Galaxidis as giving rise not only to the payment of solicitor's fees but also to an obligation to pay stamp duty and capital gains tax. He avoided that liability by declining to promise an immediate proprietary interest in that one-third of the property saying, "it's all going to be yours, anyway", meaning that the Flinders Street property, like the mansion in Balgownie, would "be yours one day", ie, upon the death of the survivor of he and his wife (see Blue 1/6V); this was certainly Nikolaos' understanding (see Black 2/305 F-Q). In my opinion, therefore, the third conversation and, in particular, the statements attributed to Mr Galaxidis therein, made it clear to John and Nikolaos that although he was offering the use of the southern one-third of the Flinders Street property to his sons to enable them to conduct the A G Motors business thereon which they regarded as essential for the future profitability of the business, he did not intend to grant them an immediate beneficial interest therein. 106 Secondly, according to Nikolaos, his father promised that the brothers could have the southern one-third of the Flinders Street property "rent free" (Blue 1/60G; Blue 1/26V; Black 2/1273R - 274J; 300F). Furthermore, in July 1996, when Mr Galaxidis informed John that he had someone to rent the southern one-third of the property for $500 per week, John responded by suggesting that his father should rent the middle one-third of the property (No. 8B), which was vacant. He did not then assert that his father had no right to rent the southern one-third because he and his brothers beneficially owned it. 107 Thirdly, Mr Galaxidis' assurances were made in response to John's forceful request for a guarantee and his expressed concern that "we don't get stuffed up". The latter was clearly a reference to the events of 1990 when John and Nikolaos took over the business on the departure of their parents and younger brother overseas, ran it successfully while they were away, and were then ejected from it by their father on his return to Australia. Furthermore, John made it clear to his father that if he and his brother were to be able to service the bank debt of $200,000 they were to take over from their father, it was essential that they be able to retail motor vehicles from No. 8C. Mr Galaxidis' response was "Don't you trust me, I'm your father". It is apparent that he was representing to his sons that he could be trusted not to frustrate or prejudice the on-going viability and profitability of the business he was willingly transferring to them in return for being relieved of a considerable debt burden. 108 Fourthly, the statement of Mr Galaxidis in the third conversation that "I know I promised you Stafford Street, but I'm going to make up for it with Flinders Street" coupled with his assurances that "the mansion's going to be yours one day as well" and "it's all going to be yours anyway" reflect an intention on his part, so understood by John and Nikolaos, that as they would ultimately receive the Flinders Street property, their use of the southern one-third of it in the meantime was to be of unlimited duration. In my opinion, no other interpretation of Mr Galaxidis' assurances, in the context in which they were made, is reasonably open. 109 Fifthly, although it was submitted by the appellants that any such licence was revocable on the termination of the partnership between the brothers to carry on the business of A G Motors, it is clear from the evidence accepted by the primary judge that no condition was placed by Mr Galaxidis upon the use or duration of use by the brothers of the southern one-third of the Flinders Street property in the sense that they could only use it for the purposes of their partnership although, clearly, that was their immediate purpose. At the very least, Mr Galaxidis' assurances, the subject of the third conversation, extended to the use of the southern one-third of the property for so long as the business was carried on by one or more of his sons. 110 In response to the suggestion in cross-examination that no-one discussed the length of the term of any guaranteed tenure of the property, Nikolaos responded (Black 2/299F-G): "well, he guaranteed it in the form of 'I'm retiring, it's yours, do what you want with it'. He's giving us permission to do what we want on that property. He didn't put any time frame on it." (Cf: Black 2/335C-D) 111 Accordingly, in my opinion, the licence to use the southern one-third of the Flinders Street property was intended by Mr Galaxidis to be of indefinite duration and, therefore, was irrevocable. 112 In my opinion, giving full credence to the requirement that to sustain a promissory estoppel the representation on which the estoppel is founded must in all the circumstances be reasonably unambiguous with respect to those matters upon which the representee relies, it follows that by his statements in the third conversation and in the context of the discussion between the parties on that occasion, Mr Galaxidis intentionally engendered in John and Nikolaos an expectation that they would be able to exclusively use the southern one third of the Flinders Street property indefinitely. 113 It follows from the foregoing that the primary judge erred when he declared that Mr and Mrs Galaxidis held the whole of the Flinders Street property upon trust for John, Nikolaos and Antonios and ordered Mr and Mrs Galaxidis execute and deliver to John and his brothers as tenants in common in equal shares, a transfer in registrable form of the estate in fee simple in that property. A lesser interest was promised and any relief to which John and/or Nikolaos are entitled will need to reflect that finding.

