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[2003] NSWSC 743
defendant. The Court found Lester entitled to the declaration sought and that Desmond and Pamela were not entitled to relief; it directed Lester’s lawyers to bring in draft orders and reserved costs for...
The Court accepted that Ferdinand told Lester in 1975 that Welcome West was his and that Lester relied on this by paying rates, farming and improving the property. In context, the statement was clear enough to create an expectation of ownership. Because Lester would suffer detriment if that expectation were not fulfilled, and no lesser remedy was adequate, the Court declared that he held the sale proceeds absolutely. The alleged agreement to transfer the land failed separately because there was no evidence of a bargain.
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Lieschke v Lieschke was a family dispute about Welcome West, a 74.56-hectare farming property on Lockhart Road, Walbundrie. Ferdinand Lieschke acquired it in 1954. The proceeding was heard in the Equity Division of the New South Wales Supreme Court by Austin J, with judgment delivered on 12 August 2003.
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The dispute turned on a conversation that Lester said occurred in about 1975. His evidence was that Ferdinand handed him a Shire rate notice and said, “That's yours now. You pay the rates” [10]. Lester understood those words to mean Welcome West belonged to him. Desmond and Pamela, his siblings, disputed his claim. Their position was that the property passed under Ferdinand's will to their mother, Elvirie, and then under her will to the three children in equal shares [3]-[4].
Lester said he began improving Welcome West soon after the conversation. His improvements included clearing land, installing water piping, constructing dams, drains and fencing, installing gates and applying gypsum [24]. He paid the rates and farmed the property. After Ferdinand retired in 1980, Lester farmed it for his own benefit; the judgment records that no rent or share of his later farming revenue was sought, and that nobody challenged his use and possession [22]-[23].
The dispute became acute in 2001. Lester applied for possessory title and contracted to sell the property for $116,000. Desmond and Pamela lodged a caveat. Under court arrangements, two-thirds of the net sale proceeds was placed in a solicitor's trust account. The amount at issue was $77,045.61 [5]. Desmond and Pamela sought payment of that money to them. Lester's cross-claim sought a declaration that he held the balance absolutely [6].
Austin J accepted Lester's account of the 1975 conversation and his evidence about the improvements. The implied-agreement claim failed because there was no evidence that Lester responded to Ferdinand in a way that made a bargain [27]. The successful basis was equitable estoppel: the Court found that the representation, reliance and detriment justified relief over the whole balance of the sale proceeds [35]-[42].
The judgment's reasoning proceeded from the meaning of the 1975 statement, to reliance, detriment and remedy.
First, the Court assessed Lester's credibility. It acknowledged that caution was required because the claim rested on one conversation recalled many years later and was given by the person asserting beneficial ownership [20]. It nevertheless accepted his account as clear and consistent, and considered it plausible that he would have taken his father's words at face value without investigating the formal title [20]. The Court also considered the surrounding evidence, including the rate notices and the history of the land's use [15]-[19].
Second, the Court identified the representation it accepted. Ferdinand had not expressly promised to arrange a transfer into Lester's name. Rather, the accepted representation was that the property belonged to Lester from that point. The handing over of the rate notice made it reasonable for Lester to expect that Ferdinand would attend to the formal transfer at some time [26]. This distinction matters: the Court rejected a pleaded implied agreement to transfer, but found a representation capable of supporting estoppel.
Third, the Court applied the elements stated by Brennan J in Waltons Stores (Interstate) Ltd v Maher, which counsel on both sides accepted as a sufficient statement of principle for this case [34]. The judgment did not purport to resolve every question about the structure or unification of estoppel doctrines. It applied the stated requirements to the facts.
On clarity, the Court accepted that an inducement must be clear. It concluded the words were brief but unambiguous in their context [36]. The relevant context was a father speaking to his son about farming land and handing him the rate notice. Austin J explained that the same words in another situation might be no more than an intention to make a gift, but here the circumstances made the statement a representation on which Lester could act [37].
On reliance and knowledge, Lester paid rates, farmed the land and made improvements. The Court found that Ferdinand intended Lester to pay the rates and must have known about improvements made while Ferdinand was still farming there. It also considered it more likely than not that Ferdinand saw later improvements visible from the road [38]. The improvements were not merely routine farming expenses: assessed against the nature and value of the land, the Court inferred that collectively they were substantial [25].
On detriment, the Court reasoned that if Lester's expectation of absolute ownership were not fulfilled, he would lose the benefit of two-thirds of the proceeds of sale [39]. Ferdinand had not transferred title during his lifetime, and after his death the expectation had not been fulfilled by those claiming under him [39]-[40].
