Pirina v Pirina Holdings Pty Limited

Judgment

1. HIS HONOUR: This is a dispute within the Pirina family as to the Plaintiff's right to continue to occupy the family company's property at Ashbury. The claim is made on the basis of proprietary estoppel.
2. The Plaintiff, who is commonly known as Grace, and without meaning any disrespect to her or other members of the family, I will refer to them by their first names, is the daughter of Salvatore and Angela Pirina. The other members of the family, siblings to Grace, are two sisters, Angela, known as Lina, and Marissa, and two brothers, Vince and Stephen.
3. Salvatore's main business has been running coffee shops. In about 2001 Salvatore and Vince incorporated the Defendant company, and the Defendant company purchased a block of units in Concord. During the first decade of this century the company operated coffee bars at Edgecliff.
4. In late 2007 the Defendant company bought the property at Ashbury which is the subject of the current proceedings.
5. At the time that the Ashbury property was purchased Grace was living with her four children who, at that stage, were aged between 10 and 21, at her parents' home at Russell Lea. The Plaintiff's eldest son became the subject of a Police drug raid in September 2007. One version of what happened in 2007-2008 is that Salvatore and Angela became incensed with this and no longer wanted Grace and her family to live in the Russell Lea home. Those supporting the Defendants in this case would have me accept that. I will deal with this contention subsequently.
6. Grace says that Salvatore said to her, "Grace, you have 4 young children to support on your own and you need to have a house to live in. I want you to live in the house at Ashbury for as long as you wish. I will pay $100.00 per week towards rent and you can pay the $400.00 per week". The Plaintiff said she replied, "Thank you for your help, Dad, I agree to that".
7. There is no doubt that at about the time that the Plaintiff moved into the Ashbury house she and her daughter Doratea (Dora) (who died in 2012) signed a Residential Tenancy Agreement. The document bears a date 10 May 2008. She said this was at the insistence of her brother, Vince, who alleged that it was necessary to create a paper trail to show that she was paying rent. The Residential Tenancy Agreement is in evidence. It is on LJ Hooker Ashfield stationery and shows a Lease from Pirina Holdings Pty Ltd to Grace and her daughter Dora, for a rent of $400 per week in advance. The term of the then current tenancy was said to be 26 weeks ending on 24 November 2008.
8. Another document was also signed and this is called a "Rental Management Assistance Agreement", which was signed by Salvatore and Grace on 26 May 2008. This agreement was one by Salvatore to pay Grace $100 per week so long as she paid $300 weekly for the Ashbury property.
9. Grace moved into the property with her children and has been living there ever since.
10. It would seem that the family company was commenced and controlled by Salvatore and Angela, though each of the five children had 240 shares. However, in July 2009, Salvatore retired and he and his wife gave up their office as directors of the Defendant, and Salvatore and Angela were replaced as directors by Vince and Lina. Vince, Lina and Stephen thereafter ran the coffee shop businesses.
11. It is fairly clear that the culture of the Defendant company changed when Salvatore retired. Vince appears to be the leader in the Defendant's camp at the moment and he quite firmly takes the view, as came out when he was being cross-examined, that the company belongs to the children of Salvatore and Angela, and that they are entitled to the company's property in equal shares and that it is not an acceptable proposition to the majority of the children that Grace should continue to live in the Ashbury property when it could be sold at a considerable profit.
12. On 1 June 2015 Grace received a letter from LJ Hooker Ashfield which commenced: "We wish to advise that our office has been instructed by the owner/landlord to sell the property in which you reside, and officially provide you with 14 days notice. We furthermore advise that this is not a notice to vacate the property but a notice of the intending sale only and you are not required to vacate the property during the marketing campaign. Could you kindly arrange access with me at your earliest convenience."
13. This was followed by a subsequent letter. The Plaintiff placed a Caveat on the title claiming an equitable interest in the land arising by way of constructive trust or, alternatively, an irrevocable licence to reside in the premises indefinitely.
14. The Caveat, of course, was bad in that; (a) it didn't set out the quantum of the equitable interest claim; and (b) a licence is not an interest in property. This is of no moment.
15. The Plaintiff commenced the present proceedings by Statement of Claim filed on 23 October 2015. The relief claimed was a declaration that the Plaintiff has the right to occupy the land pursuant to an irrevocable licence to occupy and that it would be unequitable to permit the Defendant now to deny it. Alternatively, a declaration that the Defendant held its interest in the land on trust for the Plaintiff. The Defendant opposed those claims.
16. The proceedings came before me on 16 November 2015. Mr A Maroya and Mr E W L Anderson appeared for the Plaintiff, and Ms R L Gall appeared for the Defendant.
17. The case was unusual in that both Grace and Salvatore gave evidence that the conversation relied on by Grace did, in fact, occur. Salvatore swore: "I recall telling Grace that the house was hers to live in for as long as she wanted to, and that there was no other limitation on her right to live there. I recall signing a document that was explained to me confirming that I would pay part of the rent for Grace… My reason in asking for the document to be made was that I did not want Grace and her kids to be kicked out of the Ashbury property. It was always my intention, in purchasing the Ashbury property on the Company's behalf, that it be used for a home for Grace to live in for as long as she wanted to." Salvatore still holds the belief that he calls the shots for the company and is rather upset that it appears that Vince and his siblings are now able to conduct the company's affairs contrary to his wishes. Apart from recognising a possible King Lear situation, that is, of course, of little moment.
18. Vince says in his affidavit of 28 August 2015 that Grace has not always paid her rent on time.
19. Exhibit VP1 gives details of proceedings in the Consumer Trader and Tenancy Tribunal (CTTT) over the disputes that arose because of the non-payment of rent. These papers include a Notice of Termination of 6 October 2010. The CTTT made the following orders on 17 November 2010: "1. By consent, the tenant is to pay Pirina Holdings Pty Ltd rent, presently $800.00 per fortnight, next payment due on 22-Nov-2010, and once the arrears are paid in full, to pay rent in accordance with the residential tenancy agreement. 2. By consent, if the orders in respect of rent are not complied with then at any time before 17-Feb-2011 the landlord may request the re-listing of the application to determine whether the tenancy agreement should be terminated."
20. A Conciliation Agreement Form was signed by the Landlord's estate agent and by the tenant, presumably the Plaintiff agreeing to these things.
21. The situation today is the company controlled by Vince and his siblings wants possession so that they can sell it and use the proceeds for the benefit of the company or the five siblings equally. Grace wishes to continue to reside in the property at the $400 per week rent.
22. The only other facts I believe I need mention is that currently living with the Plaintiff in the Ashbury property are her three surviving children, the youngest two who are 18, the oldest is 28.
23. In 2013 Vince and his siblings considered that the company was in financial straits and asked all the brothers and sisters to sign a personal Guarantee. All did so, other than Grace, who declined.
24. In these circumstances, Grace asks for an order under the principle of proprietary estoppel to protect her occupation of the Ashbury property.
25. The proceedings were odd in many ways. First, it was very difficult to comply with s 63 of the Supreme Court Act 1970 (NSW) which requires the Court to determine, as far as possible, all matters in controversy between the parties, completely and finally, in the one proceeding. One would have expected, at the very least, that there would have been a Cross-Claim for possession brought by the Defendant, but there is not. One would have also thought that a creative lawyer for the Plaintiff would have also made an application to wind up the Defendant on the just and equitable ground or on the oppression ground: cf Luo v Hui [2008] HKEC 996. Again, this was not done.
26. The Statement of Claim itself is strange in that there is an allegation that there was a promise by Salvatore, who is stated to be "the Defendant's director", to the Plaintiff that she could reside for as long as she wanted to in the subject property. There is an allegation that the Plaintiff went into occupation in 2008 and continued without interruption, but there is no allegation that the Plaintiff acted in the expectation that the Defendant would keep the promise its director made. It actually goes worse than that because there is nowhere in the evidence where the Plaintiff ever said that she did have such an expectation. She was not cross-examined on this, understandably, but there was little made of it in the closing address of the Defendant's Counsel.
27. Although there is a defence that if any such promise was made, the promise was not made on behalf of the Defendant, or if it was, it was in breach of his duties owed as a director of the Defendant, there is no mention at all in the defence or in the submissions of s 258B of the Corporations Act 2001 (Cth), which empowers a company to grant to a shareholder a right to occupy or use real property, whether the right is a lease or license or a contractual right. That section which was passed (or its predecessor was passed) to counter the decision in Jenkins v Harbour View Courts Ltd [1966] NZLR 1 was intended to ensure that such an arrangement was not a reduction of capital but it would have been useful for there to be some debate on the real extent of s 258B.
28. No particulars were given of the allegation that Salvatore's act as a director, if it be an act of a director, was in breach of his duties. Even if it is assumed that it is a breach of duty of the controlling director of a family company to authorise the use of the company's property by a shareholder, being a member of the family, even though that benefits one member of the family over and against the other, no argument was put before me as to whether the consequence is that the transaction is voidable or merely results in equitable compensation against the director. I would have thought it was only the second, but as I say, it was not argued.
29. There was also little attention paid in argument to the juristic nature of the "lease". At one stage, indeed until I rejected the question of my own motion, one of the Counsel asked whether the Plaintiff had ever had a lease in respect of the occupation of her parents' home at Russell Lea when she lived there with her family, together with her parents. This question completely ignored the fact that a lease in the technical sense requires exclusive possession.
30. Again, although the parties kept talking about "rent", it is clear that they were using the word in a colloquial sense, as meaning a payment for occupation. Neither side took the point that the word "rent" meant, in the traditional sense, that there was a lease with a right to exclusive possession.
31. There was also confusion as to the interest that is provided by a Residential Tenancy Agreement which is governed by the Residential Tenancies Act 2010 (NSW). It seemed to be assumed that although the Residential Lease was dated 2008, the Act still applied. The definition of Residential Tenancy Agreement in s 13 of the Act makes it clear that a Residential Tenancy Agreement is an agreement where a person is given a right of occupation of residential premises and it does not matter that the document does not grant a right of exclusive occupation. A licence may well be a right conferred by a Residential Tenancy Agreement: see Cohen-Hallaleh v Cyril Rosenbaum Synagogue [2003] NSWSC 395.
32. Thus, whilst there was some (though strangely enough very limited) argument that because there was a Residential Tenancy Agreement, the Plaintiff had acknowledged that she was a lessee not a licencee, as she now claims, the above analysis of the rights given under the Residential Tenancy Agreement reduce the strength of the submission in favour of that proposition, over what would appear at first blush. Again, this was not argued. It was however pointed out that the Residential Tenancy Agreement was quite defective. It provided for a six month term and no one in the evidence had ever mentioned six months. It named as the occupiers both the Plaintiff and her now deceased daughter Dora. It indicated that only two people were to occupy the premises when everyone knew that the Plaintiff had her four children who were to occupy. When asked about this in the witness box, Vince said that this had nothing to do with him, and that it was the agent's negligence. That very answer demonstrated that Vince's evidence of requiring a lease so that the "paper trail" could be established, was untrue. What is the use of saying you want a paper trail if you don't read or take care to see that the estate agent actually prepares a document which has some meaning.
33. Likewise, the conduct of the Plaintiff before the CTTT is not as significant as I first thought it was. The Tribunal did not have to proceed on the basis that the Plaintiff had a common law tenancy, it would have jurisdiction even if there was merely a licence so long as it gave a right of occupation to the Plaintiff. She appeared in person and mentioned that there was a family trust. This was wrong but certainly the Defendant was a company of which her parents and her siblings were the shareholders so that a lay person could well have elided the two concepts.
34. On the other hand, the background circumstances to the making of the promise are significant. There is no doubt that in 2007, the Plaintiff's eldest son was subject to Police charges for, it would appear, possession of drugs and pornography. The evidence led by the Defendant that this seriously upset Salvatore and Angela appears uncontradicted and a purpose of providing the Plaintiff with accommodation was to get her out of the parents' house. This does not matter much because the authorities show that so long as one purpose of the promise is to provide the promisee with the expectation that the promise will be fulfilled, it matters not that the motive of the promisor may be mixed or altogether different. The question is whether the promisee was so influenced by the promise: Sidhu v Van Dyke [2014] HCA 19; 251 CLR 505, at [71].
35. Then there is the evidence of the Plaintiff in cross-examination, at T18, that she realised that she was in occupation "until I was able to afford to move out or otherwise".
36. This amounts to an acknowledgment that the Plaintiff realised that she would not necessarily be able to remain in the premises indefinitely.
37. This then leads on to the Defendant's case that the property needs to be sold because of the Defendant's parlous financial situation.
38. As to this, there is very little evidence of such a financial situation. Indeed, the Plaintiff has complained for some years that she has just been kept completely in the dark as to the company's affairs.
39. Next, the Defendant says that Salvatore himself recognised that the property could be sold. This is not completely correct. The evidence of Salvatore, which I accept, is that he recognised that the company may need to sell assets but he wanted the assets sold first, the company's business secondly, the units at Concord, and only last, the Plaintiff's house. Thus while he recognised that the house may have to be sold, he wanted it to be the last item sold. Of course, Salvatore is no longer in charge of the decision-making processes of the company so that his desire as to the order of sale is nothing more than a precatory wish.
40. The promise that was made (and it is clear beyond all doubt on the evidence that it was made) is relatively vague. Apart from the payment of what is called "rent", there is no specification as to who is to pay for repairs, who is to pay the rates, taxes, insurance, etc. There is also nothing said about what is to happen if the registered proprietor can no longer afford to pay the mortgage expenses or otherwise needs to sell the property because of its financial situation.
41. I am fairly sure that one must imply a term that if circumstances forced the registered proprietor to sell the property, it may do so and terminate the Plaintiff's licence but it may well be that in such a circumstance the Plaintiff is entitled to an equitable interest in the proceeds of sale: see, eg Luo v Hui (supra).
42. Ms Gall stressed the detriments which she said have been suffered by the other shareholders in the Defendant through the Plaintiff not agreeing to join in the guarantees that the other shareholders felt that they had to sign, and the fact that she is using one of the major assets of the company without compensation. Mr Maroya argued, in my view, correctly, that as on the Plaintiff's case, the Defendant is the company. Whilst some detriment to the company may be relevant, detriment to the individual shareholders could not be. In any event, if one is looking in terms of detriment, one looks to it at the time when the promise was challenged. The first challenge was the issue of a Termination Notice by the Defendant's estate agent on 6 October 2010. Whilst there was a second challenge when notice was given to the Plaintiff that the property was going to be sold in June 2015, it would seem to me that the date of challenge of the assumption that she could stay in the property for life was first made in October 2010, and that is the operative date. As of that date, the guarantees had not been entered into.
43. Accordingly, there is no way that any prejudice caused by the entry into the guarantees by the shareholders can be taken into account as a relevant matter in these proceedings.
44. Having dealt with the pleadings and the material facts, I must now pass to questions of law.
45. The Plaintiff puts her case on two bases, (a) proprietary estoppel; and (b) constructive trust.
46. As to proprietary estoppel, both Counsel acknowledge that the approach taken by Brennan J in Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387, at 428-429, set out the factors which the Plaintiff needed to establish in order to get relief under this head. The Court of Appeal's decision in Ashton v Pratt [2015] NSWCA 12; [2009] 88 NSWLR 281, at [109], confirms that view.
47. Under this test, removing parts of it not applicable to the current fact situation, a plaintiff needs to prove:-
48. The Plaintiff expected that a particular legal relationship would exist between the Plaintiff and the Defendant, and the Defendant would not be free to withdraw from that expected legal relationship;
49. The Defendant has induced the Plaintiff to adopt that expectation;
50. The Plaintiff acts or abstains from acting in reliance on the expectation;
51. The Defendant knew or intended her to do so;
52. The Plaintiff's action or inaction will occasion detriment if the expectation is not fulfilled; and
53. The Defendant has failed to act to avoid that detriment, whether by fulfilling the expectation or otherwise.
54. In Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis), at [17.260] and [17.265], the test is set out as a passage dealing with promissory estoppel, but in Ashton v Pratt it was held to be equally applicable to proprietary estoppel by encouragement or by acquiescence. The elaborations of Brennan J's formulation in Meagher, Gummow & Lehane at [17.265] should be noted.
55. The first question is whether the Plaintiff did form the expectation induced by the Defendant that she would have an irrevocable licence to occupy the Ashbury property as long as she wished.
56. As I have noted earlier, she never directly says this. The onus is on her to establish it. Moreover, there is an alternative explanation as to why the house was provided for her. That is, that Salvatore wanted her, and particularly her eldest son, to be removed from the Russell Lea property. Again, the background appears to be that the Plaintiff had recently separated from her partner, whether husband or de facto partner is unclear, and that she was without funds. Her statement that she was in the Ashbury property "until I was able to afford to move out" tends to suggest that her occupation was to be a temporary one rather than for life, and that the circumstances were that she and her infant children needed a home.
57. All this adds up, to my mind, that the only expectation that the Plaintiff could have formed is that she would have occupation of the Ashbury property whilst she had dependent children and whilst she could not afford other accommodation, provided she paid $400 per week, and provided the property did not have to be sold (subject possibly to her being compensated for termination of her interest).
58. The trouble of this formulation is that neither side put it forward even as a backup proposition. However, it is very difficult to imply a licence to live in the property for life, from the words used. First, even lay people are not immune from thinking about inflation and the Plaintiff was 44 at the time of the promise. There is no evidence as to the expectation of a woman of 44 but taking the Biblical "three score years and ten", it is difficult to imagine a person thinking that the rent "would be fixed for 26 years".
59. If there was an expectation, it has clearly been induced by the Defendant or by Salvatore in his personal capacity. If it had been induced by Salvatore in his personal capacity then there could be no equity binding the company's property, see: Luo v Hui, at [39] where Ribeiro PJ (with whom the other judges, including Brennan J, agreed) said: "The fact that A and B might form a common intention that they should have shared beneficial interests in C's property cannot in principle be sufficient to impose a constructive trust on C to hold C's property on trust for A and B. C is not party to and does not unconscionably depart from any common intention, so there is nothing to constitute C a trustee for A and B. If B does not make good his promise, he might attract personal liability to A, but it does not mean that an equitable interest in C's property is created in favour of A."
60. In my view, whilst the evidence is scanty, it is more likely than not that Salvatore made the promise on behalf of the company and not personally. This was a family of Italian extraction and one's experience of life is that in such families the father, as the head, occupies the dominant position. Moreover he and Angela were, at the relevant time, the only directors of the company. Salvatore considered (and indeed still considers, though perhaps vainly), that he made the decisions on behalf of the company, he knew that the property was in the company's name and could only grant interest to the Plaintiff if he was acting on behalf of the company. Although Vince now says that the father has no position of influence in the company at all, he acknowledged that the father might still think he has, though wrongly. It would not seem that Vince or his siblings ever paid any money to acquire their shares in the company. The Plaintiff says she never did. However, it is clear that Vince, Stephen and Lina did work in the company's business, probably for little remuneration so that they have earned their shares that way.
61. On the other hand, there is no Minute in the company's Minute Book granting a licence to the Plaintiff and whilst this was an informal company, in that decisions were made, it would seem, in family meetings rather than formal meetings, there was a professional accountant who was advising the members of the family and it is of some significance that there is no Minute of the decision to grant the Plaintiff a licence over the company's property.
62. Thus, there are factors both ways. However, it is clear that Salvatore was calling the shots at this stage. Although it was Vince and Stephen that actually went to the auction and bought the property, it was Salvatore who organised the purchase. The property was clearly property of the company. Vince and Stephen say that they spent a lot of time and expense in renovating the property so that it was fit for occupation, and they almost certainly did so, though I have a little doubt as to their estimate of $40,000 worth of work and materials. The property was to be a company asset. However, it would seem common ground that everyone knew that Salvatore wanted Grace and her family out of his house. It may well be that Grace assumed that her siblings knew about the arrangement and it may well be that they did not until relatively recently, but to my mind this is of no moment. If the company, by its then directors, made this arrangement then (apart from any possible action against the directors personally for compensation for misfeasance) the act is binding on the company. There is no evidence to show that Grace ever thought that the licence she was being granted was in breach of the duty of a director or of the Corporations Act.
63. Thus, on the balance of probabilities, if there was a licence granted, it was granted by the company, by its duly authorised organ.
64. Has Grace, however, shown that her actions in taking advantage of the licence would cause her detriment?
65. Of course, being deprived of a right to occupy property at a reduced rent would be a detriment but that is not the detriment with which the principle is concerned. What has to be looked at is what did the Plaintiff sacrifice in the expectation engendered by the promise.
66. In the leading case of Sullivan v Sullivan [2006] NSWCA 312; (2006) 13 BPR 24,755, the Plaintiff had given up her right to occupy a Housing Commission property and she had waited seven years on the waiting list before she was allocated that house, because the promise was made that she could have a home for life provided by her brother. There was clearly a detriment in giving up that accommodation. It is clear that the detriment can be either expenditure of money or personal disadvantage: David v David (Supreme Court (NSW), Young J, 4 February 1998, unrep); Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; 88 ALJR 552, at [150], and Ashton v Pratt, at [147].
67. In the instant case, the Plaintiff gave up nothing. She was living in her parents' home with her children, she was a mere licensee there. Her father wanted her family out, not because of her conduct but because of her eldest son. She would have had no defence to a claim of ejectment. She gave up any "right" she had to occupy part of her parents' house and accepted the promise. She seemed to have accepted the promise on the basis that this was somewhere for her to live until she could afford it, or could afford anything else and wished to move out. In my view, the Plaintiff did not suffer any detriment at all.
68. Accordingly, the Plaintiff's claim based on proprietary estoppel must fail.
69. If it had succeeded, the question would have been what order should be made. The Plaintiff is now 51. Her life expectancy is possibly another 20 years. If she remains in the property, with inflation, her "rent" of $400 per week will each year become less and less valuable to the Defendant.
70. The High Court in Sidhu v Van Dyke (supra) dealt with this question. Unfortunately this was not referred to by counsel and there was no debate before me on the old principle of what was the minimum equity required to satisfy the expectation that had been supposedly engendered by the company. Sidhu makes it clear that that principle is no longer applicable. The plurality said, at [85], "[t]he appellant's argument, rightly, sought no support from the discussion in cases decided before Giumelli v Giumelli of the need to mould the remedy to reflect the 'minimum relief necessary to "do justice" between the parties'".
71. Thus cases such as Jennings v Rice [2003] 1 P & CR 100; [2002] EWCA Civ 159 do not represent Australian law. The approach in that case to the majority approach in Sullivan v Sullivan (supra) are now inconsistent with the High Court's decision in Sidhu where it would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption "but in the circumstances of the present case… justice between the parties will not be done by a remedy the value of which falls short of holding the appellant to his promises". The same view was taken in Ashton v Pratt, at [142].
72. Before leaving this part of the case I should observe that despite some dicta in English cases, it is now clear that a right for relief under the principle of proprietary estoppel does not confer an interest in the land, see eg: King v King [2012] 2 Qd R 448; Ben McFarlane, The Law of Proprietary Estoppel (2014, Oxford University Press), at [8.179]. However, there are dicta that support the proposition that it may well be a right which is assignable but I do not need to go into this aspect in the current case.
73. The alternative attack was that there was a constructive trust.
74. Mr Maroya argued on the cases such as Allen v Snyder [1977] 2 NSWLR 685 that the parties had a common intention that the Plaintiff should have the right to reside in the Ashbury home for as long as she wished and it would be unconscionable for the company now to renege.
75. One great difficulty in the Plaintiff's way is that she is a volunteer. She gave no consideration for the promise of the company at all. Ms Gall says that this is not a case of constructive trust, she says there is no evidence in this case of any joint endeavour between the Plaintiff and the Defendant which expenditure is shared for the common benefit or even the pooling of resources. All that the Plaintiff did is some painting, installation of wardrobes and a carport, and that sort of thing. The amounts expended by Grace on her evidence at the highest only amounted to some $7,000, far less than the contribution made by Vince and Stephen in putting the property into order for it to be occupied. The evidence is that the current market rent is $700-$750 per week, so that the Plaintiff has been enjoying a reduced rent and this more than offsets the expenditure made by the Plaintiff whilst she has been in occupation.
76. I cannot see sufficient evidence for me to find that there was any constructive trust. When one looks at the facts, all there was, was a father making sure his daughter was not living in his house anymore but ensuring she and her children had a roof over their head for the foreseeable future. It was not sufficient to show that there was some joint enterprise whereby proprietary rights were to be enjoyed by the daughter.
77. Mr Maroya relied on Bannister v Bannister [1948] 2 ALL ER 133 and the judgment of Megaw LJ in Binions v Evans [1972] Ch 359; [1972] 2 All ER 70, at 371.
78. In Bannister the Plaintiff, the Defendant's brother-in-law, agreed with the Defendant that if she sold him two houses for £250, she could stay in one room of one of the houses for life. Later, he sought to evict her. The Defendant succeeded at first instance, and in the Court of Appeal, the Courts held that it would be fraud in equity for the Plaintiff to assert that what appeared to be an absolute conveyance was not subject to the beneficial interest of the Defendant. A trust was decreed. Note the Defendant gave consideration in the transactions.
79. Likewise in Binions v Evans, there was a contract which was the basis of the right being asserted.
80. The only other matter raised by Ms Gall is a defence of unclean hands. The alleged unclean hands is that the Plaintiff must have known that Salvatore was a director and he was benefiting her to the detriment of the other shareholders in the company. This is not within the generally recognised conception of a defence of clean hands. It is difficult in any event to say when there is a family company what is the interests of the shareholders as a whole or the hypothetical representative shareholder (cf Woods v Cann (1963) 80 WN (NSW) 1583). As it happens, I do not have to deal with this defence but it does not seem to me to be made out on the facts.
81. Accordingly, for the above reasons the Plaintiff's claim fails and should be dismissed with costs.
82. It follows that the temporary injunction granted by Darke J will now come to an end.
83. As I said at the beginning of these reasons, the situation is unsatisfactory in that there was no Cross-Claim so that for the moment, the Plaintiff remains in possession but is open to attack in subsequent proceedings, possibly with the counter-attack of an application to wind up the company. There is no reliable evidence as to what the financial state of the company is and it may be that some creditor will solve the problem for both sides. However, I would urge the parties to see if they can now settle their differences without any further expensive litigation.

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