[39]

Did John and Nikolaos rely upon the assurances of Mr Galaxidis (as I have found them to be) the subject of the third conversation? If so: (a) was that reliance reasonable; and (b) did they do so to their detriment? 114 The primary judge answered the first part of this question in the affirmative based upon the more extensive assurance that he found. On the more limited assurance, which I consider was expressly and impliedly encouraged by Mr Galaxidis in the third conversation, the same conclusion should be reached. 115 A consideration of John's evidence in cross-examination (at Black 1/150-155) reveals the following. Firstly, as I have already observed, both John and Nikolaos were particularly concerned to ensure that they had some security from their father that they would be able to conduct the second-hand car sales part of the A G Motors business upon the southern one-third of the Flinders Street property. Secondly, they were understandably concerned that given the necessity to repay the debt incurred by their father for the purpose of constructing his home at Balgownie and the overdraft of the business (which the brothers had taken over) their continued occupation of the Flinders Street car yard would not be frustrated by Mr Galaxidis ejecting them as was done in 1990. Thirdly, although John's preference was for his father's promise to be in writing or some other form of guarantee so that in the future he would not be "stuffed up", he accepted his parents' assurances that they could be trusted not to repeat what had happened in 1990. Fourthly, the only reason John recanted from obtaining written confirmation from his father and proceeding with the arrangement was that he took his father at his word that he could be trusted not to kick them out of the property given that he "did not think my father was capable of kicking his kids out on the street to service his debt that he originally accumulated, that he put there in the first place" (Black 1/151U-V); (see also Black 1/151G-L; 152E-I; 152M-N; 153R-V; cf Antonios at Black 3/485J-N) 116 In my opinion, it follows from the foregoing that not only did John and Nikolaos rely upon their father's assurances with respect to their continued occupation and use of the southern one-third of the Flinders Street property, but that that reliance was, in the circumstances, patently reasonable. 117 So far as the question of detriment is concerned, it was submitted by the appellants that the primary judge erred ([154], [157]) when he held, in reliance upon the judgment of Priestley JA in Austotel, that it was unnecessary for John to prove detriment in order to make out an entitlement to relief. Whether that is so or not, it is more than apparent that his Honour considered that John and Nikolaos did suffer detriment although on one reading of what his Honour said, he confined that detriment to the loss of the property that John was encouraged to expect. 118 In my opinion, it is unnecessary finally to determine whether or not reliance to the representee's detriment is a requirement to be satisfied before equity will grant relief. In all probability it is, for equity generally only relieves the representee from that detriment. In other words, the relief equity will afford is only that which is necessary to avoid the detriment suffered as a consequence of the representee's reliance. 119 In the present case I am firmly of the opinion that the reliance by John and Nikolaos upon their father's assurances pursuant to which they undertook their father's indebtedness to the National Australia Bank, was clearly to their detriment. However, it was submitted by the appellants that if one balanced the assets that the brothers acquired against the liabilities they undertook, the result was fairly even with the consequence that no detriment was suffered. In other words, it was contended that there was no detriment as the brothers received assets equal in value to the liabilities they incurred. 120 In my opinion that submission overlooks the fact that although the National Australia Bank had security over the Stafford Street property, each of the brothers entered into a personal covenant with the Bank to repay the loan with interest. In so doing, their ability to do so was very much dependant upon the continued profitability of A G Motors which, in turn, depended upon their ability to operate the retail sales part of the business from the southern one-third of the Flinders Street property. Furthermore, if they defaulted, their ability to repay the loan depended upon the value of the assets of the business at the time and, in particular, upon the value of the Stafford Street property, at the time of its acquisition, being (at the very least) maintained. Clearly, once they undertook their father's liability to the Bank, they were considerably at risk. As such, their taking over of the business and the loans in reliance upon the assumption encouraged by Mr Galaxidis that they had an irrevocable licence to use No. 8C Flinders Street, constituted a relevant detriment.

