21 In short, counsel submitted, to measure the equity by reference to the October 2002 sale price would give the plaintiff the benefit of a windfall gain which would not be just and equitable as between the parties. It would be well above the minimum equity. In making this submission, counsel supported the submission he had made at trial which I referred to earlier in this judgment. Counsel concluded this part of his submissions by noting that the evidence of the valuers was not determinative of the value of the land but was there to assist the Court.
22 Counsel then proceeded to identify a series of matters to be considered in deciding upon the minimum equity.
23 First, when the promise was made the parties would have believed that the marriage would last a long time, the lifetime of the couple. If they had thought early separation or divorce was possible the promise would probably not have been made or if made it would have been conditional on the marriage lasting.
24 Secondly, when the promise was made the parties did not know that in a few years the property would dramatically increase in value. He submitted that the evidence to the contrary relied on by the plaintiff would have been pie in the sky rather than a real belief. It was improbable that it was the defendants' belief as, if it was, it was improbable that they would have made the promise.
25 Thirdly, it was the idea and decision of the first and second defendants to purchase the property and they took the investment risk. Further, the first and second defendants paid all the money for the property; as to that I refer to my finding that Steven made an unspecified contribution to the mortgage.
26 Fourthly, the plaintiff's detriment did not cause the property to increase in value. The property was sold as broad acres to a developer. I note that that proposition is not challenged. As I noted above it was not part of the plaintiff's case that her contributions or any aspect of her detriment otherwise caused the increase in value.
27 Fifthly, the promise was broken on the plaintiff not being on title at or shortly after the time of the marriage. The minimum equity should be determined as at that time, taking the then value of the property. To the amount thus established interest could be added to compensate for the passage of time to the present. An appropriate rate would be about 7 percent, not the penalty interest rate although that rate would apply to the judgment amount. However, interest should not be allowed in respect of the period when the plaintiff lived at the property rent free, that is from marriage in February 1997 to final departure from the property in February 2000.
28 Sixthly, it was relevant to consider the first and second defendants' younger son Michael who would probably have some sort of expectation of benefit from his parents in due course and the reduction in the amount he might receive by reason of the amount awarded to the plaintiff.
29 Finally, there should be a stay on payment of any amount ordered until the determination of the proceedings between the plaintiff and Steven in the Family Court. This had been proposed by counsel for the plaintiff in his written submission at trial, para 44. Counsel queried whether that remained the plaintiff's position as it seemed a contrary position was now being taken. Even if the plaintiff had changed her position and wanted the amount awarded to be paid pending conclusion in the Family Court, counsel for the defendants submitted that there should be a stay on payment. He submitted that it would be appropriate for the amount to be placed in an interest bearing account.
30 Counsel for the plaintiff then addressed some submissions in reply. They dealt with two matters, the zoning of the land and a stay on payment. On the first matter of zoning, counsel submitted, by reference to the report of the defendants' expert, Mr Papworth[15], that at all relevant times the Mernda land was amenable to subdivision with a permit. It was therefore not correct for the defendants to say that when the land was acquired it could not be subdivided. It is important to note that at this point counsel for the defendants interrupted to concede that counsel for the plaintiff was correct. The materials[16] showed that the land could be subdivided, although a local structure plan was required to be implemented and none had been up to the time when the land was rezoned to Residential 1. Nevertheless, as counsel for the plaintiff repeated, without denial by counsel for the defendants, in principle the land was subdividable. It was just that until a developer became interested and purchased the land in 2002 no-one had taken the steps necessary to do so.
31 It thus became clear that the submission of the defendants at trial and continued on 9 December until abandoned in the course of the plaintiff's reply, that the value of the property increased by reason of an unexpected planning zone change after the parties separated and prior to divorce was erroneous and misleading with the capacity to prejudice the plaintiff. The point is important and should be developed.
32 In the first place, even if there had been a planning zone change as stated by counsel for the defendants, the submission that that change caused the "dramatically increased" value in the property was mere assertion that was not supported by evidence. There was no evidence from the purchaser that explained how the purchase price was calculated. Indeed, my recollection from the trial is that I was told by counsel that the price was affected by the fact that the developer purchased other adjacent properties at the same time and by the provision for payment by extended instalments. Even as to that though, the defendants did not call the purchaser or its solicitors to seek to provide an evidentiary foundation for these explanations.
