MATTER : Sections 42, 43 and/or 45 of the Administration Act 1903

Sections 57 and 92 of the Trustees Act 1962

DELMA KAYE PATEMAN in Her Capacity as Executor and Trustee of the Estate of EDNAH DAW

Contract - Wills and estates - Deed of sale and co-ownership of real property inter vivos - Parties to the Deed were testator and beneficiaries under a Will - Death of party to Deed - Partition - Property Law Act s 126 - Remaining parties to the Deed equal beneficiaries and one an executor - Obligations as executor - Construction of Deed - Extrinsic evidence - Abandonment and termination of Deed - Estoppel by conduct - Estoppel by convention - Equitable damages - Pre-judgment interest - Section 32 of Supreme Court Act

Property Law Act 1969 (WA), s 126

Supreme Court Act 1935 (WA), s 32

Orders given, the precise terms of which to be the subject of further submissions

Bahr v Nicolay [1988] HCA 16; (1988) 164 CLR 604

Brickwood v Young & Anor [1905] HCA 12; (1905) 2 CLR 387

Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457

Carlin v Hamersley Iron Pty Ltd [2003] WASCA 270

Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337

De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56

Digby v General Accident Fire and Life Assurance Corporation Ltd [1943] AC 121

Elton v Cavill (No 2) (1993) 34 NSWLR 289

Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164

Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420

Grove v Fisher & Anor [2002] WASC 247

In re Walder (1903) 3 SR NSW 375

Lysaght v Edwards (1876) 2 Ch D 499

McLauchlan & Anor v Prince & Anor [2001] WASC 43

Midland Brick Co Ltd v CMS Gas Transmission of Australia [2003] WASC 222

Midland Brick Co Pty Ltd v Welsh & Anor [2002] WASC 248

Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273; [2004] WASCA 145

National Trustees Executors & Agency Co of Australasia Ltd v Dwyer [1940] HCA 5; (1940) 63 CLR 1

Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635

Ramage v Waclaw (1988) 12 NSWLR 84

Re Atkinson (dec'd) [1971] VicRp 73; [1971] VR 612

Woodberry v Gilbert (1907) 3 Tas LR 7

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99

Cohen & Co v Ockerby & Co (1917) 24 CLR 298

Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181; (2001) 185 ALR 152

Morris v Barron & Co (1918) AC 1

Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VicRp 74; [1990] VR 834

Summers & Anor v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144

Westpac Banking Corp v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521; [2000] ANZ ConvR 354

1 This is a claim on behalf of a deceased estate for a share of the proceeds of the resale to a third party of what had been, until the deceased sold it to two of her three daughters, the family property. The deceased had lived in the home on this property. The property had been sold to the two daughters under a Deed of Sale and Co-ownership dated 14 August 1992 ("the Deed").

2 Not long after the purchase, one of the two purchasing daughters had sold her share to the other, who thereby became the sole owner of the family property. Some years later that daughter resold the property to a third party. Not long afterwards, the mother died. The three daughters are equal beneficiaries of the mother's estate, of which the reselling sister is also the executor. The action is against the reselling sister by the other two sisters.

3 The share of the proceeds of the resale is claimed under a provision in the Deed for the mother, in certain circumstances, to receive a one-third share of the net proceeds of a "sale" of the property to "any third party".

4 This case raises the following questions about the meaning of that provision in the Deed:

• the admissibility and the effect of extrinsic evidence to assist in the determination of such meaning;

• whether the Deed was intentionally abandoned and replaced by another oral agreement;

• whether by reason of certain events the Deed was terminated and the first defendant discharged from any further obligations under it; and

• whether the plaintiffs and the mother are estopped by certain conduct of theirs from claiming any part of the proceeds of the resale.

5 In addition, there are questions about whether the first defendant is entitled to set off, against the plaintiffs' claim, the amount or value she claims for work she says was carried out on the property during the time she occupied it which improved its value.

6 I will first provide an account of the basic background to these questions, by reference primarily to what is not in contest between the parties. I will then consider the questions I have set out in the order in which I have listed them.

7 Janice Daw Koh, Ronda May Jamieson and Delma Kaye Pateman are the three children of the marriage of the late Courtney James Daw and the late Ednah Daw. Janice and Ronda are the plaintiffs in this case. Delma is the first defendant in her personal capacity and the second defendant in her capacity as the executor and trustee of Ednah's estate. This action is brought by Janice and Ronda as parties interested as beneficiaries under that estate. The action is principally:

• to have Delma as first defendant declared a debtor to the estate as to one-third of the net proceeds of what had been the family home;

• to have Delma as second defendant declared to be holding that one-third for the estate's beneficiaries;

• to have Delma as second defendant account to the beneficiaries as to that one-third; to have Delma as second defendant distribute the estate in accordance with Ednah's will; and

• to have damages against Delma as second defendant for wilful default in failing to call in, account for or distribute the assets of Ednah's estate in accordance with her will or any combination of those things.

8 The action is also for interest under Supreme Court Act 1935 (WA), s 32 and any other relief the Court sees fit to order, and costs.

9 Although no issue was taken with the standing of the plaintiffs in this action, I note that, in part, this is a case principally involving the residual beneficiaries under the Will (other than the first defendant) taking action to vindicate what, as will shortly appear, is said to be a significant claim of the estate against the first defendant, who is also the executor and trustee of the estate. In those circumstances, it is clear to me that the plaintiffs have standing to sue for the estate: see Ramage v Waclaw (1988) 12 NSWLR 84, per Powell J, at 89 - 93, and Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457, per Gaudron, Gummow and Kirby JJ, at [80], referring approvingly to Ramage. This is a view of the matter which has some significance to my conclusions below as to the appropriate orders to make in this case.

10 From now on, I will refer to the "defendants" without differentiation, except where more precise identification is important to the issue being addressed.

11 The family property was 49 Sulman Avenue, Salter Point, ("the Property") and it was acquired by Courtney and Ednah in 1959 (as will become apparent from these reasons, the Property is defined in the Deed as "the Land"). The couple occupied the Property until they separated in 1979, when Courtney continued to occupy it. The couple were divorced in 1985. Courtney died in 1987, when Ednah returned to occupy the Property. At all material times thereafter, until she transferred the Property to Delma and Ronda, Ednah was the registered proprietor of the Property.

12 By some time in 1991 Ednah had reached the conclusion she could no longer manage living alone in the Property, and had become interested in moving into retirement accommodation. She lacked the ready means to make this move. At the same time she had discussions with her three daughters about the possibility of providing, out of the Property, for the means she lacked and for amounts for the daughters. By July 1992 an arrangement had been struck between Ednah, Delma and Ronda and the matter of implementing it was taken to a firm of solicitors, Chalmers & Partners.

13 By a letter dated 31 July 1992 (Ex 18, TB 61 - 64), Chalmers & Partners wrote to Delma setting out their understanding of the facts and enclosing a draft deed to "evidence the proposed transaction" as between Delma, Ednah and Ronda. The letter sets out the firm's understanding, including as to Janice's position. Counsel for the plaintiffs took me to the following passages in the letter (TB 61 - 62):

"1 Your mother is 80 years of age and currently occupies the property alone. Despite her age your mother is capable of understanding the nature of the transaction proposed to be entered into.

2 You and Mrs Jamieson reside in Western Australia.

3 Your other sister, Mrs Daw-Koh, resides in New South Wales.

4 Your mother finds it difficult to remain in occupation of the property and is desirous of acquiring a unit in a Retirement Village. She does not have the means of acquiring the unit other than upon disposal of the property.

5 Your mother wishes to benefit you and your sisters during her lifetime from the proceeds of the sale of the property. She wishes the property to remain in the family. Your sister Mrs Daw-Koh, wishes to reside in New South Wales and therefore does not wish to participate in the acquisition of the property either alone or with you and Mrs Jamieson.

6 You and Mrs Jamieson propose to acquire the property from your mother for the sum of $200,000.00 whereupon you and Mrs Jamieson will hold the property as tenants in common in equal shares with the intention of making application for subdivision of the land into 2 Lots. Upon obtaining subdivisional approval, you will partition your respective interests so that you are the proprietor of Lot 2 (being the Lot adjacent to the river) and your sister Mrs Jamieson will be the proprietor of Lot 1. Simultaneously therewith you will burden Lot 2 with a restrictive covenant not to build any structure so as to restrict the views of Mrs Jamieson or her successors in title.

7 The purchase price will be paid equally by you and your sister in the following manner:

7.1 $100,000 on the execution of the Deed,

7.2 the balance upon completion of the subdivision.

8 Upon receipt of the purchase price, your mother intends to:

8.1 purchase a retirement unit with the initial payment, and

8.2 give the balance to your sister Mrs Daw-Koh."

"You will note that we have not included Mrs Daw-Koh in the Deed or made reference to the acquisition of the retirement unit by your mother. This is because both of those transactions involve a disposal of the purchase price by your mother. Your mother should not be bound by the terms of the Deed to acquire the unit or make the gift to your sister. The purchase price is for her benefit alone and she may dispose of it freely without regard to any party.

The mere fact that you are directed by her to pay the purchase price to the vendor of the retirement unit or to your sister does not alter the position. That is merely a direction by your mother as to the disposal of the purchase price."

15 In the event, after some minor modifications, the Deed of Sale and Co-ownership dated 14 August 1992 was executed by Ednah, Delma and Ronda. I set out in some detail the terms of the Deed, as they provide the context to the question of construction that is at the heart of this case. Definitions in the Deed will become definitions in this judgment where indicated.

16 After reciting the agreement to the sale and purchase, and that "upon completion" the parties would hold "as beneficial tenants in common in the proportions upon the terms and conditions hereinafter appearing", the Deed (Ex 11, TB 34 - 49) provided (cl 2.1) for Ednah as "Vendor" ("the Vendor"), to sell and for Delma and Ronda as "Purchasers" ("the Purchasers" or either of the two named as "Purchaser" singular), to purchase "the Land" for the "Purchase Price". The Deed made no provision as to the use to be made of the Purchase Price by Ednah, nor did it make any mention of Janice.

17 The Property was described as "all that piece of land being part of Lot 257 on Plan 5137, the whole of the land in Certificate of Title Volume 21 Folio 382A" (Sch, Item 3, as referred to by cl 1.6, "the Land"). It is not contested that this was the Property, of which Ednah was registered proprietor at the date of the Deed.

18 The Purchasers were to purchase the Property as tenants in common in "the Proportions" (cl 2.8), which as to each of them was "one undivided half share" (Sch, Item 4, as referred to by cl 1.13) ("the Proportions").

