The Case Limited to the Homestead Area
96Had Mr McGrath not indicated that it was open to the Court to take the "middle course", I would not have been inclined to permit the Hardies, after the hearing of the appeal had concluded, to advance for the first time a contention that orders should be made granting them a licence limited to the Homestead Area. They neither pleaded nor conducted such a case at trial. Neither Mrs Hardie nor her husband gave evidence that they had an expectation that they would become entitled to an interest (whether by way of transfer inter vivos, a gift by will or the grant of a licence) in the Homestead Area severed from the remainder of Lots 110 and 118. On the contrary, Mrs Hardie gave evidence that her expectation was that she would inherit the whole of Weeraman and not just the Homestead Area. Unlike Lot 20, which was physically distant from Lots 110 and 118, the Homestead Area formed part of Lots 110 and 118 and, on the way the trial was conducted, could not be created as a separate lot. The Hardies did not file a notice of contention or a cross-appeal seeking orders, in the alternative, limited to the Homestead Area. The written submissions on the appeal did not identify or support a claim limited to the Homestead Area. And, as I have indicated, the issue did not arise in oral argument until the Court raised the possibility of a claim limited to the Homestead Area.
97In view of the concession made on behalf of Mr Milling, however, the Court should approach the appeal on the basis that, if it is appropriate on the evidence, an order can be made granting the Hardies relief, but limited to rights in relation to the Homestead Area (including access to and from it).
98On the findings made by the primary Judge, Mr Milling invited the Hardies to live in the homestead shortly before the birth of their first child (Mr Milling's grandchild) in February 1993 (at [28]). Mr Milling, in his evidence accepted that at all material times he intended the Hardies to feel secure in the residence that had become their home (at [57]).
99The improvements undertaken by the Hardies were described by the primary Judge as follows (at [31]):
"...the laying out of an extensive garden by [Mrs Hardie] and her mother (1992); the construction of a new shed ("the House Shed") in 1994; the installation of a water tank, providing a domestic water supply in about 1995; the installation of a cattle grid, coupled with a gate, at about the same time; extensions to the Weeraman homestead that doubled its size, in about 1997; an unsuccessful attempt to drill a new bore, on the site of an old bore, for the provision of a general water supply in 1997; the construction of a swimming pool in 1998; the construction of a machinery shed in 1999; extension of the garden, with a piped water supply system, in and following the year 2000; the successful sinking of a new bore in 2002; the installation of a tennis court, and a cricket practice net, in 2003; and sundry other improvements (including air conditioning in the homestead and shade sails over the pool) in subsequent years up to about 2006."
100There is no detailed evidence as to the cost of the improvements carried out by the Hardies, but the valuation in evidence attributes a market value to the improvements as at January 2012 of $175,000.00. The value attributed to Weeraman as a whole, including improvements, was $1,350,000.00.
101It is now accepted that in cases of equitable or proprietary estoppel there is no need to mould the remedy to reflect the minimum relief necessary to do justice between the parties: Giumelli v Giumelli [1999] HCA 10; 196 CLR 101 at 124-125 (Gleeson CJ, McHugh, Gummow and Callinan JJ); Sidhu v Van Dyke [2014] HCA 19 at [85] (French CJ, Kiefel, Bell, and Keane JJ, with whom Gageler J agreed). Those decisions make it clear that:
"... because the fundamental purpose of equitable estoppel is to protect the plaintiff from the detriment which would flow from the defendant's change of position if the defendant were to be permitted to resile from his or her promise, the relief granted may require the taking of active steps by the defendant including the performance of the promise and the performance of the expectation generated by the promise."
Sidhu v Van Dyke at [82], citing Giumelli v Giumelli at [6], [40]-[48].
102The factors to be taken into account in determining the relief to be granted were stated succinctly by Allsop P in Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483 at [3]:
"... relief in such cases is not to be measured by weighing detriment too minutely in order that it be converted into some equivalent of cash or kind, as if one were measuring the consideration for a commercial bargain. 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."
103The primary Judge found (at [49], [53]) that this was a case of "classic miscommunication", in which the Hardies formed a belief that Weeraman would be transferred to them within the foreseeable future, but Mr Milling had not said anything that could justify such a state of mind. Nonetheless, Mr Milling encouraged the Hardies to live in the homestead and to make extensive renovations and improvements to the dwelling and curtilage at their own expense. Mr Milling also accepted that when he was asked by his daughter whether she and her husband had a future there, he had replied "yes, so far as living here is concerned". When the matter is viewed at the time when these events occurred, they justified an expectation in the Hardies that they would be permitted by Mr Milling to live in the homestead as their home for a lengthy period and that the improvements would enure to their benefit for as long as they made the homestead their home.
104This is not, however, a case where the party estopped has made a representation or promise that the representee will receive a specific interest in land: cf Dillwyn v Llewellyn (1862) 4 De GF & J 517; 45 ER 1285; Donis v Donis [2007] VSCA 89; 19 VR 577. It is a case of estoppel by encouragement in which the conduct of the party estopped (Mr Milling) did not define the expectation in the other party: Delaforce v Simpson-Cook at [55] and cases cited there. Such cases can present greater difficulties in determining the extent of relief that should be granted to protect the party in whom an expectation has been created from the detriment that might flow from a change of position by the party estopped. In the present case, although the Hardies defined their expectation by reference to the whole of Weeraman, it is open to the Court to protect them from the detriment which would flow from a change of position by Mr Milling by framing relief confined to the Homestead Area.
105Macfarlan JA has identified the matters suggesting that any relief granted to the Hardies in relation to the Homestead Area should not extend beyond Mr Milling's lifetime. To these I would add that the Hardies never said at the trial that they formed an expectation that, if they had no entitlement to an interest in the whole of Lots 110 and 118, they nonetheless would be able to remain in occupation of the Homestead Area after Mr Milling's death (assuming one or both outlived him). As I have pointed out, the trial was conducted on the basis that Lots 110 and 118 could not be subdivided. Had the Hardies asserted that they believed that they were entitled to remain in occupation of the Homestead Area, separated from the rest of Lots 110 and 118, after Mr Milling's death, that assertion no doubt would have been tested by reference to the obstacles in the path of severing the Homestead Area from the remainder of Lots 110 and 118.
106In these circumstances, I agree with the orders proposed by Macfarlan JA.