Perman v Wentholt-Dwyer

5085/02 Gwendolyn Edith PERMAN v Lisette Wilhelmine WENTHOLT-DWYER & ANOR JUDGMENT 1 HIS HONOUR: The plaintiff claims to be entitled to a charge or lien over some land owned by the first defendant, whom I will refer to as the defendant (the second defendant, Commonwealth Bank of Australia, which was the mortgagee of the land in question, was dismissed from the proceedings earlier, and it will not be necessary to mention it again). On the plaintiff's case the defendant promised to give the plaintiff a life interest in respect of "portion 68", part of the land owned by the defendant and thereafter the plaintiff, in the expectation that she had or would obtain that interest, spent money and effort improving the property with the knowledge and acquiescence of the defendant. A claim made earlier, that the plaintiff had a life interest, was not pressed, presumably because of the provisions of s 54A of the Conveyancing Act 1919. 2 The defendant is now the registered proprietor of an estate in fee simple of the land in Folio Identifier 1/874893. As a matter of history this represents the consolidation of nine separate portions of land, mentioned in various deposited plans. It is 8.459 hectares, or about 20.9 acres in size, and it is bordered on the west by the Deua River, and on the east by Araluen Road. It is about 26 kilometres from Moruya. The nine portions were consolidated in 1998 in circumstances that I will mention later. The land is perhaps best described as bushland. 3 The plaintiff and the defendant were formerly good friends, but they have been estranged for some time now. The plaintiff went to live on portion 68 in 1986, and has lived there ever since, in a bus, subject to a qualification I will explain later. 4 The defendant bought what is now the consolidated land on a date which is not established, but no later than 1979. In that year she entered into an arrangement with a friend, Mr Fortescue. That arrangement permitted Mr Fortescue to occupy portion 68, and he constructed a building there. He left the area in 1981, and then the defendant entered into an arrangement with another friend Ms Deirdre Schofield. That arrangement permitted Ms Schofield to occupy portion 68, and she extended the building that Mr Fortescue had erected, cleared some of the land, and dug a pit toilet. Ms Schofield then left about 1985, and in conversations that occurred in 1985 and 1986, the defendant entered into an arrangement permitting the plaintiff to occupy portion 86. 5 The principal area of contention relates to the terms of the arrangement between the plaintiff and the defendant. On the plaintiff's case, she bought a life estate in portion 86 from the defendant for the sum of $5,040, which sum the plaintiff paid to the defendant in about March 1986. On the defendant's case, she made an offer to the plaintiff that the plaintiff could "live in Diedre's old house", on the same terms that Mr Fortescue and Ms Schofield had lived there, that is that each of the three of them (Mr Fortescue, Ms Schofield and the plaintiff) would pay "a bond" which the defendant would refund if and when they left, that the four parties would live amicably, treat the land with respect and not have any guns on the property. The "bond" was to be repaid at the discretion of the defendant upon each of Mr Fortescue, Ms Schofield and the plaintiff leaving the property, having complied with the other terms of the arrangement. The amount of the bond was $5,000 in each case. (Nothing turns on the difference between $5,000 and $5,040.) Each of the three arrangements was made orally. 6 I admitted evidence about the terms of the first and second arrangements (those with Mr Fortescue and Ms Schofield) on the basis that there was a dispute between the plaintiff and the defendant as to what had been said between them in 1985 and 1986 (there being no one else present at the time), and since on the defendant's case, the arrangement made between the defendant and the plaintiff represented a continuation or a replacement of the earlier arrangements, evidence as to the terms of the earlier arrangements might rationally affect the assessment of the evidence concerning the terms of the third arrangement: s 55 of Evidence Act 1995. 