[41]

Given the interest of John and Nikolaos in the Flinders Street property which I have found the appellants are estopped from denying, what is the appropriate relief to which John is entitled with respect thereto and should Nikolaos also be entitled to such relief? 122 It was submitted by the appellants and accepted by the first respondent that upon the basis that the estoppel extended only to an irrevocable licence, the appropriate form of relief was an award of monetary compensation. In my opinion this is clearly so: cf: Morris v Morris [1982] 1NSWLR 61 at 64; Giumelli at 125 [50]. This is the form of relief appropriate to avoid going beyond what is required for conscientious conduct by Mr and Mrs Galaxidis. The question that arises is the quantum of that compensation. 123 The effect of the unconscionable conduct of Mr and Mrs Galaxidis in excluding John and Nikolaos from the southern one-third of the Flinders Street property the subject of the promised licence is that they have been deprived of carrying on the business of A G Motors upon that section of the property and deriving profits therefrom. In these circumstances, it was not really contested that the minimum equity required to avoid the detriment suffered by the unconscionable conduct of Mr and Mrs Galaxidis would be an inquiry into the lost profits. However, it was common ground that there would be obvious and serious practical difficulties in any such process. It would inevitably lead to further acrimonious disputes between the parties as well as a great deal of speculative evidence (much of it of an expert nature). Importantly, it would involve a continuation of this litigation with its attendant costs and expenses to the parties. 124 Accordingly, and most properly, both the appellants and the first respondent accepted that the most appropriate course was for there to be an order for compensation based upon the market value of the southern one-third of the Flinders Street property upon the assumption that it was a subdivided allotment. Of course, whether or not the Flinders Street property is capable of subdivision in accordance with its physical division into Nos. 8A, 8B and 8C Flinders Street, is unknown. What is known is that Mr Ryan valued the whole property as at 19 April 2002 in the sum of $897,000. As that valuation is now two years old, the first respondent submitted that the value of the property should be updated and that each of John and Nikolaos should be awarded (in view of the finding I have made) an amount equivalent to one-ninth of that value. On the other hand, the appellants submitted that compensation should be based upon Mr Ryan's figure of $897,000 and that the 2 years difference between the date of that valuation and the present should be compensated for by the application of an appropriate rate of interest. 125 In order to avoid further disputes between the parties, it would be easy to take Mr Ryan's valuation of $897,000 and apply an appropriate interest rate. However, on reflection, I do not think that such an approach would do justice to the John. It seems to me that if the parties agree, Mr Ryan should be requested to update his valuation of the Flinders Street property to the present time upon the basis that that figure, whatever it is, will form the basis of an appropriate order for compensation. The difficulty with adopting his 2002 value and applying an appropriate interest rate thereto is that the value of the property may well have increased over the last two years at an annual rate greater than any particular interest rate the Court might adopt. The new valuation should take into account (if it has not already done so), in accordance with well-established valuation principles, the potential (if any) for the property to be subdivided into the three allotments represented by Nos. 8A, 8B and 8C. I intend that the Court will adopt the value so determined. Once adopted, the order of the Court would be that John is entitled to payment by his parents of one-ninth of that value. 126 The foregoing assumes that the parties will agree to the further valuation exercise being undertaken by Mr Ryan in order to minimise any further dispute with the inevitable costs that would otherwise be generated. If agreement on Mr Ryan or some other valuer cannot be reached, then the valuation exercise will need to be performed by valuers selected by each of the parties. If that gives rise to a dispute as to value which the parties still cannot resolve between them, the Court should order that that dispute be remitted to the primary judge for determination upon the basis that John is entitled to payment by his parents of one-ninth of the value so determined. I would propose leaving it to his Honour to decide who should pay the costs of the remitter and on what basis. 127 The appellants submit that Nikolaos, not being a plaintiff in the proceedings and having submitted to the orders of the Court with respect to the appeal, should not be entitled to any order for compensation in his favour. 128 In his Third Further Amended Statement of Claim, John sought relief in favour of himself, Nikolaos and Antonios, that relief being based upon an assumed proprietary interest in the whole of the Flinders Street property. It may be that had the primary judge's finding with respect to that interest been upheld the only form of relief which the court could have granted to do justice between the parties would have required the inclusion therein of both Nikolaos and Antonios. However, the relief now proposed is confined to monetary compensation. Promissory estoppel operates in personam. John was the only plaintiff. In these circumstances, Nikolaos, not having claimed relief as a party, is not entitled to have such relief granted to him through his brother as some form of surrogate. Accordingly, I would confine any relief by way of financial compensation to John. 129 Since writing the preceding paragraph I have had the benefit of reading the judgment of Hodgson JA on the question of whether an order should be made in favour of Nikolaos. I acknowledge the points made by his Honour in [6] to [10] of his judgment. However, with respect, none of them meet the objection that Nikolaos was never at any material time and is still not a claimant for relief. Although John purported to claim relief for the benefit of Nikolaos, he did not do so as agent or trustee for his brother. 130 Nor do I consider that an order in favour of Nicholas is mandated by s 63 of the Supreme Court Act, 1970. It is true that Nikolaos is a party to the proceedings, but he has not asked for relief: only John has done so. Furthermore, there is no relevant "controversy" between Nikolaos and his parents, as he is not claiming relief against them based on their unconscionable conduct towards him. Accordingly, no order should be, or is required to be, made in his favour.