33 However, and this is the second point, the terms of the submission misstated the legal position, as counsel for the defendants immediately conceded when I was taken to the terms of his clients' expert's report. The defendants' point was there had been a rezoning which permitted residential subdivision and a purchaser had acquired the subject land with a view to such subdivision. That is what I stated, as a finding, at [28] of my judgment. It was that which had led to the increase in value of the land, or windfall gain, and to which I referred at [394] and [396]. It is to be recognised that in so stating in my judgment I acted on what I was told by the defendants' counsel who, I think, sought to minimise expense in the case and thus (I would infer) did not call valuation evidence or give sufficient attention to the relevant planning provisions. This would also explain the failure to call evidence to establish how the purchaser arrived at the purchase price. In the end, as I have said, in this area matters were put, and I was left to decide the case, without a proper evidentiary foundation. But, at the death knock, it became clear that the fundamental premise of the defendants' submission that the land could not be subdivided was wrong. The contrary was the case. It is true that a local structure plan was required but that was not the defendants' point. Indeed as expressed the defendants' submission was inconsistent with the actual facts of the planning situation. I do not overlook that counsel for the defendants ultimately came to rely on the fact of the requirement of a local structure plan but when he did the reference to it was like a reflex reaction to counsel for the plaintiff having taken me to the expert's report where the planning position was set out.
34 In these circumstances, and for these reasons, I conclude, as I now do, that I reject the defendants' submission that the "value of the property was dramatically increased by an unexpected planning zone change after the parties separated and prior to their divorce". Furthermore, in these circumstances and for these reasons, it is apparent that certain observations I made at [394] and [396] of my judgment were incorrect and I recall them. In [394] that is the statement that the net purchase price "is greater than it otherwise would have been as a result of the land having been rezoned ... " and that that was a relevant circumstance. In [396] it is the statement that it did not seem appropriate that the plaintiff receive the full benefit of the gain in the value of the land as rezoned because the increase in value was in the nature of a windfall gain to the property owner. What I there said was based on the value of the land having been affected by rezoning. Whatever amount is appropriate for the plaintiff to receive must be determined in light of the relevant facts and circumstances which will not include that the land was rezoned to permit subdivision and that such rezoning resulted in the amount paid by the purchaser being an amount greater than would otherwise have been paid. As to the value of the Mernda property I note that the valuation agreed on by the valuers is $613,245 less than the actual sale price but that reduction is by reason only that the valuers achieved a compromise by discounting the sale price to arrive at a present value as at the date of the sale.
35 The second point mentioned by counsel for the plaintiff in his reply concerned the question of a stay on payment of the judgment sum. Counsel could not recall why he had proposed a stay in his written submission at trial. However, in the absence of a suggestion that the plaintiff was likely to dissipate the judgment amount there was no good reason why the order to be made should not be complied with forthwith.
Decision
36 I commence with some comments on counsel's submissions in addition to those already made above.
37 The point to note about the submissions of counsel for the plaintiff, apart from those concerning the matter of rezoning and a stay on payment, is that they relied on evidence I had accepted and findings made in my earlier judgment. It was by reference to these matters considered in the circumstances of the case that he submitted that the Court should conclude that the appropriate way in which to satisfy the equity was by payment to the plaintiff of the amount which represented one-quarter of the 2002 sale price or, in the alternative, a lesser but very substantial amount.
38 As to the defendants' submissions, it is correct that in principle the valuation evidence is not determinative of the issue of valuation. Expert evidence is provided to assist the Court and at the end of the case it is for the judge to decide the issue and in that determination the judge is not bound to act on the opinion of the expert. Nevertheless, while that is so, the only evidence I have as to the value of the Mernda land is that constituted by the July 1995 purchase price, the 2002 sale price, and the agreed valuations set out at [8] above. Putting aside for the moment the difference between the 10 October 2002 purchase price and the lesser amount agreed on by the valuers as the value of the land at that date, I have no objective criteria by reference to which I could differ from the July 1995 purchase price or the other agreed values.