19 The Purchase Price was $200,000 (Sch, Item 5, as referred to by cl 1.14) now defined as ("the Purchase Price"). The sale and purchase of the Property was (by cl 2.3) to be completed and the Purchase Price was to be paid by the Purchasers to the Vendor in the manner provided by Item 6 of the Schedule to the Deed. That Item provided that as to $100,000 the Purchase Price was to be paid within seven days of the "Execution Date" which was 14 August 1992 (Item 2 of the Schedule, as referred to by cl 1.4) ("the Execution Date") and as to the remaining $100,000 of the Purchase Price was to be paid on "the Completion Date" (Sch, Item 6, as referred to by cl 2.3) ("the Completion Date"). I will return to the Completion Date shortly, which appears to have been intended to be the date, not only of the payment of the second instalment of the Purchaser Price (cl 2.3) and the date on which the purchasers were entitled to take exclusive possession of the Property (cl 2.5) but also the date of completion or settlement of the transfer of title from the Vendor to the Purchasers (cl 2.3, opening words).

20 The Deed provided that forthwith on the Execution Date, "or as soon thereafter as is reasonably possible", the Purchasers were to apply to the relevant authority for approval of a subdivision of the Property in accordance with "the Plan" (cl 12.1), which was a document annexed to the Deed (referred to in cl 1.12) ("the Plan"). The Plan was not included with the papers for the trial. The Deed also provided that forthwith "on any diagram or plan of subdivision being signed or initialled" by the relevant officer of the "Land Titles Office" the Purchasers were to effect a "partition" of the Property by which Delma was to transfer to Ronda, "Lot 1" as shown on the Plan. Further, Ronda was to transfer to Delma "Lot 2" as shown on the plan, and Delma was to grant "the Restrictive Covenant" as defined in the Deed for the benefit of Ronda's Lot 1 (cl 12.2).

21 It was agreed before me that Lot 2 was, as indicated in the Chalmers & Partners letter above, the part of the Property adjacent to the Swan River and Lot 1 was the remainder of the Property. The restrictive covenant was to be one, in the "usual" form, "not to build any structure of a height greater than 16.42 metres above the Australian Height Datum" (cl 1.16).

22 The Completion Date was to be as follows (Sch, Item 1, as referred to in cl 1.3):

"Fourteen (14) days after the earlier of the following events:

(i) approval of the subdivision of the Land in accordance with clause 12;

(ii) the sale of the Land to any third party;

(iii) the third anniversary of the Execution Date;

(iv) the transfer of either Purchaser's Proportion to the other Purchaser."

23 I will return to this provision at a number of points later in my judgment. For now, I note that the provision in the Deed clearly contemplates any of the events referred to as (i) to (iv) could occur earlier than, or instead of, any of the others. Thus, the sale of the Property to any third party could have occurred before the third anniversary of the Execution Date. Thus too the transfer of either Purchaser's proportion to the other Purchaser could have occurred before that anniversary, a possibility which the Defence denies (in par 17.2 and par 18.4) the Deed allowed for, but which I consider it clearly does allow for. I should note that such a sale or transfer (to a third party) would necessarily have to precede the completion of the sale and purchase the Deed provided for (see cl 2.3). However, it seems to me that in that case the transfer or sale would be of the equitable interest of the Purchaser or Purchasers that arose on the execution of the Deed by virtue of the equitable doctrine of conversion, which would apply here given that the sale and purchase is not in any way conditional: see Lysaght v Edwards (1876) 2 Ch D 499; and Bradbrook A, MacCallum SV and Moore AP, "Australian Real Property Law" 3rd ed (2002), at [5.59] - [5.63].

24 It will be noted that the effect of the transaction, if completed in accordance with its terms, was that there would be $200,000 at the disposal of Ednah, who would be in a position to use a portion to fund the acquisition of other accommodation and give the balance to Janice. The market value of the Property as at the Execution Date was $425,000 (facts agreed by the parties, par 4). Delma's uncontested evidence on the understanding of Ednah, Ronda and herself of the economic effect of the arrangement proposed was as follows (Examination-in-chief, TS 365, Ex 32, witness statement, par 12(a)):

"At a subsequent meeting in July 1992 between my mother, myself and Ronda my mother put forward this proposal: (a) the home was worth about $400,000; (b) each of us would get $100,000 in money or an interest in Salter Point to that amount; (c) the Salter Point block was to be subdivided so Ronda and I, who would buy Salter Point from my mother, would each have one block; (d) Ronda and I would pay my mother $200,000 for Salter Point; (e) my mother would use $100,000 to buy the TPI unit; the remaining $100,000 would be given by my mother to Janice."

25 Of course Delma and Ronda as Purchasers would, on the face of it, have the exclusive occupation of the Property, and exclusively share in any appreciation in its value. However, the Deed provided for a number of restrictions on the alienability of the parties' respective interests and for the sharing with the vendor of the net proceeds of sale of the Property to third parties. As the focus of the litigation was on the sharing provision in the Deed, I need to set out these provisions in some detail.

26 The Deed provided that (cl 4.5) "prior to the completion of clause 12.2" neither Purchaser was to "sell, transfer, assign, sublet, lease or otherwise dispose of or alienate their share or interest in the Land or any part thereof" without "the prior written consent of the other". There was also a separate provision (cl 6) that, "prior to completion of clause 12.2", neither Purchaser was to "sell, or attempt to sell, their respective interests in the Land to third parties for a period of three years from the Execution Date" without "the prior written consent of the other party". I note that there is a question as to the validity of these restraints on the alienation of the Purchasers' interests: see Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635, per Brennan J (dissenting: no other member of the Court considered this point, which, however, did not affect the determination of the appeal), at 642; Elton v Cavill (No 2) (1993) 34 NSWLR 289; and Bradbrook, McCallum and Moore (supra), at [11.20].

27 After the expiry of three years from the execution date, if "either of the parties" wished "to enforce the trust for sale to which the Property is subject or to dispose of their beneficial interest in the Land", then that party had first to offer the whole of that interest to the other party (cl 7.1). The process under cl 7.1 was to be initiated by the party so desiring giving a notice of sale to the other party offering to sell the beneficial interest to that party (cl 7.1). The Deed defined the party giving the notice of sale as "the Seller" (cl 1.17), and the party receiving the notice as "the Buyer" (cl 1.2). Within one month the buyer was to give a notice to buy to the seller (cl 7.2), which in turn was to trigger a process for agreement on the price and, failing agreement within one month, for a valuation of the beneficial interest to be carried out (cl 8). Following the communication of the valuation to the parties, the seller had seven days within which to give a notice to proceed indicating whether the seller was prepared to proceed with the "sale of the Land" at the price so determined (cl 9), and, if the notice to proceed was given, the buyer had 30 days to pay the amount upon which the seller was to execute a transfer of her beneficial interest (cl 10). If either party failed to comply with these time limits, "the other" was "entitled to enforce the trust for sale without further notice" (cl 11).

28 There were no other provisions in the deed with respect to the "trust for sale to which the Land is subject". However, the Deed said that s 126 of the Property Law Act 1969 (WA) ("the Act") was "expressly excluded from", and did "not apply" to, "this Deed, the Land and the interests of the parties in the Land". That provision of the Act states that "in an action for partition" a party or parties interested individually or collectively to the extent of a one-half share or more may "request" the court to order a sale of the land and a distribution of the proceeds among the parties interested "instead of a division of the land" among them, and the court must so order "unless it sees good reason to the contrary" (s 126(1)).

29 The intention expressed in the Deed would appear to be to exclude any sale of the Property under s 126 of the Act, replacing it with the "trust for sale", whose enforcement was conditioned by the process in relation to the right of acquisition of the seller's co-ownership interest. In relation to the enforcement of a "trust for sale", and without language like that in the deed, there might be greater discretion to refuse a sale other than on the terms that s 126(1) of the Act would allow (see Nullagine Investments, per Brennan J, at 645). However, on the language of the Deed, once the relevant conditions set by the right of acquisition process had been met, it would seem that the extent of any discretion in relation to the enforcement of the trust for sale in this case would have been equivalent to or even less than that under the statute. In any event, there is authority that a term like cl 16.2 of the Deed, "bargaining away the statutory right to apply for an order for partition or sale that is part of an agreement which itself provides for the termination of the tenancy in common", would not be contrary to the policy of the statute (Nullagine Investments, per Brennan J, at 650, a point not reached in the other judgments).

30 However, the Deed also provides that "after the third anniversary of the Execution Date", in certain circumstances and "only" in those circumstances, the seller initiating the process under cl 7.1 could apply to the Supreme Court for "partition of the Land pursuant to s 126 of the Property Law Act 1969" (cl 12.5). The circumstances in which such "partition" might have been applied for were that, after the third anniversary of the Execution Date, the approval of the relevant authority for a subdivision of the Property had not been obtained, a notice of sale had been given and either the buyer had not given a notice to buy in accordance with the requirement for one (in cl 7.2), or the buyer had informed the seller in writing that the buyer did not wish to purchase the seller's beneficial interest in the Property.

31 The effect of cl 12.5 is not altogether clear. Situated as it is in the provision in the Deed (cl 12) concerned with sub-division of the Property, which is expressed to culminate in the parties effecting a "partition" as cl 12.2 provided, it might be read to provide only for physical partition of the Property under s 126 of the Act. The fact that consent of the planning authorities to such partition must be obtained does not prevent an order being made if neither party has asked for a sale (De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56). However, as one of the conditions to the operation of cl 12.5 was that no approval of the planning authorities had been obtained after three years, it might be concluded that the clause allowed for the seller to seek either physical partition or a sale instead. On either reading, cl 16.2 is qualified by cl 12.5.

32 It is in this context that the provision, concerning sharing of proceeds of the sale of the Property to a third party, appears. As I have indicated, it is of central significance to this litigation. That provision is cl 13 of the Deed, which reads in full as follows:

It is agreed between the parties that in the event the Land is sold to any third party then the proceeds of sale will be applied in the following manner and priority:

13.1 Payment of Agent's commission and auction expenses (if any) due on the sale;

13.2 Payment of legal costs of the sale;

13.3 Payment to the Vendor of one third (1/3) of the balance of the proceeds of sale;

13.4 Payment of the balance to the Purchasers in the Proportions."

33 The constructional question posed in this litigation might then be put in terms of whether cl 13 applies only to a sale of the sort expressly provided for under the Deed, which would confine its application to a sale in enforcement of the "trust for sale" and (possibly) a sale in a partition action by a seller under cl 12.5. Indeed, it is possible that the application of cl 13 is even more narrowly confined than the narrowest of those positions, as I will indicate. I return to this question when I consider the parties' submissions below.

34 It only remains to indicate what events, material to this litigation, occurred, or did not occur, on or subsequent to the Execution Date under the Deed. The first instalment of the Purchase Price of $100,000 was not paid by Delma and Ronda to Ednah (Agreed Facts, par 9). However, prior to entering into the sale and purchase, Delma and Ronda, at the oral request of Ednah, contributed in equal amounts to the purchase of $87,500 ($43,750 each) for Unit 57, TPI Memorial Estate, Henley Street in Como ("the TPI Unit"). This was a property Ednah wished to own and occupy, and she did so (Agreed Facts, par 11). It was agreed by the parties that in about September 1996 she sold the TPI unit and at or about the same time the proceeds were used to purchase another unit, known as the Gracewood unit.