Finally, the Court considered the remedy. It drew on the remedial flexibility discussed in Giumelli v Giumelli, noting that the equity established may be more than defensive and that the circumstances determine how it should be satisfied [40]. Lester's long period of treating the property as his own, paying rates and outgoings, farming it and substantially improving it led the Court to conclude that a lesser remedy was inappropriate [41]. Because the property had been sold, the remedy was a declaration concerning the whole balance of the proceeds.
The judgment did not set out a comprehensive before-and-after account of equitable estoppel. It expressly declined to investigate whether separate historical strands of equitable doctrine had been unified, or what the complete principles of any unified doctrine might be [33]-[34]. Its approach was narrower: the parties accepted Brennan J's formulation in Waltons Stores as sufficient for deciding this dispute [34].
The judgment situated proprietary estoppel within a broader equitable context. It described the kind of estoppel capable of conferring an equitable interest in land as sometimes called “proprietary estoppel” [31]. It referred to Ramsden v Dyson for the proposition that equity may give effect to an expectation concerning an interest in land where a person acts on that expectation, with the landowner's knowledge and without objection [31]-[32]. It also noted that the doctrine could complete an otherwise imperfect gift, referring to Dillwyn v Llewelyn [33].
The decision's contribution, as expressed in its own terms, is an application of those principles to a family farming arrangement. It treated the father’s words and the rate notice together as a clear representation in context. It then connected the representation to decades of conduct and substantial improvements, rather than treating the conversation as an isolated, informal promise. The result demonstrates the judgment's view that the remedy for an established equity is not necessarily limited to compensation for the value of improvements. Here the Court considered the whole course of conduct and concluded that relief over the whole sale proceeds was required [40]-[41].
The decision should not be read as holding that every informal statement that land “is yours” transfers an interest in land, or that paying rates alone establishes an estoppel. The Court expressly recognised that such words may, in many circumstances, amount only to an intention to make a gift [37]. Its result depended on the representation's context, Lester's reliance and the evidence of substantial improvements and long-term treatment of the property as his own [37]-[41].
The accepted representation: “That's yours now. You pay the rates” [10]. In plain English, Austin J accepted that Ferdinand told Lester the property belonged to him, not merely that he could use it. The Court did not find an express promise to complete formal transfer, but found that the circumstances supported Lester's expectation that his father would attend to it [26].
The clarity of the words: The statement “was brief but it was unambiguous” [36]. The Court's point was not that those words always have a legally decisive meaning. It assessed what they communicated to Lester in the setting of a father handing his son the rates notice for farming property.
The contextual approach: “One must take a common sense view of the representations and their likely effect on the hearer” [37]. In plain English, the Court considered the words as a real person in the circumstances would understand them, not in isolation from the family and farming context.
The reliance and detriment: Lester would suffer detriment if he could not retain the proceeds of sale [39]. The Court connected the earlier reliance to the actual remedy in dispute: the risk was not abstract, because the property had been sold and the money was being held in trust.
The remedy: The Court said there was “no appropriate remedy falling short” of a constructive trust over the whole proceeds [41]. In plain English, the Court considered that a smaller payment, such as one limited to some measure of improvement value, would not adequately satisfy the equity created by Lester's long course of conduct. It declared him entitled to the balance.
The judgment is most relevant to fact patterns involving a clear representation about ownership of land, reliance that is known to or intended by the representor, and substantial detriment if the expectation is not fulfilled. Its facts concerned an informal family arrangement, farming property, payment of rates, prolonged possession and use, substantial improvements, and the landowner's awareness of at least some of that conduct [10], [22]-[25], [35]-[39].
The decision gives particular weight to context. An assertion that land “is yours” may be ambiguous or amount only to an intention to make a gift in other circumstances. Here the rate notice and the father-son farming relationship informed the Court's assessment of meaning [37]. A lawyer considering an analogous dispute would likely want to examine the precise words used, their surrounding circumstances, the parties' subsequent dealings, and whether the person alleged to have made the representation knew of the reliance.
The judgment also illustrates why the nature of the detriment and the appropriate remedy are distinct questions. The Court found reliance through rates, farming and improvements, then separately considered whether the equity should be satisfied by a lesser remedy or by the whole sale proceeds [38]-[41]. It does not establish that every successful estoppel claim gives the claimant the land or all sale proceeds. The remedy depended on the circumstances the Court found, including about 27 years of conduct and substantial improvement.