39 As to the value at 10 October 2002, the agreed value is simply the result of discounting the terms contract to arrive at a value as at 10 October 2002. The question that arises is whether in considering the amount that would satisfy the plaintiff's equity I should have regard to the agreed value or the actual sale price as the value of the land. Counsel did not address me on this issue. Addressing the submissions that they made, I was, in the context of those submissions and the circumstances of the case overall, left to determine the amount that would satisfy the plaintiff's equity. Nevertheless, the subject point should be addressed. It seems to me that it is the actual sale price to which regard should be had. That seems to me to be just and equitable as between the parties. The first and second defendants have received 50 percent of the purchase price, the last instalment having been received as long ago as 10 October 2003[17]. The gross amount of the deposit and first two instalments is $1,898,555. At [27] of my earlier judgment I noted that the net deposit received by the first and second defendants was $313,551.69, after allowing for commission, advertising and related expenses of the agent, and that in addition there were legal costs on the sale of $2,327.75. I have no evidence of additional costs and expenses of the sale paid or payable by the first and second defendants. Thus, on the evidence the first and second defendants have borne costs of $68,087.06 which may be presumed to have been paid out of or borne by the deposit. Hence, disregarding the odd cents and subject only to one other matter the first and second defendants have received and had the benefit of the net deposit plus two instalments of purchase price, a total of $1,830,468. The other matter is the amount of $450,000 which pursuant to an agreement between the parties was placed in an interest bearing trust account on condition of which payment the plaintiff withdrew a caveat on title to permit the sale to proceed. I referred to this at [30] of my earlier judgment where I noted that the caveat was withdrawn in December 2002. Although at that time only the deposit had been received it is reasonable to treat the $450,000 as having been paid out of the purchase price. Certainly the defendants did not seek to establish that they had suffered financial disadvantage by setting that sum aside, bearing in mind of course that the fund is bearing interest.
40 Then, looking forward, the first and second defendants will receive, and have the benefit of, the instalments of purchase price payable on 10 October 2006 and 2007, subject to the order in this proceeding. The discounted value of the entire contract sum as at 10 October 2002 is irrelevant to the amount of those instalments, just as it was irrelevant to the instalments of purchase price already paid. That is, the amounts paid and to be paid are those stipulated in the contract.
41 From her point of view the plaintiff has not received any amount. Furthermore, she will not receive any amount until the Court determines her entitlement and in accordance with its order. Her entitlement, and the receipt by her of any amount in accordance with the order I make, is prospective.
42 Regarding the circumstances overall it seems to me that the agreed discounted value of the contract price is irrelevant to the parties. The entitlement of the first and second defendants to receive the balance of the sale price in accordance with the contract is not affected by the discounted value of that price. It necessarily follows that it would be unjust to the plaintiff to confine regard to the discounted value of the sale price. To do so would have the consequence that the plaintiff's claim was considered on the basis that the land was worth $613,245 less than the actual sale price. One quarter of that amount is $153,311.25. It is immediately apparent that to act on the lower value could only prejudice the plaintiff and advantage the first and second defendants. There is no justice in that in the circumstances. Furthermore, as Brooking JA so clearly pointed out in Flinn[18], the question as to what relief is appropriate to satisfy the plaintiff's equity is to be determined at the date of judgment.
43 I turn then to the other matters relied on by the defendants. The first point rested on the parties having the belief that the marriage would last a long time, the lifetime of the couple. That is what counsel said but there is a difference between a marriage lasting a long time and a marriage lasting until the death of one of the spouses. Therein lies an inherent difficulty in the submission because a marriage that may last a long time may also last a short time or somewhere in between and in the experience of life these things are hard to predict. But, passing over that difficulty, let the premise be accepted that the parties believed that the marriage would be long lasting. The critical point lies in the next step that if early separation or divorce had been thought possible the promise would probably not have been made or, if made, would have been conditional on the marriage lasting. This step does not follow from the premise. In the first place, I have found that the promise was made. Having been made, and acted on by the plaintiff to her detriment, it cannot now be undone. In the second place, the marriage was of two young people in a society in which the incidence of separation and divorce is notoriously high. Doubtless, the couple and their families had the expectation of a long, happy and successful marriage. Unfortunately the marriage failed. That failure was foreseeable to the defendants as a possibility when the subject promise was made. Yet, with such awareness, the promise was made. It was, of course, entirely a matter for the first and second defendants whether to make the promise. They chose to do so. It was their voluntary act made in the circumstances and for the reasons discussed in my judgment. They conditioned the promise on marriage but not otherwise, and the promise or its performance was not deferred for any period or dependant on the occurrence of any other event. In short, the defendants or, more particularly, the first and second defendants, took the risk of the marriage failing.