35 The sale and purchase of the Property did not complete in accordance with the terms of the Deed. Despite the fact (as will shortly appear) that the Completion Date had not then arrived on or about 22 September 1992 the Property was transferred to Delma and Ronda as tenants in common in equal shares, and on or about that date they became the registered proprietors of the Property (Agreed Facts, par 8).

36 On or about 13 October 1992 the relevant authority granted conditional approval for the subdivision of the Property in the proportions set out in the plan. One of the conditions for the approval required the demolition of the family home (Agreed Facts, par 10). However, on the evidence, this demolition did not occur, and the Property was not partitioned. However, it appears to me that it is arguable the completion date under the Deed was 14 days after the subdivisional approval, even if it was conditional (Sch, Item 6(1) above, read with cl 12.1), putting that date on or about 27 October 1992.

37 By a contract of sale by offer and acceptance dated 15 January 1993 Ronda sold her interest in the Property to Delma for $100,000 (Agreed Facts, par 15) and on or about 8 March 1993 her interest was transferred to Delma. It would appear that, if the completion date in the terms of the Deed had not come earlier, it came 14 days after that transfer, putting the completion date on or about 22 March 1993.

38 On 23 June 1993 Delma began the payment to Janice of the sum of $100,000 by two instalments, one of $60,000 on 23 June 1993, and the other of $40,000 on 16 August 1993 (Agreed Facts, par 16).

39 In or about late 1997 Delma sold the Property to a Lyndon John Lewis for $1,168,000, and on or about 12 January 1998 Mr Lewis became the registered proprietor of the Property (Agreed Facts, par 18). No amount corresponding to the one-third of the balance of the proceeds of this sale was ever paid to Ednah during her lifetime, or, after her death. Nor has any amount corresponding to the one-third balance of the sale proceeds been brought into account, called in or paid to Ednah's estate or been distributed to Janice or Ronda (Agreed Facts par 21, par 24 and par 25).

40 It appears on Ronda's uncontested evidence that she never occupied the Property or any part of it; however, Delma occupied it, living in the Property (Ronda's examination-in-chief TS 255, from her witness statement Ex 59, par 59). Over the period from the Execution Date to 12 January 1998, improvements and renovations were carried out which by the latter date had increased the market value of the Property by $150,000, to the figure of $925,000 (Agreed Facts, par 18 and par 19). The costs of making those renovations and improvements were a matter of some controversy before me, and I return to those costs below.

41 On 20 August 1998 Ednah died. By cl 3 of her last Will, made 4 January 1993 (Ex 13), she appointed Delma executor and trustee of the estate, and by cl 5(3) of the Will provided that the remainder of her estate, after the payment of specific bequests, funeral expenses and just debts, was to be divided equally among Janice, Ronda and Delma.

Whether cl 13 of the Deed required the sharing of the proceeds of the sale with Ednah's estate

42 The principal issue in this trial was the construction of the Deed, and the bulk of the parties' written submissions at the end of it were directed to their competing constructions.

43 For the purposes of addressing the possibility that there was ambiguity in the meaning of cl 13, the plaintiffs led considerable evidence at the trial about what the framework of background facts to the Deed was, and how that framework was understood by the parties to the Deed, namely Ednah, Ronda and Delma. The received position as to the admissibility of such evidence is usefully reviewed for my purposes in the judgment of McLure J in Carlin v Hamersley Iron Pty Ltd [2003] WASCA 270, at [63], with whose statement of the relevant principle the other members of the Court, Parker and Miller JJ, appear to be in agreement:

"Extrinsic evidence is admissible to assist in the interpretation of a contract if its language is ambiguous and the evidence is of objective background facts. The classic statement of the law is that of Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 352:

'The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. ... Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, ... if the facts are notorious knowledge of them will be presumed'."

44 I note further that the evidence is not admissible so far as it consists of "statements and actions of the parties which are reflective of their actual intentions and expectations" (Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337, per Mason J at 352), the reason for which has been explained as follows (at 352):

"The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract."

45 In the interests of an efficient disposition of the issues in the trial, I followed the course of provisionally admitting the evidence in question pending resolution of the issue of whether or not the meaning of cl 13 was indeed clear or unambiguous and the evidence thus "properly admissible": see Midland Brick Co Ltd v CMS Gas Transmission of Australia [2003] WASC 222, Hasluck J, at [86].

46 Thus, it is necessary for me first to determine, without the aid of any other evidence than the terms of the Deed, whether its meaning was unambiguous and, if so, what that meaning was. Only if I determine that there was an ambiguity would I be justified in considering whether there was other evidence on which I could draw. I consider then the parties' arguments with respect to the construction of the Deed, on its terms alone.

47 The plaintiffs contend that the meaning of cl 13 of the Deed is clear. It applied to any sale to a third party of the Property as a whole, where that sale was allowed for by its provisions and the interests it created, and subject to the valid provisions of the Deed.

48 The interests the Deed created were tenancies in common. Those interests were created as equitable ones at the entry into the Deed by reason of the equitable doctrine of conversion, as I have previously indicated. Tenants in common cannot deal with the entirety of the fee simple (as opposed to their undivided interests as tenants in common) except in certain ways, absent another (valid) agreement between them. This is described by Brennan J in Nullagine Investments (at 644 - 645, footnotes omitted) as follows, a statement of general principle that, notwithstanding its appearance in a dissenting judgment, is not at odds with the majority opinion, and reflects the received view of the law (Bradbrook, McCallum & Moore (supra), at [11.17], [11.18]):

"The shares of tenants in common are not carved out of, or engrafted onto, some notional tenure of an estate in fee simple in the land amenable to sale by, or on the application of, one tenant. Nor are tenants in common equitable owners of land capable of compelling a sale of the legal title by a bare legal owner. The rights of ownership are exhausted by the shares of two tenants in common, each seised of and holding on his own behalf an estate in fee simple in a one half share in a parcel of land. If tenants in common concur in a sale of a parcel of land to a third party, each must convey his own share to the purchaser who takes a single estate in fee simple in the whole of the land. Or one tenant in common may take a conveyance of the shares of the other co-tenants and acquire sole ownership of the land. But, if tenants in common do not concur in one or other of these courses, the only way in which one of them can secure a sale of the land is by applying for an order for sale under statute - in Western Australia under ... s 126(1) [of the Property Law Act]."

49 However, in this case, as I have indicated, there appears to be a valid agreement (the "trust for sale") that is meant to operate in place of s 126(1) of the Act, except so far as cl 12.5 provides. So the array of possible sales for which the Deed allows comprises those listed by Brennan J, subject to that modification.

50 The plaintiffs say this meant that cl 13 applied to Delmah's sale some years after her acquisition of Ronda's interest. Thus, Ednah's estate was entitled to a one-third share of the net proceeds, calculated as I have indicated. See cl 1.20, which provides that "where the context so admits" the expressions "the Vendor" includes "the personal representatives, estates and successors in title" of the Vendor. The selling Purchaser (Delma) was entitled to the balance, as to her original proportion in that right, and as to the remaining proportion as Ronda's "successor in title". See cl 1.20, which provides that "where the context so admits" the expression "Purchasers" includes "the personal representatives, estates and successors in title" of the "Purchasers".

51 The defendants contend that the meaning of cl 13 is indeed clear. However, that meaning is not the one contended for by the plaintiffs. Rather, it is said, cl 13 applied only when the Property had been sold to some one other than Ednah, Ronda or Delma, but then only as the Deed specifically authorised. The only such authorisation was when, after three years, the sale by the Vendor to the Purchasers had not been completed, the Property had not been sub-divided, and, either the trust for sale had been enforced under cl 11 after one Purchaser had not sold her interest to the other under the process in cl 7 - cl 10, or the Seller had, in exercise of her right under cl 12.5, obtained an order for sale under s 126(1) of the Act (assuming cl 12.5 so qualified cl 16.2). Those were the only cases of a sale "event" for which the Deed provided specific authorisation, and to which then cl 13 could have applied. Those sales events had to precede completion, as after completion the parties were discharged from further performance, including any obligations otherwise arising under cl 13.

52 There are, it seems to me, some insuperable obstacles in the path of acceptance of the defendants' construction, in this or the modified forms I will reach. Those obstacles give reason to prefer the plaintiffs' construction.

53 The first obstacle is that the Deed clearly contemplated that a sale of the Property to a third party could precede the third anniversary of the Execution Date, and thus any enlivening of the right to enforce the trust for sale under cl 11, or of the right to apply for partition under cl 12.5 (see Item 1(ii), Sch). It might be suggested that this was a recognition by the Deed of the possibility of a sale of the equitable ownership of the Property, which the Purchasers acting together could make in their capacities as holders of the equitable interests in the Property that arose by virtue of the equitable doctrine of conversion.

54 The defendants sought to avoid this by arguing (as I understand it) that the sale referred to (and any other made possible by the nature of the interests created by the Deed) was one which the Deed allowed for but did not specifically authorise. Sales it specifically authorised were ones forming part of its "objects", of which the principal one was a "sale by subdivision" to the Purchasers. Subdivision would follow from the approval of the subdivision as a result of the process under cl 12 that would permit dealings with Lot 1 and Lot 2. The Vendor would then transfer her interest in the Property to the Purchasers, who would then make the transfers between them that would work the partition referred to in cl 12.2. If that "sale by subdivision" did not occur within three years, then a subordinate object was the facilitation of the transfer of one party's beneficial interest in the Property to the other. A further subordinate object, where no such transfer took place, was the facilitation of a sale of the Property under either cl 11 or cl 12.5. Those facilitation provisions could only operate so long as the Purchasers and the Vendor had beneficial interests in the Property, given the language of cl 7.1, which refers to the seller offering its "beneficial interest" to the buyer. Both of the sale provisions in the Deed, in cl 11 and cl 12.5, depended upon the application of cl 7.1. The Purchasers could only have had a beneficial interest before completion, as on completion the Purchasers' beneficial interests in the land, arising by virtue of the equitable doctrine of conversion, 'merged' with the legal title which they received then from the Vendor, together with her beneficial interest.

55 The defendants' argument is that completion would not discharge the obligations in cl 12 to proceed to a subdivision of the Property. Those obligations in the facts of this case were discharged when Ronda transferred her interest in the Property to Delma, a position with which, as I will indicate, I agree. But the argument, as I understand it, is that even before that event, given that Ednah had transferred the Property to the two sisters, cl 13 could not operate as no sale "event" could subsequently occur.