The decision is less directly applicable where the evidence shows only an unaccepted statement, a revocable intention to make a gift, no reliance, no knowledge of the reliance, or no detriment. It also does not establish a contract where no bargain was made. In this case, the implied-agreement claim failed for want of evidence that Lester responded so as to form an agreement [27].
The supplied judgment contains no discussion of decisions after Lieschke v Lieschke and therefore does not establish how later courts treated this decision. No later-court treatment can be stated on the material provided.
The authorities discussed by Austin J were earlier authorities, not subsequent treatment of Lieschke. The judgment referred to Ramsden v Dyson, Waltons Stores, Giumelli, and other cases in developing or applying its reasoning [31]-[40]. It cited Waltons Stores for the elements it applied and discussed Giumelli in connection with remedial flexibility [34], [40]. Those references show the doctrinal sources the Court relied on in 2003, not whether later courts followed, distinguished or limited Lieschke.
For research purposes, the judgment itself supports a careful proposition: in its particular circumstances, equitable estoppel justified a declaration to the whole balance of sale proceeds. Whether a later decision adopted that reasoning, and how it treated the remedy, cannot be answered from this judgment alone.
The Court expressly left open whether the historically separate strands of equitable doctrine had been unified and, if so, what the principles of a unified doctrine were [33]-[34]. It was unnecessary to resolve those broader questions because both parties accepted the Waltons Stores formulation as sufficient for the dispute.
The judgment also did not decide how the result would differ if the words had been less definite, if the rate notice had not been handed over, if the landowner had not known of improvements, or if the reliance had produced only modest expenditure. Its contextual reasoning indicates that these matters could affect whether the elements were established, but the judgment does not decide hypothetical variations.
Nor did the Court quantify the value of each improvement or compare that figure with the value of the land. It noted that the evidence did not provide a full valuation of the improvements, but inferred from their nature and the property's overall value that they were substantial [25]. Its remedy reasoning rested on the full course of conduct, not a calculation of improvement value alone [41].
Finally, the decision did not determine the costs order. It directed that short minutes be brought in and said it would hear submissions about costs [42]. This judgment therefore records the substantive outcome but not the final costs disposition.
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CITATION : Lieschke v Lieschke [2003] NSWSC 743 HEARING DATE(S) : 11 August 2003 JUDGMENT DATE : 12 August 2003 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Declaration that the cross-claimant holds the balance of proceeds of sale for himself absolutely
CATCHWORDS : EQUITY - equitable estoppel - son claims interest in farming land through improvements made in reliance on father's statement - ingredients of estoppel - reliance and detriment Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Commonwealth of Australia v Verwayen (1990) 170 CLR 394 Dillwyn v LLewelyn (1862) 4 De GF & J 517 Gillett v Holt [2001] Ch 210 Giumelli v Giumelli (1989) 196 CLR 101 CASES CITED : Legione v Hateley (1983) 152 CLR 406 Milchas Investments Pty Ltd v Larkin (1989) 96 FLR 464 Ramsden v Dyson (1866) LR 1 HL 129 Riches v Hogben [1985] 2 Qd R 292 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387 Wykes v Samilk Pty Ltd [1998] Aust Contract R 90-097 PARTIES : Desmond John Lieschke and Pamela Jean McEvoy (P/XD) Lester Ferdinand Lieschke (D/XC) FILE NUMBER(S) : SC 6124/01 COUNSEL : P T Taylor (P/XD) L J Ellison (D/XC) SOLICITORS : Marshall Sheehan & Associates, Albury (P/XD) Harris Lieberman Boyd, Albury (D/XC)
IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION
6124/01 DESMOND JOHN LIESCHKE & ANOR V LESTER FERDINAND LIESCHKE JUDGMENT 1 HIS HONOUR: This is a family dispute about the ownership of farming land. The land is Lot 201 in Deposited Plan 753763, a parcel of 74.56 hectares on Lockhart Road, Walbundrie, called "Welcome West". It was acquired by Ferdinand Andreas Lieschke in 1954. 2 Ferdinand Lieschke's wife was Elvirie Cecilia Lieschke. They had three children, the defendant/cross-claimant Lester Lieschke born in 1943, the first plaintiff/first cross-defendant Desmond Lieschke born in 1945, and the second plaintiff/second cross-defendant Pamela McEvoy (formerly Lieschke) born in 1949. For convenience I shall refer to the members of the family by their first names. 3 Lester claims that in about 1975 his father represented to him that Welcome West would thereafter belong to him, and he says that in reliance on this representation he effected substantial improvements to the land, to his father's knowledge, and thereby acquired an equitable entitlement to it. Desmond and Pamela deny Lester's claim, and say that the ownership of Welcome West passed on Ferdinand's death by his will to Elvirie, and on her death by her will to the three children in equal shares. 4 Ferdinand Lieschke died on 22 April 1997, by his last will leaving his estate to his wife Elvirie, whom he appointed executor. Elvirie died on 26 February 2000, by her last will appointing Desmond and Pamela as her executors and leaving her estate to Desmond, Pamela and Lester as tenants in common in equal shares. Probate has not been granted of either of the two wills. 5 The dispute between Lester and his siblings came to a head in 2001 when Lester made an application for possessory title to Welcome West and contracted to sell the land for $116,000, and on 28 March 2001 Desmond and Pamela lodged a caveat to protect the interest they claim. Lester caused a notice of lapse of caveat to be served upon them, whereupon they commenced the present proceeding, originally seeking only an extension of their caveat. In December 2001 arrangements were made, reflected in orders of this Court, to permit Lester's sale of the land to be settled. Two-thirds of the net purchase money was paid, eventually, into a solicitor's trust account. The amount standing to the credit of that account is now $77,045.61, and the contest is over that money. 6 By a statement of claim filed in March 2002, Desmond and Pamela as plaintiffs seek a declaration that Lester is liable to account to them for two-thirds of the net proceeds of the sale of the property, and an order that Lester pay them the sum of $77,045.61 standing in the solicitor's trust account. By his defence and cross-claim filed in July 2002, Lester admits the contentions of fact in the statement of claim, but alleges that at all material times Ferdinand held the property in trust for him. The cross-claim recites Lester's contentions about his father's representations and his reliance on them, seeking a declaration that he holds the balance of the proceeds of sale of the property absolutely. At the hearing, the only issue was whether Lester could make out the assertions in the cross-claim. Ferdinand's representation to Lester, and the surrounding circumstances 7 Lester left school in about 1959, aged 16 years, and from that time until recently he has worked as a farmer, initially with his father and from about 1980 for himself. He was married in 1965 and has two children. 8 In about 1961 Lester's grandfather, Paul Herman Lieschke (who died in 1977), transferred to Lester some farming land called Welcome East, which is about 2 km from Welcome West. Lester's uncontradicted evidence is that his father farmed Welcome East from 1961 until he retired from farming in 1980, without paying Lester rent or a share of the revenue or profits from the farming activity. 9 Lester says that his father retired from farming in approximately 1980, about 63 years of age. He says that from the time he commenced working for his father, until the time his father retired, his father did not pay him any wage, nor any share of the proceeds of the farming operation. He says he accepted that position on the basis that ultimately his father would benefit him by transferring farming property to him without requiring payment. He supported himself, and later his wife and family, by obtaining casual work in shearing sheds, by share farming and by truck driving during seasons when farming was relatively inactive. He says he would not have done as he did without the expectation that eventually the land would be his. He was not challenged on that statement in cross-examination. 10 The central part of Lester's evidence is that in about 1975, his father approached him with a Shire of Culcairn rate notice to the land at Welcome West in his hand. Ferdinand handed the rate notice to Lester and, according to Lester's evidence, Ferdinand said "That's yours now. You pay the rates." He understood his father to mean that Welcome West was now his. His evidence is that from the time of this conversation until about five years later when he retired from farming, Ferdinand continued to conduct his farming operations over both Welcome West and Welcome East, and it was only after he retired in about 1980 that Lester was able to farm both of these properties for himself alone. 11 In cross-examination Lester agreed with the proposition that his father told him that Welcome West was his to use. However, observing his demeanour in the witness box, and having regard to the context of the questions, I did not form the opinion that in agreeing with this proposition, Lester was changing his evidence. His intention, in answering the question, was to agree with the proposition that his father told him that the property thereafter would belong to him, to use as he saw fit. It was clear from his evidence as a whole that at no stage did he agree with the proposition that his father said words to the effect that he could thereafter use Welcome West but that Ferdinand would remain the owner of it. Although, at one stage in his cross-examination, Lester gave a slightly different account of the words used by his father, his evidence was at all times consistent on the central point, that his father said words to the effect that the land was his and therefore he should pay the rates. 12 Lester's evidence is that he understood his father would take care of any legalities associated with transferring the land to him. He also said that the first he knew that the land was not registered in his name was when his solicitor obtained title searches for the purpose of selling it in 2001. Counsel for Desmond and Pamela challenged his evidence on this point, and sought to establish that Lester was aware, at all relevant times, that Welcome West belonged to his father and that he had nothing more than the right to use it for farming purposes. 