44 The next contention was that when the promise was made the parties did not know that the land would dramatically increase in value. The submission was that the evidence to the contrary relied on by the plaintiff - that is, the statements that the land will be worth millions, a fortune - should be regarded as puffery or hope rather than a real belief. If the defendants had held that belief it was improbable that they would have made the promise. The last part of this contention was in effect a back door way of challenging my finding of a promise and I reject it accordingly. Otherwise the contention, regarding it as a whole, seems to be this, that the defendants or, more particularly, the first and second defendants, did not have a belief that the land might in the time involved increase in value as much as it did. There is much difficulty in this submission. The first and second defendants had prior experience in buying land, although not in broad acres. The first and second defendants were hard workers who impressed me as street smart and as understanding the value of land as an investment. I accept as a fact that they spoke of the land one day being worth millions, and a fortune, and I find that that was their belief, a belief that was vindicated in a relatively short time. I further find that they had this belief when the promise was made. It is then important to note the submission's use of the word "dramatically" to describe the increase in value. The Oxford Dictionary relevantly defines the word "dramatic" as "sudden and striking". In context, the use of the word dramatic is a layman's adjectival reaction, and as such and on its own is an assertion that establishes nothing. Of course the increase in value was substantial and it may have been greater than the first and second defendants might have guessed or hoped might be the case in the time involved assuming that they put their mind to the matter in a precise way. But, strictly speaking, whether or not the increase in value in the period between 11 July 1995 and 10 October 2002 is to be described as "dramatic" may be a matter of semantics and argument, the argument doubtless depending on evidence as to movements in the value of land over time and in context.
45 The final point to note about the submission is that it contains within it elements of the windfall argument. That is, that in assessing that which is appropriate to satisfy the plaintiff's equity regard should be had to the magnitude of the increase in value and that it was unexpected. I take account of the former in considering the balance of justice between the parties in the circumstances. As to the increase being unexpected, I refer to the above discussion.
46 The next factor is that it was the first and second defendants' idea to purchase the land and that they took the investment risk. This is correct. As mentioned earlier, the first and second defendants paid for the land apart from Steven's contribution to the mortgage[19], the amount of which I was unable to assess. It is to be noted that the first and second defendants' mortgage was paid out on 4 August 1997[20]. The amount paid on that day to clear the mortgage was $89,105.15. I note that the statement of account[21] states that at 16 February 1997 the date on which the plaintiff and Steven married, the amount owing under the mortgage was $96,982.91, the difference between that amount and the amount paid to clear the mortgage being $7,877.76.
47 Passing by the point that the plaintiff's contributions did not cause the property to increase in value, it was next submitted that the amount required to satisfy the plaintiff's equity should be determined at or shortly after the marriage. I deal with this below.
48 The next point concerns the effect of an order on the expectation of the younger son Michael. While I do not overlook his position as a son in the family, I am yet concerned with the consequence in equity of detriment suffered by the plaintiff as a result of the breach of a specific promise made to her by Michael's parents. Furthermore, it is not as though the order to be made in this case will leave the first and second defendants without appreciable assets. At the worst they will have the benefit of three-quarters of the purchase price which is what they would have had if they had honoured their promise to place the plaintiff on title. As counsel for the plaintiff pointed out, the only prejudice they suffer is that which is consequent on the allowance of the amount assessed as sufficient to satisfy the equity arising in favour of the plaintiff as a result of their breach of promise.
49 The final point concerns a stay on payment. I deal with that later.
50 I return then to the question I posed in my earlier judgment at [393], what is required to satisfy the equity that has arisen? And, as I said, by reference to Giumelli[22], in deciding this question regard must be had to the circumstances of the case. Each case turns on its own facts. The defendants' submissions referred, time and again, to the relief to which the plaintiff was entitled as being that which was the minimum necessary to satisfy the equity. The expression "minimum relief" is to be found in the authorities, including in the judgment of Mason CJ in Verwayen where he referred to the task of ascertaining the minimum relief necessary to "do justice" between the parties.[23] It was this that Deane J addressed in Verwayen[24]. In each case the task is, in light of the relevant circumstances of the case, to ascertain the relief that is appropriate to do justice between the parties.
51 In the present case the defendants submit, in essence, that to enforce the promise by requiring payment of the amount that represents one-quarter of the 2002 sale price would be disproportionate to the detriment suffered by the plaintiff. It was this issue which Deane J referred to in Verwayen (at 442) when he said: