4 All ER 713
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
[1983] HCA 14
Commonwealth of Australia v Verwayen (1990) 170 CLR 394
[1990] HCA 39
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1
[2016] HCA 26
Delaforce v Simpson-Cook (2010) 78 NSWLR 483
Source
Original judgment source is linked above.
Catchwords
4 All ER 713
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447[1983] HCA 14
Commonwealth of Australia v Verwayen (1990) 170 CLR 394[1990] HCA 39
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1[2016] HCA 26
Delaforce v Simpson-Cook (2010) 78 NSWLR 483[2010] NSWCA 84
DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728[2011] NSWCA 348
Dillwyn v Llewelyn (1862) 4 De GF & J 51745 ER 1285
Donis v Donis (2007) 19 VR 577[2007] VSCA 89
Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247[2016] NSWCA 105
Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45[2007] HCA 22
Flinn v Flinn [1993] 3 VR 712[1999] VSCA 109
Fox v Percy (2003) 214 CLR 118[2003] HCA 22
Galaxidis v Galaxidis [2004] NSWCA 111
Gillett v Holt [2001] Ch 210
Giumelli v Giumelli (1999) 196 CLR 101[1999] HCA 10
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641[2021] NSWCA 298
Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500[2017] NSWCA 106
Milling v Hardie [2014] NSWCA 163
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825
(2015) 329 ALR 1
New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163
Olsson v Dyson (1969) 120 CLR 365
[1969] HCA 3
Pham v Gall (2020) 102 NSWLR 269
(2020) 383 ALR 469
Ramsden v Dyson (1866) LR 1 HL 129
Riches v Hogben (1985) 2 QR 292
Sidhu v Van Dyke (2014) 251 CLR 505
[1933] HCA 61
Thorner v Major [2009] 1 WLR 776
Trentelman v The Owners - Strata Plan No 76700 (2021) 106 NSWLR 227
Judgment (46 paragraphs)
[1]
v Percy (2003) 214 CLR 118; [2003] HCA 22
Galaxidis v Galaxidis [2004] NSWCA 111
Gillett v Holt [2001] Ch 210
Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58
Hopgood v Brown [1955] 1 WLR 213
In re Basham, decd [1986] 1 WLR 1498
Jennings v Rice [2003] 1 P&CR 8
Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467
Lloyds Bank Plc v Rosset [1991] 1 AC 107
McNab v Director of Public Prosecutions (NSW) (2021) 106 NSWLR 430; [2021] NSWCA 298
Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106
Milling v Hardie [2014] NSWCA 163
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1
New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163
Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3
Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116
Plimmer v The Mayor, Councillors and Citizens of the City of Wellington [1884] 9 AC 699
Priestley v Priestley [2016] NSWSC 1096
Priestley v Priestley [2017] NSWCA 155
Q v E Co [2020] NSWCA 220; (2020) 383 ALR 469
Ramsden v Dyson (1866) LR 1 HL 129
Riches v Hogben (1985) 2 QR 292
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19
Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466
Sledmore v Dalby [1996] 72 P&CR 196
Steria Ltd v Hutchison [2007] ICR 445
Stone v Kramer (No 2) [2022] NSWSC 1716
Stone v Kramer [2021] NSWSC 1456
Stone v Stone [2014] NSWSC 1655
Sullivan v Sullivan [2006] NSWCA 312
Taylor's Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133
Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61
Thorner v Major [2009] 1 WLR 776
Trentelman v The Owners - Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242
Trippe Investments Pty Ltd v Henderson Investments Pty Ltd (1992) 106 FLR 214
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1998] HCA 7
Willmott v Barber (1880) 15 Ch D 96
Texts Cited: A Robertson, "Knowledge and Unconscionability in a Unified Estoppel", (1998) 24(1) Monash University Law Review 115
Heydon JD, Heydon on Contract: The General Part (Thomson Reuters, 2019)
J Hamilton, G Lindsay and C Webster, New South Wales Civil Procedure Handbook 2023 (13th ed, 2023, Thomson Reuters)
K Handley, "Recent Cases" (2017) 91 Australian Law Journal 812
K Handley, Estoppel by Conduct and Election (2nd ed 2016, Sweet & Maxwell)
Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014 Lexis Nexis Butterworths)
W Cornish et al, The Oxford History of the Laws of England (2010, Oxford University Press), Vol XI
Category: Principal judgment
Parties: Hilary Lorraine Kramer (First Appellant)
Jaime Ferrer (Second Appellant)
David Lindsay Stone (Respondent)
Representation: Counsel:
R Wilson SC with M McGirr (Appellants)
L Ellison SC with H Bennett (Respondent)
[2]
Solicitors:
Walker & White (Appellants)
Lane Associates (Respondent)
File Number(s): 2023/84277
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Equity
Citation: [2021] NSWSC 1456
Date of Decision: 16 February 2023
Before: Robb J
File Number(s): 2017/00261027
[3]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[4]
HEADNOTE
[This headnote is not to be read as part of the judgment]
This appeal arose out of a dispute concerning the ownership of a property in Upper Colo, New South Wales (the Property). The Property was owned by the late Dame Leonie Kramer (the deceased) after the death of her late husband (Dr Kramer). Under the deceased's final will made in 2011, the Property was left to one of the couple's daughters, the first appellant.
The respondent had farmed the Property under an oral share farming agreement since 1975. He claimed he was entitled to the Property on the basis of a representation allegedly made to him by the deceased (the Representation), that he would receive the Property on her death, following earlier representations allegedly made to him by Dr Kramer to the similar effect (although the first of those representations referred only to a life interest). The respondent maintained that he relied on the alleged Representation to his detriment by undertaking additional tasks on the Property and in continuing with the share farming agreement in circumstances that he would have terminated the agreement and sought more remunerative work elsewhere.
The primary judge found that the Property was held on constructive trust for the respondent, on the basis of an equitable estoppel arising out of the Representation made by the deceased to the respondent. In so doing, the primary judge found that the respondent had relied on the Representation to his detriment, and that the deceased "ought reasonably to have assumed" and "ought to have known" that the respondent had continued with the share farming agreement on the expectation that he would inherit the Property, and that it was otherwise unconscionable for the deceased to have resiled from the Representation.
The principal issues before this Court were whether the primary judge erred in: (i) finding that the Representation had been made; (ii) finding that the Representation was an assurance as opposed to a revocable testamentary promise; (iii) failing to find that the deceased did not encourage the respondent to act to his detriment; (iv) finding that actual knowledge by the deceased that the respondent acted to his detriment is not essential where constructive knowledge is made out; (v) finding that the deceased had constructive knowledge of the respondent's reliance on the Representation; (vi) finding that the deceased acted unconscionably in not leaving the respondent the Property despite leaving a legacy of $200,000; and (vii) finding that the respondent's reliance on the Representation was reasonable.
A further issue (ix) arose on the appellants' application to rely, for the purposes of their challenges on appeal to findings made in the principal reasons for judgment, on evidence admitted for the purpose of a subsequent hearing in which the respondent applied to reopen his case.
The Court held (Ward P, Leeming and Kirk JJA agreeing) dismissing the appeal:
[5]
As to issue (i)
(1) It was open to the primary judge, having had regard to all of the evidence, to be positively satisfied on the balance of probabilities that the Representation was made to him by the deceased. The primary judge had the benefit of seeing the respective witnesses and clearly formed a favourable view of the respondent's credit, and (notwithstanding the delay in judgment) there was nothing to indicate that his Honour did not carefully review the evidence when he came to prepare his reasons. Nor is the finding as to the making of the Representation inconsistent with incontrovertible objective evidence: [128]-[132] (Ward P); [296] (Kirk JA).
(2) There was no error in the fact-finding process adopted by the primary judge. This Court is not entitled to set aside findings made by the judge who saw the trial unfold and who was acutely conscious of the frailties of memory: [277] (Leeming JA).
[6]
As to issue (ii)
(3) The primary judge did not err in concluding that the Representation made to the respondent (that the deceased would leave the Property to him) would have been understood by a reasonable person in the respondent's position as an assurance, (i.e., tantamount to a promise) rather than a mere statement of revocable intention, given what would have been objectively conveyed to a person in the respondent's position, knowing the character of the deceased: [150]-[151] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
[7]
As to issue (iii)
(4) Upon a fair reading of the primary judge's reasons, his Honour must have concluded that the Representation by itself amounted to the requisite encouragement, especially given his Honour's emphatic rejection of the proposition that the deceased would have made the Representation to convey a mere possibility of inheritance rather than as an assurance (as that would have been cruel and out of character for her): [166] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
(5) Having not run a case of acquiescence or standing by at first instance, the respondent cannot now maintain such an argument without having filed a notice of contention: [168] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
[8]
As to issue (iv)
(6) There is a distinction between proprietary estoppel by encouragement and by acquiescence, and in the latter, it is the defendant's knowledge of the plaintiff's reliance on the assumption or expectation that amounts to the relevant inducement or encouragement. However, if the requirement that the defendant "knew or intended" the plaintiff to act or abstain from acting in reliance on the relevant assumption or expectation is a requirement of subjective knowledge at the time of making the relevant representation, then the findings in the present case are problematic insofar as there is no express finding of such knowledge or intention. As to the question of knowledge, as a matter of principle, such knowledge may be inferred: [191]-[193] (Ward P); [291] (Leeming JA); [296] (Kirk JA).
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1998] HCA 7; New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163; Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105; DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348; Priestley v Priestley [2016] NSWSC 1096; Priestley v Priestley [2017] NSWCA 155, considered.
(7) The question of knowledge of detrimental reliance goes to the question of whether it would be unconscionable for the estate of the deceased to be permitted to resile from the representation; it is therefore not necessary to express any concluded view as to whether such knowledge must be actual or constructive: [201]-[202] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
[9]
As to issue (v)
(8) The complaint as to whether the primary judge correctly applied the "clearly ought to have known" test (assuming it applied at all) goes nowhere given the conclusion as to issue (iv): [217] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
(9) The primary judge's finding that the deceased ought to have known that the respondent's motivation for staying on the Property was the expectation that he would inherit it is not glaringly improbable or inconsistent with incontrovertible facts: [218] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
[10]
As to issue (vi)
(10) The relief granted was not out of proportion to the detriment or wholly disproportionate thereto. The authorities on relief for a proprietary estoppel make clear that the starting point is the prima facie position that the expectation be made good: [243] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19; Donis v Donis (2007) 19 VR 577; [2007] VSCA 89; Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84, considered.
[11]
As to issue (vii)
(11) The primary judge did not err in concluding that reliance by the respondent on the Representation (by not terminating the share farming agreement and instead remaining on the Property until the deceased's death) was not unreasonable: [252] (Ward P); [257] (Leeming JA); [296] (Kirk JA).
[12]
As to issue (ix)
(12) The appellants should not be permitted to rely, for the purposes of their appeal, on evidence adduced at first instance subsequent to the principal hearing, for the purposes of the respondent's application to reopen, even though the evidence was adduced before orders were made: [67]-[75] (Ward P); [258]-[275] (Leeming JA); [296] (Kirk JA).
[13]
Judgment
WARD P: This appeal arises out of a dispute concerning the ownership of a 100 acre property situated on the Colo River in Upper Colo, New South Wales (the Property), which (after the death of her husband, the late Dr Harry Kramer) was owned by the late Dame Leonie Kramer (the deceased). Under her final will made on 11 November 2011 (the Will), the deceased left the Property to one of the couple's two daughters (Hilary Kramer, the first appellant) (cl 2 of the Will).
The respondent (David Stone) had for many years farmed the Property under an oral share farming agreement. The respondent claimed that he was entitled to the Property on the basis of a representation allegedly made to him by the deceased, following earlier representations allegedly made to him by Dr Harry Kramer, to the effect that the Property would be his. The respondent maintained he had relied to his detriment on the alleged representation in undertaking additional tasks on the Property and in continuing with the share farming agreement (in circumstances where he could otherwise have terminated the agreement and sought more remunerative work elsewhere).
The primary judge found that the respondent had established an entitlement to equitable relief, on the basis of a proprietary estoppel arising from the making by the deceased of the third of the representations relied on by the respondent (see below), characterising the case as one based upon an estoppel by encouragement (see Stone v Kramer [2021] NSWSC 1456, the primary judgment, at [30]). His Honour found that, on the faith of that assurance, the respondent had acted to his detriment in continuing the farming operation on the Property for about 23 years in the belief that he would inherit the Property under the deceased's Will (see the primary judgment at [249]-[250]).
His Honour found that the deceased "ought reasonably to have assumed" ([234]) and "ought to have known" that part of the respondent's motivation in continuing the farming operation was the expectation that he would inherit the Property and concluded that, in those circumstances, it was unconscionable for the deceased not to have left the Property to him in the Will ([251]).
However, his Honour considered that it would not be equitable to the estate to order that the Property be transferred to the respondent in circumstances where the respondent was entitled to keep the bequest that had been made to him in the Will (a legacy of $200,000 subject to any Consumer Price Index (CPI) increase between the date of the Will and the date of payment) ([340] of the primary judgment). Hence, the orders ultimately made in February 2023 included a declaration that the executors of the deceased's estate, in lieu of the provision made for the respondent in cl 6 of the Will, hold the Property on trust for the respondent (see orders made on 16 February 2023). There is no challenge by the respondent to the conclusion by the primary judge that the declaration as to the respondent's interest in the Property should be in lieu of the legacy provided for him under the Will.
[14]
Events leading up to the proceeding at first instance
By way of background, the Property (valued at the time of the Grant of Probate dated 2 December 2016 at $1.5 million) is a partly cultivated property that has been used over the years variously as a citrus orchard, for grazing cattle and as a commercial vegetable farm. The respondent's father had been a sharefarmer on the Property with the previous owner since 1965 and, after the Kramers acquired the Property in 1969, the respondent's father continued to share-farm the Property with them until 1974, when he left the Property. When the respondent was about 22 years old, in 1975, he commenced to share farm the Property. The respondent lived rent-free in a house on the Property while he was share farming.
The respondent particularised the share farming agreement he had with Dr Harry Kramer (see the particulars to [4] of the respondent's statement of claim) as being an oral agreement, the terms of which included that: the respondent would grow crops and maintain the Property; Dr Harry Kramer would pay all operating costs except fuel (which would be shared by Dr Harry Kramer and the respondent); the respondent would reside rent-free in one of the houses of the Property; and the respondent would receive a quarterly retainer ($600) and half the gross proceeds from the sale of produce and cattle. The arrangements in relation to the profit-share seem to have changed over time but nothing turns on this.
The respondent alleged that in the 1980s three representations were made to him (defined in the pleading as the First, Second and Third Succession Plans) as to the ownership of the Property.
The first representation, as pleaded, was an oral representation by Dr Harry Kramer that he would leave the respondent a life interest in the Property in his will (see at [6] of the statement of claim). The respondent's evidence as to the first representation (see [83]-[85] of the primary judgment) was that in the early 1980s the late Dr Harry Kramer said to him words to the effect:
I am dealing with my Will and have decided to give the Colo Property to the girls on condition you receive a life interest, so you can work the Colo Property as your own for your life. The only other condition is that the family retain use of this cottage.
In cross-examination, the respondent accepted that the expression "life interest" was not used by Dr Harry Kramer (T 69.5-42) (attributing that expression to his lawyers).
[15]
Primary judgment
As noted above, the primary judge characterised the respondent's claim as being based on an estoppel by encouragement ([30] of the primary judgment) and there was no demur to this, although in submissions in this Court the respondent at times invokes the language of estoppel by acquiescence. The primary judge set out (from [32]) his distillation of the relevant principles governing such a claim. The primary judge, having referred (at [32]-[34]) to the judgments of Priestley JA in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 and Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582 (Austotel), noted that equitable estoppel operates on representations or promises as to future conduct and that it is not necessary that the representation be promissory in form (see at [35]). His Honour said that the "expanded fifth proposition" set out by Priestley JA in Austotel (as to the requirement for the creation or encouragement of an assumption and reliance thereon in circumstances where departure from the assumption would be unconscionable) may be satisfied:
… if the representation by the defendant encourages the plaintiff to make an assumption that an interest will be granted to the plaintiff by the defendant, and the plaintiff relies upon the assumption in circumstances where departure from the assumption by the defendant would be unconscionable.
going on to say:
Subjective knowledge by the defendant that the plaintiff is acting in reliance upon the assumption encouraged by the defendant may contribute to a departure from the assumption being unconscionable. However, the issue of whether the departure is unconscionable depends upon the particular circumstances of the case, so that if the nature of the representation and the circumstances in which it is made are calculated to induce reliance by the plaintiff, departure from the assumption may be unconscionable even if the defendant does not subjectively understand that the representation has motivated the plaintiff's reliance.
Pausing here, this is relevant when considering the challenge to the primary judge's finding that the deceased "clearly ought to have known" that the respondent's motivation for staying on the Property was the expectation that he would inherit it. That finding (of constructive knowledge) cannot be understood as being determinative of the issue of detrimental reliance in his Honour's eyes (as opposed to being a factor going to the unconscionability of resiling from the promise), as to which I say more in due course.
[16]
Kramer (No 2) judgment
I have already noted that outcome of the application by the respondent to amend his claim at first instance. Relevantly, in light of the challenge here made to the credibility findings, the primary judge in his second judgment, at [62], when referring to his finding in the primary judgment as to the lack of the commercial viability of the Property as a farming operation, indicated that this was a substantial basis for the determination of the respondent's claim in his favour. His Honour, somewhat equivocally, said:
It may be that a reason why the Court and [the first appellant] and her legal representatives simply accepted that the subject matter of [the respondent's] claim was the real property component of the Colo Property was that a basis of [the respondent's] claim was that the farming operation was not commercially viable, so the implicit assumption was that if [the respondent] succeeded in his claim, he would in due course sell the Colo Property and use the proceeds of sale to fund his retirement. [my emphasis]
As the primary judge presumably knew the assumption on which he had proceeded in the primary judgment, the equivocation in the above passage may simply relate to the position of the first appellant and her legal representatives. In any event, it is relevant to note that the primary judge at [62] of Kramer (No 2) made clear that the fundamental basis on which the respondent had achieved success in the proceeding was his Honour's finding as to the lack of commercial viability of the farming operation (a finding relevant to the detriment the respondent would suffer in reliance on the promise were the promise not to be made good; and the unconscionability of the deceased, through her executors, being permitted to resile from the promise). This was one of the matters that his Honour considered militated against the application by the respondent to amend and re-open his claim to encompass the water licence and farming equipment as part of the Property alleged to be held on trust for him.
At [65] of Kramer (No 2), his Honour accepted that if the claims for water licence and farming equipment had been advanced in the first hearing the respondent would have been subject to more avenues of cross-examination, with a "correspondingly increased risk" that he would have been unable to sustain his position with the same credibility that his Honour had accorded to his evidence in the primary judgment.
[17]
Appellants' application to adduce additional evidence
Before turning to the grounds of appeal it is convenient to deal with the application by the appellants, pursuant to r 51.51 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and s 75A(9) of the Supreme Court Act 1970 (NSW) (the Supreme Court Act), to adduce, as additional evidence, affidavit evidence given by the respondent after the date of the primary judgment (which was published on 10 November 2021) but before final orders were made in the proceeding in April 2023 (see their notice of motion filed 24 July 2023). That evidence was adduced in support of the respondent's May 2022 notice of motion for leave to amend his pleading and to re-open the evidence at trial (see the discussion in the transcript of the hearing on the motion on 20 October 2022 from T 3.22).