7 In 1979 the defendant and Mr Fortescue were friends. They were both potters. He said that he moved to the property to help the defendant build her home, a pottery kiln, and a workshop. He said that the arrangement was that he "bought the right to live there", spending time, money and material on her property, and acquiring some stability and a place to live and work. He could not afford to pay rent, but by agreement paid her $2,000 and agreed to pay a further $20 per week until he had paid a total of $5,000. Before he left the property in 1981, he had built what he had called a small studio. He did not know Ms Schofield but was vaguely aware that someone moved in to portion 68 after he left, and that the incoming person was buying the studio. The defendant paid him $2,000, he said in 1985 although in fact it seems that he was paid this sum in 1986, out of the $5,040 that the plaintiff paid to the defendant. Mr Fortescue said that he did not actually pay to the defendant the whole of the $5,000 that was payable, and he did not remember how much he did pay. Again, there was no exploration of this detail in his evidence. 8 The defendant said of her arrangement with Mr Fortescue that she told him that he could live on the land now identified as portion 68 if he paid her a bond which she would refund if and when he left and if he lived there amicably, treated the land with respect and did not use guns there. She said that he paid her $5,000, but that when he left she paid him back $3,000, which was all the money that she had available at the time; and she owed him $2,000. 9 In cross-examination he agreed that he had used the word "bought" and the word "buying" in his affidavit, but said that he "did not consider it to be a buy or a sell in some senses". He did not remember the word "bond" having been used, and said that he thought that the money he had paid was refundable if he left the property. He said that he understood from a conversation he had with the defendant that the defendant had sold the studio to Ms Schofield. Ms Schofield was not called as a witness. The defendant described her having come to an arrangement with Ms Schofield, generally using the same form of words as she had used in respect of the arrangement with Mr Fortescue. The defendant accented the used of the word "bond", whilst the plaintiff denied that it had been used, and Mr Fortescue disavowed its use. On the other hand, the plaintiff attributed to the defendant the use of the expression "life estate" and the defendant denied that, and denied having "sold" anything to any of Mr Fortescue, Ms Schofield or the plaintiff. 10 Both Ms Schofield and the plaintiff are painters, and, it seems, they used the premises as a place in which to work, whilst the defendant and Mr Fortescue worked as potters. The defendant has a dwelling on one part of the land formerly called portion 69. The evidence does not disclose any detail about that, except that it is perhaps about 200 metres (Mr O'Dea said 400 metres) from the dwelling that the plaintiff started to erect on portion 68; and there are trees between the two locations that affectively screen each of them from the other. Portion 68 is about three acres in size. 11 Mr Fortescue originally constructed "a small timber clad pole building consisting of one room and a veranda". Later, Ms Schofield extended that building, cleared some land in the area and dug the pit toilet. By 1985, about the time Ms Schofield left, the plaintiff knew the property as she was a friend of the defendant, and as a visitor. There were conversations between the plaintiff and the defendant in 1985 and 1986. According to the plaintiff, the defendant asked the plaintiff if the plaintiff was interested in buying "the land Deirdre is on", and the plaintiff understood this to be reference to what can now be identified as portion 68, although apparently neither party knew at the time of the precise location of the boundaries of the different portions, or the size of portion 68. The defendant says that she did not know the term "portion 68". The plaintiff said that she would like to buy the land. 12 Later, on the plaintiff's account, there was a further conversation concerning the "purchase" of the land. The plaintiff asked the defendant what she got for the asking price, $5,040, and the defendant said: "A life estate. You can stay here until you die. That is the arrangement that Andrew [Fortescue] and Deirdre had. I will change my will so that you can stay here for your life ".

The plaintiff said that she would like "better security" and the defendant said that she would speak to her solicitor. She did speak to her solicitor, a Mr Moloney, who was also her personal friend. Later she did execute a will, or new will. 13 At the request of the defendant, the plaintiff procured two cheques, one for $3,040 in favour of Ms Schofield and the other one for $2,000 in favour of Mr Fortescue. The defendant gave to the plaintiff a receipt for $5,040, marked "for Dee and Forty", that is Deirdre Schofield and Mr Fortescue. She also handed to the plaintiff at some time a receipt signed by Ms Schofield for $3,040. 14 On the plaintiff's account, on the occasion when she handed these cheques to the defendant, she again raised the question of what title she would receive and the defendant said:

"As I have done with the previous purchasers, I'll give you a life estate, that is what my solicitor has told me to do. You will be able to stay here for the rest of your life. I will alter my will to give you the life estate." 15 The sequence of events is not clearly established, but the receipt signed by the defendant is dated 13 March 1986, and the defendant made a new will dated 22 May 1987. It might be that the personal rather than professional relationship between the defendant and Mr Moloney explains or partially explains the delay in the drawing and execution of the will. It may be too that the will of this date represents the making of a new will since it recites that the defendant had married her husband, Mr Dwyer, on 18 April 1987. The will provides, in part: "I leave the right to live on my land at RMB 529, Deua River aforesaid for the rest of their respective lives to each of the following people, as arranged between us during my lifetime in return for the financial support provided by them: (a) RICHARD CHARLES FITZGERALD MOLONEY aforesaid. (b) CHRISTOPHER RORY LIMON … (c) GWENDOLYN EDITH PERMAN of RMB 529 Deua River aforesaid. These gifts may not be transferred or assigned in whole or in part by the beneficiaries, except to each other at whatever price they may determine between themselves." 16 Mr Limon is the stepbrother of Mr Fortescue. He and Mr Fortescue also lived on some unidentified part of the defendant's property at some stage. 17 On the evidence, there is no question but that if the arrangement made between the plaintiff and the defendant was as the plaintiff contends, the plaintiff acted in reliance upon that arrangement, and in the expectation that the defendant had granted or would grant to her a life interest in portion 68. She moved a bus onto portion 68 in 1986 and, generally speaking, she has lived in that bus ever since. She started to construct a dwelling, but it was the subject of a white ant infestation and had to be demolished before it had been completed. It has not yet been rebuilt. However, the plaintiff constructed other, apparently relatively minor improvements, including a building described by Mr O'Dea, a valuer, as a storage shed/laundry/bathroom; she installed an electric generator, a water tank and associated ancillary pumping arrangements and she has done a good deal of other work. Perhaps the product of all this is best described, for brevity, in the terms of Mr O'Dea's report: "…we believe the subject property, with all improvements as stated, is to a degree temporary in nature. If the improvements insitu were in suburbia, they would add comparatively little value to the property. However, in a rural location, this style of improvement becomes an essential part of the site infrastructure. Improvements on site are basic and effective, though not up to current building standards, none the less, are a value added component to the entire site. As such, the structures in place add value when assessing a Life Interest. All structures in place assist in providing general amenity to the life style of Ms Perman. Whilst Ms Perman's current residence is temporary, the fixed structures ie out house, laundry, bathroom and workshop/storage shed are an [integral] component of metropolitan and rural living. To this end, the structures aforementioned, irrespective of their condition, are still income generating assets supplied and constructed by Ms Perman." 18 Some people would regard living in these circumstances as a hardship, but the defendant obviously regards her property as idyllic, and eminently suitable for her, and until the plaintiff and the defendant became estranged, the plaintiff apparently wanted to live there for the rest of her life. The evidence shows that the plaintiff has spent approximately $37,000 in relation to the property and Mr O'Dea expressed opinions about a number of matters. He considered that the current market value of the former portion 68, as it is, is $120,000, but that without the improvements effected by the plaintiff and without development approval, the value would be $65,000. He considered that the current market rental of the former portion 68 was $85 per week in the present state of that property but that it would be $50 per week without the improvements, and without the development approval. He valued the plaintiff's assumed life interest at $85,000. 19 There was a measure of controversy about the various applications made by the parties to the local Shire Council. I do not find this of any real assistance in resolving the question of what were the arrangements made between the plaintiff and the defendant in 1985 and 1986, and I find them to be of little help otherwise. It seems clear that the Council wanted to have the nine portions owned by the defendant consolidated into one lot, to assist it in a general endeavour to keep a large area of land, of which the defendant's land was only a small part, in a generally rural state, and that the Council took advice from "the Department of Planning" as to how best to achieve this objective. So far as I can tell, it was the Council, and neither the plaintiff nor the defendant that initiated all the steps taken in this regard. If one stands back from the details of the conflict between the plaintiff and the defendant, and looks at the matter from the Council's perspective, there were sound policy reasons for this stance. In the meantime, the plaintiff and the defendant seem to have recognised that Council approval was unlikely to be forthcoming in relation to any development or building application that either of them made, unless the nine portions were consolidated, and they therefore accepted the consolidation of the nine portions as a practical necessity. 20 The plaintiff is now engaged to marry a Mr Elliott, who is confined to a wheelchair. I express no view at all as to the cause or causes of the estrangement between the plaintiff and the defendant, but Mr Elliott was almost certainly somehow involved, and perhaps the defendant's husband, Mr Dwyer, was also involved. It does not matter for present purposes. All that matters is that the parties are estranged, it seems irrevocably. Various apprehended violence orders have been sought, obtained, and extended, and there is some appeal from one of those orders which is to be listed for hearing in the District Court at Bega on 16 February next. At present Mr Elliott is the subject of an order which effectively forbids him from going within one kilometre of the defendant's dwelling, and therefore from entering upon portion 68 at all. To state matters shortly, it is these circumstances coupled with the plaintiff's working in Moruya which means that she only lives on portion 68 on a part time basis now: she divides her ordinary week up into three sections: with Mr Elliott, at work at Moruya, and on portion 68. 21 Returning then to the principal question to be decided, I accept each of the plaintiff and the defendant as a truthful witness: I consider that each of them believes what she says to be true. However what they say is irreconcilable and I think that the plaintiff's account if more likely to be generally reliable than is the account of the defendant. The defendant presented as a pleasant person, nervous about the court proceedings and nervous about giving evidence but able to readily distinguish between this nervousness and her fear of, or concerning Mr Elliott. She expressed her contentment about her property (subject to criticisms of the present state of portion 68) and her views about environmental matters generally, in such a way as to command respect but at the same time she seemed to allow her emotions to colour her views about what had happened or what she thought should have happened. Additionally, her insistence that the arrangement involving Mr Fortescue and the arrangement concerning the plaintiff both included the use of the word "bond" did not seem convincing, given the other evidence in the case. Mr Fortescue seemed to be quite sympathetic towards her and her case, and trying to assist so far as he could properly do so, but on this point his evidence did not really assist her. 22 The defendant took another point, that since the plaintiff had not obtained a "building permit", it would be illegal for her to occupy portion 68. This point seems to have been something of an afterthought, although it should be added that the defendant and her lawyers apparently expected until a very late stage to succeed in the litigation, by force of the operation of s 54A of the Conveyancing Act. It was only after the plaintiff foreshadowed the filing of an amended summons seeking the imposition of an equitable charge or lien that attention was focussed upon other possible defences. On the other hand, paragraph 11 of the original summons sought "further or other orders". 23 Perhaps this is best expressed as a defence of illegality, although it was also said to be a matter going to the question of unconscionability. 24 The defendant relied upon the decision of the Judicial Committee in Chalmers v Pardoe [1963] 1 WLR 677, a case involving the purported assignment of an area of land the subject of the Native Land Trust Ordinance of Fiji. Section 12 of that Ordinance provided: "…it shall not be lawful for any lessee under this Ordinance to alienate or deal with the land comprised in his lease or any part thereof, whether by sale, transfer or sub lease or in any other manner whatsoever without the consent of the Board as lessor … and any sale … or other unlawful alienation or dealing effected without such consent shall be null and void. 25 In that case the assignee failed by reason of that section. However, it is to be contrasted with the legislation now relied upon by the defendant, and with the circumstances of this case. 26 Omitting a good deal of detail, because it does not seem to be significant, and received those approvals upon conditions that were not satisfied. Nevertheless she built certain structures on portion 68. The defendant now relies upon ss 76B, 81A, 109C and 109M of the Environmental Planning and Assessment Act 1979. None of those provisions was in force at the relevant time: the applications were made under earlier legislation. Putting this aside, however, s 76B provides that: "A person must not carry out" development work without approval, and s 126 provides for the imposition of a maximum penalty of 10,000 penalty units (that is a fine of $110 x 10,000). Section 81A provides that the erection of a building "must not be commenced" without approval; and s 126 provides the same penalty for breach. Section 109C defines "occupation certificate", and s 109M provides that a person "must not commence occupation or use of a new building" without an occupation certificate; and the maximum penalty for a breach of s 109M is 25 penalty units. 27 Perhaps more to the point, s 121B provides that the Council might make an order for the demolition or removal of a building, in respect of which there had not been given a relevant development consent or construction certificate. On the evidence, it is scarcely likely that the Council will do that, having regard to the nature of the buildings, their location, and the length of time the structures have been there. The Council seems to be content to act passively in the matter. Additionally, as the plaintiff points out, the dwelling erected by the defendant on portion 69 appears to suffer from the same lack of Council approval. 28 Whatever the merits about these matters, it cannot be said that the Environmental Planning and Assessment Act has the effect of making the arrangement between the plaintiff and the defendant an illegal one, or that it operates otherwise so as to give rise to a defence of illegality. Even if it is taken to be the fact that the buildings now erected on portion 68 were erected without the relevant consents, the statute does no more than expose the defendant and, perhaps, the plaintiff to a monetary penalty. See Nelson v Nelson (1995) 184 CLR 538, 613 and Fitzgerald v F J Leonhardt Pty Limited (1997) 189 CLR, 235 and 250. 29 Further, these circumstances do not go to the question of unconscionability, as between the plaintiff and the defendant: they are simply irrelevant to that question. 30 Generally, therefore, I hold that the arrangement made between the plaintiff and the defendant in 1985 and 1986 was to the effect that, in consideration of the payment by the plaintiff to the defendant of $5,040, which sum was paid and accepted, the defendant agreed to permit the plaintiff to occupy portion 68, for so long as the plaintiff lived. Whilst I am not confident that the expression "life estate" was used, I think it more likely than not that the parties used that expression, or some generally synonymous expression, and that the parties did not make the arrangement containing the terms for which the defendant contends. As a matter of legal nicety, what the arrangement involved may not have been a life estate, but an arrangement, supported by consideration, that the plaintiff had the right to live on the property for the rest of her life. I find that the parties expected that the plaintiff might build a dwelling and effect other improvements upon portion 68, and I accept the plaintiff's evidence that she planned to live on portion 68 for the rest of her life, and that she told the defendant so. 31 I also find that the plaintiff thereafter expended a considerable amount of time, money and effort improving portion 68, and that in doing so she acted upon the expectation induced by the arrangement I have mentioned that she could live on portion 68 for the rest of her life. 32 Given these findings, and the defendant's subsequent conduct in seeking to expel the plaintiff from portion 68, the plaintiff is generally entitled to succeed in her claim for some equitable relief. The only relief she now claims is the imposition of an equitable charge or lien, on the basis that it would be unconscionable for the defendant to retain the improvements effected, whilst denying the plaintiff the right to occupy portion 68. There is no dispute about the relevant principles of law to be applied, as distinct from how they should be applied in the circumstances of the case, but see Morris v Morris (1982) NSWLR 61, Cadorange Pty Limited (In Liq) v Tanga Holdings Pty Limited (1990) 20 NSWLR 26 and Giumelli v Giumelli [1999] HCA 10. 33 The defendant contends that the plaintiff is at liberty to continue to live on portion 68 but without Mr Elliott; and she submits that it is only the existence of the apprehended violence order which prevents him from being present. This is somewhat artificial and unrealistic, but in any event the defendant has previously demanded that the plaintiff surrender possession of the property and I am not persuaded that the defendant has really repented of this view: the estrangement between her and the plaintiff seems too deep. 34 A much more significant question arose, in determining what remedy should be granted. The defendant queried several aspects of the work carried out by the plaintiff, and of the benefits to the defendant flowing from what the plaintiff has done. In the light of the evidence of Mr O'Dea, I am satisfied that the improvements effected by the plaintiff have produced some degree of real benefit to the defendant. 35 Additionally, the defendant submitted that it was open to the plaintiff to remove some, although not all of the improvements. The evidence does not permit an informed judgment to be made as to what, precisely, might be removed, what it would be worthwhile to the plaintiff to remove, what cost or effort would be involved in the removal, and what would be the value upon removal of what improvements were left on the land. Additionally, some of the items said to be able to be removed might very well be fixtures, and the evidence did not explore the detail of these matters. 36 The defendant also submitted that some of the expense incurred by the plaintiff was of a kind or nature that reflected no more than the plaintiff having lived upon the land in question, that is, rural land with few if any of the amenities taken for granted by people who live in cities, suburbs, or even rural townships; and there was instanced the provision of a generator. The defendant also emphasised that the plaintiff had lived on the land since 1986, without paying rent or other sums of a similar nature; and that she had "voluntarily" paid certain sums by way of contribution towards the defendant's liability for rates and to the Pastures Protection Board. The defendant also submitted that the sum of $5,040 originally paid was "minimal". 37 I do not consider that any of these effects or affects significantly, the question whether the plaintiff is entitled to the kind of relief she claims, but I do think that they are relevant to the measure of the relief. The defendant did not suggest that there was any form of relief, other than that now claimed, that might be appropriate, if the plaintiff succeeded. That is, the defendant accepted that, once the plaintiff abandoned her claim for a life estate, then if the plaintiff otherwise succeeded, it was appropriate to impose a charge or a lien. Rather, she said that the plaintiff was not entitled to succeed at all; and if the plaintiff did succeed then there was no sum of money that could or should properly be the subject of a charge or lien. 38 The measure of the amount of the charge to be imposed seems to be the most difficult question in the case. As Mr O'Dea said, the improvements are of a temporary nature. If the plaintiff continued to live on portion 68 for the rest of her life (about thirty-six years, on an average life expectancy basis) there would be lost some, perhaps a significant part, of their value, and certainly their value is not to be equated with their cost. 39 The estrangement of the parties, for which it seems inappropriate to attribute blame to either the plaintiff or the defendant, makes it inappropriate to grant any remedy other than an equitable charge, and I am in no position to forecast what might happen in the future concerning an apprehended violence order relating to Mr Elliott. If, as seems likely, the practical position is that the plaintiff will have to vacate the property, then on the evidence it would be appropriate to make some adjustment in favour of the defendant in relation to the removal of some of the materials that the defendant says should be taken away, and that the plaintiff may take away (for example building materials, not yet utilised, concerning the dwelling; and old car bodies), but the evidence does not establish, even approximately, what sum is appropriate for this adjustment. The parties are obviously of limited means, so that a formal enquiry by a Master is an unattractive course from anyone's point of view. If the materials in question are able to be taken away by the plaintiff, it is unclear whether she has any use for them, or whether they have any resale value worth troubling about. On the other hand, on Mr O'Dea's evidence, some of the improvements do have a real benefit to the defendant, at least potentially. That is, they have a value, although the defendant may not care to use it to economic advantage. I assume that the defendant will not be able to sell the former portion 68, since the nine portions have now been consolidated, but it may be that portion 68 can be rented out. The topic was simply not explored in evidence, but one must remember that there will not be very many people who will wish to live at such a place, no matter how attractive the defendant and the plaintiff find it, and who will be acceptable to the defendant as tenants. (I have in mind that the defendant will wish to make arrangements such as she says were made concerning Mr Fortescue, Ms Schofield and the plaintiff.) 40 Additionally, the evidence leaves unclear the question of how the valuations of portion 68, considered above, interacts with similar valuations in respect of the whole of the defendant's land; and what effect, if any, should be given to the development approval that has been obtained in respect of portion 68. 41 Doing the best I can, I think that there ought to be imposed an equitable charge in the sum of $25,000 which sum should bear interest calculated in the usual way as from 21 February 2000 (the date is not in contention.) However, the parties may think it desirable, having considered these reasons to confer and to bring in short minutes dealing with such incidental questions as fixing upon details concerning the timing of the plaintiff vacating the property, what might be removed, how it might be removed, and the like. If the parties cannot agree upon these matters, then the plaintiff should serve upon the defendant proposed short minutes of order, and the defendant should respond to that document, in writing, and the matter can be relisted. 42 As asked, I will defer a decision about costs at this stage. **********

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