[45]

Was John and/or Nikolaos disentitled from claiming any relief by reason of their laches acquiescence and/or delay in commencing the proceedings? 136 In the circumstances, the issue raised by this question is confined to John's conduct. The primary judge rejected this defence for the reasons set out in [177] to [179] of his first judgment. The delay in question was between July 1996 when the brothers were ejected from the Flinders Street property and March 1998 when a caveat was lodged and September 1998 when proceedings were commenced. 137 The relevant principles are conveniently stated in Meagher, Gummow & Lehane's Equity Doctrines and Remedies 4th ed at [36-005] in the following terms (omitting citations): "It [the equitable defence of laches] is a defence which requires that a defendant can successfully resist an equitable (although not a legal) claim made against him if he can demonstrate that the plaintiff, by delaying the institution or prosecution of his case, has either: (a) acquiesced in the defendant's conduct; or (b) caused the defendant to alter his position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb. Mere delay, of itself, is not enough to constitute either laches or acquiescence." 138 The appellants rely upon the evidence of Nikolaos (Black 2/282M-O), which however, must be read in conjunction with what follows at 282O-R. Furthermore, John's conduct needs to be understood against the background of his experience of his father's previous change of mind in 1990 and of the importance of the Greek tradition of a son not questioning his father's decisions. No doubt, he was resigned to the fact that his father had ejected himself and Nikolaos from the Flinders Street property and that there was nothing he could do about that in physical terms. Furthermore, acquiescence denotes a plaintiff's behaviour in refraining from seeking redress once he knows his rights have been violated and to denote his acceptance of the fact that his rights have been violated. In the present case, there is nothing to suggest that John refrained from seeking redress once he knew of his legal rights or, at least, of his right to seek equitable relief. The evidence seems to indicate that he took action as soon as he had obtained legal advice: (Black 2/331F-R). 139 Nor, in my opinion, was there relevantly prejudice to the appellants. As the primary judge points out ([178]), it is clear that the reason Mr Galaxidis ejected his sons from the Flinders Street property was because they justifiably refused to pay rent in relation to the southern one-third upon which they had been conducting the A G Motors business. Furthermore, the equitable relief to which John is entitled, being confined to compensation, will not involve any disturbance of the activities of Mr and Mrs Galaxidis and/or Antonios upon the Flinders Street property such as the continuation of their Compact Car Rental business. In my opinion, like his Honour, I do not consider that the defence of laches, acquiescence and/or delay has been made out.

[47]

Should John's final fallback position be entertained? 141 In [56] above, I referred to John's belated attempt to resurrect his alternative claim, rejected by the primary judge, that Mr and Mrs Galaxidis promised from time to time and over an extended period to give the Flinders Street property to their sons upon the death of the survivor of them. Mr and Mrs Galaxidis took objection to the Court entertaining this argument on a number of grounds, which were the subject of a supplementary written submission dated 23 March 2004 but one of those grounds was that the claim could not succeed on the facts. 142 It is to be noted that this claim was made in [2] of the Third Further Amended Statement of Claim (the Statement of Claim), as a claim in contract and as an alternative to the contractual claim that Mr and Mrs Galaxidis had promised to give their sons the property upon Mr Galaxidis' retirement. It was also advanced in [6] of the Statement of Claim as an alternative claim in estoppel, the allegation being that Mr and Mrs Galaxidis created in John and Nikolaos an expectation that they would have an interest in the Flinders Street property upon the death of the survivor of them. 143 The particulars to [2] and [6] of the Statement of Claim refer to [5], [8] and [15] of John's affidavit sworn 10 September 1998. Paragraph 5 related to the first conversation; [8] to the second conversation and [15] to the third. So far as the first and second conversations are concerned, they only asserted a promise by Mr and Mrs Galaxidis to give the properties to his sons when Mr Galaxidis retired (the first conversation) or when the properties were paid off (the second conversation): so much was found by the primary judge at [151] and no challenge was mounted by John to this finding. Relevantly, neither conversation supported the promise now being considered. 144 Only the third conversation contained a possible promise by Mr Galaxidis that the Flinders Street property would be "yours one day as well" as he was "not going to take it 6 foot under with me". The primary judge found that this conversation contained a promise by Mr Galaxidis to immediately transfer the property to his sons. I have found ([103] above) that no such immediate transfer of a proprietary interest in the whole of the Flinders Street property was made. This was, in part, because Mr Galaxidis wished to avoid the payment of stamp duty and capital gains tax as evidenced by his saying that "it's all going to be yours anyway": see [105] above. 145 However, the context in which Mr Galaxidis made the promises or assurances referred to in the third conversation demonstrated that they did not generate an expectation in John and Nikolaos (that they would receive the Flinders Street property on the death of the survivor of their parents) upon which they relied to their detriment. The only expectation or assurance generated by Mr Galaxidis upon which there was reliance (and which, therefore, was capable of supporting an estoppel) was, as I have found ([105]), the assurance that the sons would be entitled to use and occupy the southern one-third of the property upon taking over the business of A G Motors and their father's debts with the National Australia Bank. Accordingly, in my opinion the alternative basis for relief relied on by John has no foundation in fact and the primary judge was correct in so finding. 146 In any event, it is far too late for John to press this alternative argument. It was not the subject of considered written or oral submissions by the parties and is inconsistent with the thrust of John's evidence in cross-examination that his father promised he and his brothers an entitlement to the Flinders Street property immediately upon his retirement and/or upon them taking over the A G Motors business and the National Australia Bank debt. Accordingly, insofar as John seeks to amend his Notice of Cross Appeal to raise this issue, that leave should be refused. 147 Furthermore, the claim in question is premature. It is true that Mr and Mrs Galaxidis made new wills in 2001 excluding John and Nikolaos from sharing in their estate. However, wills can be changed and, in time, John and/or Nikolaos may once again be the recipients of their parents' testamentary bounty. Also, it may well be unfair to mandate that Mr and Mrs Galaxidis should now re-make their wills, render them in some way irrevocable and/or injunct them from ever dealing with the Stafford Street property during their lifetime. Surely, Mr and Mrs Galaxidis did not intend, and John and Nikolaos did not expect, that the property could never be sold or encumbered prior to their death even if its sale or mortgage was necessitated by, for instance, the parents or either of them falling on hard times. 148 For the foregoing reasons I am of the opinion that John should not be permitted to rely on the alternative basis for relief for which he contends.

[53]

(e) in the event that the parties agree to the valuation being determined by Mr Ryan or some other agreed valuer, then the first and second appellants are to pay to the first respondent one-ninth of the value of the property so determined. 151 The parties should within 14 days bring in short minutes to reflect the directions foreshadowed above. Those short minutes should also reflect the foreshadowed order that the first and second appellants pay the first respondent one-half of the amount referred to in Order 13 made by the primary judge on 20 December 2002, adjusted to account for the period from 19 December 2002 to the date of this Court's orders. Consideration should also be given to whether either or both of the orders reflected in [150] above and in this paragraph should be the subject of a charge on the Flinders Street property. Obviously, the parties should, if at all possible, put in place arrangements that will avoid this added complication to their relationship. 152 So far as the costs of the trial are concerned, subject to any submissions that the parties may wish to make in respect of any special order for costs, the appellants should pay the first respondent's costs of the trial. This is because John has been successful in establishing an estoppel against his parents albeit of a more limited nature than that claimed. The appellants should file any documentary evidence and/or submissions with respect to any special order for costs of the trial within 14 days of today's date and the first respondent should file his reply within a further 7 days. 153 As to the costs of the appeal, as the appellants have only been partially successful, the first respondent should be ordered to pay one-third of the appellants' costs of the appeal but to have a certificate under the Suitor's Fund Act 1951 with respect to those costs if otherwise entitled. However, if the parties wish any different order to be made, any submissions with respect to the costs of the appeal must be included in the submissions relating to the costs of the trial referred to in the preceding paragraph.