It is also of relevance to note that the respondent made clear at the hearing on 20 October 2022 that there was no application to vary the primary judgment or order (20/10/22; T 4.47). The respondent's affidavit evidence was read insofar as it went to the re-opening application and what would be said on any future hearing (and not read to prove facts on that application) (see 20/10/22; T 5.47). On that basis, the respondent was not cross-examined on various paragraphs of his affidavit evidence that the appellant's counsel indicated he would otherwise challenge (see 20/10/22; T 5.37).
Relevantly, what the appellants now seek to adduce is the respondent's evidence (contained in his affidavits affirmed on 11 March 2022 and 3 May 2022) as to what he understood the Property to comprise (i.e., that he considered the "farm" to comprise the land, the farm machinery, the improvements affixed to the land, and the water licence) (see his affidavit affirmed 11 March 2022 at [15]; and his affidavit affirmed 3 May 2022 at [4]) and as to his intentions in relation to the Property (namely, that he wanted to continue to operate, manage and maintain the farm if it were transferred to him) (see his affidavit affirmed 3 May 2022 at [5]).
The appellants seek to rely on this additional evidence in support of their challenge to the respondent's credibility (see ground 1 of the grounds of appeal). They argue that the respondent's "new" evidence that he sought to recommence the farming operation on the Property is inconsistent with a case of fundamental commercial unviability of the farming operation (which was a substantial basis for the determination in favour of the respondent at first instance, referring to [62] of Kramer (No 2) - see above). The appellants say that this new evidence would also have opened up a further line of cross-examination had this evidence been led at the trial.
[18]
Determination
Pursuant to r 51.51 of the UCPR, and s 75A(8) of the Supreme Court Act special grounds must be established for evidence that was available before the hearing to be admitted on a subsequent appeal. Ordinarily, an appellant will need to satisfy three requirements: first, that the evidence is credible; second that the evidence is highly or relevantly probative; and, third, that the evidence was not previously obtainable by reasonable diligence (see Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 per Clarke JA, with whom Sheller JA agreed).
In the present case, the evidence sought to be relied upon by the appellants is evidence that was read in the proceedings at first instance, albeit after the primary judgment had been delivered and only as to what would be adduced if the application to re-open was successful. As explained above, it was not adduced until prior to the final determination of the proceedings (and then only in the context of the application by the respondent to amend the pleadings and to re-open the evidence). In one sense, therefore, it might be said that the respondent's affidavit evidence that was read in the course of the hearing of the May 2022 motion is not evidence "after" final judgment in the matter (such that leave would not appear to be necessary for it to be relied upon in the appeal).
The real difficulty, it seems to me, is that the appellants seek to rely on this evidence in order to challenge the credit findings that were made by the primary judge following the first hearing (i.e., without the benefit of that additional evidence), in circumstances where at least some of the matters raised by that "additional" evidence had been the subject of challenge at the hearing itself (namely, the evidence as to the respondent not having informed the first appellant of the third representation) or were the subject of evidence that was before the Court on the hearing of the May 2022 motion (namely, the evidence as to the expenditure by the first appellant on equipment after the respondent had left the Property, on which the appellants seek to base an unfairness argument to impact on the respondent's credibility; and the evidence as to the respondent's intention to continue farming on the Property). It was presumably open to the appellants at the time of the hearing of the May 2022 motion to seek to rely on that additional evidence in order to re-open the credit findings that had been made in respect of the respondent following the first hearing, but the appellants apparently did not seek to do so; and to that extent they ought be bound by that forensic decision.
[19]
Proprietary estoppel by encouragement
To put into context various of the grounds of appeal, it is helpful briefly to outline the elements of a proprietary estoppel by encouragement claim, that being the equitable doctrine here invoked by the respondent (see the primary judgment at [30]).
Proprietary estoppel by encouragement is one of a number of discrete equitable doctrines falling within the rubric of "equitable estoppel". The elements common to such doctrines are encapsulated in the well-known formulation of Brennan J, as his Honour then was, in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429; [1998] HCA 7 (Waltons Stores v Maher):
… [I]t is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs. [My emphasis]
While those elements are not to be applied in every case in a "mechanical fashion" (Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 (Doueihi) at [166] (Gleeson JA, with whom Beazley P, as Her Excellency then was, and Leeming JA agreed); and see DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 (DHJPM) at [47] (Meagher JA, with whom Macfarlan JA agreed)), they are commonly regarded as a useful guide or check. It has been said that "if the facts of the case did not measure up to those tests, it would be necessary to think thoroughly about why not" (Austotel at 615-616 (Priestley JA), referred to approvingly in Doueihi (at [166] by Gleeson JA)).
[20]
Representation
The weight of appellate opinion is that there are less stringent certainty requirements for a representation or promise in proprietary estoppel, as distinct from the certainty requirements for estoppel by representation or promissory estoppel. While an express representation or promise is not necessary (indeed, the representation or promise may derive from conduct), it is necessary carefully to identify the alleged representation or promise (and this is to be assessed by reference to the circumstances of each case - see Doueihi at [186] (Gleeson JA), citing Verwayen at 445 (Deane J); see also, Thorner v Major [2009] 1 WLR 776 (Thorner v Major) at [56] (Lord Walker)).
In Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109 (Flinn v Flinn), Brooking JA (with whom Charles and Batt JJA agreed) concluded (at [80]) that a promise "may be definite in the sense that there is a clear promise to do something even though the something promised is not precisely defined" and made clear that uncertainty of the kind that would prevent the creation of a contract would not necessarily prevent the intervention of equity (see at [95]). Those passages from Flinn v Flinn have been cited approvingly on numerous occasions (see, for example, Delaforce v Simpson-Cook at [55]; Evans v Evans [2011] NSWCA 92 (Evans v Evans) at [121] (Campbell JA, with whom Giles JA and Sackville AJA agreed); DHJPM at [54] (Meagher JA); Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 (Crown Melbourne) at [215] (Nettle J); cf [159] (Keane J)). Similarly, in Evans v Evans (see at [116] per Campbell JA) it was accepted, in effect, that the precise content of the assumption and expected arrangements flowing from the relevant representation or promise need not always be susceptible to precise legal analysis (see also Plimmer at 713).
The representation or promise has been said to be sufficiently clear "if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely" (Galaxidis v Galaxidis [2004] NSWCA 111 at [93] (Tobias JA, with whom Giles and Hodson JJA agreed)). See also the statement by Hodgson JA in Sullivan v Sullivan [2006] NSWCA 312 (Sullivan v Sullivan) at [85] (cited with apparent approval in Evans v Evans at [124] (Campbell JA), Doueihi at [187] (Gleeson JA) and in Crown Melbourne at [147]-[148] (Keane J); [179] (Nettle J)) that:
Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit.
[21]
Assumption and inducement
In order to rely upon a proprietary estoppel by encouragement, it must be established that the representative held an assumption that he or she would have an interest in the relevant property (Carter v Brine [2015] SASC 204 at [326] (Blue J); Doueihi at [131]; [154]; [159]-[168] (Gleeson JA)), this requiring careful identification of the nature of the assumption held by the plaintiff (Doueihi at [186] (Gleeson JA)); and, relevantly, that this assumption was induced by the representor.
In cases of estoppel by encouragement, the relevant assumption is "induced" by the relevant representation or promise, be it express or implied from conduct. By contrast, in cases of estoppel by acquiescence, the relevant assumption is not "induced" in the same sense. Rather, it is the defendant's knowledge of the assumption, and his or her inaction while possessing this knowledge, which supplies the element of inducement; "[t]he act of standing by without correcting the plaintiff's mistaken belief is itself an act of encouragement" (Priestley v Priestley [2016] NSWSC 1096 (Priestley NSWSC) at [109] (White J, as his Honour then was)). As Brennan J said in Waltons Stores v Maher at 429:
… a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
This distinction is of significance here in terms of the challenge made by the appellant to the finding of knowledge (see ground 4 below).
[22]
Reliance
There is no presumption of reliance; rather, reliance is a fact to be found (Sidhu v Van Dyke at [58]); and it is not necessary that the relevant assumption be the sole inducement operating on the mind of the party setting up the estoppel (Sidhu v Van Dyke at [71]; it need only be a "contributing cause" at [71]-[73] (French CJ, Kiefel, Bell and Keane JJ); [90] (Gageler J)).
The test for reliance has been variously expressed. On the one hand, it has been said that a plaintiff must show that he or she "would have acted differently" but for the assumption (see Gageler J in Sidhu v Van Dyke at [90]ff; Darke J in Stone v Stone [2014] NSWSC 1655 at [44]-[46]; this Court in Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 (Miller Heiman) at [37]-[49] (Macfarlan JA, with whom McColl JA and Sackville AJA agreed); White J in Priestley NSWSC, and Macfarlan JA, on appeal, in Priestley v Priestley). On the other hand, it has also been said that the question is whether the promise or representation was "a contributing cause" or "influenced" the plaintiff's action (Edelman J's reading of Sidhu v Van Dyke in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1 at [776]-[779]; Emmett AJA in Priestley v Priestley at [136]; K Handley, "Recent Cases" (2017) 91 Australian Law Journal 812). In E Co v Q [2018] NSWSC 442, at first instance I noted my view was that the better reading of the Sidhu v Van Dyke "contributing cause" test is that propounded by Gageler J (Sidhu v Van Dyke), White J (Priestley NSWSC), and Macfarlan JA (Miller Heiman; Priestley v Priestley). I remain of that view.
[23]
Detriment
The basal purpose of the equitable estoppel doctrine was identified by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674; [1937] HCA 58 as being "to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting".
In a case of estoppel by encouragement, the relevant detriment is not the loss flowing from mere non-fulfilment of a representation or promise (Verwayen at 429 (Brennan J); and see Neuberger LJ in Steria Ltd v Hutchison [2007] ICR 445 at [125]). Rather, what must be established is that the plaintiff has suffered (or will suffer) detriment if the defendant is permitted to resile from his or her representations or promises.
As with reliance, there is no presumption of detriment; the fact that detriment has been suffered (or will be suffered) must be established on the balance of probabilities. However, the concept of detriment in the context of proprietary estoppel is neither narrow nor technical (Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 (Donis v Donis) at [20] (Nettle JA, with whom Maxwell ACJ and Ashley JA agreed)).
The question of detriment is assessed as at the time a party seeks to depart from the assumption or expectation (DHJPM at [72] (Meagher JA)). Detriment may be of a kind that involves "life-changing decisions with irreversible consequences of a profoundly personal nature" (Donis v Donis at [34]; cited approvingly in Sidhu v Van Dyke at [84] (French CJ, Kiefel, Bell and Keane JJ)).
[24]
Unconscionability
Finally, as to the element of unconscionability, it does not exist at large (and has been said not to be a "triable issue" as such - see MGL at [17-040] and the authorities cited therein; K Handley, Estoppel by Conduct and Election (2nd ed 2016, Sweet & Maxwell) (Estoppel by Conduct and Election) at [1-027]-[1-032]).
The question of unconscionability requires an enquiry into the conduct of the relevant representor or promisor; and a conclusion that such conduct was sufficiently unconscionable (see, for example, Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 506 (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ); [1993] HCA 15; Trippe Investments Pty Ltd v Henderson Investments Pty Ltd (1992) 106 FLR 214 at 231 (Kearney, Angel and Morling JJ)). The current holistic approach to unconscionability can be seen in the judgment of Allsop P, as his Honour then was, in Delaforce v Simpson-Cook at [3]:
Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character.
In equitable estoppel in general, the knowledge or intention of the representor or promisor is fundamental in the enquiry as to the unconscionability or otherwise of the representor's conduct.
Knowledge was given prominence in Fry J's formulation of proprietary estoppel in Willmott v Barber (1880) 15 Ch D 96, 105-106 (Willmott v Barber), which included a requirement that the representor knew of the representee's mistaken belief. Brennan J's formulation in Waltons Stores v Maher suggests that intention may suffice, insofar as his Honour considered that a requisite element of equitable estoppel is that a party "knew or intended" for the other to act in reliance on the assumption or expectation. However, the standard of knowledge so required is not settled. Deane J in Verwayen suggests that an objective or constructive knowledge test would be sufficient (at 444-445):
…in cases [where a party has induced the assumption by express or implied representation], a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption. [my emphasis]
[25]
Grounds of Appeal
Turning now to the particular grounds of appeal, the appellants have raised eight grounds of appeal. I deal with those in turn.
[26]
Ground 1 - challenge to finding as to the making of third representation
Ground 1: The primary judge erred in finding that the late Dame Leonie Kramer ("the Deceased") made a representation in the terms of or to the effect of the third representation to the Respondent ([249])
The appellants' challenge to the finding at [249] of the primary judgment that the deceased made the third representation largely focuses on the asserted implausibility of the first and second representations, which is said to cast doubt on the making of the third representation, but the appellants also take issue with the primary judge's credibility findings. To the extent that the challenge is to a finding based on an assessment of credibility, the Fox v Percy test must be met (namely, that "incontrovertible facts or uncontested testimony" demonstrate that the trial judge's conclusions are "erroneous" or the conclusion at trial was "glaringly improbable" or "contrary to compelling inferences" (see Gleeson CJ, Gummow and Kirby JJ at [28]-[29] of Fox v Percy)).
The significance placed by the appellants on the implausibility of the first and second representations is that the terms of the third representation are predicated on there being an earlier agreement between the Kramers. That is, of course, true insofar as the respondent's evidence was that the deceased prefaced the third representation with words to the effect of "Harry and I did agree …" but in one sense whether or not there was in fact any such agreement is not material - the question is whether the deceased conveyed to the respondent that there was such an agreement.
As noted earlier, the appellants complain that the primary judge did not consider the acceptability of the third representation in the context of the acceptability of the first and second representations. The respondent cavils with this, pointing out that, in accepting the evidence of the respondent, his Honour stated that it was more rational to decide that the assurances (plural) were made as asserted by him or that they were not made at all ([244]). The respondent says that the first and second representations were correctly characterised as forming the background (as held at [162]) to the third representation, as they were made by Dr Harry Kramer (not the deceased) and therefore did not bind the deceased's conscience, and they were superseded by the third representation (referring to [159]-[162] of the primary judgment).
[27]
Asserted implausibility of the first and second representations
As to the asserted implausibility of the making of the first and second representations, the appellants point to the following matters: first, that, in the early 1980s when the first representation was allegedly made, the respondent was about 30 years old and had only been share farming on the Property since 1975; second, that the Property was owned by the Kramers jointly and hence would pass by survivorship to the deceased on her husband's death; third, that there is no reference in Dr Harry Kramer's 7 July 1988 will (or his document "Actions you must take soon after I die") to any agreement between the Kramers that the Property be transferred to the deceased on the basis that it be left to the respondent on her death; and, fourth, the evidence of Jocelyn Kramer (the deceased's other daughter) as to her conversation with Dr Harry Kramer in April 1987 when she asked him whether he would leave the Property to the respondent and his response thereto (see her affidavit sworn 14 August 2018 at [31]).
The appellants submit that it is implausible that Dr Harry Kramer, then in his early to mid-60s, would have spoken to the much younger respondent (who had then only share farmed the Property for five years) about a life interest in a will that he (Dr Harry Kramer) might in the future make. They argue that the respondent's evidence as to the first representation suggests that Dr Harry Kramer did not know that he held the Property jointly with the deceased or did not know the significance of a joint tenancy (contrary to the terms of Dr Harry Kramer's will, which included reference in cl 3(1)(i) to the farm property owned by his wife and himself). The appellants note that in cl 3(1)(i) of his will, Dr Harry Kramer gave the respondent a $10,000 legacy if he was share farming at the date of his death; and that in the conversation to which Jocelyn Kramer deposed, Dr Harry Kramer's response was to the effect that leaving the Property to the respondent could become awkward as the family would still want access to the farm and that it seemed the most practical to leave it to the deceased and whatever she decided to do about it later was her decision.
The appellants also maintain that the conversation attributed by the respondent to Dr Harry Kramer was out of character for him, pointing to the evidence that both the deceased and Dr Harry Kramer were very private persons (as to the latter reference being made to T 68.7); and that the deceased was careful as to the decisions made about her wills (reference being made to the discussions that Jocelyn Kramer had with the deceased as to her wills - see -(c) of her affidavit sworn 14 August 2018).
[28]
Challenge to the credibility findings
As to the challenge to the respondent's credibility (leaving aside the additional evidence that the appellants sought to adduce in relation to this, which has been considered already), the appellants say that the respondent's evidence in cross-examination in relation to the first and second representations was unsatisfactory and that this adversely affects the acceptability of his evidence concerning the third representation.
In this regard, the appellants point to the respondent's concession in cross-examination in relation to the first representation that the words "succession plan" were not used (T 67.45) (cf the account in his affidavit); and that the expression "life interest" was not used by Dr Harry Kramer (T 69.5) and that this was an expression he had heard from his lawyers.
As to the criticism of this evidence, the respondent says that he never stated that Dr Harry Kramer used the words "succession plan"; rather, that he only used those words to describe what he believed Dr Harry Kramer was raising or "bringing up" with him. Reference is made to [84], where his Honour noted that the respondent had conceded that Dr Harry Kramer had not used the words "life interest" but that the respondent had given evidence that Dr Harry Kramer had explained to him that the Property would be his to work for the rest of his life (T 69.41). It is also noted that (at [99]) the primary judge observed that the recollection of the words used by the Kramers in making the representations must be fallible, given the length of time that had passed, and did not diminish the honesty and genuine recollection of the respondent's understanding of the meaning and effect of the words used.
In relation to the second representation, the appellants note that the respondent maintained in cross-examination that Dr Harry Kramer had agreed to transfer the Property to the deceased even though the respondent knew that the Property was jointly owned and passed automatically to the other joint tenant (T 78.32-34).
As to the significance of the joint ownership of the Property by the Kramers, the respondent says that he did not know at the time the second representation was made that the Property was jointly owned by the Kramers as joint tenants, pointing to his evidence (at T 78.20-30) that "I know that now" and "I understand that now".
[29]
Import of additional evidence
As explained above, the appellants argue that the respondent's evidence (after the primary judgment) as to his understanding of the expression "farm" in the third representation and his intentions concerning the Property casts doubt as to the "exceptional credibility" finding made by the primary judge at [167], placing weight on the fact that the respondent failed to adduce that evidence at the first instance hearing and therefore did not expose himself to cross-examination on these matters.
[30]
Determination
I do not accept that the challenge to the credibility findings has been made good. The primary judge had the benefit of seeing the respective witnesses in the course of the hearing; and clearly formed a very favourable view of the respondent's credit (expressing that view in emphatic and unqualified terms). Further, although the primary judge adverted to the "increased risk" (had there been cross-examination on the matters sought to be raised by the additional evidence) that the positive ("exceptional") credibility findings would not have been sustained, the primary judge apparently did not see the need to revise his view of the respondent's credit having regard to the (untested) additional evidence that was put before him at the second hearing as evidence that would be adduced if the matter was to be re-opened on those issues.
Relevantly, I do not accept that the credibility finding made by the primary judge (although in uncommonly glowing terms) that the third representation was made is glaringly improbable on the objective evidence. While it is unfortunate that there was delay in the publication of the primary judgment, his Honour made clear that in preparing his reasons he had had the benefit of his notes at the time and there is nothing to indicate that his Honour did not carefully review that evidence in light of all of the oral and documentary evidence before him when he came to prepare his reasons. This is not a case where it could be concluded that the delay was such as to cast doubt on the reasoning process adopted or the findings that were made.
Nor is the finding as to the making of the third representation inconsistent with incontrovertible objective evidence.
As to the complaint that the primary judge failed to assess the acceptability of the third representation by reference to the acceptability of the first and second representations, I accept that there is not a clear finding as to the making of one or both of the first or second representations but I do not accept that this leads to a conclusion that there was error in the finding as to the third representation. Rather, the third representation is capable of standing on its own, even with the words "Harry and I did agree …"; and I consider that the significance of the evidence as to the first and second representations goes only to the context in which the third representation was made and as to what it would objectively have conveyed to a person in the respondent's position.
[31]
Ground 2 - was the third representation an assurance or a revocable statement of testamentary intention?
Ground 2: The primary judge erred in finding ([244]) that the third representation was an "assurance" the Deceased would give the [Property] to the Respondent in her Will
Ground 2 challenges the finding that the third representation was an "assurance" (as opposed to a revocable testamentary promise). This ground of appeal raises the difficulty identified in the cases where the relevant assumption or expectation relates to testamentary intentions or promises (see, for example, Gillett v Holt [2001] Ch 210 (Gillett v Holt); Flinn v Flinn; Waltons Stores v Maher; Thorner v Major; and Priestley v Priestley).
In Flinn v Flinn (at [75]) Brooking JA said that:
Most people, I suppose, know that the maker of a will can revoke it at any time before death. How is a promise to make a will to be understood? Surely it will ordinarily be regarded by the promisee as a promise, not merely to make a will which can be revoked at any time before death, but to make a gift by means of an instrument which will take effect upon the donor's death. In other words, the promise of a gift by will is ordinarily to be understood as meaning just that - an effective gift by will, taking effect on death, not an ineffective, because revoked, disposition. Of course it all depends on the circumstances. ...
In Delaforce v Simpson-Cook at [36] Handley JA made reference to the observation by Robert Walker LJ in Gillett v Holt at 227-228:
…the inherent revocability of testamentary dispositions (even if well understood by the parties …) is irrelevant to a promise or assurance that 'all this will be yours' … Even when the promise or assurance is in terms linked to the making of a will … the circumstances may make clear that the assurance is more than mere statement of present (revocable) intention, and is tantamount to a promise.
In the context of a case premised on estoppel by encouragement, the factual question in this regard is whether the representation or conduct amounted to more than a mere statement of present (revocable) testamentary intention and was instead "tantamount to a promise" (in Estoppel by Conduct and Election at [16-031], the author notes that "[a]lthough testamentary promises are normally revocable, they become irrevocable if they are reasonably understood as being binding").
[32]
Determination
I am not persuaded that the primary judge erred in concluding that the representation made to the respondent that the deceased would leave the Property to him would have been understood by a reasonable person in the respondent's position as an assurance, (i.e., tantamount to a promise) rather than a mere statement of revocable intention, although I have reached that conclusion not without some hesitation. The reason for that hesitation is simply the fact that the third representation in its terms is a discrete statement of testamentary intention; there is nothing to indicate that it was linked to the respondent continuing to remain as a share-farmer on the Property (cf the terms in which the first representation conditioned the promise of a life interest on that fact); and it was not made in response to anything that the respondent had raised. Unlike the position in Gillett v Holt, it was not repeated many times over the years.
However, when one considers what would objectively have been conveyed to a person in the respondent's position knowing the character of the deceased, it was open to the primary judge to conclude that this was not a mere revocable statement of testamentary intention. Ground 2 should therefore be dismissed.
[33]
Ground 3 - is it necessary that there be encouragement after representation?
Ground 3: The primary judge erred by failing to find the Deceased did not encourage the Respondent to act to his detriment in reliance upon the making of the third representation
Ground 3 raises the legal issue as to whether in an estoppel by encouragement case it is necessary that there be encouragement by the representor after the making of the representation. The appellants argue that this is required in conformity with the decision of the High Court in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 (Giumelli) at [35] (Gleeson CJ, McHugh, Gummow and Callinan JJ); and that the failure of the deceased to encourage the respondent to act in reliance on the third representation (after the making of the representation) means that the claim should have been dismissed.
In this regard, the appellants say that [228] of the primary judgment (see above) contains the primary judge's only "finding" of encouragement, noting that the primary judge did not make a finding that the third representation, on a reasonable interpretation, contained the necessary element of encouragement. (Pausing here, [228] is not a finding at all; it is an exposition of legal principle.)
The appellants refer to Olsson v Dyson at 378-379, where Kitto J (Barwick CJ and Windeyer J agreeing) considered at 379, after observing that "what gives rise to an equity which the attempted making of the gift did not by itself create is the conduct of the intending donor after the act of incomplete gift", that:
He intended to make her a gift ... but there the matter ended, without him thereafter offering her any encouragement or inducement to adopt a course prejudicial to herself, and without his doing anything else that can be held to have bound him in conscience to perfect the imperfect gift.
As noted above, reliance is placed by the appellants on Giumelli, where the High Court at [35] quoted with approval the observation of McPherson J in Riches v Hogben (1985) 2 QR 292 (Riches v Hogben) that "the critical element is the conduct of the defendant after the representation in encouraging the plaintiff to act upon it"; and (at [36]) noted that in Kitto J's observations in Olsson v Dyson of the two concurrent lines of reasoning in Dillwyn v Llewelyn both involved encouragement. The appellants also make reference to MGL at [17-095] where there is reference to the element of encouragement common in the lines of authority derived from Dillwyn v Llewelyn and Ramsden v Dyson, that the acts performed in detrimental reliance on the relevant expectation or belief are either encouraged by, or known to the representor.
[34]
Determination
I accept that there are no positive findings by the primary judge as to the element of encouragement per se; rather, the primary judge observed (in his distillation of the relevant principles (at [228])) that a bare statement that the maker will do a specified act in the future may be sufficient encouragement. Nor was there any positive finding of intention on the part of the deceased as at the time of making the third representation. However, I consider that, fairly read, the primary judge must have concluded that the making of the third representation by itself amounted to the requisite encouragement (particularly having regard to his Honour's emphatic rejection of the proposition that the deceased would have made the third representation to convey a mere possibility of inheritance rather than as an assurance, as that would have been cruel and out of character for her ([244])).
I agree with the respondent that the submissions by the appellants do not distinguish between encouragement constituted by the making of the representation itself and encouragement after the making of the representation; and that in that sense they conflate the two concepts. The authorities to which I have earlier referred make clear in my opinion that the act of inducement or encouragement in an estoppel by encouragement case may simply be the making of the representation itself. Indeed this will often be the case where the form of estoppel invoked is estoppel by encouragement. Accordingly, I am not persuaded that the primary judge erred in failing to find that there was encouragement after the making of the representation.
That said, I consider that the respondent cannot now maintain a case of acquiescence or standing by, not having run such a case at first instance and without having filed a notice of contention.
Ground 3 is not made good.
[35]
Ground 4 - is actual knowledge of detrimental reliance required?
Ground 4: The primary judge erred in finding that subjective knowledge by the Deceased that the Respondent had acted to his detriment is not essential where she ought reasonably to have assumed (J [234]) or ought to have known (J [251]) that part of the Respondent's motivation for continuing was an expectation he would receive the [Property]
By ground 4, the appellants contend that the primary judge erred in applying a test of constructive knowledge to the deceased's knowledge of the respondent's detrimental reliance (see the primary judge's reasons at [234]). The appellants contend that in an estoppel by encouragement case there is a requirement of actual knowledge or intention (relying on the judgment of Brennan J in Waltons Stores v Maher at 429, extracted above, and its acceptance by this Court in DHJPM at [48] per Meagher JA (Macfarlan JA agreeing), and its later explanation in Doueihi per Gleeson JA).
The appellants complain that the primary judge does not explain how the "clearly ought to have known" test articulated by Deane J in Verwayen is to be expressed in terms of what a reasonable person in the position of the representor would understand was probable (see at [234]), suggesting that his Honour may there have been influenced by the discussion of constructive knowledge in Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) at [174] (which addressed constructive knowledge in second limb Barnes v Addy (1874) LR 9 Ch App 244 cases by reference to the five categories of knowledge explained in Baden v Societe Generale pour Favouriser le Developpement du Commerce et de l'Industrie en France SA [1992] 4 All ER 161).
The appellants submit that the requirement in a Dillwyn v Llewelyn proprietary estoppel case that the representor knew or intended that the representee act to his detriment has its genesis in the dissenting speech of Lord Kingsdown in Ramsden v Dyson at 170, which was quoted with approval by Meagher JA in DHJPM at [53]. The appellants refer to the judgments in Waltons Stores v Maher, where Brennan J quoted with approval Lord Kingsdown's statement of principle in Ramsden v Dyson and included, in the matters necessary to establish an equitable estoppel, the requirements that "the plaintiff acts or abstains from acting in reliance on the assumption or expectation" and that the defendant "knew or intended him to do so"; saying that each of the other members of the Court in Waltons Stores v Maher referred to a requirement of actual knowledge (Mason CJ and Wilson J at [406]; Deane J at [433]; and Gaudron J at [463]).
[36]
Determination
I have referred earlier to the distinction between the two forms of proprietary estoppel - estoppel by encouragement and estoppel by acquiescence - and, in particular, that in the latter it is the defendant's knowledge of the plaintiff's reliance on the assumption or expectation that amounts to the relevant inducement or encouragement (i.e., that the acquiescence or standing by without correcting the mistaken belief or expectation is itself an act of encouragement, in the words of White J in Priestley NSWSC).
However, there is a question as to the temporal nature of a requirement of knowledge or intention in an estoppel by encouragement case. If the requirement that the defendant "knew or intended" the plaintiff to act or abstain from acting in reliance on the relevant assumption or expectation (adopting the language used in the fourth of the elements set out by Brennan J in Waltons Stores v Maher at 428-429, which I have extracted at [77] above) is a requirement of subjective knowledge or intention at the time of making the relevant representation, then the findings in the present case are problematic insofar as there is no express finding of such knowledge or intention.
As to the question of knowledge at the time of making the representation, while there is no express finding that the deceased knew that the promise of inheritance would be relied upon by the respondent, I consider that his Honour must have inferred such knowledge (having regard to his finding at [244]) to which I have referred above; and I accept the respondent's submission that as a matter of principle such knowledge may be inferred.
As to the question of intention, the closest that the primary judge comes to such a finding is in the observation to the effect that it would have been cruel for the deceased to have made the third representation intending to convey that the respondent's inheritance of the Property be no more than a possibility ([244]).
I have difficulty seeing an evidentiary basis for an inference that the deceased intended the promise to be relied upon (and certainly not that it would be relied upon by the respondent choosing to remain on the Property) particularly where it is not suggested that the third representation was made in the context of any discussion as to the respondent's future plans in relation to the Property or the share farming agreement. It seems to me that this is a far cry from cases where the promise or representation is linked in some way to the party asserting the estoppel continuing to perform services of some kind (see, for example, the representation in In re Basham, decd [1986] 1 WLR 1498 at 1503 that "[y]ou'll lose nothing for this, doing all these jobs").
[37]
Ground 5 - challenge to finding that deceased "ought to have known" that there was detrimental reliance
Ground 5: The primary judge erred in finding at J[234] that the Deceased ought reasonably to have assumed (J [234]) or ought to have known (J [251]) that part of the Respondent's motivation for continuing was the expectation he would receive the Colo property
Ground 5 challenges the finding of constructive knowledge and, in light of the conclusion I have reached as to ground 4, it is not necessary to determine and I propose only briefly to address it.
The appellants say that, despite adopting the "clearly ought to have known" test formulated by Deane J in Verwayen at 445, the primary judge did not make factual findings which conformed to the test; arguing that the factual findings at [234] that the deceased "ought reasonably to have assumed" and at [251] that the deceased "ought to have known" are materially in different terms to the "clearly ought to have known" test and that they appear to involve a lesser standard of constructive knowledge than the "clearly ought to have known" test. The appellants thus submit that there is an "arguable case" that the primary judge erred in his findings of constructive knowledge at [234] and [251].
As to this submission, the respondent argues that the primary judge's findings on this issue are in conformity with what was found in relation to knowledge of detrimental reliance in Doueihi (referring to the "must have known" test in Doueihi at [51]; [60] (Gleeson JA)). (In reply submissions, the appellants say that, whether or not the test of "ought reasonably have assumed" and "ought to have known" applied by the primary judge is in conformity with the "must have known" test in Doueihi at [51], [60], it is not the test of "clearly ought to have known" enunciated by Deane J in Verwayen at 445 (from which the primary judge drew authority to apply a constructive knowledge test).)
Leaving aside any error in the test applied, the appellants challenge the factual finding that the deceased ought to have known that the respondent's motivation for staying on the Property was the expectation that he would inherit it.
Complaint is made that the primary judge, in considering the issue of constructive knowledge, focused on the respondent's paucity of income (see [234] and [251]) and his own research as to what the respondent could have earned had he pursued employment that returned an average level of income (see [153]-[154]) but failed to have regard to the benefits the respondent received from the share farming agreement and his lack of complaint by the respondent (as to his working arrangements).
[38]
Determination
The complaint as to whether the primary judge correctly applied the "clearly ought to have known" test (assuming it applied at all) goes nowhere in light of the conclusion reached in relation to ground 4.
As to the challenge to the factual finding itself, I do not accept that the finding that the deceased ought to have known that the respondent's motivation for staying on the Property was the expectation that he would inherit it is glaringly improbable or inconsistent with incontrovertible facts. The very fact that the appellants' submissions are cast in terms that there must be a doubt about the deceased's awareness, or that it is far from clear that this was her awareness, suggests that what the appellants here cavil with is the ultimate conclusion that the primary judge drew from the evidence before him as to matters that would be a matter for assessment balancing the competing advantages and disadvantages of the respondent continuing to work on the Property. I am not persuaded that the primary judge erred in the conclusion he reached and thus ground 5 is not made good.
[39]
Grounds 6 and 7 - issues going to detrimental reliance and relief
Ground 6: The primary judge erred in finding that the Deceased acted unconscionably in not leaving the Respondent the Colo property in her Will despite the fact that she left him a legacy of $200,000
Ground 7: The primary judge erred in finding that the Respondent is entitled to equitable relief to relieve him of the effect of unconscionable conduct attributed to Dame Leonie ([252])
Ground 6 raises the question whether the respondent is entitled to rely on his contractual performance of the share farming agreement as a detriment, or whether (as is alleged in ground 8) such reliance by him was unreasonable. Ground 6 also raises the question of relief and whether the respondent's equity was satisfied by the monetary legacy received under the Will. Ground 7 is also a general ground of appeal which relies upon the success of grounds 1 to 5 and 8. The submissions on grounds 6 and 7 overlap.
As to ground 6, the appellants invoke the statement made by Young CJ in Eq in Barnes v Alderton that contract and proprietary estoppel are mutually exclusive (his Honour there referring to the observation of McPherson J in Riches v Hogben at 301 to the effect that if there is a contractual promise then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law, and not to replace it.). The appellants point to the description by the primary judge of the relationship between the respondent and the Kramers as an informal halfway house between a commercial and a domestic one, even though there was an underlying commercial relationship in the form of the share farming agreement ([41]).
By ground 6, the appellants pose the question whether the respondent can rely on his contractual performance of the share farming agreement in order to found a proprietary estoppel, i.e., whether the respondent can rely on performance of the share farming agreement as detrimental reliance. The appellants argue that, as the purpose of an equitable estoppel is the avoidance of detriment (see Verwayen per Mason CJ at 410-411, Dawson J at 454, quoted with approval in Giumelli at [43]), that there can be no room for an estoppel in the present case since the detriment relied upon by the respondent is his performance of the share farming agreement (which the respondent was bound to perform). The appellants submit that estoppel and contract in this way are mutually exclusive.
[40]
Determination
Insofar as the appellants challenge the finding of detrimental reliance on the basis that the respondent cannot rely upon his contractual performance of the share farming agreement as a relevant detriment (because he was bound to perform those obligations in accordance with the share farming agreement) and argue that contract and estoppel are here mutually exclusive, I consider that this fails to engage with the basis on which the respondent maintains that there was detrimental reliance - namely, that he did not terminate the share farming agreement (as he could have done) but remained on the Property in the expectation that he would inherit it. Understood in that way it does not seem to me that the respondent's case relies on contractual performance of the share farming agreement per se; rather, it relies on the fact that he chose not to terminate that agreement.
It is not necessary to delve into the issue whether the appellants' submissions impermissibly characterise the rights between the deceased and the respondent from a contract perspective in the absence of a ground of appeal that challenges the finding by the primary judge at [41] (though I have some difficulty with the proposition that it suffices simply to "introduce a review" of such a finding in submissions in chief). Nothing turns on this.
If the expectation induced in the respondent was a contributing cause to his decision to remain on the Property and not to terminate his share farming agreement and, but for the expectation engendered in him he would not have done so (as the primary judge in essence has found), then, as a matter of common sense and likelihood as "a matter of the probabilities of human behaviour" it can comfortably be concluded that there was detrimental reliance on that expectation in the sense explained in Sidhu v Van Dyke (and in Donis v Donis).
As to the complaint that the relief granted is grossly disproportionate to the detriment suffered by the respondent doing what he contracted to do, again that fails to recognise that the detriment is not the continued performance of his contractual obligations but the fact that the respondent did not seek remunerative employment elsewhere.
As to the question of proportionality, I do not accept that the relief granted is out of all proportion to the detriment suffered.
In Donis v Donis at [34], Nettle JA (then sitting in the Victorian Court of Appeal), with whom Maxwell ACJ and Ashley JA agreed, gave the example of two extremes: a defendant promising to transfer property worth $1 million and the plaintiff suffering "a couple of hundred dollars" detriment in constructing a shed on the defendant's land (where such an outlay may be characterised as "small and impersonal" and "wholly compensable in cash") contrasted with detriment involving "life-changing decisions with irreversible consequences of a profoundly personal nature".
[41]
Ground 8 - was reliance unreasonable?
Ground 8: The primary judge erred in declaring that the Appellants as executors of the estate of the Deceased and in lieu of clause 6 of the Will of the Deceased dated 11 November 2011 hold the Colo property on trust for the Respondent (order 1 made 16 February 2023) in circumstances where:
(a) it was unreasonable for the Respondent to have acted in reliance upon the third representation given that he and the Deceased were in a commercial relationship in the form of a share farming agreement by which the Respondent farmed the Colo property and lived in one of the cottages on it;
(b) the Respondent received a legacy of $200,000 pursuant to clause 6 of the Deceased's Will dated 11 November 2011
Ground 8 approaches the question of detriment from a different perspective to that raised by ground 6; the appellants by this ground argue that it was unreasonable for the respondent to have acted in reliance upon the third representation given that he and the deceased were in a commercial relationship through the share farming agreement.
The appellants distinguish between the requirement that the representee act reasonably in relying on the promise (referring to Priestley v Priestley at [13] per Macfarlan JA; Doueihi at [77] per Gleeson JA quoting White J (as his Honour then was) at first instance at [227] in Priestley NSWSC) and the separate principle that a representation reasonably carries the meaning contended for (referring to Sullivan v Sullivan at [85] per Hodgson JA); as well as the further principle that it is sufficient if the representation was a "contributing cause" to the representee's conduct (referring to Sidhu v Van Dyke at [90] per Gageler J).
Again, the appellants point to the existing contractual agreement, arguing that it is unreasonable and inequitable for the respondent in effect to say that he would not perform his share farming agreement without the promise of the Property; and hence they argue that it was not unconscionable for the deceased to have resiled from the third representation.
Insofar as this submission is premised on the arrangement between the deceased and the respondent being a commercial relationship, the respondent again points to the primary judge's finding that the relationship was not purely commercial (namely, that a "halfway house" commercial/domestic relationship existed - see [41]). The respondent says that his Honour's finding is consistent with the absence of a number of elements from his relationship with the deceased, including that he was not an experienced businessman who could be taken to have contemplated or intended that any proprietary right could be created by a binding contract ([39] (citing Doueihi at [165]), [40]), and who was not receiving legal advice (at [45] citing Trentelman at [122] (Bathurst CJ, with whom Bell P, as his Honour then was, and Leeming JA agreed) and Cobbe at [68] (Lord Walker)).
[42]
Determination
I do not accept that Ground 8 has been made good. Leaving aside whether the share farming agreement was "commercial" or a halfway house between a commercial and domestic relationship (whatever that may mean), I cannot see that the primary judge erred in concluding that reliance by the respondent on the third representation (by not terminating the share farming agreement and instead remaining on the Property until the deceased's death) was not unreasonable. Nor do I consider that the respondent's claimed relief is in any way inequitable.
As I understand the evidence, the respondent did not make any demand of the deceased in relation to the Property; rather, the deceased made the third representation to him and his evidence, in effect, was that he simply relied on the deceased to keep her word. The flaw in the submission that his conduct was in some way inequitable because of the existing contractual agreement is that it assumes that the respondent could not lawfully have brought that agreement to an end - it is the foregoing of the opportunity to seek remunerative employment elsewhere that founds the relevant detriment (not a demand for a promise of inheritance as some price for performing his existing contractual obligations).
[43]
Conclusion
For the above reasons I consider that the appeal should be dismissed.
The appellants sought, if the appeal were successful, the costs of both the appeal and the first instance proceedings. Had that issue arisen there may have been some difficulty in that part of the issues raised at the hearing before the primary judge were determined against the appellants (and there is no challenge thereto); such as the allegations of dishonesty and incompetence in performance of the share farming agreement. Nevertheless, in light of the conclusion I have reached as to the outcome of the appeal, it is not necessary to consider this. Costs should follow the event.
The orders I propose are therefore:
1. Dismiss the appellants' notice of motion filed 24 July 2024 with costs.
2. Dismiss the appeal with costs.
LEEMING JA: I have had the large advantage of reading the reasons of Ward P in draft. I agree with the orders her Honour proposes, and, subject to the following, which is by way of elaboration rather than qualification, with her Honour's reasons.
The first hearing took place over six days between 20 and 27 November 2020. Judgment was reserved. No orders were made when the primary judge published reasons on 10 November 2021: Stone v Kramer [2021] NSWSC 1456. Instead, those reasons invited the parties to draft short minutes of order to give effect to them. Rather than orders being made in the following days, there was a second hearing on 18 March 2022, which served to confirm that a number of matters remained in dispute, including that Mr David Stone sought to amend his pleading so as to advance new claims over the water entitlements attaching to the land. That led to procedural orders being made (by consent) on 29 March 2022, granting Mr Stone leave to file and serve further evidence in support of his new claims, and a third hearing on 20 October 2022 following which his Honour reserved and delivered further reasons on 16 December 2022: Stone v Kramer (No 2) [2022] NSWSC 1716. Once again no orders were made, although this time 15 substantive orders were proposed with a view to the parties being heard further as to their form. The reasons recorded the primary judge's view that the application to amend should in large measure be refused, primarily on the basis of what had occurred at the first hearing, including the more limited cross-examination Mr Stone had faced, the unfairness of permitting Mr Stone to add to his success by expanding his claim without being subjected to the same litigation risk as if he had advanced the expanded claim at the first hearing, and the inevitability that the Court would be drawn into re-considering many of the issues that have been determined: at [65]-[67]. However, the primary judge did permit a limited expansion of Mr Stone's case, and thus ordered a further timetable for the determination of the "New Issue", which was defined in proposed order 7 as "the new issue raised by the amendment of [Mr Stone's] statement of claim".
[44]
Ground 1
I agree with Ward P that ground 1 should be dismissed. That said, it should not be thought that factual findings at first instance are insulated from appellate review merely either by concluding that a witness was "exceptionally credible", or by relying on contemporaneous notes made shortly after a trial. However, the primary judge explained, at length, that he was familiar with the distortions of human recollection, the close scrutiny of evidence required when a deceased estate is involved, the fallibility of demeanour-based findings and the need for reconciliation with the probabilities and other evidence, and attended to the fact that Mr Stone's sworn evidence of the conversation some thirty years ago was materially different from that in his affidavit. His Honour said at [182]-[183]:
Notwithstanding the self-evident validity of these reservations about the wisdom of a court accepting the oral evidence of an interested witness that is not directly corroborated of statements allegedly made by a now-deceased person long in the past, the courts may from time to time have to decide cases of considerable importance to individual plaintiffs, where the plaintiff's claimed rights are based upon statements made to them in private, in circumstances where the context is one of trust between the participants, and where they have no intention to seek legal advice, to involve strangers in the transaction, or to enter into formal legal agreements. …
While it is clear that the amplification of the forensic uncertainties that may attend the enforcement of non-commercial arrangements based on oral agreements in informal circumstances, where it is expected that the agreements will be honoured on the basis of trust, requires that the Court exercises exceptional care in acting on the evidence of a plaintiff that is not directly corroborated concerning oral assurances, that is a circumstance that only makes the Court's duty more onerous. The issue is always whether the plaintiff has established the claim on the balance of probabilities, having regard to all of the evidence, as well as the gravity of the matters alleged and the other considerations required to be taken into account under s 140(2) of the Evidence Act 1995 (NSW). There is no rule that the Court should not act on the uncorroborated evidence of an interested party as to the terms of historical conversations. There is scope for great injustice to be done if the Court adopts an excessively inflexible resistance to accepting oral evidence of conversations in that manner.
[45]
Ground 4
This ground boils down to whether a claim based on estoppel by encouragement was available if it were not shown that the representor (in this case, the late Dame Leonie Kramer) had actual knowledge of the plaintiff's (Mr Stone's) assumption.
The appellants maintained that the primary judge had erred in finding at [234] that:
I do not accept that an estoppel by encouragement can only arise where the representor has actual knowledge that the only reason why the representee engages in the conduct that will lead to detriment being suffered if the representation is not realised is the expectation that the representation will be made good. It will be sufficient if the making of the representation is a real or significant reason for the response of the representee. Furthermore, subjective knowledge on the part of the representor is not essential, provided that a reasonable person in the position of the representor would understand that it was probable that the representee was engaging in the conduct in the expectation that the representation would be realised. …
The primary judge relied on what Deane J had said in Commonwealth v Verwayen (1990) 170 CLR 394 at 445; [1990] HCA 39 that "a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption", as adopted by Macaulay J in Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467 at [67]-[69], the latter based in part upon a preference expressed by Nettle JA writing for the Victorian Court of Appeal in New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163 at [98]-[99].
The appellants contended that the primary judge was bound to find that Mr Stone's case required showing actual knowledge on the part of the representor, because of Brennan J's formulation in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7, which was said to have been accepted by this Court as applying in an "orthodox proprietary estoppel case". They submitted:
Unlike Brennan J's general formulation in Waltons v Maher, Deane J's statement of the General Doctrine of Estoppel by Conduct has not been accepted by the NSW Court of Appeal as applying to an orthodox proprietary estoppel case. In Doueihi … Gleeson JA at [136] observed that in Giumelli the plurality noted that in Verwayen, Dawson J (at 454) and McHugh J (at 499-501) did not accept Deane J's general doctrine of estoppel by conduct and that Brennan J approached the matter on a different footing.
The primary judge described this case as an estoppel by encouragement case. There is nothing in the facts to suggest it is otherwise than an orthodox proprietary estoppel case. The primary judge erred in applying a constructive knowledge test in assessing whether the Deceased knew the Respondent had acted in reliance upon the third representation. The primary judge was bound by the Court of Appeal decision in DHJPM to apply Brennan J's test of actual knowledge or intention. The primary judge should not have applied a constructive knowledge test as Deane J's formulation in Verwayen has been questioned by this Court in Doueihi, and it is only arguably applicable in a promissory estoppel case.
[46]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 10 November 2023
After the primary judgment was handed down but before final orders were made (and in the context of the parties seeking to reach agreement on the orders to be made to reflect his Honour's reasons), issues arose between the parties as to a number of matters, such as who was to bear the liability for stamp duty on the transfer of title to the respondent and for rates and taxes over the period up to the date of transfer, as well as what was encompassed by the Property (namely, whether farm equipment and water rights attaching to the land were encompassed in the representation made by the deceased) and whether the transfer was to be subject to a condition permitting occupation of the cottage on the Property by the deceased's family.
There was a hearing on 18 March 2022 as to the form of the proposed orders, at which evidence was adduced by both parties.
On 29 March 2022, the primary judge made orders by consent granting leave to the respondent to file and serve a notice of motion seeking leave to amend his statement of claim and to re-open the evidence in the proceeding. The respondent filed that notice of motion on 3 May 2022, seeking leave to file an amended statement of claim in which he sought a declaration that the appellants not only hold the land on trust for him but also the water licence, the machinery, pumps, plant and equipment still in existence at 20 April 2016.
The respondent's motion was heard on 20 October 2022. This culminated in a second judgment (Stone v Kramer (No 2) [2022] NSWSC 1716, to which I will refer as Kramer (No 2)), which was published on 16 December 2022.
In Kramer (No 2), the primary judge determined that leave should be granted to the respondent to amend his statement of claim and to re-open his case for the limited purpose of his application for the appellants to pay or indemnify him for: all stamp duty on the transfer of the Property to him and all rates, taxes, fees and liabilities assessed and/or levied in respect of the Property up to the date of transfer. Procedural orders to that effect were made by consent on 16 February 2023. His Honour did not permit claims to be made as to the inclusion of the farm equipment and water rights in the definition of the Property and similarly refused to entertain an application made at that second hearing by the appellants for the transfer of the Property to be subject to a condition permitting their family occupation rights in relation to the cottage on the Property.
Final orders were made in the proceedings at first instance on 6 April 2023. This date has some relevance in light of the application by the appellants before this Court to adduce additional evidence (see below).
The appellants (Hilary Kramer and her co-executor, Jaime Ferrer) now appeal from the first of the two decisions (the primary judgment). There is no appeal from the decision in Kramer (No 2). Nor is there any cross-appeal or notice of contention filed by the respondent.
As adverted to above, at the outset of the hearing of the appeal, an application was made by the appellants for leave, if leave be necessary, to adduce additional evidence (see their notice of motion filed 24 July 2023). The evidence sought to be adduced comprises evidence which was put before the primary judge at the hearings on 18 March 2022 and 20 October 2022 (see affidavit affirmed 24 July 2021 by the appellants' solicitor, Jamie Cklamovski). In essence, the appellants seek to rely on this evidence to challenge the primary judge's finding in the primary judgment that the respondent was a person of "exceptional credibility" (relevant to ground 1 of the grounds of appeal). I consider this application in due course.
The second representation pleaded was that Dr Harry Kramer represented to the respondent that he had made an agreement with the deceased that he (Dr Harry Kramer) would leave the Property to the deceased in his will but that the deceased would then leave the Property to the respondent in her will (see at [8] of the statement of claim). The respondent's affidavit evidence as to the second representation (see [86]-[90] of the primary judgment) was that in about 1987 or 1988 he had a conversation with Dr Harry Kramer in which the latter said words to the effect:
I don't want to upset you but I am not long for this world. I have been diagnosed with cancer. I have also changed my Will and the girls will not be inheriting this place. [The deceased] wants the farm transferred to her and whilst I have agreed, it's on the basis she and I have agreed it will go to you, outright, on [the deceased's] death. Like before, the girls will always have use of the cottage.
and:
When you inherit the farm you will be free to do whatever you like with it. You can sell it, borrow money against it; whatever you like.
As to the second representation, it may be noted that the interest in the Property that it is alleged Dr Harry Kramer had represented the respondent would have was now no longer simply a life estate but absolute ownership. (As I have noted above, in cross-examination the respondent accepted that Dr Harry Kramer had not used the words "life interest"). Further, there is an inherent inconsistency between the proposition that the respondent would be free to deal with the Property as he wished, after he inherited it on the death of the deceased, and the proposition that the "girls" would always have use of the cottage (an inconsistency to which the appellants have emphasised when arguing that the making of this alleged representation was implausible).
The third alleged representation (see at [11] of the statement of claim), said to have been made by the deceased in 1988 after the death of Dr Harry Kramer, was pleaded as a representation that the Property would pass to the respondent upon the deceased's death, together with a sum of money. It was alleged that the context of this so-called Third Succession Plan was that the respondent would continue with the share farming agreement and otherwise assist the deceased and her family with management of the farm (see at [12] of the statement of claim). There was, however, no evidence of any conversation between the respondent and the deceased in which his continuation with the share farming agreement was a condition of the promised inheritance.
The respondent's evidence as to the third representation was considered at [91]-[93] of the primary judgment. Relevantly, his Honour extracted the following passage from the respondent's affidavit affirmed 24 August 2017:
33. Harry died in 1988 and shortly after his death [the deceased] had a conversation with me in the main machinery shed on the Property. We were standing near the driver's door of the Hino Truck. [The deceased] initiated a conversation where she said words to me to the effect:
"Harry always admired your honesty. Harry and I did agree the farm will pass to you upon my death and I want you to know there will also be a sum of money."
I said words to [the deceased] words to the effect:
"Thank you very much Leonie, and for outlining the succession plan."
In cross-examination, the respondent accepted that the words "succession plan" were not said by him in this conversation (T 67.46-47).
The respondent acknowledged in his affidavit that the deceased did not advise him what amount of money she would be adding to his inheritance and that he did not discuss the third representation, or anything arising from her death or estate, again with the deceased (see [92] of the primary judgment). In cross-examination, the respondent accepted that the representation was: made once, was "out of the blue", and was not made in response to any complaint by him or any agreement by him to continue working the share-farm agreement (evidence recorded at [93] of the primary judgment).
In his 24 August 2017 affidavit (at [36]-[37]), the respondent deposed to his reliance on the promise that he would inherit the Property (see [92] of the primary judgment), namely, that he did not leave the Property and pursue any new employment elsewhere; that he restricted his personal and domestic life to stay living on the Property; and that he did not make any attempt to build a superannuation fund or consider how he might acquire a home of his own.
The deceased died in April 2016. In 2017, the respondent commenced proceedings claiming that the Property was held on trust for him.
Of the representation necessary to establish a proprietary estoppel by encouragement, the primary judge noted (by reference to Meagher JA's reasons in Q v E Co [2020] NSWCA 220; (2020) 383 ALR 469 (Q v E Co)) that the meaning and effect of a representation must be determined objectively according to the impact that whatever is said may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee ([37]; and see also [228] of the primary judgment). (The appellants here complain that his Honour impermissibly applied a subjective test on this issue.)
From [94], his Honour addressed the credibility of the respondent as a witness, recording (see [95]) that he had no hesitation in accepting the respondent's evidence as being truthful "and as reliable as the passage of time will permit". Perhaps anticipating the complaint here made as to the delay in publication of his reasons, his Honour also there made clear that the findings he made concerning the respondent's credibility as a witness were based on the notes his Honour had made in the two days following completion of the hearing. His Honour then recorded a submission made by the appellants' senior counsel of the respondent (including that the respondent was an intelligent, articulate, not inexperienced and not incompetent person), with which his Honour expressed emphatic agreement (as evidenced by the exclamation mark at [97]).
At [99], his Honour expressed his satisfaction that the respondent's evidence was given honestly and with a genuine recollection of the respondent's understanding of the meaning and effect of the words used and in which the respondent had believed since the time that the representations were made. His Honour returned to the issue of the credibility of the respondent's evidence concerning the making of the three representations at [166], affirming at [167] that he had found the respondent to be an "exceptionably credible witness". Indeed, his Honour recorded that, if it had been sufficient to be satisfied on the balance of probabilities on the basis of the respondent's testimonial evidence alone that the deceased had made the third representation with the meaning that the respondent claimed it had, his Honour would have accepted that the third representation was made in the way that the respondent had claimed (at [167]).
Nevertheless, acknowledging the inherent fallibility in all testimonial evidence, the danger in accepting testimonial evidence that is not directly corroborated, the scope for misinterpretation of nuance in the meaning of the words actually used by the deceased ([168]-[169]), and the need to make proper allowance for the fact that neither Dr Harry Kramer nor the deceased was available to give evidence in contradiction of the evidence given by the respondent ([177]), the primary judge proceeded to a consideration of the circumstances surrounding the making of the alleged representations, the subsequent behaviour of the parties to the conversation, and a scrutiny of the available objective evidence (from [189]).
Relevantly (in light of the reliance now sought to be placed by the appellants on the so-called "new" evidence of the respondent's intention to continue farming on the Property), at [195] his Honour said that the evidence did not support a conclusion that, at the time the representations were allegedly made or at any time thereafter, the Property was a viable property for the purpose of conducting farming operations. (The respondent argues that this was his Honour's conclusion; not the tenor of his evidence.)
His Honour then (at [221]) addressed the submissions made by the appellants as to the improbability of the representations having been made. When addressing the evidence that the respondent never discussed the issue again with the deceased after the making of the third representation, his Honour considered this to be explicable on the basis of his impression of the respondent in the witness box that he is relatively laconic; and referring to the great social imbalance between the respondent and the deceased. His Honour noted that he had formed the judgment that the respondent was a man of his word, who expected other people to act honourably in the same way.
His Honour made no express finding as to the making of the first and second representations; rather, his Honour treated these as only forming the contextual background to the making of the third representation (see at [162] of the primary judgment). (Complaint is here made by the appellants that his Honour did not consider the acceptability of the third representation in the context of the first and second representations - a complaint that I address in due course.)
His Honour had earlier concluded (at [111]) that the collective effect of the evidence from the respondent's witnesses, while not directly corroborating the making of the first, second and third representations, supported an inference that the effect of the representations was that the Property would be left to the respondent in the deceased's Will. I interpose to note that such an inference would be consistent with an acceptance that the second representation had been made but not the first (since the first representation was as to the giving of a life interest in the Property, not that the respondent would be left the Property) but in any event there was not an express finding to that effect.
At [228], his Honour repeated that it is not necessary that an encouragement be formally expressed in terms of a promise before it may form the basis of a proprietary estoppel. His Honour then went on to say that:
A bare statement that the maker will do a specified act in the future may be sufficient. Whether the maker will be held to performing the act will depend upon whether the circumstances justify an expectation in the listener that the intention to do the act is serious and the statement may reasonably be relied upon by the reasonable listener. Where the act is the conferral of a benefit on the listener, it will be easier to treat the statement as being an assurance. It will also be easier to do so where the making of the statement is likely to induce conduct by the listener from which the maker will benefit. In short, a statement that is not overtly promissory in form may be sufficient to create a reasonable expectation. …
His Honour also there repeated the reference to Meagher JA's acceptance in Q v E Co that whether a representation or promise has been made, and if so its meaning, must be judged objectively according to the impact that whatever is said or done may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee.
Relevantly, in the context of grounds 4 and 5, his Honour addressed (from [230]) the appellants' reliance on the fact that there was no evidence that either Dr Harry Kramer or the deceased knew that the respondent was only staying on the Property and continuing to implement the share farming agreement because of any of the representations.
His Honour stated at [231] that, for an equitable estoppel to arise, the representor must know that the representee has placed reliance on the representation; and referred to Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 445 (Deane J); [1990] HCA 39 (Verwayen) as authority to the effect that constructive knowledge was sufficient. His Honour did not there distinguish between the different forms of equitable estoppel (and it is of relevance to note that Verwayen was a case of promissory estoppel).
The primary judge referred at [232] to Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467 (Leading Synthetics), where Macaulay J adopted the preference expressed by Nettle JA (as his Honour then was) in the Victorian Court of Appeal in New Zealand Pelt Export Co Ltd v Trade Indemnity Ltd [2004] VSCA 163 (New Zealand Pelt) for the view of Deane J (as opposed to Brennan J) as to the requisite knowledge that the inducing party must have to establish an estoppel (i.e., the "knew … or clearly ought to have known" test as opposed to Brennan J's formulation "knew or intended").
Then, addressing whether there was a need to establish that the deceased knew that the "only" reason the respondent stayed on the Property was because of the alleged representations, the primary judge said at [234]:
I do not accept that estoppel by encouragement can only arise where the representor has actual knowledge that the only reason why the representee engages in the conduct … Furthermore, subjective knowledge on the part of the representor is not essential, provided that a reasonable person in the position of the representor would understand that it was probable that the representee was engaging in the conduct in the expectation that the representation would be realised. [my emphasis]
His Honour went on at [234] to find that:
In any case, as a matter of fact, the income earned by [the respondent] from the farming operation was consistently so irregular and meagre compared to the amount of arduous work that was required that, if it is accepted that [the deceased] made the third representation to [the respondent], she ought reasonably to have assumed that part of his motivation for continuing was the expectation that he would inherit the Farm. That [the first appellant] and Jocelyn [the deceased's other daughter] had at various times assumed [the respondent] would be left the Farm lends weight to this inference.
As to the third representation, his Honour noted (at [244]) that he had accepted that the respondent believed he had been given an assurance that he would inherit the Property because of the third representation (which, as I read it, must be a reference back to his Honour's earlier finding as to the credibility of the respondent), and that the respondent had told other family members of that belief. This was in the context of the primary judge addressing the first part of a submission by the appellants (see as noted at [243]) to the effect that, even if the statements were made as asserted by the respondent, what was said only encouraged in the respondent a hope and not an expectation that he would receive the Property when the deceased died (and hence no estoppel could arise). The primary judge considered that it was an inherently improbable proposition that the "collective effect of the representations allegedly made by Dr Harry [Kramer] and [the deceased] were only reasonably capable of conveying to a person in [the respondent's] position that it was possible that the Farm would be left to him when [the deceased] died".
Complaint is here made by the appellants that this wrongly assesses whether the representation was made by reference to the subjective belief of the respondent, rather than an objective test being applied to that question. However, read in context, I do not see this as employing subjective reasoning. Rather, his Honour is there considering, against the background of the respondent's belief that he had been given such an assurance, what the alleged representations were reasonably capable of conveying to a person in the respondent's position.
At [245], his Honour dealt with the second part of the appellants' submission recorded at [243], namely the submission that, even if the representations were made and did encourage the respondent to have an expectation rather than just a mere hope, neither of the Kramers "intended or knew" that the respondent had that expectation "and that he was staying on the property only because of what they had said to him" (and that in those circumstances an estoppel could not operate). His Honour there repeated both his conclusion that for estoppel by encouragement to arise it was not necessary that the assurance be the "only reason" why the representative acted on the faith of the occurrence and his conclusion that:
…it is not necessary for the representor to have any intention or subjective appreciation that the representee is acting on the faith of the assurance, if the representee is aware of circumstances that make it objectively reasonably apparent that the representee is so acting.
At [249], the primary judge expressed his positive satisfaction that, on the balance of probabilities, the third representation was made to the respondent by the deceased. Read in context, the reference by the primary judge to the "third representation" in this finding must be understood as a reference to the representation set out at [91] from the respondent's affidavit evidence (rather than to the somewhat differently worded third representation as pleaded).
The primary judge was satisfied that the respondent acted to his detriment on the faith of that assurance by continuing the farming operation on the Property for about 23 years thereafter in the belief that he would inherit the Property under the deceased's Will (at [250]). His Honour was further satisfied that there was a sufficient probability that, in the absence of such a belief, the respondent would have decided that the farming operation was "too hard going" and would have terminated the share farming agreement and successfully pursued a more remunerative occupation (at [251]). Earlier, at [195] the primary judge said that the evidence did not support a conclusion that, at the time the representations were allegedly made, or at any time thereafter, the farm was a viable property for the purpose of conducting farming operations. (I again note that the respondent has submitted this was not the tenor of his evidence but, rather, was his Honour's conclusion drawn from the objective facts.)
Repeating his finding that the deceased "ought to have known" that part of the respondent's motivation for continuing the share farming operation was the expectation that he would inherit the Property (at [251]), his Honour went on to conclude that it was unconscionable in the circumstances for the deceased not to have left the Property to him in her Will.
From [253], his Honour considered (and rejected) the matters raised by the appellants in defence of the respondent's claim, including: the appellants' claim that the respondent had deceived the deceased on a significant number of occasions from 2007 ([254]-[277]); the allegation that the respondent had not conducted the farming operation under the share farming agreement in a proper and workmanlike manner ([278]-[325]); the fact that the respondent and his family had rent-free accommodation on the Property for almost 40 years ([326]-[329]); the allegation that the respondent did not comply with the share farming agreement because he failed to maintain the house that he lived in ([330]); the fact that the share farming agreement contained terms entitling the respondent to half the proceeds of sale of the crops and a bonus ([331]); the fact that loans had been made by the Kramers to the respondent from time to time (that it was alleged had been forgiven from time to time) ([332]); the fact that the respondent's only desire was to live on the Property ([333]); and the making of the bequest under the Will to the respondent ([334]-[337]).
As noted, the primary judge rejected the respondent's application to amend his statement of claim to seek a trust over the water licence, the machinery, pumps and the plant and equipment (including by reference to the principle of finality of litigation - see at [68] of Kramer (No 2)). The primary judge also declined to accede to the appellants' application (raised only during the second hearing) to the effect that the declaration of trust ought be made subject to a provision that the Kramer daughters have a licence (during their lifetimes or alternatively during the period the respondent remains the registered proprietor of the Property) to use the cottage on the Property that was formerly occupied by their parents as they see fit (see at [75]-[80]). His Honour did so, consistently with the basis on which he had denied the respondent's application to raise new issues, on the basis that this issue had not been formally raised at the hearing (at [76]).
The appellants submit that his Honour's credibility findings in relation to the respondent were central to the primary judgment (referring to the findings at [94]-[100]; [166]-[222]) and they argue that his Honour could only have made the findings as to the critical representation(s) if (as the primary judge found) the respondent's credibility was impeccable. The appellants emphasise in this context that the representations: were attributed to deceased persons, were not witnessed by any other person, were not reduced to writing, and were not asserted ever to have been mentioned or discussed between the deceased and the respondent after 1989. Hence, the significance placed by the appellants on the additional evidence as undermining the findings of credibility. (Pausing here, I do not consider that the findings made as to the third representation required such an effusive finding of credibility that his Honour made, although I quite accept the need for careful scrutiny of the evidence when reliance is placed on representations allegedly made by person now deceased.)
Further, the appellants argue that the unfairness of the respondent permitting outlays by the first appellant on irrigation equipment and farm equipment at a time when he had not informed the first appellant of his belief (or expectation) that he would inherit the Property (referring to [15] of the respondent's affidavit of 11 March 2022 in which the respondent does not dispute that he did not inform the first appellant of his belief that he would inherit the farm at that time) impacts on the finding by the primary judge that the respondent was "exceptionally credible". The appellants refer to the first appellant's affidavit sworn 22 February 2022, in which she deposed to the acquisition of plant and equipment in 2015 after the respondent had left the Property (at [20]), evidence which the appellants say would have been led at the trial had the respondent led evidence of his expanded understanding of the "farm".
The respondent opposes the application to adduce additional evidence, submitting that the evidence has little relevance and is of low probative value; and complains that, by this application, the appellants again seek (as they did at the hearing below) to impugn his credit and character. The respondent (perhaps ironically since finality of litigation was in essence the reason why he was not permitted to amend and re-open the proceedings except to the limited extent noted above) emphasises the public interest in the finality of litigation, citing Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 where Payne JA (with whom White and McCallum JJA agreed) stated at [51] that "regard must be had to the nature of the proceedings and the general public interest in the finality of litigation".
In particular, the respondent says that the issue of him not informing the first appellant of the third representation was extensively addressed in the evidence at the hearing (noting that it was explored in depth during his cross-examination) (at T 100.37-103.10) and that it was the subject of submissions (at T 330.29-332.7). The respondent points to the primary judge's findings in relation to the issue as to why he did not raise the third representation with the deceased again (see at [221], referred to above); and argues that the evidence that the appellants now seek to have admitted brings no new or other relevant evidence to the proceedings on this issue which has already been addressed by the primary judge.
As to his understanding as to what the "farm" comprised, the respondent submits that there is no evidence of a "change" in position; rather, there was a need for further delineation of his understanding on the issue (given the ambiguity which the primary judge accepted was interest in the term "farm" (see Kramer (No 2) at [54]-[55])). The respondent accepts that the affidavit and oral evidence at trial made no reference to the water licence but he points out that the Grant of Probate made no reference to this asset as an asset of the estate and says that its disclosure and the details of its identification only arose in the context of making the final orders. The respondent submits that any further fresh evidence on which the appellants might seek to rely is not relevant to this appeal and is of no probative value.
As to the issue of his intentions in relation to the Property, the respondent maintains that from the commencement of the proceedings he has been clear in stating that his intention was to work the farm as long as he was able to do so, and then to sell and use the funds from the sale to provide an income in his retirement as well as a home in which to live (referring to his affidavit affirmed 24 August 2017 at [116]), which was not the subject of challenge and from which he says he has never resiled. The respondent says that there is no evidentiary basis for an asserted "change in position" in this regard.
Insofar as the appellants have raised the issue of his credit by reference to the primary judge's statement that the farm was never a viable property for the purpose of conducting farming operations (at [195]), the respondent emphasises that this was an objective finding made by the Court. The respondent says that there is no evidence that he believed this to be the case; rather, that the evidence to the contrary was that his passion for farming continued and that he intended to continue farming. The respondent says that, in the course of his cross-examination, he explained his dedication and ongoing commitment to farming and the farm, and his subjective expectation, even as he was leaving the farm in 2014, that he could make the farm viable (T 110.32-47). Further, the respondent says that his 2022 affidavit evidence goes to his state of mind (i.e., what he believed at that time and not necessarily in the context of his discussions with the Kramers) and suggests that, had such evidence been sought to be adduced at the first hearing, it would have been ruled inadmissible by the primary judge. In any event, the respondent argues that the appellants had ample opportunity to explore the respondent's state of mind at the first hearing.
Insofar as the appellants seek to challenge credit findings made by the primary judge, the respondent points to the advantage of the primary judge in seeing and hearing from the respondent (as well as from the Kramer daughters). It is submitted that the proposed evidence is not capable of impugning the respondent's credit (reference here being made to Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 (Fox v Percy) at [23] per Gleeson CJ, Gummow and Kirby JJ).
In any event, I do not accept that the evidence now sought to be relied upon to challenge the credibility findings made in favour of the respondent is sufficiently probative to undermine those findings (notwithstanding the observation by the primary judge to the effect that, had it been clear at the first hearing that the respondent claimed that the water licence and plant and equipment were held on trust for him, the respondent would have been subjected to more avenues of attack in cross-examination and may not have been able to sustain the favourable credit findings that had been made) (see [65] of Kramer (No 2)).
That is because the fact that the initial pleading did not identify the water licence and farm equipment as part of the Property the subject of the trust allegation is equally (if not perhaps likely to be more so) explicable by reference to an oversight in the pleading of the claim as it is by reference to some change of position on the part of the respondent. Any unfairness to the appellants in this being raised at a late stage in the proceeding is met by the fact that the respondent was ultimately not permitted to amend his claim to encompass those additional components within the declaration as to the Property held on trust. Moreover, to rely on that evidence now (at appellate level) to challenge the credibility findings that were made at first instance would require that the evidence be able to be tested and would, in effect, require that the matter be remitted for re-hearing.
As to the submission that there was unfairness on the part of the respondent in failing to inform the first appellant of his expectation to inherit the Property at the time that the first appellant was expending money on the acquisition of farm equipment and the like, any such unfairness is met by the respondent not being permitted to amend his claim to encompass the plant and equipment. It does not, without more, undermine the respondent's credit as to his evidence of the making of the representations to him in the first place. The additional evidence does not on its face (and certainly not without being tested) warrant a conclusion that the respondent knowingly acquiesced in expenditure by the appellants on the farm with a view to the respondent unfairly seeking later to obtain a benefit therefrom if the Property was ultimately transferred to him.
As to the evidence of the respondent's intentions at the relevant time as to future farming on the Property, I accept that the additional evidence does not necessarily establish a change of position as such on the part of the respondent and that the finding by the primary judge as to the unviability of the commercial farming operation was not one founded (or at least explicitly based) on any evidence of subjective belief or intention by the respondent on that issue.
Therefore, to the extent that leave were to be necessary for the admission of the additional evidence, I would refuse such leave and, to the extent that the additional evidence was already in evidence before the primary judge at the time of the second hearing but was not there relied upon to challenge the credibility findings made in the primary judgment, I consider that the appellants should not now be permitted to re-open those findings on the basis of that evidence (not having chosen to do so when the matter was before the primary judge). I consider below the overall complaint as to the credibility findings in the context of ground 1 of the grounds of appeal.
The appellants' notice of motion filed on 24 July 2023 to adduce further evidence should be dismissed with costs.
There is a recognised need for care in identifying the requisite elements for the different forms of estoppel, as emphasised by Meagher JA in DHJPM. The suggestion of an emergence of "one overarching doctrine of estoppel" (see Mason CJ in Verwayen at 410-413) or that estoppel is a "unified [doctrine] which operates consistently in both law and equity" (see Deane J at 445-446 in Verwayen) not having gained currency (as recognised in this Court in Doueihi at [136] per Gleeson JA, with whom Beazley P and Leeming JA agreed; and see also JD Heydon, MJ Leeming & PG Turner, Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed 2014, Lexis Nexis Butterworths) (MGL) at [17-055]). Their Honours were there speaking in the context of the doctrines of proprietary and promissory estoppel. However, relevantly, for the present case, there also remains a recognised distinction between the two forms of proprietary estoppel (see Milling v Hardie [2014] NSWCA 163 (Milling v Hardie) at [50]-[52] (Macfarlan JA, with whom Beazley P agreed); Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 (Sidhu v Van Dyke) at [2], [77] (French CJ, Kiefel J, as her Honour then was, Bell and Keane JJ); Priestley v Priestley [2017] NSWCA 155 (Priestley v Priestley) at [7]-[8] (Macfarlan JA); MGL at [17-100]).
The line of authority concerning proprietary estoppel by encouragement derives from Dillwyn v Llewelyn (1862) 4 De GF & J 517; 45 ER 1285 (Dillwyn v Llewelyn) and the dissenting judgment of Lord Kingsdown in Ramsden v Dyson (1866) LR 1 HL 129 at 170-171 (Ramsden v Dyson), that judgment cited approvingly by the Privy Council in Plimmer v The Mayor, Councillors and Citizens of the City of Wellington [1884] 9 AC 699 (Plimmer). Ramsden v Dyson itself is the authority from which the separate line of authority concerning proprietary estoppel by acquiescence derives.
The foundation for an estoppel by encouragement, as summarised by Kitto J in Olsson v Dyson (1969) 120 CLR 365 at 378; [1969] HCA 3 (Olsson v Dyson) by reference to the decision in Dillwyn v Llewellyn, is conduct which induces a change of position for the worse in reliance thereon. In Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 (Delaforce v Simpson-Cook), Handley AJA at [21], expressed an estoppel by encouragement as one that may arise "when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to [his or her] detriment".
The equity does not arise through the mere attempt or promise to make a gift to another of a proprietary interest. As Mason CJ and Wilson J noted in Waltons Stores v Maher at 406, there needs to be "something more" which amounts to unconscionable conduct on behalf of the representor.
As to the elements required to establish a proprietary estoppel by encouragement, the following may be noted.
While a distinction has sometimes been drawn between arms-length/commercial cases and domestic/family cases when assessing adequacy of an assurance or the reasonableness of an expectation or assumption (see, for example, DHJPM at [104]-[105] (Meagher JA); Cobbe v Yeoman's Row Management Ltd [2008] 1 WLR 1752; 4 All ER 713 (Cobbe) per Lord Walker (at [68])), Gleeson JA has stressed the need for care in the use of such "shorthand labels" (Doueihi at [178]). I consider in the context of ground 2, the cases which consider testamentary promises.
The Victorian Court of Appeal, in a case of promissory estoppel, has expressed preference for constructive knowledge as sufficient, adopting Deane J's test in Verwayen (see New Zealand Pelt). In New Zealand Pelt, Nettle JA (as his Honour then was), with whom Ormiston JA and Hansen AJA agreed, said:
I add, however, that if it were necessary to make a choice, there are at least three reasons to prefer Deane J's formulation [as articulated in Verwayen]. In the first place, it is more consistent with the observations of Mason CJ and Wilson J in Waltons Stores v Maher, that the principle which underlies High Trees estoppel [i.e., promissory estoppel] is that the courts will grant relief to a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party has played such a part in the adoption of the assumption that it would be unfair or unjust if left free to ignore it. That view accords with the broad general ground of estoppel that where one of two innocent parties must suffer, the loss should fall on him by whose indiscretion it was occasioned. Secondly, as the joint judgment of Mason CJ and Wilson J in Waltons Stores v Maher demonstrates, the principle which underlies High Trees estoppel is the same principle as underlies the kind of estoppel exemplified in Ramsden v Dyson; and the better view is that in such a case the party to be estopped need not know of the full extent of his or her legal rights - it is sufficient that he or she ought to have appreciated what they were. Parity of reasoning suggests that it may be sufficient in a case of High Trees estoppel that the party to be estopped ought to have known that the other party would be induced by the estopped party's conduct to adopt and act on the basis of an assumption or expectation. Thirdly, the source of the idea that actual knowledge is an essential requirement seems to be the judgment of Lord Denning in Crabb v Arun District Council, and while his Lordship did say in that case that it was necessary that the party to be estopped know and intend that the other party act on the basis of the relevant assumption, his Lordship based his judgment on the speech of Lord Cairns in Hughes v Metropolitan Railway Co, and Lord Cairns did not speak in terms of knowledge or intent. [citations omitted]
As to Nettle JA's preference for Deane J's formulation over Brennan J's formulation, it may be noted that there remains a distinction drawn by the Court in this State between proprietary estoppel and promissory (or eponymously named High Trees) estoppel; and that this formulation does not grapple with the extent of unconscionability required to engage the principles of equity (and hence risks conflation with common law estoppel, such as estoppel by representation - cf Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [93] (Allsop P and Handley AJA, with whom Hodgson JA agreed)).