13 Thus, Lester was asked whether he recalled having signed any document when Welcome East was transferred to him, and he said he did not know, but he recalled that the title deeds for Welcome East were given to the bank. He agreed that he had dealt with the bank to borrow money on the security of Welcome East. When asked to explain why he did not follow up his father's representation by seeing to it that Welcome West was transferred into his name, he said he thought the title deeds to Welcome West must have been sent to the bank by his father. He said he did not know whether he had signed any document for transfer of Welcome West to him, but that he sometimes signed documents at the bank without understanding what they were. He said it had never been necessary for him to borrow on the security of Welcome West, because he had enough money from the bank's loan secured over Welcome East. 14 Lester gave evidence that his father transferred a property called Netherby to his brother Desmond, and in approximately 1985 Desmond sold that property and received the full net proceeds of sale. Lester said that in about 1969 he had constructed a house for himself on Netherby, and when Desmond sold the property he had to remove his house. He moved the house, which must have been sufficiently transportable for him to do so, to Welcome East. When asked why he did not move it to Welcome West, he said there was no electricity there. 15 There is evidence before the Court that rate notices were sent to Ferdinand Andreas Lieschke or FA Lieschke care of LF & M A Lieschke from 1981, and there is a handwritten schedule of quarterly payments of rates beginning in 1985 and ending in 1993, prepared by Lester's wife. Lester's evidence is that he knew that Welcome East was in his own name and knew that according to the records of the Shire Council, Welcome West was in his father's name. When asked to explain why, if he was the owner of Welcome West, he did not correct the Council's rates records, he said there was no need to do so until he wished to sell the land in 2001. That is consistent with Lester's evidence that he expected his father to take care of the legalities, and that the title deeds to Welcome West had been given to the bank. 16 Counsel for Desmond and Pamela submitted that care should be taken as to how much of Lester's recollection should be accepted, given that there is no corroboration in crucial respects. He pointed out that no material had been produced with respect to payment of rates before 1981. In my view no significance should be attached to that fact, given the evidence that the Shire Council itself destroyed records after six years. Counsel also drew attention to the fact that in cross-examination, Lester was uncertain as to how the land was used in the period from 1975 to 1980, and could not remember what crops were sown. Again, that seems to me of no real significance. It is not implausible that Lester might have remembered clearly the occasion when his father represented to him that Welcome West was his, but not remember the crops he planted in the five years after the event. He did remember some information about the use of the property during that period, namely that his father grazed about 60 cattle there, which he removed when he retired in 1980. 17 Counsel for Desmond and Pamela drew attention to Lester's evidence that he would not have worked on the farm without payment unless he expected that eventually the land would be his. That, said counsel, is consistent with an expectation that the property would be left to Lester by will, rather than that it had already been given to him. In my opinion the evidence on this point is as consistent with his account of his father's representation as it would be of an expectation to be benefited by will. Lester's point is only that he would not have worked on the land, from about 1959 to 1980, without remuneration unless he expected an entitlement to it in some form or another. 18 Counsel for Desmond and Pamela emphasised that the rate notices issued after Ferdinand's alleged representation to his son were addressed to the father. Particular attention was drawn to the handwritten notes summarising payments, to which I have referred, because the heading of those notes was "FA Lieschke paid by LF Lieschke". I can derive nothing of assistance to the determination of this case from that heading. It does not, in my view, signify that when the list was prepared, Lester and his wife believed that Welcome West was still owned by Ferdinand. The heading may simply reflect what was on the rate notices. Lester's explanation for the rate notices (and therefore the heading to the notes) seems to me to be adequate - that is, he did not do anything about the fact that the rate notices were in his father's name until he decided to sell the property. 19 Lester's credibility as a witness was attacked in two ways, but unsuccessfully. First, when the matter was before the Court on 24 December 2001, he undertook through his solicitor that two-thirds of the net proceeds of sale of Welcome West would be retained in the solicitor's trust account pending determination of the proceeding. In fact, for a while the money was held in an account in Lester's name. It is not clear from the evidence that this was done on Lester's initiative, and in any case the real proceeding began only later, when the statement of claim was filed pursuant to a direction that it be filed by 14 January 2002. I can draw no inference adverse to Lester from these facts. Secondly, when Lester made his application for possessory title he swore a statutory declaration dated 6 August 2001, that he was not aware that anyone other than himself had any estate or interest in the land. His evidence was that he signed this before his solicitor, who read and explained it to him. His case is that, indeed, no one else has any interest in Welcome West. In these circumstances, again, it would be wrong to draw any adverse inference concerning Lester's credibility. 20 I agree with counsel for Desmond and Pamela that care must be taken in assessing evidence in this kind of case, especially where the evidence is given by the person who claims the beneficial ownership on the basis of that evidence, and where the evidence is of a single conversation 28 years ago, which the deponent was asked to recollect only about three years ago. However, Lester gave his evidence clearly and consistently, notwithstanding that he was challenged in cross-examination. Counsel's criticisms of the evidence have been unsuccessful. Lester is a man of the land who, while he has had some limited experience with mercantile transactions (buying and selling second-hand cars for himself, and mortgaging Welcome East), is not a man of any sophistication in legal matters. I regard it as plausible, given his circumstances, that he would have taken his father at his word and acted accordingly, without further exploring his legal position until the need arose to sell the property. I also regard it as plausible that a farmer might make such a representation about farming land to his son, without later getting around to transferring the land, notwithstanding that he transferred Netherby to Desmond. In all the circumstances, I have decided to accept Lester's evidence of the conversation with his father in 1975, in the form given in paragraph 8 of his affidavit. Lester's improvements to Welcome West 21 Lester's evidence about the improvements he made to Welcome West was not challenged by Desmond and Pamela, and was supported in part by evidence of some neighbours, Robert McClelland, Leo and Bernard Coyle, and Stuart McCall. I accept Lester's evidence on this subject. Conversely, there is no evidence that Ferdinand spent any money on Welcome West after 1975. 22 Lester worked the land at Welcome West and Welcome East with his father for his father's benefit during the period from 1975 to 1980, and for his own benefit thereafter. When his father retired in 1980 he removed all his plant and equipment from the land, as well as his livestock, and did not again enter Welcome West. However, he continued to drive and had reason to drive along Lockhart Road from time to time. In my view it is more likely than not that Ferdinand would have driven past Welcome West fairly often after 1980 and would have seen Lester's improvements to the property. 23 Lester has used Welcome West generally for growing cereal crops, although he has occasionally run cattle and sheep on the land. At no stage did his father ask him to pay rent for the land, or seek to be paid any share of Lester's revenue from his farming operations after 1980. No-one has attempted to challenge his use and possession of the land since 1980. 24 Lester said he began to improve the land immediately upon his father handing him the rate notice. His improvements may be summarised as follows: · in 1975-76 he cleared about 12 hectares of dead trees and stumps so that this land could be cultivated; · in 1977 he and a neighbour purchased a pump which they used to draw water from the Billabong Creek, and he laid five kilometres of polythene piping which drew water from the creek into three dams on the land, at a cost of $1,600; · in 1978 he constructed a 2000 cubic yard dam, and in 1985 he constructed a further 2000 cubic yard dam; · in about 1982 he constructed a drain which diverted water into dams on the property, and in that year he filled in a "wash out" by carting approximately 100 loads of soil and fill from his other property and then levelling this area with a dozer attachment to his tractor; · he constructed 600 metres of internal fencing in 1978, and 500 metres of internal fencing in 1987, and 800 metres of boundary fencing in 1990; · he installed gates at various parts of the property in 1978, 1987, 1990 and 1996; · in about 1998 he applied 55 tonnes of gypsum to certain low-lying areas of the land at an approximate total cost of $3,300; · in about 1999 he planted 50 pepper and cedar trees for shade and shelter. 25 This evidence does not deal with the value of the improvements, and puts a cost only on the piping and the gypsum. In my opinion, however, when one considers the general nature of the work in relation to the value of Welcome West as a whole, which was sold for $116,000 in 2001, it is appropriate to infer that the work as a whole amounted to a substantial improvement to the property, rather than merely effort and expenditure on "revenue account" for the purpose of sowing and reaping crops. The grounds for relief in the cross-claim 26 The cross-claim seeks to derive two representations by Ferdinand to Lester from the conversation in 1975, namely that Welcome West was Lester's, and that at some understated time the property would be transferred to Lester. Having accepted Lester's evidence, I agree that the conversation in 1975 contained an express representation by Ferdinand to the effect that from that point Welcome West belonged to Lester. In my opinion there was no express or implied representation by Ferdinand that he would cause the property to be transferred into Lester's name, but the circumstances in which the conversation took place and, in particular, the handing over of the rate notice, made it reasonable for Lester to expect that his father would attend to the transfer of the land at some time. I accept that Lester did have such an expectation, and eventually a belief that transfer had taken place. 27 The cross-claim asserts an implied agreement arising out of the 1975 conversation, containing an implied term that Ferdinand would attend to all the legal and administrative requirements for transfer of the property within a reasonable period, and it asserts that Ferdinand breached that agreement by failing to attend to the transfer of title. In my opinion the claim based on an implied agreement fails on the facts, quite apart from any issues of absence of writing and part performance. Lester did not give evidence that he said anything at all in response to his father's statement in 1975, let alone anything that might constitute the making of a bargain. On Lester's own evidence, there was no agreement, but only statements by Ferdinand upon which Lester then relied. 28 The only other basis for recovery pleaded in the cross-claim is the making of the two representations to which I have referred, and Lester's reliance upon them and his action to his detriment as a result of them, by making the improvements to which I have referred, and also by paying all rates, taxes and outgoings on the property from 1975 to date (as he did, on the evidence), and by farming the land and carrying out activities on it as if it was his (as he did, on the evidence). The cross-claim asserts that in those circumstances, Desmond and Pamela, as beneficiaries and executors of their mothers will, who in turn was the beneficiary of their father's will, are estopped from denying Lester's entitlement to the whole of the equitable interest in the property. 29 In written submissions, counsel for Lester sought to rely on the principles of resulting and constructive trusts emerging out of such cases as Gissing v Gissing [1971] AC 886, Ogilvie v Ryan [1976] 2 NSWLR 504 and Baumgartner v Baumgartner [1987] 164 CLR 137, but at the hearing reliance was placed on equitable estoppel, corresponding with the cross-claim. Equitable estoppel
30 Since Lester seeks to rely on an estoppel as the basis for asserting an interest in land, and hence in the proceeds of its sale, he must rely on equitable estoppel. As McHugh J (dissenting as to the application of principle) explained in Commonwealth of Australia v Verwayen (1990) 170 CLR 394, at 500, neither the common law nor equity will permit "an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations", but whereas the common law doctrine is concerned with rules of evidence, the equitable doctrine creates rights.
31 The species of equitable estoppel that may confer an equitable interest in land is sometimes called "proprietary estoppel". In Ramsden v Dyson (1866) LR 1 HL 129, Lord Kingsdown said (at 170): "The rule of law applicable to the case appears to me to be this: If a man, under a verbal agreement with the landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the face of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation."
32 There is a reasonably close analogy between the case envisaged by Lord Kingsdown and the present case, if one substitutes "landowner" for "landlord".
33 This doctrine, which is capable of being used to complete an otherwise imperfect gift (Dillwyn v LLewelyn (1862) 4 De GF & J 517 [45 ER 1285]), has been explored and applied in recent Australian cases such as Riches v Hogben [1985] 2 Qd R 292, Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 and Giumelli v Giumelli (1989) 196 CLR 101 (and for a recent English application, see Gillett v Holt [2001] Ch 210). The tendency of some recent Australian judgments is to bring together the historically separate strands of equitable doctrine within a single overarching doctrine (Verwayen at 411; Giumelli at 549). Such a unified doctrine would emphasise the common characteristics of those strands, reformulating them in a comprehensive set of principles (see Priestley JA's judgments in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, 472 and Austotel at 610, and also Wykes v Samilk Pty Ltd [1998] Aust Contract R 90-097), and also emphasising the breadth and flexibility of remedies evident in Giumelli.
34 This is not an appropriate case for any deeper investigation into whether unification has been achieved and if so, what is the shape of the emerging principles. Counsel for both parties were content to treat the observations of Brennan J (as he then was) in Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387, at 428-9, as a sufficient statement of principle for present purposes. His Honour said: "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."
35 Here, I have held that Ferdinand's statement in 1975 that the land was Lester's induced Lester to expect that his father would transfer the land, and therefore caused Lester to expect that he would become the owner of Welcome West in substitution for Ferdinand. The statement, accompanied by the handing over of the rate notice, was in such definitive and irrevocable terms as to cause Lester to assume that his father was thereafter not free to withdraw his representation. Brennan J's first and second ingredients were therefore satisfied.
36 As counsel for Desmond and Pamela emphasised, a representation or other inducement must be clear if it is to ground an equitable estoppel. It appears from the remarks of Mason and Deane JJ in Legione v Hateley (1983) 152 CLR 406, at 436, that the standard of clarity to be achieved is no less than the standard of clarity for a variation of contract, and may be higher. Even so, my view is that Ferdinand's statement in 1975 satisfies that test. It was brief but it was unambiguous. It clearly conveyed the idea that as from that moment, Welcome West belonged to Lester, and he should therefore pay the rates from then on.
37 In assessing whether the ingredients of equitable estoppel are present, one must take a common sense view of the representations and their likely effect on the hearer. In many situations, a statement by a landowner saying to another that the land is his would not be treated as anything more than a mere statement of intention to make a gift, not effective until perfected by transfer. Here it is the circumstances in which the statement is made, between father and son in respect of farming land and accompanied by the delivery of the rate notice, that elevates the statement into a form of representation capable of being acted upon so as to alter the rights of the parties.
38 Lester acted in reliance on the expectation created by his father's statement. Almost immediately he commenced to make improvements to the land. He also paid the rates. He farmed the land, initially for his father and, after 1980, on his own account. Ferdinand intended that the rates be paid by Lester after 1975, and must have known about Lester's improvements to the land in the period from 1975 to 1980, when he was still there farming it. It is more likely than not that Ferdinand would have observed such of the later improvements as could be seen from the road when he drove along it from time to time after 1980. Although there is incomplete evidence of the cost of the improvements and their effect on the value of the land, there is sufficient evidence for me to have concluded that the improvements amounted together to a substantial improvement to the property. Therefore Brennan J's third and fourth requirements are satisfied.
39 If Lester's expectation that he would, after 1975, be the absolute owner of Welcome West is not fulfilled, Lester will occasion detriment. The detriment is that he will not be able to retain two-thirds of the proceeds of sale of Welcome West. During his lifetime Ferdinand failed to act to avoid that detriment by causing title to Welcome West to be transferred to Lester. Since Ferdinand's death his widow and then, on her death, Desmond and Pamela as executors and as co-beneficiaries with Lester, have failed to fulfil the expectation created by their father. Therefore Brennan J's fifth and six ingredients have been satisfied in the present case.
40 The same conclusion could be expressed by using Lord Kingsdown's language in Ramsden v Dyson, or by applying Priestley JA's criteria set out in the Silovi and Austotel cases. Once the ingredients of equitable estoppel are established as they are in the present case, there is no question that the application of the doctrine would permit nuda pacta or outflank the doctrine of consideration (cf Milchas Investments Pty Ltd v Larkin (1989) 96 FLR 464, 473). The result is that Lester has succeeded in establishing an equitable estoppel against Ferdinand and those who take under him, Desmond and Pamela. The remaining question is whether the most appropriate remedy to give effect to the estoppel is the declaration sought by Lester in the cross-claim or some lesser relief, that would be designed to reflect the value of the improvements realised upon sale of the property. In Giumelli the majority judges indicated (at 113) that the equity established by the application of the doctrine may be more than a "defensive equity", and that the Court must look at the circumstances of each case to decide in what way the equity can best be satisfied.
41 In my opinion, in the present case there is no appropriate remedy falling short of the imposition of a constructive trust on the whole of the proceeds currently held in trust pursuant to the Court's orders. None of the special considerations present in Giumelli are present here. If Welcome West had not been sold, in my view it would have been appropriate to order that the land be conveyed to Lester. This is because, for a period of about 27 years, Lester, in reliance on his father's statement and subsequent lack of assertion of any inconsistent right, farmed the property, paid rates and outgoings, improved it substantially, and in every way treated it as his own property. His actions in relation to the property go beyond what might reasonably be addressed by some lesser remedy than a conveyance - or, the property having been sold, a declaration of his entitlement to the entire proceeds of sale.
42 Lester has made out of his entitlement to the relief he seeks in the cross-claim, namely a declaration that he holds the balance of proceeds of sale of the property for himself absolutely. Desmond and Pamela are not entitled to the relief they seek in the statement of claim. I shall direct Lester's legal representatives to bring in draft short minutes of orders and I shall hear the submissions of the parties with respect to costs.
Last Modified: 08/18/2003 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.
Lieschke
Lieschke
(1989) 16 NSWLR 582
(1990) 170 CLR 394
(1989) 196 CLR 101
(1983) 152 CLR 406
(1989) 96 FLR 464
(1988) 13 NSWLR 466
(1998) 164 CLR 387
The Court found Lester entitled to the declaration sought and that Desmond and Pamela were not entitled to relief; it directed Lester’s lawyers to bring in draft orders and reserved costs for further submissions.