56 However, it seems to me that, to the extent the argument depends on the view that the "beneficial interest" referred to in cl 7.1 could only be that arising from the equitable doctrine of conversion, the argument must fail. After completion by transfer of the Vendor's legal interest, the Purchasers would hold as tenants in common in equity, whether or not they took legal title as joint tenants (see the Deed, Recital B and cl 2.8, and Bradbrook, McCallum and Moore (supra), at [10.16], [10.17], [10.19] and [10.26]). The words in cl 7.1 are capable of sensible application to such a case. This is particularly so as the latest completion could have occurred was 14 days after the third anniversary of the Execution Date (Sch, Item 1), which was well before any right to enforce the trust for sale under cl 11 could arise. The defendants' argument, as was indicated in the written closing submissions, thus required a gloss on Sch, Item 1 of the Deed to retard completion until the process initiated by a notice to sell before the expiry of the 14 day period had had a chance to run its course. This gloss seems to me to be a substantial strain on the language of the Sch, Item 1 of the Deed.

57 The defendants' argument might, however, be put in modified terms. They would be that cl 13 only applied to sales that terminated the co-ownership of the sisters to which the Deed gave rise. Such sales would be those under cl 11 or cl 12.5, following the failure after three years to complete the subdivision process in cl 12.2. This modified argument is supported by the context in which cl 13 appears, immediately after cl 11 and cl 12. A subdivision (including a rather unlikely subdivision that came about as a result of the partition action provided for by cl 12.5) would have eliminated "the Land", and thus the possible application of cl 13. The alternative to a subdivision envisaged by the Deed was the termination of the co-ownership of the sisters, either by one selling her beneficial interest to the other under the process in cl 7 - cl 10, or by a sale of the Property. A sale of the Property was provided for under the Deed, either as a result of enforcement of the trust for sale under cl 11, or as a result of the partition action provided for by cl 12.5 (if it did permit such a sale).

58 However, the difficulty with this argument is again the Deed's recognition of the possibility of "the sale of the Land to any third party" other than as a result of cl 11 or cl 12.5 (see Sch, Item 1(ii) of the Deed). It is difficult to see why a sale captured by language very close to that used in cl 13 should not be seen to engage that clause. I have already dealt with the difficulty with the defendants' attempt to do so.

59 However, there is a further constructional argument the defendants appear to make. It is that the terms "Vendor" and "Purchasers" in cl 13 must be read to refer to the parties themselves, or at least to them and their personal representatives, so long as they held the interests in the Property as provided for by the Deed. That is, cl 1.20 would not apply to cl 13, at least to the extent of providing for successors in title. If successors in title for the Purchasers were covered, as the plaintiffs' case called for, then, it is said, the Vendor's successor in title should likewise be seen as covered. The Vendor's successor in title would be the Purchasers and, in this case, as one Purchaser had sold her interest to the other, the remaining Purchaser. On the defendants' submission, that would be absurd, as cl 13 appeared to envisage sharing by all three parties. It is said this construction is confirmed by the use of "any third party", which must refer to some one other than those three: Digby v General Accident Fire and Life Assurance Corporation Ltd [1943] AC 121, per Lord Simon LC, at 127.

60 The construction contended for would mean that on completion, when the Vendor had transferred the Property to the Purchasers as equitable tenants in common, cl 13 would cease to have any application. Similarly, it would seem, if before completion one Purchaser had transferred her interest to another person, whether the other Purchaser or a third party, then cl 13 would likewise cease to have any application.

61 The difficulty with this construction, it seems to me, is that it does not allow for the sale which, as the defendants' earlier argument indicated, the Deed expressly contemplated. That was the sale pursuant to the "trust for sale to which the Land is subject" (cl 7.1). As I have explained this necessarily would have taken place after completion. This would indicate to me that in cl 13 "Vendor" was not intended to include the Purchasers themselves following the transfer of the Vendor's title on completion, and in such a case the application of cl 1.20 to the term "Vendor" was displaced so far as that term concerned the Vendor's "successors in title" (as opposed to its "personal representatives"). However, the same logic would not apply to a transfer of one Purchaser's Proportion (which in light of cl 2.8 appears to me to be equivalent to the "whole of the beneficial interest of the Seller" referred to in cl 7.1) to another, a transfer which was not entailed by or necessarily prior to completion, and which could sensibly be seen to carry with it the right in cl 13.4 to "payment of the balance ... in the Proportions".

62 There is a difficulty, however, in applying cl 13 to cases where one or other, or both, of the Purchasers had transferred their proportions to different third parties, as cl 4.5 and cl 6 allow, prior to the expiry of three years after the Execution Date, and where those third parties had sold their respective interests to the same person who was not Ednah, Ronda or Delma. It seems to me that a transfer by the Purchasers of their respective interests to the same third party would have been a sale caught by cl 13, as I have explained, for which the Purchasers as sellers would have fallen under the obligation to account in cl 13. In such a case, cl 13 might have been incapable of application, at least as to the third party or third parties concerned (see Bradbrook, MacCallum and Moore, (supra) at [4.70] - [4.72], and Bahr v Nicolay [1988] HCA 16; (1988) 164 CLR 604). However, this does not seem to me to be a reason to construe cl 13 in the more limited way the defendants propose, but rather a limitation on the effectiveness of the clause.

63 On this analysis I conclude that the meaning of cl 13 is clear, and is such that the sale by the defendants in this case was caught by it. This would mean that there would be no cause to consider the evidence led by the plaintiffs' supplementary to the terms of the Deed. I note that arriving at this position has been a matter of some complexity and not a little difficulty. However, this does not prevent the meaning of the cl 13 being clear in the relevant respect. I also note that the defendants did not suggest that there was any question of latent ambiguity in this case, which would allow for reception of admissible extrinsic evidence to show that what might otherwise appear to be a clear meaning was in fact one requiring clarification (see Seddon NC and Ellinghaus MP, "Cheshire and Fifoot's Law of Contract" 8th Australian ed (2002), [10.12]). The only parties seeking to adduce extrinsic evidence in this case are the plaintiffs.

64 Even if I had been disposed to admit extrinsic evidence in this case, I do not consider I would have arrived at a different result.

65 I begin by noting that it is extrinsic evidence, of objective background, but not subjective intention, that is admissible to clarify the meaning of cl 13. The objective background includes, however, both "facts notorious or known to both parties, to which [the contract's] terms inevitably allude", and "purposes and assumptions of fact or meaning in which the parties have actually concurred in the course of negotiation" (Seddon & Ellinghaus, [10.13]; and Codelfa, per Mason J, at 352 and 354).

66 The plaintiffs rely heavily on what they say is that form of objective background fact represented by Ednah's wish that the Property stay in the family. I have previously referred to this, as it was described in the letter from Chalmers & Partners to Delma dated 31 July 1992 (Ex 18, at TB 61), (supra). This letter also enclosed a draft of what became the Deed. That wish of Ednah's was confirmed by Delma in her evidence (TS 397, cross-examination). It is the uncontested evidence of Ronda she also received a copy of this letter with the draft deed (examination-in-chief, TS 250, following Ex 29, witness statement, par 42). This wish is also referred to in Ronda's evidence as to what Ednah said were her wishes at a family conference attended by all three at the end of June or the beginning of July 1992. (See her examination-in-chief, TS 246, following her witness statement, Ex 29, par 22.1.)

67 The plaintiffs say this wish of Ednah's indicates why it is not unreasonable to read cl 13 as broadly as the plaintiffs suggest. That reading has cl 13 providing a disincentive to selling the Property outside the family which the defendants' reading would weaken. That reading would, the plaintiffs say, have made it easier for a purchaser to have brought any family interest in the Property to an end. In the case of a sale of the Property to a third party after a transfer between Purchasers, that reading would remove or weaken the disincentive represented by the obligation to share the proceeds of the sale with Ednah that would have applied had the two agreed to sell the Property to a third party by transferring their interests to that person, or had there been a transfer under cl 11 or cl 12.5. The only way the Deed envisaged the Property being freed of cl 13 was the completion of the subdivision process in cl 12.2 (or, on my view of this argument, any other subdivision).

68 The plaintiffs also say the matter of the possibility that one of the Purchasers would have wished to realise on the value of their interest in the family Property subsequently should be considered against another background fact, to which I have also previously referred, that Ednah wished all three of her daughters to share in the Property. This wish is referred to in the letter from Chalmers & Partners (Ex 18) from which I have previously quoted. It was as I have previously indicated the uncontested evidence of Delma that "each of us would get $100,000 in money or an interest in Salter Point to that amount". A sale to a third party, by joint agreement of the Purchasers as co-owners, or as a result of a sale under cl 11 or cl 12.5, would have attracted the obligation to share the proceeds with Ednah as provided for by cl 13. If (in the first case) the sale had occurred soon after the Deed's early completion, and if the value of the Property had been in the order of $400,000, this would have left Ronda and Delma well short of realising the $100,000 Janice would have realised through Ednah. There was thus a disincentive to any such sale, as the plaintiffs contend. However, realisation of the value of the Property capable of producing the equality between the sisters Ednah wished for could have been produced in the ways the Deed allowed for, by sales following the completion of the cl 12.2 process. At least this equality would follow assuming no appreciation in the value of the Property, or any appreciation's equivalence in investment return available to Janice over the time she had her $100,000 before the sale, and depending on the purchase price paid by the purchaser.

69 The two wishes of Ednah's appear to me to be, not only background facts known to all parties, but also purposes for the Deed in which all parties concurred in the course of negotiation. The evidence tending to establish those background facts and purposes to which I have referred would have been admissible had the meaning of cl 13 been unclear. After considering this evidence I am of the view that those facts offer some support for the meaning of cl 13 contended for by the plaintiffs. However, as I have indicated, that meaning can be arrived at without resort to such extrinsic evidence.

70 My conclusion as to the clear meaning of the Deed also means that I do not need to consider a further argument of the plaintiffs in support of their position that cl 13 covered Delma's resale. This argument was based on estoppel, by convention or by conduct (or representation). However, I should say something more about that argument, as an estoppel of a different kind is argued for by the defendants; an argument to which I will return.

71 It was submitted by the plaintiffs that the estoppel by convention rested on a shared assumption by the parties, Ronda, Delma and Ednah that, on the transfer of Ronda's interest to Delma, the latter would become "the Purchasers" for the purposes of the Deed, including the obligation to pay the balance of the Purchase Price and becoming the sole owner of the Property. This shared assumption was shown by the conduct of the parties in relation to the arrangements for the transfer of Ronda's interest to Delma. Those arrangements included the payment of $100,000 to Janice by way of discharge of the obligation to pay Ednah the second instalment of the Purchase Price, as a result of which Delma would become sole owner of the Property.

72 It was submitted by the plaintiffs that the estoppel by conduct (or representation) rested on the conduct of Delma in paying the second instalment of the Purchase Price and becoming sole owner of the Property and was relied upon by Ednah in not taking any action to rescind the Deed. Such action might have been taken on the basis that there were no "Purchasers" who were obliged to perform. While there was no reference to reliance by Ronda, I presume reliance by her would be represented by her agreement to transfer.

73 The requirements of estoppel by convention and estoppel by representation differ (see Seddon & Ellinghaus (supra) at [2.5]; "Chitty on Contracts" 29th ed (2004), at 3-107 - 3-110). However, they share a common requirement that there be a clear understanding which is the basis of the estoppel and which is induced by the conduct of the party sought to be estopped (see the requirement for a "clear and unequivocal" representation for estoppel by representation, and the requirement for an assumption as to the meaning of the contract for estoppel by convention, in Chitty, (supra) at 3-107, 3-108). For the reasons I give below when I consider the submissions of the defendants as to an estoppel sought to be raised against the plaintiffs, or at least as against Ednah, I consider it has not been shown that the parties proceeded, in the matter of the transfer of Ronda's interest to Delma, or subsequently, on the basis that the Deed ceased to have any application. That, however, is not to say that the parties shared, or that one induced in the others any belief as to, any particular construction or application of the Deed in relation to the circumstances created by the transfer or payment to Janice. There was no evidence of any such shared belief or any such inducing conduct. This was other than the belief that Delma had indeed become the sole owner of the Property and that, at the latest by the payment to Janice, there was no longer any obligation in relation to the second instalment of the Purchase Price.

74 I now proceed to consider the alternative bases upon which the first defendants contend there is no obligation to share the proceeds of Delma's sale. Those bases lie in the way the defendants say the parties behaved in relation to the Deed. That behaviour shows, the defendants say, that the Deed was simply abandoned, or it was abandoned and replaced by an arrangement which did not have any part corresponding to cl 13; or that the Deed was frustrated or further performance became impossible, and Delma was discharged from further performance; or that the plaintiffs and Ednah, or at least Ednah, are or is estopped by their/her conduct from relying on cl 13.

Abandonment of the Deed, and its replacement

75 The defendants contend that in or about January 1993 the parties to the Deed, namely Ednah, Ronda and Delma, orally agreed that the Deed would be abandoned and instead the following provisions would be made. Ronda would sell her interest in the Property to Delma for $100,000, a sale which did indeed occur, as I have indicated. Ednah would retain ownership of the TPI Unit, which as I have indicated did indeed occur, until September 1996 and the replacement of the TPI Unit by the Gracewood Unit. An amount equal to the unpaid balance of the Purchase Price ($100,000) would be paid by Delma alone to Janice. Payment of $100,000, in two instalments, was in fact made by Delma to Janice later in 1993, as I have indicated.

76 The oral agreement is not said to have any other terms than those specified. In particular, there was no continuation in any form of cl 13 of the Deed. Therefore, there was no obligation on Delma to share any of the proceeds of the sale of the Property to Mr Lewis with Ednah's estate.

77 Alternatively, the defendants say that in the respects indicated the parties behaved so at variance with the Deed as to compel the inference that they had abandoned the Deed, or at least to permit Delma to draw that inference. For this purpose, I was particularly referred to the transfer of Ronda's interest to Delma prior to the expiry of three years from the Deed's Execution Date which it was contended discharged the Purchasers from the obligation to pursue the primary purpose of the Deed, the subdivision of the Property, as well as the subordinate objectives, either to have one Purchaser buy the other's interest, or to have the Property sold.

78 It has been said that a contract in writing, whether or not required to be in writing, may be abandoned or terminated by an oral agreement between the parties: Seddon and Ellinghaus (supra) at [22.5]. However, it is not clear that a contract to abandon or discharge is required: see Seddon and Ellinghaus at [22.9]. In any event, it is clear that an abandonment or rescission of a contract may be implied where "the parties have effected such an alteration of its terms as to substitute a new contract in its place": Chitty, (supra), at 22-028. As that passage explains, abandonment or rescission is to be distinguished from a "variation which merely qualifies the existing rights and obligations". In determining which is the correct characterisation, one looks to the intentions of the parties "to be gathered from an examination of the terms of the subsequent agreement and from all the surrounding circumstances". The passage in Chitty (22-028) goes on (footnotes omitted):

"Rescission will be presumed when the parties enter into a new agreement which is entirely inconsistent with the old, or, if not entirely inconsistent with it, inconsistent with it to an extent that goes to the very root of it. The change must be fundamental and 'the question is whether the common intention of the parties was to "abrogate", "rescind", "supersede" or "extinguish" the old contract by a "substitution" of a "completely new" or "self-subsisting" agreement'."

79 However, while the inference of an intention to replace the former agreement with a new one will be more readily drawn where "the new terms are so far inconsistent with the original contract as to destroy its substance", this will not invariably be drawn in such circumstances (Seddon and Ellinghaus, (supra) at [22.3]).

80 Abandonment or termination will also be made out when a party can show that the other parties so conducted themselves as to entitle her to assume, and she did assume, that the contract was abandoned or terminated sub silentio (Chitty (supra) at 22-027)).

81 In this case, I have concluded that no abandonment or termination of the Deed has been made out. In my view, while there may have been a variation in the obligations of the parties under the Deed, particularly concerning Ronda's obligation to pay the balance of the Purchase Price, the parties had not effected such an alteration of its terms as to show an intention to substitute a new contract in its place, or to entitle Delma to assume the Deed was abandoned.

82 This conclusion derives from my earlier conclusion that the Deed did indeed contemplate a transfer between Purchasers prior to the expiry of three years from the Execution Date. As I explain below, in relation to the defendants' submissions as to frustration of the Deed, I agree that on such a transfer the obligations of the Purchasers as to the subdivision would cease, as would most of their remaining obligations. However, in my view, this does not indicate that the parties meant, or that Delma could reasonably assume that, the Deed was abandoned or terminated.

83 However, in addition to the transfer, there is evidence, from Delma of a conversation she said occurred with Ednah shortly before Delma agreed to acquire Ronda's interest in the Property. I provisionally admitted this evidence as an admission against interest by Ednah, reserving a final ruling on its admissibility. The evidence in question is as follows (her examination-in-chief, TS 366, following her witness statement, Ex 32, par 23), as follows:

"In January 1993 my mother spoke to me saying that she had had second thoughts about the subdivision. My mother told me that Ronda was prepared to sell her share for $100,000 and that if I agreed I would have to also pay my mother $100,000. I said to my mother something to the effect that I did not have $200,000 and that the home was not liveable as it needed a lot of repairs. My mother said something to the effect, 'It will be your home to do what you want, but don't demolish it'.

I told my mother that I would have to sell my home in order to pay the $200,000. My mother said to the effect that that would be fine, 'Pay Ronda her money,' and when I had the rest it was to be paid to Janice. Ronda and I signed a contract for sale of land by offer and acceptance dated 15 January 1993. I paid Ronda $100,000 for her share in the Salter Point property, document 7."

84 It is apparent that this conversation refers to a previous exchange between Ednah and Ronda in which the possibility of a transfer of Ronda's interest to Delma had been identified, and amounts for a payment for such a transfer, and a further payment for the benefit of Janice, had been settled upon between the Ednah and Ronda.

85 However, Ronda's evidence is at variance with such an order of exchanges. Ronda's evidence is of a meeting at the TPI Unit, and was, from her witness statement (her examination-in-chief, TS 254 - 255, following her witness statement, Ex 29, par 48 and par 49) as follows:

"During the second week of January, although I do not recall the exact date, I attended a meeting at the TPI unit with mum and Del. Mum had been crying. Mum and I spoke with Del being present throughout, but passing no comment. In response to my asking mum why she had been crying, mum said words to the effect that Del was unhappy about not having the whole property. Del had told mum that she and Warren would live in the house on the property. Mum then asked was there anything she could do to have me surrender my interest in the property in favour of Del and Warren, to which I answered, 'You only have to ask.' In response to mum saying words to the effect, 'Well, I am asking,' I said to mum words to the effect that Del could have the whole property if she paid me the same amount already paid to Jan, being $100,000.

I was concerned about Jan in all this, especially as she was the person in greatest need."

86 Delma's evidence was, however, that she was not present at any such meeting; and I note that the reference to $100,000 as an amount "already paid to Jan" would need to be understood as already committed to her (which the reference to Janice's "need" would support), as no such amount on the other evidence of all of the parties, including Janice herself, had been paid.

87 I note there is nothing in Ronda's evidence of language being used at the meeting as to the expenditure on the house on the Property or its being saved from demolition, except by implication from the reference to Delma and her husband Warren living in the house. It will also be evident Ronda's evidence includes that there had been a previous exchange between Delma and Ednah as a result of which Ednah was exploring the possibility of Ronda transferring her interest to Delma.

88 I was invited by the plaintiffs to find that the two accounts of the background to the transfer from Ronda to Delma could not stand together and to choose one over the other on the basis that the protection of the house from demolition, had it been important to Ednah, would have been mentioned in the conversation of which Ronda gave evidence about. Therefore, either there was no reference to the matter in any conversation between Delma and Ednah as Delma alleged, or there was a reference to it, about which Ronda had not testified, at the meeting between Ednah and Ronda, at which Delma denied being present. I was invited by the plaintiffs, both to conclude that the former was more plausible, in view of the unlikelihood of Ednah changing her mind on subdivision so soon after the period leading up to entry into the Deed, and more generally to prefer Ronda's evidence over Delma's.

89 I consider that it is not possible for at least some of the detail in Delma's evidence as to her conversation with her mother to stand with at least some of the detail in Ronda's evidence. It seems to me to be more likely than not that a meeting did indeed occur at the TPI Unit as Ronda testified, whether or not Delma was present. I note that, in any event, Ronda's evidence was that, while Delma was present, she took no part in the exchange between Ronda and Ednah. It is in my view likely that, that exchange had identified the possibility of a transfer of Ronda's interest to Delma and Delma's occupation of the house on the Property, based on an earlier exchange between Delma and Ednah. In my view, it is also likely that an earlier exchange between those two women had taken place, whether shortly before the meeting on which Ronda gave her evidence, or some time before it. That exchange had occurred at a meeting that went into the possibility she would have to make expenditures on the house to make it "livable" and included Ednah's response with her further request of Delma. My reasons for making such finding are these.

90 There was evidence that Ronda had written to Delma, by an undated letter (Ex 16), but written it would seem after the conditional approval for a subdivision had been obtained, indicating there was disagreement between the sisters with respect both to the terms of the restrictive covenant and to the bearing of the cost of demolition of the house. Delma's evidence with respect to this letter is as follows (her witness statement, her examination-in-chief, TS 365, following her witness statement, Ex 32, par 22), evidence which is immediately followed by her testimony as to the exchange with Ednah in January 1993 referred to above:

"Ronda and I applied for subdivision of the land. Conditional approval for subdivision was obtained, document 5. Once subdivision had been approved Ronda and I carried on with the plan of the subdivision. For example, we arranged for separate demolition quotes for the removal of the existing house which had to be done before final approval for the subdivision would be given.

The plans, however, did not go smoothly and there was considerable disagreement. Ronda was not happy with what was being done or the way it was being done and she wrote and told me so, document 6."

91 The "document 6" referred to is the letter Ex 16. That letter contains the following penultimate paragraph:

"We are not trying to be unhelpful but we must protect our interests and there is a right and a wrong way of doing things. I hark back to the fact that the five of us sat down that night and agreed to certain things. You have already gone against the wording of that agreement in now not paying the full cost of the demolition of the house. I can see no reason for other things we agreed to being altered."

92 This does indeed support the characterisation of the relations between Delma and Ronda to which Delma testified. In view of those relations, if they had been known to Ednah, it is plausible that Ednah might have been led to reconsider any demolition of the family home at all, in the context of a transfer of one sister's interest to the other that would remove the basis for the disagreement. I also find it likely that Delma would have mentioned to her mother the need to make expenditures on the house to make it "livable", if it were not to be demolished, and Delma were to move into it. I so find in view of the extensive work done to the house beginning after the transfer of Ronda's interest to Delma of which there is significant photographic evidence (Exhibit 34), as well as the other evidence of significant expenditures on the house which I will reach shortly. While Delma's evidence as to dates was not always precise, particularly referring the work done on the house as indicated by the photographs to "sort of late 92, early 93" (TS 361), such lack of precision does not cause me to doubt the evidence of her recollection that she had referred to the need to make expenditures to Ednah, and that Ednah had replied in the terms Delma indicated.

93 I also find it likely that the differences between the sisters over demolition would have caused or contributed to Ednah's state to which Ronda's evidence of the meeting with Ednah refers, and that Ednah would not have wished to return to the matter of demolition at that meeting.

94 I also note the convergence between the evidence of the two sisters I have referred to on a number of matters of background as understood by them and, on their evidence, by Ednah. One matter was Ednah's understanding of Delma's interest in owning the whole of (the interest in) the Property, and of her intention to occupy the house on it with her husband. This convergence is, in my view, to be understood, as I have explained, against the approval for the subdivision of the Property, with the condition for demolition of the family home, over which there was some disagreement between the Purchasers, at least as to responsibility for the cost of demolition (see the quotation from Ex 16, above).

95 Further, there is uncontested evidence from which I would infer the parties' joint understanding that, as part of the arrangement of matters between the parties into which the transfer fitted, Delma would pay what I would infer is the sum of $100,000 to Janice (Ex 15, letter dated 17 January 1993 from Ronda to Delma). I infer from this that Delma had agreed to assume an obligation corresponding to that previously shared by the two Purchasers.

96 However, I do not conclude from the transfer and these other arrangements that there had been such a change as to destroy the Deed's substance. The Deed's effect in the case of such a transfer was that the Property came to rest in the hands of at least one of the sisters. In those circumstances, the Deed's provisions based on the Property being shared between the two sisters ceased to have any operation. However, there remained cl 13, as I explain below, in relation to the defendants' submissions as to frustration. The effect of this provision, as I indicated earlier, was to create an incentive to keep the Property in the hands of a family member, unless the Property was to be subdivided.

97 The defendants' submissions, as I understood them, were however, that the background understanding that the Property would be Delma's and that Delma and her husband would occupy the house on the Property should be seen, or could reasonably be seen, to point to a common intention that cl 13 would no longer apply to the parties' relations. This was on the basis that it would be inconsistent with the Property being Delma's alone and the house hers to occupy and that the proceeds of her resale of the Property, to any third party, should be shared with any one else. This inconsistency was even clearer, it seems to have been put, on the conversation between Ednah and Delma, and the latter's evidence on which I have previously referred to and accepted. That conversation, it will be recalled, included Ednah's request that the house not be demolished and her form of acknowledgement that Delma would be making expenditures on it. It was agreed by the parties that expenditures had been made that had increased the value of the Property by $150,000, as I have indicated. There is also evidence from Delma, to which I will return, that she had made expenditures to a larger amount and this is evidence which I indicate I accept.

98 The defendants' submission is that such a background understanding made the conduct of the other parties in seeking or agreeing to the new arrangements, comprising the transfer of Ronda's interest to Delma on a basis including Delma's payment of a further sum to Janice, conduct entitling her to assume that the Deed should be treated as abandoned. Her expenditures showed that she had so assumed.

99 However, I do not agree that Ronda's evidence, or even Delma's, supports such a view of the Deed. I have already indicated that the Deed contemplated a transfer between the Purchasers that would result in one of them becoming the full owner of the Property, freed of the subdivisional obligations. In my view this is quite consistent with the continuation of the arrangements under the Deed with respect to any subsequent transfer of the Property to third parties, the bulk of the proceeds from which the acquiring Purchaser would take in any event. The Deed created an incentive for the acquiring Purchaser to retain the Property so as to enjoy the benefits of any renovation of the family home, at least until the acquiring Purchaser was prepared to revisit subdivision, perhaps on terms that would not require the demolition of the family home as renovated.

100 I also need to note there had been other departures from the provisions of the Deed, previous to these arrangements. Indeed abandonment or rescission may be concurrent with entry into the agreement being abandoned or rescinded (Chitty (supra) at 22-028). However, these arrangements do not make out an abandonment of the Deed, and show rather that the parties had modified their relations under the agreement as their relations had evolved. See Seddon and Ellinghaus (supra) at [22.3], on the way courts recognise that "commercial parties commonly modify their contractual regime as it steers its course through the various pot holes of business life"; footnote omitted.

101 The first such departure I note concerns the payment of the first instalment of the Purchase Price, which as I have indicated was to be on the Execution Date of the Deed. The context to the Deed indicated this instalment was to permit Ednah to acquire the TPI Unit. However, the payments apparently required for this purpose fell short of $100,000 by $12,500 and were made before the Execution Date, as I have earlier indicated. Nor was there any payment of the $12,500 difference to Ednah or her estate.

102 However, it seems to me that those differences do not, in light of the achievement of the purpose to the Deed so far as it concerned Ednah's replacement accommodation, show an inconsistency with the Deed which would (on that account) cause me to infer an intention to substitute a new arrangement for it. Nor does Ednah's failure subsequently to demand payment of the $12,500 difference (on its own) cause me to infer anything more than (at most) a waiver of the entitlement to that balance: see Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, and the discussion of that case in Seddon and Ellinghaus (supra) at [22.9]; and see, on waiver, [22.6]. There is, however, against any such inference evidence in the form of undated handwritten notes, accepted as being Ednah's, that she viewed the remaining amount as a sum she could seek payment of "when needed" (Ex 17). In the event, I do not need to determine whether or not there was any such waiver.

103 An alternative view of the matter, put by the plaintiffs, was that the whole of the first instalment of the Purchase Price remained due and payable. However, it was said, the Purchasers were beneficiaries of a resulting trust arising in respect of their contributions to the purchase price of the TPI Unit, and they would be in a position to set off their entitlements against any claim by Ednah's estate for the first instalment of the Purchase Price: Ford HAJ, Lee WA and McDermott PM, "Principles of the Law of Trusts" 3rd ed (1996), at [21060], [21110].

104 I do not consider I am required to choose between these two views of the matter. On either, the relations between the parties under the Deed were at most varied, but not replaced.

105 There was also a departure from the terms of the Deed in relation to the transfer of the Vendor's title to the Purchasers. As I previously indicated, this occurred on 22 September 1992, before the transfer of Ronda's interest to Delma, and before the payment by Delma of $100,000 to Janice. It was not disputed by the parties, however, that the Deed remained on foot, including as to the obligations to pay the balance of the Purchase Price, and to proceed with the application for approval for a subdivision (cl 12). This represented a departure from the Deed's provisions as to the transfer of title in return for the payment of the balance of the Purchase Price (cl 2.3, and cl 4(4) of the 1991 Joint Form of the General Conditions for the Sale of Land, imported by cl 2.7).

106 I note there is no evidence before me that it was one of the terms of any revised relationship between the parties that Ednah retain ownership of the TPI Unit, although she did in fact do so, until September 1996, as I have indicated. Thus, it does not seem to me that this retention of ownership has any bearing on the matter of abandonment.

Frustration or impossibility of further performance

107 The defendants say that, because of the transfer of Ronda's interest to Delma, the Deed was terminated from that point or shortly thereafter. This appears to be put on two bases.

108 One basis is that the transfer of one Purchaser's proportion to the other was an event 14 days after which the sale and purchase under the Deed was to complete (cl 2.3). From this, I was invited to conclude that the Deed's obligations were meant to cease from the transfer point or at least on the expiry of 14 days thereafter. It seems to me that this submission must be understood in terms of the completion of the sale and purchase under the Deed by the discharge of the remaining obligation as to the payment of the Purchase Price, in a case where, as I have indicated, the transfer of title from the Vendor to the Purchasers had occurred some time previously.

110 It is true that all of the obligations as between the Purchasers (cl 3), as well as the obligations restricting dispositions (cl 4 and cl 6) and of indemnification (cl 5) would appear to have ceased to have application from the point of transfer of the interest of one Purchaser to the other. I would also accept that the obligations to complete the process of partition of the Property following from initial subdivisional approval (cl 12) would also seem to have ceased from that point, given that partition between co-owners would no longer have any application (see cl 12.2). I further accept that the notice for sale process (under cl 7 to cl 10, read with cl 11) could no longer have unfolded, because transfer between co-owners could no longer have had any application. The obligation to pay the unpaid balance of the Purchase Price would of course have remained (cl 2.3 and Item 6 of the Schedule). For the purposes of the submission, I assume that such balance had been paid, and that the transfer of title from the Vendor had also taken place.

111 However, while these are the bulk of the obligations under the Deed, they do not exhaust them: cl 13 remains. If, as a matter of construction, it was capable of application to a resale by a Purchaser who had acquired the other's interest, then it is not evident to me why it was not part of the purposes of the Deed it should continue to have such an application in this case. I have already indicated my reasons for concluding cl 13 had such application.

112 I turn to consider the other basis for the defendants' contention. That basis is the frustration of the contract by reason of the transfer of Ronda's interest to Delma. I have already indicated that such a transfer was an event contemplated by the Deed. I have also indicated that cl 13 should be seen to have been applicable to sales to third parties by the acquiring Purchaser. In those circumstances, it would seem to me to be difficult to see how the situation created by that transfer, after which cl 13's performance might be called for, represented one "fundamentally different from the situation contemplated by the contract" (Codelfa (supra) at 160, per Mason J; and see Seddon and Ellinghaus (supra), at [19.4]).

113 It is true that the transfer between Ronda and Delma, read with cl 13 as the plaintiffs would have me construe it, would have produced an inequality in return between Ronda, Delma, Janice and Ednah. This would have been whether or not the Property had been subdivided and the Lots sold.

114 The case of no subdivision and a prompt resale of the Property by Delma to a third party may be taken first. It may be assumed for the purposes of the analysis that the Property at the date of transfer to Delma and her resale was worth $400,000. One may also ignore both the difference between the cost of the TPI Unit and $100,000 and any of the deductions from the proceeds under cl 13. On a resale of the Property to a third party for $400,000, Delma would have gained a net $22,917. This sum is calculated as follows:

Less Delma's contribution to the cost of the TPI Unit

Less Ednah's one third share of the sale proceeds on resale

115 Ronda would have gained $56,250, or $100,000 (from the transfer to Delma) less $43,750 (Ronda's contribution to the cost of the TPI Unit). Janice would have gained $100,000 (from Delma). And Ednah would have gained $220,833, or $87,500 (the TPI Unit) and $133,333 (Ednah's one third share of the $400,000 proceeds on the resale).

116 If, however, Delma had completed the subdivision of the Property and sold the two Lots for $200,000 each, this would have affected her gain and Ednah's. Delma would not have had to share the proceeds with Ednah, as cl 13 would have had no application. She would have gained $156,250. Ednah would have had no gain beyond the value of the TPI Unit, or $87,500 (ignoring the difference between its cost and $100,000).

117 However, the results I have described would have been the result of Delma's agreement to those terms. In effect, any "frustration" would be self-induced: see Seddon and Ellinghaus, (supra) at [19.23].

118 The defendants contend that the circumstances in which Delma agreed to acquire Ronda's interest, as a tenant in common in the Property and then acted subsequently in relation to the Property were such that Ronda, Janice and Ednah, or at least Ednah, are or is estopped from relying on any rights they might otherwise have had arising out of cl 13 of the Deed.

119 The doctrine of estoppel by conduct, whereby a party may be prevented from denying the correctness of an assumption on which another has acted, can apply to "conduct by one party which induces the other to assume that their contract has been terminated" (Seddon & Ellinghaus (supra) at [22.10]). The doctrine will often be argued for in cases, such as this one, where it is also argued a contract has been abandoned by agreement. This is noted in the leading authority in this jurisdiction on this aspect of the matter, Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164, per Nicholson J at 170:

"It is also pleaded on behalf of the defendants that the agreement was abandoned. In Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 914 Lord Brandon said:

' ...Where A seeks to prove that he and B have abandoned a contract in this way, there are two ways in which A can put his case. The first way is by showing that the conduct of each party, as evinced to the other party and acted on by him, necessarily leads to the inference of an implied agreement between them to abandon the contract. The second method is by showing that the conduct of B, as evinced towards A, has been such as to lead A reasonably to believe that B has abandoned the contract, even though it has not in fact been B's intention to do so, and that A has significantly altered his position in reliance on that belief. The first method involves actual abandonment by both A and B. The second method involves the creation by B of a situation in which he is estopped from asserting, as against A, that he, B, has not abandoned the contract ... '

Abandonment can take place therefore either by accord and satisfaction or by estoppel: Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA; The Leonidas D [1984] 1 WLR 1 at 9; [1983] 3 All ER 737 at 742. ..."

120 As the quoted extract indicates, to find an estoppel I must find conduct of the requisite sort, by the parties and by Ednah, or at least by Ednah. I must also find that, if such conduct is shown, Delma has significantly altered her position in reliance on the relevant belief.

121 However, the conduct relied upon for this purpose by the defendants is, as to Ronda and Ednah, the same conduct as that relied upon for the purposes of the contentions as to abandonment which I examined above. For the reasons I gave there I would conclude that there was no conduct by Ednah and Ronda on the basis of which Delma could reasonably believe that Ronda and Ednah, or Ednah alone, were or was representing to Delma that she could treat the Deed as abandoned or otherwise fully discharged. I note the requirement for clear representations to found such an estoppel to which I referred when I considered the plaintiffs' argument that the first defendant was estopped. This means I do not have to reach a conclusion on the matter of reliance.

122 On this basis then, there is no estoppel that arises in this case.

123 The defendants contend that if cl 13 of the Deed did indeed apply to Delma's sale to Mr Lewis, then there should be credited by way of set-off against the net amount due to Ednah's estate the agreed value ($150,000) of the improvements and renovations made to the Property between 14 June 1992 and 31 December 1997 (Agreed Facts, par 20). This set-off is put on the basis that, if cl 13 of the Deed applied to the sale, then it created an interest in the Property which made Delma, as seller, a trustee for the deceased and, as a trustee, she would be entitled to recoup from the corpus the value of the improvements she had made to the corpus. The corpus in this case would be the Property.

124 The plaintiffs submit that there is no right of set-off, as the Deed does not provide for one. Instead the Deed simply provides, as one of the "Covenants between the Purchasers", as follows (cl 3.7):

"Provided they both approve the nature and costs of the improvements they will contribute to the costs of any improvements to the Land in the Proportions."

125 I have already indicated that, on the transfer of Ronda's interest to Delma, this obligation, among others, ceased to have any application. That would mean, it seems to me, that the acquiring Purchaser who made improvements thereafter would not be entitled to recover back under this provision any portion of their cost from the transferring Purchaser. Nor would there be any scope for the application of the equitable doctrine that, in a sale ordered in a partition action under a provision like s 126 of the Act, any co-owner who has made improvements is entitled to recoupment from the proceeds of the sale - the lesser of the value of the expenditures on the renovations or the increase of the value of the property (Meagher RP, Heydon JD and Leeming MJ, Meagher Gummow and Lehane's "Equity Doctrines & Remedies" 4th ed (2002), at [25-065]). I note that the doctrine appears to extend beyond the case of a sale ordered in a partition action to any case where a co-owner seeks the aid of equity to claim a share of the proceeds of a sale (Brickwood v Young & Anor [1905] HCA 12; (1905) 2 CLR 387; and Mendes Da Costa D, "Co-ownership under Victorian Land Law" [1961] MelbULawRw 20; (1961) 3 Melb UL Rev 137 at 144 - 145). There would be no partition action involved here, and no claim by a co-owner in equity; rather, the claim would be one for the enforcement of cl 13.

126 However, the question arises whether - had there been no transfer and the Purchasers, after one of them had made improvements to which they had not both agreed in conformity with cl 3.7, had resold the Property - there would have been an entitlement to set off an amount in respect of the contributions. If there were such an entitlement, the question would be - in what amount? On the construction of cl 13, at which I have arrived, this would seem to me to be the measure of recovery, if any, in respect of those improvements of an acquiring Purchaser who made them after taking a transfer of the other Purchaser's interest. I do not see why the matter of transfer should affect the claim, and I do not see the plaintiffs' submissions to be to any other effect. While the power of a Purchaser, with the consent of the other Purchaser, to make improvements and recover the cost of them entailed by cl 3.7 would cease with a transfer, it seems to me to be entailed by the transferee's ownership - which, as I have found, the Deed allowed for on a transfer between Purchasers - that the acquiring Purchaser has a power to make improvements.

127 It follows from my construction of cl 13 that the plaintiffs' claim, which as I explained at the outset derives from that of the deceased, to have Delma declared to be a debtor to the estate as to one-third of the proceeds of Delma's sale of the Property, is a contractual claim. It is not on relying on an equitable interest in the Property, whether or not cl 13 gave rise to such an interest.

128 The defendants contended, on the authority of Woodberry v Gilbert (1907) 3 Tas LR 7, that cl 13 did give rise to such an interest. I note the consideration of Woodberry in Midland Brick Co Pty Ltd v Welsh & Anor [2002] WASC 248; a case concerning whether a covenant gave rise to a caveatable interest in land in favour of the covenantee ("the first defendant"). In Welsh, his Honour, Hasluck J described Woodberry as follows (at [48] - [50]):

"The first defendant drew upon Woodberry v Gilbert (1907) 3 Tas LR 7 in support of her contention. In that case, by indenture, the plaintiff assigned certain horses, vehicles, and chattels to Gilbert, and covenanted that he would not let certain stables or any other stables which might be built on certain land to be used for livery work. The plaintiff covenanted also that he would not carry on the business as a livery stable keeper in the said stables. Gilbert lodged a caveat forbidding any dealing with the land on which the stables were built without notice to him.

It was held that the plaintiff's covenant was purely personal and did not run with the land, and did not confer any interest in the land in question within the meaning of the statutory provision concerning caveats.

Clark J was of the opinion that the right to the benefit of a restrictive covenant running with the land, or a right to purchase the land, would be an interest in the land within the meaning of the relevant provision. However, he was of the view that the covenant in question was not a covenant running with the land, and that it was only an amplification of the personal covenant not to carry on the business of a livery stable keeper. Its evident purpose was to preclude the plaintiff from assisting to establish a rival business to that of the putative caveator and receiving any benefit from it in the form of rent. There was not any estate or interest granted by the indenture to the caveator in the land, and the benefit of the covenant therefore did not attach to any such estate or interest in that land."

129 It does not seem to me to follow from that case so described that a right to share in the proceeds of the sale of land is the same sort of interest as a right to purchase the land. However, I do not need to resolve this, as the claim here, as I have said, is for enforcement of the contractual entitlement arising under cl 13, not for the enforcement of any equitable interest in the Property that the Vendor took. Had the action been one for the enforcement of that equitable interest then, in my view, Delma would have had a strong claim as trustee of the interest with a power to improve and to claim, by way of set-off, the lesser of the enhancement of the value, the result of her expenditures, or those expenditures: In re Walder (1903) 3 SR NSW 375; Holder v Holder [1968] Ch 353.

130 That contractual entitlement of the Vendor is, it seems to me, to the share, determined as cl 13 provides, of the net proceeds, calculated as that clause provides. Clause 13 provides no set-off or reduction for any value enhancement the result of expenditure by a Purchaser.

131 It follows that there is no set-off as against Ednah's estate of any amount in respect of the enhancement of the value of the Property, the result of expenditures by the first defendant. This is a result that follows from the bargain the parties struck, as recorded in the terms of cl 13.

132 I should not leave this aspect of the action without considering whether, had the first defendant shown a basis for a claim in respect of her enhancement of the value of the Property, the measure of her recovery would have been that enhancement or a lesser amount. For the reasons I have given previously, the measure of her recovery would have been that increase in value or her expenditures, whichever is the less.

133 The plaintiffs say that the first defendant has only proved expenditures on the Property significantly less than the $150,000 enhancement of its value to which I referred earlier. The first defendant adduced evidence in the form of receipts, invoices annotated in terms referring to payment, invoices or delivery dockets not bearing any such annotations and quotations for work to be done on the Property. The first defendant says that the total of all of these, or even the total of all of these except the quotations, shows significantly greater expenditures than that value enhancement, which would accordingly be the set-off amount.

134 The plaintiffs say that only the receipts should be given any weight as proof of expenditures made on the Property. There was no admissible evidence of who made the annotations. Invoices or delivery dockets without proof of their payment were entitled to no weight. Quotations were also entitled to no weight. As to the last, the defendant in closing submissions did not press a separate claim for any of them, the quotations apparently being included only to explain the invoices or delivery dockets related to them.

135 On the plaintiffs' submissions, there was sufficient proof only of $14,720.74 of expenditures, which it was not in contest is the total of the receipts. On the uncontested evidence before me the annotated invoices and delivery dockets add up only to $35,192.13. When that sum is added to the sum for the receipts, there is a total of $49,912.87. This may be compared with the agreed enhancement of the market value of the Property by reason of the improvements and renovations done on it of $150,000. It may also be compared with the sum of the receipts, all of the invoices and all of the delivery dockets, of $181,476.16. There was no contest that the latter is indeed that sum.

136 I consider that I am entitled to give weight to the receipts, and to all of the invoices and delivery dockets whether or not annotated, and would find that expenditures in the sum last given, $181,476.16, were indeed made. As the defendant submitted to me, the invoices and delivery dockets were evidence at least of obligations to make payment. It does not seem to me that the lack of an annotation on an invoice or delivery docket should cause me to infer there was a retirement or (undocumented) replacement of the obligation it represented. The ordinary course of recording payment of invoices and delivery docket amounts as household expenses is not so reliable. Further, given the photographic evidence of the work done on the house to which I referred earlier, and the agreed value of the enhancement of the property, it seems to me to be likely that work of the sort represented by the invoices and delivery dockets was indeed done and the obligations of the sort those invoices document incurred.

137 As I indicated at the commencement of this decision, the plaintiffs claim as the principal relief in this action is as follows:

A. "a declaration" that upon the sale and settlement of the Property the first defendant became a debtor to of the late Ednah Daw as to one-third of the proceeds of the sale from the Property (after deducting agent's commission and legal costs);

B. "a declaration that the second defendant as executrix holds one-third of the proceeds of sale from the Property for and on behalf of the beneficiaries of the Estate", as well as

C. an order that the second defendant account to the beneficiaries in relation to one-third of the proceeds of that sale (after deducting agent's commission and legal costs),

D. an order that the second defendant distribute the Estate in accordance with the Will,

E. against the second defendant, damages for "wilful default in failing to call in and/or account for and/or to distribute to the plaintiffs the assets of the Estate in accordance with the Will"; and

F. against the defendants' interest in accordance with s 32 of the Supreme Court Act.

138 On my decision thus far, I would make a declaration in terms of A. This would mean that, on the first defendant's appointment as executor of Ednah's estate, that amount represented a debt owed the estate for which, at common law, the first defendant's appointment as executor operated as a release or extinguishment of the debt: Meagher, Heydon and Leeming (supra) at [29-015].

139 However, in equity the debtor-executor is to be treated as having paid the debt to the estate, and holding the assets enhanced thereby for distribution among the creditors and the beneficiaries: Meagher, Heydon and Leeming (supra), at [29-020]. It would follow that a declaration is appropriate in terms of B, with an amendment. The amendment is to allow for the deduction of agent's commission and legal costs, as in A. As has been seen, those deductions are called for by the Deed cl 13.1 and cl 13.2.

140 As the defence admits that the second defendant has not brought into account into the estate one-third of the balance of the proceeds of the sale nor made any distribution of that portion, it is appropriate to order an account in the terms of C and a distribution in accordance with D.

141 This brings me to the order sought in the terms of E, "damages" for "wilful default". As executor of Ednah's estate, the second defendant was under a duty to get in the assets of the estate: Re Atkinson (dec'd) [1971] VicRp 73; [1971] VR 612, Gillard J, at 616 and authorities cited there. In a case of failure to get in a debt owing to the deceased, the burden would fall on a personal representative to "justify their conduct or be answerable for all the consequences of their neglect": National Trustees Executors & Agency Co of Australasia Ltd v Dwyer [1940] HCA 5; (1940) 63 CLR 1, per Starke J, at 22, referred to in Atkinson at 616. In this case, of course, there was a live issue of some difficulty as to whether or not there was a claim by the estate on Delma under cl 13 of the Deed. In such cases, of "real doubt" as to the estate's entitlements, the "proper course" is for the personal representative to apply to the court for directions, although the matter might be different if there were insufficient funds in the estate to support such a course, and no indemnity could be secured from the beneficiaries (Atkinson, at 615). There was no evidence in this case that there were insufficient funds in the estate, and no evidence that an indemnity was unavailable.

142 However, in this case the plaintiffs have sought, properly as I have explained, to vindicate the right of the estate to make a claim under cl 13. Given the position of conflict in which the second defendant found herself in relation to that claim, that represented a reasonable resolution of the difficulty of testing the claim. In Atkinson, where there was no such conflict, the court recognised the right of a beneficiary, the deceased's son, to bring an action to vindicate the claim in that case, although there was no indication any such action had been or would be brought. The claim in question was to a declaration that the estate had a partnership interest in a farming business the deceased had conducted with his wife. Gillard J said (at 618):

"For these reasons, I would confirm the view that I tentatively expressed on the first occasion, namely, to advise the trustee company that it was not bound in the circumstances put before me to bring any action against the surviving joint tenant - the widow of the testator in relation to 'Spray Farm'. I come to that conclusion only on the basis that I am of opinion that the son has an equity to seek a remedy on behalf of the estate of the testator by himself initiating proceedings to seek a declaratory judgment against his mother and on account of the partnership assets, if any, since the date of death."

143 Ednah died, as I have earlier indicated, on 20 August 1998. The date of the grant of probate of her will is not in evidence before me. However, the action in this case was commenced by writ of summons dated 6 July 2000. There is no suggestion in this case that there was any delay for which the second defendant was responsible in the commencement of these proceedings, and none is evident from the matters I have just recited. These proceeding have, of course, produced a resolution of the live issue as to cl 13.

144 Accordingly, I do not find in this case a default by the second defendant for which it would be appropriate to order "damages", in the terms of E or otherwise. The circumstances are such that the second defendant could not, in my view, be held liable for breach of duty in awaiting the outcome of these proceedings in relation to the estate's claim under cl 13 of the Deed. She is thus not accountable for any loss to the estate from any failure during that period to invest those funds in a way that would have enured to the estate's advantage: see Sunnucks JHG, Ross Martyn JG and Garnett KM, "Williams, Mortimer and Sunnucks on Executors, Administrators and Probate" (1982), at 60 - 61, and authorities in note 42.

145 I note that the determination of "damages" for any such loss would necessarily be equitable compensation for breach of equitable duty, which of course is not the same as common law damages, the former being concerned with recouping to the beneficiary of the equitable duty what was lost because of the breach: see Meagher, Heydon and Leeming (supra) at [23-010]. However, I am relieved of the need to determine how such "damages" might be calculated, a matter likely involving the consideration of the award in equity of interest as the measure of the loss to the estate of the use of the money owed. Such a consideration would have been one of some difficulty: see McLauchlan & Anor v Prince & Anor [2001] WASC 43, Sanderson M; Grove v Fisher & Anor [2002] WASC 247, Hasluck J, at [41] - [47]; and Davis JLR, "Interest as Compensation", in Finn PD, "Essays on Damages" (1992), at 139 - 141. However, as I will now explain, the matter of awarding interest as equitable relief may arise in a different way.

146 In this case the second defendant has had the use of what were (as I have explained, by reference to Meagher, Heydon and Leeming (supra), at [29-020]) estate funds. In those circumstances, it seems to me that she would be accountable to the estate for any profit she has derived from such use, on the principle that a personal representative "ought not to derive any profit from the trust property": Williams, Mortimer and Sunnucks (supra), at 62. The second defendant would be accountable for such profits, unless it would be "unconscientious" so to order: see Meagher, Heydon & Leeming at [5-245]. It would seem to me that it would be unconscientious so to order when there was no live question that the money was caught by cl 13 of the Deed. However, I am also of the view that it would not be unconscientious so to order where the second defendant was aware that there was a live question as to the claim of the estate under cl 13. There would have been such an awareness when the first demand had been made on her as executor to call in the proceeds in question. Any profit she in fact derived from such use after that time should emerge from the accounting that I have indicated should be ordered in this case. I would thus be prepared to make an order requiring the second defendant to account for any profits she made accordingly.

147 In relation to the second defendant's liability under such an order, I have considered whether or not to charge the second defendant with interest on the principle that the court should presume such interest was earned (Williams, Mortimer and Sunnucks (supra), at page 56 and page 64). However, it seems to me (see page 56) that such a principle is inappropriate where the second defendant is not shown to have used the proceeds in a trade or business or financial transaction where such a presumption appears to have its most appropriate place. If the accounting shows such use, however, the matter it seems to me could be returned to.

148 It follows from these conclusions as to the appropriate relief that the plaintiffs should have an order for interest in terms of F at least up until the appointment of the second defendant as executor. The effect of s 32 of the Supreme Court Act 1935 (WA) is conveniently stated in Grove (supra), per Hasluck J, at [34]:

"By statutory provisions, such as s 32 of the Supreme Court Act 1935 (WA) in this State, the Courts are given a discretion to add a sum by way of interest to money judgments in order to compensate plaintiffs for being kept out of their money: Kercher and Noone (1983) Remedies at 118 - 119."

149 I have already explained the right in which the plaintiffs are proceeding in this litigation. The appointment of the second defendant as executor meant that the debt owed by the first defendant to her mother is to be taken as having been satisfied or released at that date. I consider that I should exercise my discretion at least to order interest under s 32 for the period prior to that date.

150 I consider that I also have a discretion whether to order interest in the terms of F for the period after appointment. It is true that s 32 was enacted to overcome the common law position that a court could not order pre-judgment interest, and that this would have "little relevance to a suit in equity", which, as I have indicated, did not have a similar position: Davis (supra) at 141. However, there seems no reason to regard the provision as inapplicable to these proceedings which are for the recovery, to the estate and ultimately the beneficiaries, of the net proceeds as provided for under cl 13 of the Deed. These proceedings seem to me to answer the description in s 32 of "proceedings for the recovery of any money (including any debt or damages or the value of any goods)", even though the basis for recovery is (after the appointment) in equity. I note the examples of courts employing provisions like s 32 in relation to claims in equity cited in Davis (supra) at 141; on the breadth of s 32, see also Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273; [2004] WASCA 145, at [299] - [304]. Professor Davis's criticism of the cases he refers to, in terms of their failure to explore the possibility of the awarding of interest in equity, in my view goes only to remind a court to consider the possibility in a suitable case of an award of interest in the exercise of the equitable rather than of the statutory jurisdiction. I have already considered the possibility of an award of interest in equity above.

151 However, it seems to me that in the exercise of the discretion to award interest under s 32 I should take account of the effect of the order I am prepared to make with respect to an accounting for profit. In relation to the award of interest in equity and an accounting for profit, I note that the claimant is regarded as having an option which to pursue: Williams, Mortimer and Sunnucks (supra), at 56; and see Meagher, Heydon and Leeming (supra), at [5-260]. By analogy with that position in equity, in the exercise of the statutory discretion I would require the plaintiffs to elect between the two remedies once there has been the accounting in the terms of C above.

152 I would thus make the orders I have indicated. I will hear from the parties as to the detailed terms of those orders.

153 The plaintiffs should have their costs to be taxed. In my preliminary view, the basis for my decision in this case, which is concerned with the liability of the first defendant under cl 13 of the Deed, and the consequential effects of that liability on the duties of the executor, is such that the terms of that order should be that those costs are to be paid by the first defendant, that is to say personally rather than to be treated as a cost to be borne by the estate. However, I will take submissions from the parties on that matter also.