Importantly, however, the requirement of knowledge in proprietary estoppel has traditionally only been imposed in cases of estoppel by acquiescence (see A Robertson, "Knowledge and Unconscionability in a Unified Estoppel", (1998) 24(1) Monash University Law Review 115 at 126). Although Lord Kingsdown suggested in Ramsden v Dyson at 170-171 that knowledge was required in cases where the representor had encouraged an expectation, subsequent cases (such as Hopgood v Brown [1955] 1 WLR 213 at 223 per Evershed MR), indicate the better view to be that the requirement of knowledge only applies in cases of acquiescence. In this regard, see Oliver J in Taylor's Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133 at 147, who held that the elements laid out by Fry J in Willmott v Barber were not necessary for all proprietary estoppels, especially if there had been encouragement which fostered an expectation.
Although Macfarlan JA in Milling v Hardie at [50]-[52] added a "non-inconsistent fourth requirement" in estoppel by encouragement, adopting Fry J's knowledge element, his Honour noted that this element is of particular importance when looking at acquiescence cases (which aligns with the use of Willmott v Barber, which looks at acquiescence rather than encouragement); and in Priestley v Priestley at [13], where Macfarlan JA emphasised the necessity of establishing the element of knowledge in a case of estoppel by acquiescence.
I consider further the question of knowledge in an estoppel by encouragement case in the context of addressing ground 4 of the grounds of appeal.
The appellants contend for a finding that the third representation was not made; alternatively, that any such representation made no reference to an agreement between the deceased and her late husband (i.e., that the deceased only said words to the effect that "the farm will pass to you upon my death and I want you to know there will also be a sum of money"); with no reference to an agreement between the Kramers that the Property would pass to the respondent on the deceased's death. What significance is placed on the alternative formation (by contrast with the first) was not made clear.
In response, as to the matters relied upon by the appellants in the challenge to the factual finding at [249], the respondent says that the first representation is plausible having regard to: the length of time that Dr Harry Kramer had known him at the time it was made (over 11 years, contrary to the five years referenced by the appellants); the fact that he assisted his father when the latter was share farming (see [72]); the conversations between the two in relation to the Property; the appreciation and reliance by the Kramers on his knowledge and skills; and the warm relationship and strong emotional connection between the respondent and Dr Harry Kramer (referring to the first appellant's affidavit sworn 14 August 2018 at [7], [24]; the respondent's affidavit affirmed 24 August 2017 at [78]); and to the primary judgment at [226]; [114]. As to the significance of the Kramers' joint ownership of the Property, the respondent says that the primary judge noted the significance of the evidence of Jocelyn Kramer (at [129]-[131]) and found that joint ownership of the Property did not lessen the inherent likelihood the representations were made (at [131]-[133]).
The respondent argues that neither Dr Harry Kramer's 7 July 1988 will nor the "Actions" document is relevant in determining whether there was an agreement between the Kramers as to the Property being left to him by the deceased. The respondent points out that the deceased was the residual beneficiary named in Dr Harry Kramer's will and that no provision was made for any secondary or contingent beneficiary to inherit any part of the residual estate in the event the deceased predeceased the testator and no intention was expressed in the will as to what was to happen with any residual estate asset beyond it passing to the deceased on the testator's death; and he argues that the "Actions" document simply detailed actions to be undertaken by, and discloses information to assist, the deceased as executor in the administration of the testator's estate.
The respondent also points out that the primary judge noted (at [218]) that Jocelyn Kramer's evidence of her discussions with Dr Harry Kramer and the deceased about each of their wills diminished the strength of the appellants' claim that it was improbable that the Kramers would have raised the issue of their wills with the respondent once only and without any prompt; and that his Honour (at [214]) set out the basis upon which he considered it not exceptional that the deceased may have made the third representation to the respondent.
In their challenge to the credibility findings, the appellants also point to the illogicality of the respondent's evidence concerning the second representation to which I have already referred, namely that Dr Harry Kramer had told him that the deceased and their daughters could stay there for as long as they liked (T 79.5) on the one hand but that he (the respondent) would be able to sell the Property at any time he wished (T 79.35) on the other hand.
In response to the above submission, the respondent says that the primary judge drew an inconsistency between the relevant conversation and the respondent's evidence; and he points to the explanation he gave in cross-examination (at T 79.5-40) as to his interpretation of the second representation, namely that the rights of the Kramers to use the house were to be subject to his rights to "do whatever you like with it. You can sell it, borrow money against it; whatever you like". The respondent argues that the primary judge considered all the elements of illogicality in the evidence (both the respondent's evidence and that of the first appellant) in making the credibility findings.
Insofar as the appellants emphasise that there was no note made by the respondent of the representation (and no corroboration thereof), the respondent points to the primary judge's reference to his (the respondent's) evidence that he considered Dr Harry Kramer to be a man of his word (at [87], [89]) and his account as to why he did not request the second succession plan be reduced in writing (referring to his affidavit affirmed 24 August 2017 at [32]); as well as to the reasons given by the primary judge as to accepting testimonial evidence that is not corroborated at [169]-[183]. The respondent points to the primary judge's findings as to his credit and the reliability of his evidence (see above), as well as the findings as to facts that indirectly corroborated the making of the representations (see from [100]ff; [248]-[249]); and argues that it was not a necessary requirement that corroboration be in documentary form.
The respondent refers to the primary judge's findings at [191], [195], [198], [201]-[204] and [207]-[209], which led to his Honour's conclusion at [226], that the likelihood was that those circumstances may have motivated the Kramers to give the assurances in question. The respondent also points in this context to the evidence as to his strong emotional connection with Dr Harry Kramer (referring to the evidence of the appellant of a conversation with her sister Jocelyn Kramer, to which his Honour referred at [114], as to Dr Harry Kramer having exhibited uncharacteristic emotion in relation to the respondent). Finally, the respondent points to the findings made by the primary judge in relation to the first appellant's evidence at [121]-[128], including the observation at [122] that her evidence dispelled the notion that there was anything fundamentally improbable about the Kramers telling the respondent that they would leave the Property to him in the will of the last one of them to die.
Accordingly, I would dismiss ground 1. I consider that it was open to the primary judge, having had regard to all of the evidence, to be positively satisfied on the balance of probabilities that the third representation was made to him by the deceased. Insofar as the appellants' alternative submission is concerned, I consider that it was also open to the primary judge to infer from the expression of the third representation that there was a prior agreement or understanding between the Kramers to the effect that the Property would be left to the deceased in Dr Harry Kramer's will and that it would be her decision as to what was to happen to it (including as to whether it was to be left to the respondent) or at least that this is what was represented to the respondent. While the language of the third representation is somewhat awkwardly expressed ("Harry and I did agree", being suggestive of that no longer being the case), I consider that the finding made by his Honour as to the making and effect of the third representation was not glaringly improbable.
It has been said that it is not enough "to hope, or even to have a confident expectation, that the person who has given the assurance will eventually do the right thing" (see Cobbe at [65] per Lord Walker, quoted with approval by Meagher JA in DHJPM at [57]).
In Barnes v Alderton [2008] NSWSC 107 (Barnes v Alderton) Young CJ in Eq (as his Honour then was) noted at [51] that where one has a situation that the detriment is incurred in circumstances where the person incurring the detriment knows that the other person may change their mind, there is no relevant representation.
At [243]-[249], the primary judge rejected the submission that the third representation only encouraged a hope rather than an expectation and that it was only reasonably capable of conveying the meaning it was "possible" the Property would be left to the respondent when the deceased died, describing this as inherently improbable and out of character for both the Kramers.
The appellants' primary submission on this ground is that, in concluding that the third representation constituted an "assurance", the primary judge (while expounding the correct test) erred by focusing on the respondent's personal subjective response to the making of the third representation.
The appellants submit that the essential features of the third representation are that it was made "out of the blue" (referring to [99] of the primary judgment) and was not made in the context of any explicit complaint by the respondent; nor was it made overtly in exchange for some return provided by the respondent or an express agreement to continue the share farming operation. It is noted that the third representation was never repeated by the deceased; nor was it the subject of any further discussion; that there was no note made of the third representation and that the deceased did not inform any other person (including her daughters) she had made the statement to the respondent (see [166]). They argue that "[s]omething more is required" to make an executory promise of this kind binding and to bring an estoppel into play (adopting the language in Waltons Stores v Maher per Mason CJ and Wilson J at 406).
The appellants place weight on the respondent's concessions that: neither the deceased nor Dr Harry Kramer ever used the word "promise" or any expression with equivalent meaning; the representations were not made in the context of explicit complaints by him that his income was unsustainable; the representations were made "out of the blue" and not in exchange for some return provided by him or even an express agreement by him to continue the share farming agreement (as found by the primary judge at [99]).
The appellants submit that a reasonable representee in the position and with the known characteristics of the respondent would not have regarded the assurance as binding but would have interpreted it in the light of the knowledge that testamentary promises are inherently revocable. It is noted that the respondent acknowledged in cross-examination that, as a "general state of wills", a "person can always change their will" (T 76.18-21). The appellants say that there is nothing in the circumstances in which the third representation occurred or the language used which takes this out of the category of a revocable testamentary promise, emphasising that it was never repeated and that it was not made in response to a complaint or made in exchange for some return by the respondent or an agreement by him to continue the share farming agreement.
In this regard, the appellants contrast the position in both Gillett v Holt, where Robert Walker LJ concluded the statements of testamentary intention were binding because they were repeated over a long period usually at special family occasions (at 228); and Thorner v Major at [97] (Lord Neuberger), where there were clear and unambiguous assurances over a long period made to the party claiming the estoppel that he would be left the farm.
Insofar as the primary judge said at [221] that the respondent is the sort of person who is a man of his word and expects other people to act honourably in the same way, saying that "[o]nce a bargain is made, it is made and does not need to be revisited", the appellants submit that the primary judge focused too closely on the respondent's subjective reaction to an "impromptu one-off representation" by the deceased and failed to consider the response of a reasonable representee to what was a revocable testamentary promise.
In his submissions, the respondent maintains that the primary judge was correct to reject (as an "inherently improbable proposition") the appellants' submission the third representation only encouraged a "hope", his Honour concluding that it was more rational to decide the assurances were made as asserted by the respondent (see [244] in which his Honour concluded that it would have been cruel for the Kramers to have informed him of the mere possibility he would inherit the Property).
The respondent says that it is incorrect to suggest that the third representation was made "out of the blue" in the sense of being without context. While he accepted in cross-examination that the representation "just came completely out of the blue" (T 71.20; T 89.24-90.1), the respondent points out that the primary judge understood this evidence to mean that the representations were not made in direct response to a request by him (see at [225]) and that his Honour did not consider it to be of any moment that the representations were not made in response to specific complaints by the respondent (at [225]). It is noted that the primary judge referred to evidence of the first appellant and Jocelyn Kramer (as to their father having broached the subject of his will, "without being prompted") ([215]-[218]), which his Honour considered diminished the strength of the proposition that it was improbable that the Kramers would have raised the issue of their wills with the respondent once only and without any prompt ([218]).
The respondent argues that the fact that the third representation was not repeated or further discussed (nor raised again by the respondent) is consistent with the nature of the individuals involved and the nature of the relationships between them (referring to his Honour's observations at [211]-[218]; [221]). It is noted that the primary judge explained the evidentiary basis for the conclusion that it was explicable for the respondent not to have raised the third representation again with the deceased (see [221]) and that the primary judge assessed the evidence of the making of the representation from the perspective of a reasonable representee ([37], [228], [244]).
The respondent submits that, to the extent that the "something more" principle applies in the context of proprietary estoppel, it applies to the whole of the circumstances and does not narrowly focus on the making of the representation (referring to Waltons Stores v Maher at 406, cited in Doueihi at [156]-[158], where the reference to "something more" was referring to something more than mere reliance). The respondent submits that in the present case there was "something more", pointing to the finding as to the deceased's knowledge about the reliance (presumably referring to [234]; [251] of the primary judgment), and suggesting that there was a finding that the deceased assented to and approved of it - though not identifying such a finding.
Insofar as the appellants submit that the primary judge focused too closely on his subjective reaction to "an impromptu one-off" representation and failed to consider the response of a reasonable representee to what was a revocable testamentary promise, the respondent reiterates his submission that the third representation was not made without context and argues that the primary judge did not fail to consider the response of a reasonable representee (referring to [221], [244]).
The appellants say that, in the present case, the third representation did not expressly or impliedly encourage the respondent to do anything; again noting that the representation by the deceased to give the Property to the respondent upon her death was not made in exchange for some return provided by the respondent "or even an express agreement by him to continue the share farming operation" (referring to [99] of the primary judgment).
The appellants further argue that the primary judge erred in failing to find that a necessary element of the cause of action in estoppel by encouragement is encouragement, "after" the making of the representation, that the representee act in reliance on the relevant expectation or belief. They maintain that there was no encouragement or inducement by the deceased after the making of the third representation that the respondent act in reliance upon it, noting the statement at [166] by the primary judge noting that the respondent accepted that the statement had never been repeated. Similarly, it is noted that there was no evidence of any subsequent discussion between the deceased and the respondent concerning the third representation.
In response, the respondent contends that the issue before the primary judge was whether the third representation was made and whether it was made with the intention of inducing the respondent to rely on it (referring to [228]). The respondent says that the appellants have not offered any plausible or inherently probable explanation that the deceased might have had for the making of the third representation (i.e., any competing explanation for its purpose being an intention that the respondent rely on the representation and remain on the Property). (The respondent thus appears to contend that the making of the representation was itself the inducement or encouragement required for this kind of estoppel.)
The respondent argues that the appellants' submissions have conflated the concept of "encouragement" connected with making of a representation itself (which occurs before any consequent reliance) with the "encouragement" by a representor that might follow after the making of a representation (pointing to the reliance by the appellants on the findings in Olsson v Dyson at 378-379) and noting that in Olsson v Dyson (Barwick CJ at 368; Kitto J at 379) the facts were distinguished from those in Dillwyn v Llewelyn.
The respondent submits that, as in Dillwyn v Llewelyn, the deceased's conscience is here bound because the deceased made the third representation intending for him to rely on it and then, after this, "assented to and approved of" his reliance (in observing him remain on the farm, to work for meagre earnings, and to live in sub-standard accommodation) and further "encouraged" him so to remain on the Property by providing loans and bonuses without which he might otherwise have been forced to leave.
The respondent maintains that the primary judge recognised that an element of encouragement (or intention to induce or provide assurance) was present both at the time of the making of the representation and also after the making of the representation (by way of standing by and allowing him to stay working on the farm for irregular and meagre income, and providing loans and bonuses to further encourage and enable him to stay). The respondent says that the fact that the third representation was not repeated, nor subsequently discussed, is irrelevant, again noting that the primary judge gave contextual reasons why this was the case.
In their submissions in reply, the appellants reiterate that there was no positive finding that the third representation contained the element of intention or encouragement to act. The appellants argue that the discussion at [228] is in response to the appellants' submission recorded at [227] and concerns the elements necessary to render a statement an assurance ([228]). The appellants maintain that, insofar as the primary judge is taken to have impliedly found intention or encouragement at [228] in the terms of the third representation itself, then this finding is erroneous.
It is submitted that the concessions made by the respondent (set out at [99] and accepted by the primary judge) are inconsistent with intention and/or encouragement being present in the terms of the third representation itself, those concessions being: that neither the deceased nor Dr Harry Kramer used the word "promise" or any expression with equivalent meaning; that the representations had not been made in the context of explicit complaints by him that his income was unsustainable; and that the representations were made "out of the blue" and not in exchange for some return provided by him or even an express agreement by him to continue the share farming agreement.
Insofar as the respondent's further answer to ground 3 is that the deceased's conscience is bound because the deceased "assented to and approved" of the respondent's reliance, the appellants note that the primary judge made no finding that the deceased "assented to and approved" the respondent's reliance in the manner now suggested by the respondent. Further, it is said that there was no finding of encouragement after the making of the representation in the way of "standing by" in the manner suggested by the appellants; nor was the case treated by the primary judge as an estoppel by acquiescence case.
The appellants further maintain that the primary judge made no positive findings that the deceased knew that the respondent had acted in reliance on the third representation; rather, they say that the primary judge treated any knowledge by the deceased of reliance in the constructive knowledge context. The appellants also submit that the argument advanced on appeal as to encouragement by acquiescence or standing by are not available to the respondent; not being supported by the evidence and not articulated in any notice of contention.
It is noted that in DHJPM, at [48], Meagher JA (Macfarlan JA agreeing) said that "[t]he propositions stated by Brennan J are applicable to circumstances which give rise to an orthodox proprietary estoppel. Reference is made to MGL, where the authors (at [17-095]) express the view that the line of authority derived from Dillwyn v Llewelyn and Ramsden v Dyson have in common the feature that the representor knows that the representee "holds this expectation or belief".
The appellants submit that the primary judge's reliance on New Zealand Pelt, in preferring the formulation of Deane J to that of Brennan J, is misplaced because (as I have noted earlier) New Zealand Pelt is a promissory estoppel case (concerning the meaning of a deed of guarantee).
Reference is made to the footnote reference in MGL at [17-265], in the context of a discussion of promissory estoppel, to New Zealand Pelt, as follows:
Fourthly, it is not settled whether, before an estoppel will run, the representor must have appreciated the nature and extent, or even the existence of that person's legal rights. Nettle JA provisionally thought that if the representor ought to have appreciated the representor's own position, the estoppel may arise but the point was unnecessary to decide.
The appellants say that Deane J's "clearly ought to have known" formulation in Verwayen occurred in a discussion under the heading "The Context and Operation of the General Doctrine and Estoppel by Conduct"; and that no authority is cited for the proposition by Deane J that in a case where a party has induced the assumption by express or implied representation "a critical consideration will commonly be that the alleged estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct...". The appellants argue that, unlike Brennan J's general formulation in Waltons Stores v Maher, Deane J's statement of the general doctrine of estoppel by conduct has not been accepted by this Court as applying to an orthodox proprietary estoppel case. It is noted that, in Doueihi, Gleeson JA at [136] observed that in Giumelli, the High Court noted that (in Verwayen), Dawson J (at [454]) and McHugh J (at [499]-[501]) did not accept Deane J's general doctrine of estoppel by conduct and that Brennan J approached the matter on a different footing.
The appellants point to the description by the primary judge of the present case as an estoppel by encouragement case and say that there is nothing in the facts to suggest that it is otherwise than an orthodox proprietary estoppel case. Thus they contend that the primary judge erred in applying a constructive knowledge test in assessing whether the deceased knew that the respondent had acted in reliance upon the third representation. The appellants say that the primary judge was bound by DHJPM to apply Brennan J's test of actual knowledge or intention; and should not have applied a constructive knowledge test as Deane J's formulation in Verwayen has been questioned by this Court in Doueihi, and it is only arguably applicable in a promissory estoppel case.
It is noted that the respondent admitted in cross-examination that he did not inform the deceased that he had remained on the Property in reliance on the third representation and that the submission was put (at [230]) that the estoppel claim ought be dismissed because there was no evidence that either of the Kramers knew that the respondent was only staying on the Property because of any of the representations. (In response to this submission the respondent points out that in cross-examination he accepted that he had not informed the deceased that the "only" reason he stayed on the Property was because of the representations (see T 94.15-45) and the respondent points to the observation by the primary judge that there is no requirement at law that the representation be the "only" basis for a change in position in reliance ([233]-[234]).)
The appellants submit that, absent a finding of actual knowledge by the deceased that the respondent had acted in reliance on the third representation, the primary judge should have dismissed the claim. Furthermore, the appellants submit that even if the primary judge was correct in preferring the "clearly ought to have known" test enunciated by Deane J, the primary judge erred by not applying that test to the facts of the case; rather, his Honour applied two different tests, namely that the deceased "ought to have known" ([251]) or "ought reasonably to have assumed" (at [234]).
In response to the appellants' contention that the primary judge wrongly applied the concept of constructive knowledge to the deceased's knowledge of the responding having acted to his detriment, the respondent argues that the appellants conflate the issue of the representor's actual knowledge and intention in relation to the making of the representation (as in Verwayen at 445 per Deane J), with that of knowledge of the actions in reliance of the representee after the making of the representation.
The respondent submits that, at the stage of the making of the representation, it is sufficient to show that the representor intended the representation to be relied on, citing the passage at Verwayen referred to above from Deane J's judgment at 445; and the respondent refers to what was said by Macauley J in Leading Synthetics at [67], namely that:
An issue of principle arises on the facts of this case. There is some uncertainty whether it is necessary to establish that the inducing party "knew or intended" that the other party would adopt and act on the assumption, as Brennan J said in Waltons Stores, or, as Deane J said in Verwayen, that the inducer "knew [or intended] or clearly ought to have known" that would be the consequence.
The respondent says that it is made clear in Waltons Stores v Maher (at 423 per Brennan J) that, at the representation stage, intention may be inferred. The respondent argues that the real distinction between the respective formulations by Brennan J in Waltons Stores v Maher and Deane J in Verwayen is the addition by Deane J of the words "or clearly ought to have known" but says that in the present case the distinction does not arise since the primary judge was properly satisfied (at the representation stage) that the deceased intended the third representation to be relied on (referring to [228]) and thus was not required to make findings as to whether the deceased "clearly ought to have known" that the respondent would rely on the representation. The respondent says that there was no alternative intention accepted by the primary judge that the deceased might have had in making the third representation (referring to [244]).
In response, as to the determination of knowledge at the reliance stage, the respondent says that this may require: first, the representor's knowledge of the acts (or omissions) themselves that are undertaken in reliance and, second, a determination as to whether the representor knew those acts or omissions were undertaken in reliance on an assumption. The respondent argues that the appellants have conflated the deceased's knowledge of the first (i.e., the acts or omissions themselves) and the second (i.e., that the acts or omission were undertaken in reliance on the representation).
The respondent submits that Waltons Stores v Maher establishes that, while actual knowledge may be required for knowledge of the acts undertaken (which the respondent refers to as the acts per se), it is open to infer knowledge of the acts being in reliance. The respondent says that in Waltons Stores v Maher all members of the Court found actual knowledge of the acts per se (referring to 394, 406 per Mason CJ and Wilson; 411, 429 per Brennan J; 442 per Deane J; 456 per Gaudron J) but that a test of constructive knowledge was applied to the question whether there was knowledge that the acts were in reliance on the representation. In that regard, the respondent points to the statements: at 406-407 per Mason CJ and Wilson J that "the crucial question remains: was the appellant entitled to stand by in silence when it must have known that the respondents were proceeding on the assumption that they had an agreement that completion of the exchange was formality?"; at 411 per Brennan J that "[t]he only reasonable inference open on the evidence is that Waltons knew that Mr Maher was building the store in conformity with the terms of the deed which he had executed"; at 418 per Brennan J that "Waltons ... must have known"; at 428 per Brennan J that "[t]he evidence was capable of supporting an inference that Waltons knew the belief under which Mr Maher was labouring"; at 429 per Brennan J that Waltons "must have known"; at 442 per Deane J that Waltons "must have realised"; and at 456 per Gaudron J that "it is implicit in the findings ... that the Appellant knew". The respondent says that Gaudron J specifically addressed the acts per se and acts in reliance at 462, where her Honour said:
Whatever the actual knowledge or belief of the appellant as to the state of mind of the respondents once it came to the appellant's knowledge that demolition work had commenced it ought then to have been aware that there was a real possibility or likelihood that the respondents had commenced work in the reasonable expectation that exchange would take place.
The respondent argues that this is consistent with the approach taken in Doueihi, where it was accepted that, where the representor was aware of the actions of the representee in outlaying money in relation to manufacturing operations, the first "must have known" that the representee had assumed occupation would be for the long term (referring to Doueihi at [51], [60], [116]).
It is submitted that such an approach as to knowledge that the acts were in reliance is analogous to that of the primary judge, who found (at [234]) that the deceased ought reasonably to have assumed or (at [251]) ought to have known that part of the respondent's motivation for continuing on the Property was an expectation he would receive the Property. The respondent says that this inference is based on the findings as to the deceased's actual knowledge of his acts per se, including that he remained working on the farm, in circumstances where his father did not, and worked for meagre wages living in sub-standard accommodation.
The respondent says that his Honour clearly turned his mind to the issue of actual versus subjective knowledge at the reliance stage, and its relevance, pointing to what his Honour said at [35] (extracted earlier); and the respondent argues that, consistent with this, it was open to the primary judge to make the finding (by way of inference) at [234] (see as extracted above), namely, that if the deceased made the third representation, she ought reasonably to have assumed that part of the respondent's motivation for continuing (to work on the Property) was the expectation that he would inherit the Property.
In their reply submissions, the appellants argue that the gravamen of the respondent's answer to ground 4 is that, as the deceased intended the third representation to be relied upon, the primary judge was not required to make findings in relation to whether she "clearly ought to have known"; and that the approach adopted by the primary judge in "ought reasonably to be assumed" or "ought to have known" approach adopted by the primary judge is analogous to the "must have known" approach adopted by some members of the High Court in Waltons Stores v Maher.
The appellants reiterate that the primary judge made no finding that the deceased intended the respondent to act in reliance on the third representation; and, further, that the primary judge made no finding the deceased knew that the respondent acted in reliance on the third representation. The appellants argue that, rather than considering constructive knowledge at the stage of considering whether there was knowledge that the acts were in reliance, the primary judge well appreciated there needed to be established (absent intention to act) knowledge by the deceased that the respondent had acted to his detriment on reliance on the representation (and that the primary judge wrongly relied upon the decision of Deane J in Verwayen to find constructive knowledge on the part of the deceased), treating this case as a conventional proprietary estoppel by encouragement case rather than an estoppel by acquiescence case (where the appellants say that constructive knowledge of reliance is permissible).
Further, the appellants maintain that (as with ground 3), the respondent in ground 4 seeks to affirm the primary judge's decision on grounds not articulated in the judgment and without filing a notice of contention; and hence that the argument advanced by the respondent as to a finding of intention is not available on this appeal.
In any event, in the present case, the question of intention does not arise because there was no finding that the deceased, when making the third representation, intended that it be relied upon. I accept that it is not open to the respondent (in the absence of a notice of contention to that effect) to seek to affirm the primary judge's estoppel finding on the basis that the deceased made the third representation with the intention that it be relied upon.
That said, the relevant issue raised by ground 4 in my opinion is as to whether, in the case of an estoppel by encouragement (where, ex hypothesi, there has been an express or implied representation made by the defendant capable of establishing the necessary element of encouragement), it is necessary that the defendant have actual knowledge of the acts undertaken in (detrimental) reliance on the representation, i.e., knowledge of the acts (or abstention of acts) of reliance "after" the making of the representation.
Where knowledge of reliance on the representation (leaving aside for the moment whether that need be actual or may be constructive) is relevant, in a case of estoppel by encouragement, is to the question whether departure from the representation would be unconscionable so as to warrant equitable intervention to prevent the defendant resiling from the representation. Thus, in Priestley v Priestley, Macfarlan JA accepted at [13] that where the representor has expressly or impliedly promised to grant a proprietary interest, the representor's subjective state of mind is irrelevant if the representee acted reasonably in relying on the promise or representation. The primary judge clearly had regard to and accepted that proposition see at [245], albeit adding the proviso that the "representee [sic; presumably representor] is aware of circumstances that make it objectively reasonably apparent that the representee is so acting".
This seems to me to point to the resolution of the conflict between Deane J and Brennan J's different approaches regarding the knowledge requirement in equitable estoppel. Knowledge of acts in reliance on the representation (or assumed state of affairs) is a necessary element for a proprietary estoppel by acquiescence (since it is the knowledge and standing by that engages the conscience of the party sought to be estopped) but it is not a necessary element where the representor's conscience has been sufficiently engaged through the encouragement made by the representation in the first place. This enables cohesion with the standard of proof a plaintiff bears in proving there was detrimental reliance, which is similarly an objective standard (see Sidhu v Van Dyke at [69] per French CJ, Kiefel, Bell and Keane JJ) and conforms with the approach to unconscionable conduct in other areas of equity, as in the case of Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14.
Knowledge of the acts undertaken in detrimental reliance on the representation or promise is certainly relevant in considering whether it would be unconscionable to resile from the promise or representation but in a case of estoppel by encouragement it is not essential. The encouragement on the part of the representor in making the representation appears to be sufficient to satisfy the requirement of unconscionable conduct (where there has in fact been reasonable reliance on the representation such that there would be detriment if the representor were permitted to resile from the representation); see Lord Bridge in Lloyds Bank Plc v Rosset [1991] 1 AC 107 at 132 implying that, in cases of proprietary estoppel by encouragement, it is sufficient for the representee merely to demonstrate that he or she relied on the representation to his or her detriment.
Therefore, in my view, the finding that the deceased "ought to have known" or ought reasonably to have known of the detrimental reliance by the third respondent on the third representation does not demonstrate error in the finding of estoppel by encouragement in the present case. Rather, the question of knowledge (what was actually known as well as, in an appropriate case, what ought to have been known) of detrimental reliance goes to the question whether it would be unconscionable for the estate of the deceased to be permitted to resile from the representation. (It is not insignificant in that regard that the issue of knowledge or intention, as framed in the fourth of the elements identified by Brennan J in Waltons Stores v Maher, relates to knowledge or intention of the acts of reliance.)
It is thus not necessary to express any concluded view as to whether such knowledge must be actual (perhaps inferred from the facts of the particular case) or constructive.
Therefore, I have concluded that ground 4 is not made good (and it is not necessary to consider the alternative submission that, even if the "ought to have known" test is not incorrect, his Honour erred in applying it).
The appellants point to the respondent's evidence in cross-examination that he had not made a specific complaint to Dr Harry Kramer about his income from the share farming (T 71.12-17); had never conveyed the proposition that he might not be able to stay because there was not enough money (T 72.32-47); and did not ever indicate to Dr Harry Kramer that he was thinking of leaving the farm or threaten to leave the farm (T 84.27-32). The appellants also point to the evidence that the respondent told a number of people that he enjoyed and loved living and working on the farm (T 93.37-94.12) and to his evidence that he had no way of showing that the deceased knew that the only reason he was staying on the farm was the testamentary promise she had made to him (see at T 96.35-40).
The appellants argue that the share farming agreement (see as noted by the primary judge at [66]-[73]) enabled the respondent to carry on the work his father had done and provided him with a place and home where he enjoyed living and working; and that, pursuant to the terms of the share farming agreement, all expenses were paid by the Kramers except for fuel (with respect to which costs the respondent paid one-third and the Kramers paid two-thirds) and the respondent received a quarterly bonus together with loan moneys of moderate proportions.
In response to the implicit criticism of the primary judge's own research, the respondent points out that the appellants tendered an "inflation calculator" based on CPI increases on the morning of the first day of the hearing (over the opposition of the respondent) (T 37.47-40.17). The respondent says that the primary judge made clear that the information that flowed from any calculations was simply used to give more accuracy to the inference he would have drawn in any event ([154]); and the respondent argues that the inference as to the respondent's average annual income being less than one third of average weekly total male earnings at November 2020 was safely drawn given the facts relied on, particularly in circumstances when the appellants' own expert admitted that on the figures shown to him, the respondent was working for "less than the basic wage" (T 286.44-287.6).
In reply to this the appellants note that the primary judge's finding at [154] that the respondent's annual income was less than one-third of the average weekly total male earnings adjusted as at November 2020 did not extend to a finding that either Dr Harry Kramer or the deceased had knowledge of this fact; and they maintain that, given the lack of evidence knowledge of comparable incomes on the part of the Kramers, and the lack of any complaint by the respondent, applying the Deane J test in Verwayen there must be a doubt the deceased "clearly ought to have known" that part of the respondent's motivation for continuing was an expectation he would inherit the Property.
The respondent submits that it was open to the primary judge to make the following findings in relation to the Kramers' knowledge: at [66], that it must have been obvious to them that at no time did the respondent earn enough from the share farming agreement to maintain the house; at [67] that the obvious fact was that the respondent did not have any independent financial resources to apply to the share farming operation and that his earning capacity was meagre and wholly inadequate to fund any onerous obligation to maintain and improve the Property; and at [225] as to the respondent's "financially grim" position.
Further, the respondent submits that the alleged "benefits" that the appellants say were afforded to him by the share farming agreement were not "benefits" (and hence were not benefits about which the deceased could or ought to have known), arguing that the evidence indicated that the ability to carry on the work was not a benefit given the low income; the accommodation was vermin infested and extremely poor; and any receipt of income or bonuses did not raise his income beyond irregular and meagre.
The appellants next raise three arguments in support for their challenge to the finding as to what the deceased ought to have known in respect of the respondent's motivation for staying on the Property: first, the temporal issue (that the third representation was made in about 1988 or 1989; it was made once; there was no subsequent discussion concerning it and no complaint about income or any suggestion that the respondent was considering leaving the farm), together with evidence of the respondent's positive statements that he enjoyed living and working on the farm (which it is said would reasonably have caused the deceased to believe the respondent was content on the Property); second, that despite the finding as to his irregular and meagre income and arduous work, there were positive benefits received by the respondent from the share farming agreement; and, third, there were other significant reasons why the deceased ought to have assumed that respondent wished to continue on the Property (those being that his father had worked on the Property; and that the Property provided the respondent with a lifestyle he enjoyed and the ability to occupy a place in the local community, including occupying senior positions in the local Rural Fire Service brigade ([74]-[81])).
In response to those three arguments (each of which the respondent says was comprehensively addressed and rejected by the primary judge), the respondent says: that the primary judge had regard to the timing and context of the third representation (at [91]-[93]) and that the suggestion that the respondent was required to show that the deceased knew the (only) reason he was staying on the farm was the promise, is a requirement that has no legal basis ([233]); second, that the alleged "benefits" available to him under the share farming agreement were not in fact benefits; and, third, that it should not be inferred that the deceased assumed that the respondent wished to continue to live on the farm as his father had worked there, given the unchallenged evidence that his father left the farm due to an "inability to earn an adequate income" ([73]) (noting his Honour's finding that the deceased would have known this; [226]); and the respondent says that the reference by the appellants to the respondent's ability to occupy a place in the local community fails to recognise that the direct "benefit" of that work was to the deceased and the Property (referring to [74]; [75]-[76]).
The appellants argue that the respondent's reliance on his performance of the share farming agreement as a basis for enforcing the third representation is akin to improper reliance on the performance of an existing duty as consideration for an agreement (referring to Heydon JD, Heydon on Contract: The General Part (Thomson Reuters, 2019) at [5-410]-[5-450]). If that argument is not accepted as a complete defence to the respondent's claim, then the appellants submit that the legacy of $200,000 with a CPI adjustment which the respondent received under the Will would satisfy his equity (the appellants arguing that the CPI adjusted legacy from 2011 until the end of 2022 year would have a value of $256,459 applying the Reserve Bank inflation calculator).
The appellants accept (referring to Sidhu v Van Dyke) that the prima facie position in fashioning relief where a proprietary estoppel claim succeeds is to make good the relevant expectation but they argue that principles of proportionality apply; and that the expectation will not be made good if such relief would go beyond what was required for conscientious conduct (referring to Giumelli at [50]; and also referring to the statement by Robert Walker LJ in Jennings v Rice [2003] 1 P&CR 8 quoted with approval by Young CJ in Eq in Barnes v Alderton at [68]-[69], to the effect that "if the claimant's expectations are uncertain, or extravagant or out of all proportion to the detriment which the claimant has suffered, the Court can and should recognise that the claimant's equity should be satisfied in another (and generally more limited) way").
The appellants argue that the respondent's case is in effect that he continued to perform his existing obligations under the share farming agreement but, because the deceased had promised to leave the Property to him on her death, he is also entitled to enforce the promise because he stayed on the farm; and they submit that the promise of the Property is grossly disproportionate to the detriment suffered by the respondent by doing what he contracted to do.
Insofar as the detriment relied upon by the respondent is the continued performance of the share farm agreement from 1988 until 2014, the appellants point to the benefits the respondent received over that 26 year period in terms of accommodation and receipt of one-half of the sale proceeds of all crops. It is submitted that those benefits need to be brought to account and amortised against the expectation of the Property (the appellants referring to Sledmore v Dalby [1996] 72 P&CR 196); and that the receipt of these benefits has over time satisfied the respondent's equity.
The appellants say that the primary judge erred in adopting the approach of taking away the $200,000 legacy adjusted for CPI but awarding the respondent the Property; rather, they submit that the primary judge should have started with the legacy of $200,000 and then asked the question whether it is unconscionable that the respondent not receive further provision in the Will (the appellants arguing that he should not).
In response, the respondent refers to the principles set out by the primary judge as to the approach to fashioning relief when a proprietary estoppel has been established (at [43]-[45]), including the recognition that it is no longer the law to provide a "minimum equity" ([43]) and that a reasonable expectation which the party bound created or encouraged should be enforced ([44] citing Delaforce v Simpson-Cook at [63] per Handley AJA); and the reference by his Honour (at [45]) to the consideration of those principles by Bathurst CJ in Trentelman v The Owners - Strata Plan No 76700 (2021) 106 NSWLR 227 at 257-258; [2021] NSWCA 242.
The respondent says that his case in relation to detriment went well beyond his performance of the share farming agreement; and he submits that the appellants have no basis to characterise the rights between the deceased and the respondent from a contract perspective, noting the finding by the primary judge (to which there is no challenge on this appeal) at [41] that:
The evidence in the present case suggests that the relationship between [the respondent] on the one hand and Dr Harry and [the deceased] on the other was an informal halfway house between a commercial and a domestic one, and that even though there was an underlying commercial relationship in the form of the share farming agreement, the parties to that agreement substantially acted upon the basis of trust and the give and take that would commonly characterise a domestic relationship.
As to this, the appellants in their reply submissions say that it is clear from their submissions in chief at [67] that they "do not endorse (but rather introduce a review of)" the finding at [41] that the relationship between the respondent on the one hand and the Kramers on the other hand, was an informal half-way house between a commercial and a domestic one.
The respondent further submits that, although the share farming agreement related to some of the various responsibilities of the parties, in its essence it related to production outcomes; whereas the estoppel relates to the land.
As to the appellants' submission that the CPI adjusted legacy under the Will would satisfy the equity, the respondent points to the consideration and rejection of this submission by the primary judge (at [338]-[342]). The respondent argues that his claim cannot be described as "uncertain, or extravagant, or out of all proportion to the detriment the claimant has suffered".
As to his detrimental reliance, the respondent points to the matters set out at [107] of the primary judgment (the evidence by the respondent's de facto partner as to her conversation with the first appellant in August 2014) and he submits that the fact that he left the Property in 2014 on being informed that the deceased had not left him the Property in her Will supports the finding that the reason he had stayed on the Property until then was on the expectation that he would receive it.
In relation to the issue raised by the appellants of proportionality, the respondent submits that the legacy under the Will would on any view be inadequate to satisfy the equity, noting that if averaged across 26 years it would represent $7,692.30 per year (or $147.92 per week). It is submitted that to make a determination of appropriate relief in this way, or as otherwise suggested by the appellants, "would see the equity become one of compensation for proved equivalent detriment", rather than on the broader basis, being "one based on the just and conscionable satisfaction in appropriate fashion of the equity arising from the expectation created in another by encouragement or representation" (at [43] citing Delaforce v Simpson-Cook at [4]).
Allsop P, as his Honour then was, emphasised in Delaforce v Simpson-Cook that, although proportionality is "undeniably" relevant and "sometimes of considerable importance", the concept is but one consideration (and should not be elevated above others, in particular above the importance of making good an expectation by encouragement or representation). His Honour had earlier noted at [3] that equity has always had a place in keeping parties to representations or promises.
In Sidhu v Van Dyke, the High Court explicitly framed the question of remedy by reference to the "requirements of good conscience". In Priestley v Priestley, Emmett AJA (with whom McColl and Macfarlan JJA relevantly agreed) said (at [164]) that:
The principle of proportionality applies only in unusual cases where proprietary relief would be out of all proportion to the detriment. The proper measure of relief in a case where the detriment to a promisee or representee is something substantial is performance of the promise or representation. … [my emphasis]
It has been said that proportionality is relevant in considering whether final relief of the kind sought by the plaintiffs would be "wholly disproportionate" to the detriment suffered (see Ambridge Investments Pty Ltd (in liq) (rec apptd) v Baker [2010] VSC 59 at [594] (Vickery J); Verwayen at 413 (Mason CJ)) or "out of all proportion" to the detriment (see Priestley v Priestley above).
I do not accept that the relief granted was out of all proportion to the detriment or wholly disproportionate thereto. The suggestion that the legacy under the Will would have been sufficient to assuage the deceased's conscience is not persuasive - not least because the third representation itself contemplated that the deceased would leave not only the Property to the respondent but an undefined sum of money. Nor do I accept that the starting point should have been the legacy of $200,000. The authorities on relief for a proprietary estoppel (and, in particular, see Sidhu v Van Dyke) make clear that the starting point is the prima facie position that the expectation be made good. It seems to me that the approach of starting with the legacy and asking if there should be further provision under the Will approaches the issue from the incorrect perspective.
Grounds 6 and 7 are not made good.
Further, the respondent says that the extent to which the share farming agreement itself may be considered "commercial" is in doubt (referring to [41] of the primary judgment), noting that the primary judge found that its "primary objective", from the perspective of the Kramers, was to enable them to have a farming property in reasonable proximity to their home, which they could enjoy at their leisure and which presented as an operating farm ([70]); and that the share farming agreement was "more of a collaboration than a conventional share farming agreement". Thus, it is submitted that the underlying assumption on which ground 8 is based (i.e., that the basis of the relationship was commercial) is not made out.
As to the appellants' submission that the respondent's reliance was unreasonable and inequitable, the respondent invokes the reasons given by the primary judge (for example, at [244]) for its rejection, including the nature of the relationship between the deceased and the respondent ([221]).
In their reply submissions, the appellants argue that it is not necessary for them to challenge the finding at [41] in order to advance the argument that reliance by the respondent upon the share farming agreement is unreasonable. The appellants maintain that it was unreasonable for the respondent to rely on his continued performance of the share farming agreement from about 1988 until 2014, because this is what he agreed to do anyway.
Even at that stage, on 16 December 2022, 13 months after delivery of the first set of reasons and 25 months after the first hearing, it remained impossible for any party to bring an appeal. That is because no determinative orders had been made. It is axiomatic that appeals lie from orders, not reasons: see BP v State of New South Wales [2019] NSWCA 223 at [11]-[12] and the authorities there cited; see also McNab v Director of Public Prosecutions (NSW) (2021) 106 NSWLR 430; [2021] NSWCA 298 at [25]. No differently from "judgments, decrees, orders, and sentences" in s 73 of the Commonwealth Constitution from which an appeal lies to the High Court, the "judgment or order" in respect of which s 101(1) of the Supreme Court Act 1970 (NSW) confers a right of appeal does not include "reasons for judgment", although as Barwick CJ and Kitto J observed in Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 at 64; [1968] HCA 91 in many contexts, "judgment" is a convenient abbreviation for reasons for judgment.
Final orders confirming Mr Stone's entitlement to the Colo Property were eventually made on 16 February 2023.
It is very much to be hoped that the 15 month delay between delivering reasons for judgment and making orders is an extreme case. Whatever may have contributed to this delay subsequent to the delivery of reasons, that delay would not have happened if orders had been made at the time judgment was delivered. It is to be borne in mind that reasons are not the objective of litigation. Parties go to court in order to obtain orders. Indeed, reasons are in fact reasons for judgment. It is a misconception to think that the reasons come first, from which orders then follow.
There is at least a chance that had orders resolving at least part of Mr Stone's claim been made shortly after the first reasons were published this appeal would have been heard and determined a year earlier than it has been. It would have been an interlocutory appeal, but there would be good reason to grant leave since there had been a six day trial. (Indeed, as this appeal stood on 16 February 2023, the present appeal would require leave for the same reason, in light of the "New Issue" identified in the reasons delivered on 16 December 2022; however, it appears that that issue has been resolved by orders made on 6 April 2023.)
It is true that orders resolving the entirety of a dispute commonly cannot be made without giving the parties an opportunity to be heard further. But it is seldom the case that no orders at all can be made after a final hearing. It is also true that if a court makes orders or enters judgment at the time reasons are delivered, it is quite possible that the court may have overlooked a point, or either or both parties may wish to be heard as to the form of the order, especially if the matter is complex. Many years ago this mattered much more than it does today. In part that was because traditionally a dissatisfied litigant was entitled to apply for a rehearing, a review or an appeal, and the right to a rehearing was not lost until a decree had been drawn up, entered and enrolled. It was with this in mind that Professor Polden wrote, "It is no wonder that nothing was ever considered final in Chancery": W Cornish et al, The Oxford History of the Laws of England (2010, Oxford University Press), Vol XI at 673, and see Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 at [35]-[39].
Times have changed. In the ordinary course, it is desirable for courts to make orders at the time reasons for judgment are delivered. I respectfully agree with the commentary in J Hamilton, G Lindsay and C Webster, New South Wales Civil Procedure Handbook 2023 (13th ed, 2023, Thomson Reuters) at 1004 [36.16.80] that "[i]t is likely that the perceived risk of the early entry of orders is higher than the reality". Any judgment or order may be set aside or varied by notice of motion if it has not been entered, and, importantly, so long as a notice of motion is filed within 14 days, orders which have been entered may be set aside or varied as if they had not been entered: Uniform Civil Procedure Rules 2005 (NSW), r 36.16(3A). That is a basal departure from the traditional approach in equity, and requires changes to habits of thought. Sub-rule (3A) was inserted by the Uniform Civil Procedure Rules (Amendment No 15) 2007 (NSW) and there is no reason to doubt that the liberalisation of the power to set aside or vary orders was intended to alter the traditional approach.
If a court makes orders when delivering judgment and if there are errors or omissions that matter, the parties are entitled pursuant to UCPR r 36.16 to apply for further or different orders. But the issue is a different one from that which arises if reasons are delivered but no orders are made. On the one hand, if a court makes no orders at all, but invites the parties to bring in orders according with the reasons for judgment, that is a course which gives rise to the greatest possible scope for disputation as to the appropriate orders, between self-selectingly disputatious litigants who not only have been unable to resolve their dispute before trial but also may be considering their rights of appeal. On the other hand, if a court makes orders, the question is never more complicated, and may in fact be significantly simpler: each litigant need only ask, "Is it necessary to vary or set aside any of the extant orders, or to seek additional orders?" Accordingly, the latter course will ordinarily accord with the just, quick and cheap resolution of the real issues. To be clear, I struggle to see how delay which has occurred in the present litigation, of 15 months between substantive reasons and orders, accords with s 56 of the Civil Procedure Act 2005 (NSW). That criticism is not directed at either party or their lawyers or the primary judge; it does not greatly matter whether the fault lies with any or all of them. However, nothing in the record suggests that sufficient regard was had by anyone to the obligations imposed upon litigants, lawyers and the court by s 56.
In addition to the above, making orders is a course which ensures that a party's rights of appeal are available. In many cases one litigant will be less concerned about delay than another. In many cases one litigant will be less concerned about expense than another. Even so, that litigant is under an obligation to advance the overriding purpose of achieving the just, quick and cheap resolution of the real matters in issue. And a court's obligation in all cases is to attempt to deal with the real issues justly, whilst minimising expense and delay. It must follow that a court must often resist the submissions advanced by a litigant who may be content with the status quo and who urges a luxurious timetable and concomitant expense.
The course adopted in the present case gives rise to unusual and perhaps novel questions of construction under s 75A(7)-(9) of the Supreme Court Act. Those provisions provide:
(7) The Court may receive further evidence.
(8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds.
(9) Subsection (8) does not apply to evidence concerning matters occurring after the trial or hearing.
When there has been a single hearing resulting in a judgment or order from which an appeal is brought, it is clear that "further evidence" in subsections (7) and (8) is evidence that was not adduced at that hearing but which existed at the time, and evidence concerning "matters occurring after the trial or hearing" in subsection (9) is "fresh" evidence which could not have been adduced at that single hearing because it concerned matters which had not yet occurred. Those provisions do not deal explicitly with a situation such as the present, where a hearing takes place in stages prior to orders being made, with evidence being adduced at subsequent stages for different purposes. This Court was not referred to any authority squarely on point. Whether evidence which was adduced before orders were made but after the relevant hearing and for a different purpose is "further evidence" is at least arguably debatable. The Court did not hear any substantive argument on the issue, and reserved its decision on the motion.
In this context, "regard must be had to the nature of the proceedings and the general public interest in the finality of litigation": Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 at [51] and the decisions there cited. As noted above, the primary judge declined to permit Mr Stone to expand his claim to include water entitlements, in part because it would have altered the way the earlier hearing was conducted, and in part because it would have involved the Court re-considering its own reasons on a different evidentiary basis.
The evidence adduced at the second hearing was directed to preventing Mr Stone from expanding his case. In large measure that effort succeeded. But no appeal is brought from orders reflecting the determination of any issue at the subsequent hearing on 20 October 2022. Instead, it is now sought to rely upon that evidence in order to impugn the orders made on 16 February 2023, which reflect the reasoning of the Court following the first hearing. Indeed, the very matters which were relied upon by the primary judge to prevent Mr Stone from expanding his case (namely, that they might call into question earlier findings of fact) are now sought to be relied upon in the appeal, and to the same end.
It is not necessary to express a definitive view as to the operation of the constraint upon the receipt of "further evidence" in s 75A of the Supreme Court Act in a case such as the present. The view which is most favourable to the appellants is that none of the evidence is "further evidence" because all of it was adduced before the primary judge before any judgment or order was made. I favour that view, which has the result that the "special grounds" requirement in s 75A(8) is inapplicable. Test the matter this way: suppose Mr Stone had brought a cross-appeal from the dismissal of that part of his application to amend to advance a claim based on the water rights, or suppose the appellants had included in their appeal a challenge to the grant of leave to Mr Stone to litigate the "New Issue". The evidence adduced by each side in respect of that application would be properly before this Court. Whether or not that evidence could be used by the appellants to impugn the findings on which the equitable estoppel was based would give rise to the same issue that arises in the appeal as constituted. Thus it is clear that the resolution of the issue does not turn on s 75A.
The evidence upon which the appellants now seek to rely was before the primary judge on a limited basis, for the purpose of opposing an expansion of the case, and it was not before the primary judge when making findings of fact and when applying the law on the only aspect of Mr Stone's claim from which this appeal has been brought. No limiting order was made under s 136 of the Evidence Act 1995 (NSW), but none was needed because the parties proceeded on the basis that the evidence could not be used to alter findings already made, and thus the evidence was only relevant to the application to amend.
The position was no different from the position which would have obtained if there had been a single hearing, at which some evidence was admitted on the limited basis that it was confined to the issue of whether an amendment ought to be permitted, and was not available to be used on other issues (such as whether Mr Stone's claim for estoppel by encouragement was made out). In such a case it is clear that this Court if hearing an appeal would not have regard to the evidence tendered on that limited basis for a different purpose, unless and until an appeal was brought from the evidentiary ruling.
Accordingly, even assuming s 75A(8) does not apply in terms, I agree with Ward P that this Court's review of findings of fact should not be conducted on a different basis from the six day trial which resulted in the first set of reasons. This is not a case where this Court should admit evidence on appeal upon which the primary judge did not rely, in order to support the challenge to his Honour's factual findings. Permitting further evidence, which was not considered by the primary judge, to be adduced for the purpose of establishing error in the fact-finding performed by the primary judge is antithetical to the public interest in the finality of litigation, and contrary to the ordinary way in which this Court conducts appeals by way of rehearing.
For those further reasons, I agree that the appellants' notice of motion filed on 24 July 2023 should be dismissed with costs.
I respectfully agree. I am unpersuaded that there was any error in the fact-finding process adopted. I do not think this Court is entitled to set aside the findings made by the judge who saw the trial unfold and who was acutely conscious of the frailties of memory.
I do not accept that the appellants' submission is correct in principle. Nor do I accept that authority obliged the primary judge so to find.
The passage from Waltons Store v Maher on which the appellants rely is the familiar conclusion of Brennan J at 428-429 which follows some 15 pages of analysis of estoppels at common law and in equity. The conclusion is as follows:
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
The appellants pointed to the fourth element "the defendant knew or intended him to do so" and said that this is inconsistent with anything short of actual knowledge of the plaintiff's detrimental reliance. I do not agree.
Previously, his Honour at 427 had referred to the following passage from Dixon J's judgment in Thompson v Palmer (1933) 49 CLR 507 at 547; [1933] HCA 61:
The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct … or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. (Emphasis added; citations omitted.)
Brennan J explicitly stated at 427 that that reasoning was applicable to equitable estoppels ("The same observations hold good, mutatis mutandis, with respect to the adoption of an assumption or expectation which founds an equitable estoppel"). That makes it clear that he regarded the part taken by the defendant/representor in bringing about the plaintiff's misapprehension to be central to the inquiry. Dixon J's nuanced account sits uneasily with the posited contention that actual knowledge of the plaintiff's reliance is necessary before an estoppel can be established. To the contrary, it was clear to Dixon J in the passage reproduced above, and reflected in the conventional distinction between estoppel by encouragement and estoppel by acquiescence, that there is a difference between cases where the plaintiff's assumption is brought about by the defendant's express representation, as opposed to cases where the plaintiff's assumption is known to but uncorrected by the defendant.
Consistently with the above, Brennan J insisted at 427 that "an element in unconscionable conduct is the inducing of the other party to adopt an assumption or expectation as to the parties' legal relations". That led to further consideration of the position whether an equitable estoppel could arise by silence, and it was in that context in which his Honour insisted upon knowledge. But where the inducement comes about not through permitting the plaintiff to labour under an incorrect assumption to which the defendant did not contribute, but instead because of the defendant's own positive encouragement, the element of inducing the other party to adopt the assumption may be satisfied by the encouragement itself. That is the force of the passage upon which the appellants rely, and in particular the words "or intended him to do so".
In other words, Brennan J's requirement that "the defendant knew or intended him to do so" was carefully drafted in order to capture cases of encouragement and also cases of silence. The disjunctive "knew or intended" captures (a) cases of encouragement where the defendant intended the plaintiff to hold the assumption, and (b) cases of silence where the defendant knew that the plaintiff was labouring under an incorrect assumption.
The passage at [48] in DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 which the appellants submitted bound the primary judge is merely Meagher JA's statement that:
The outcome of this appeal does not turn on whether the equitable estoppel relied upon is a proprietary estoppel or a promissory estoppel with respect to a promise to create new rights. The propositions stated by Brennan J are applicable to circumstances which would give rise to an orthodox proprietary estoppel. …
When it is understood that Brennan J's formulation does not stand in the way of a finding of knowledge or intention when the defendant's own express encouragement has brought about the plaintiff's assumption, DHJPM takes the matter no further.
I think the correct position is that the point is unsettled, with the weight of authority suggesting, as the primary judge correctly observed, that actual knowledge is not necessary.
I do not accept, as seemed implicit in some of the appellants' submissions, that the test is the same for estoppel by encouragement and estoppel by acquiescence. There is similarity and overlap between the species of proprietary estoppel commonly known as estoppel by encouragement and estoppel by acquiescence, which is to say the principles associated with Dillwyn v Llewelyn (1862) 4 De GF & J 517; 45 ER 1285 and Ramsden v Dyson (1866) LR 1 HL 129 respectively. There will be cases where the defendant has both encouraged and acquiesced in the plaintiff's incorrect assumption. There will also be cases where the defendant's encouragement of the plaintiff is so marginal that it may be debated whether the plaintiff's claim is in estoppel by encouragement or estoppel by acquiescence. But just as the existence of twilight does not erode the distinction between day and night, so too there is a sensible distinction between cases where a defendant's active conduct causes a plaintiff to hold an assumption, and cases where the defendant does nothing to bring about the plaintiff's wrong assumption, but nonetheless knows that the plaintiff is labouring under a misconception.
Both doctrines confer an entitlement in equity to relief, consequent upon the detriment occasioned to the plaintiff in acting pursuant to an assumption brought about by the defendant, typically in relation to the defendant's land. Both doctrines, no differently from some other types of estoppel, are driven by the same purpose, namely, preventing unjust departures by the defendant of an assumption adopted by the plaintiff. But it is one thing to identify common elements or a shared purpose, and another to conflate the doctrines. I mention this because I am conscious that it has been said by the highest authority that there is a "category of equitable estoppel that is usually traced back to the decisions in Dillwyn v Llewelyn and Ramsden v Dyson": Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [2], referring to Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [6]. That assimilation is sensible in order to contrast those types of estoppel in equity with the "traditional notion" that "estoppel could only be relied upon defensively as a shield and not as a sword": cf Waltons Stores v Maher at 400. But that does not mean that the differences between the types of proprietary estoppels have been conflated.
When dealing with whether an equitable estoppel could be supported by silence, Brennan J's reasons make it clear that knowledge is required. "Silence will support an equitable estoppel only if it would be inequitable thereafter to assert a legal relationship different from the one which, to the knowledge of the silent party, the other party assumed or expected": at 426. But where the assumption has been brought about by the defendant's positive encouragement of the plaintiff, there is no reason in principle why some further knowledge on the part of the defendant should be required. Why should it be necessary not only to know that the defendant has encouraged the plaintiff to labour under a false belief, but also to know that the plaintiff has relied on the encouragement? The distinction is quite artificial. Further, I can see no reason why two landowners, both of whom make the same representation to their neighbours who act upon it, should be in different positions if one is thereafter absent from the country and has no means of knowing what steps have been taken by the neighbour. That view is consistent with A Robertson, "Knowledge and Unconscionability in a Unified Estoppel" (1998) 24 Monash University Law Review 115 where it is stated at 117:
The central thesis of this article is that the unconscionability requirement is fulfilled in most cases by the core elements set out above: assumption, inducement, detrimental reliance and reasonableness. It is only in cases where the representor has not actively induced the adoption of the relevant assumption that questions of knowledge or intention become relevant. In cases of estoppel by silence or acquiescence, the representor must know of the representee's adoption of the relevant assumption, and must have knowledge of the representee's detrimental reliance, or intend to induce such reliance.
As the primary judge observed, the weight of authority favours the conclusion that actual knowledge of detrimental reliance is not required in a case where the defendant's own positive encouragement brought about the plaintiff's assumption, and in my respectful view that accords with principle.
KIRK JA: I agree with Ward P. I also agree with the additional observations of Leeming JA with respect to grounds 1 and 4.