Plaintiff v First Defendant

Plaintiff v First Defendant - [2007] VSC 547 - VSC 2007 case summary — Zoe

[10]

8 In December 1994, Mr Lollis was convicted of offences relating to the conduct of the nursing home, and was sentenced to a period of imprisonment. While he was in prison, the first defendant was appointed a director of La Trobe Private Nursing Home Pty Ltd. The plaintiff was also charged with offences under the Commonwealth Crimes Act in relation to deductions claimed by her in her income tax return. She was placed on a bond to be of good behaviour, and ordered to pay a sum of $880 approximately to the Commissioner for Taxation. In March 1995 Mr Lollis was released from prison. In June 1995 the plaintiff went overseas for a period of two months, and for some of that time Mr Lollis was with her. In late 1995, after her return from overseas, the plaintiff consulted a solicitor, Mr Tony Goldsmith. As a consequence of that consultation Mr Goldsmith prepared a document entitled "Notice to Determine Tenancy at Will" (to which I shall refer as "the notice to quit"). The plaintiff's evidence is that three notices were prepared, one directed to the first defendant, one to the second defendant, and one to both of them. The first defendant's evidence is that one such notice, addressed to him and undated and unsigned, was placed in the letterbox at Green Street. In her evidence the plaintiff stated that she spoke to the first defendant about the notice when she visited him at Green Street. He threw the notice at her and said "I'm leaving when I'm ready". On the other hand, the first defendant denied that that conversation occurred. He said that, after he found the copy of the notice in the letterbox, he telephoned the plaintiff, who disclaimed any knowledge of it. He also said, in his evidence, that he reminded the plaintiff that he and she had "a deal". The defendants continued to occupy the premises at Green Street after that notice was received by the first defendant. In April 1997 their son, Pantelis, was born. In 1998 Mr Lollis and the plaintiff moved their home from Rosebud to Mt Martha, where the plaintiff now resides. The defendants' second child, Violetta, was born in November 2002.

[111]

105 Stella Loulatzis is now 69 years of age. She has had a difficult life. After her husband died, she worked very hard to sustain her family. It has not been disputed that she was a good mother who did her best to provide for her family. Over the years she has had to cope with the difficulties of her relationship with Con, with a particularly troubled relationship with Christina, with the proceedings brought against her by Christina, and with the failure of her second marriage to Con Lollis. In evidence she gave the appearance of a resilient individual with strong, if inflexible, views on the issues which I must determine. As I have already stated, in my view the plaintiff, as a witness, has been significantly affected by the bitterness of her dispute with her eldest son. In particular, she was quite open about her powerful dislike of the second defendant, Irene Petruccelli. She could hardly acknowledge Irene Petruccelli's relationship with her son at all. In my view she understated the true nature of the relationship between Con and Irene in the early 1990s. She also, in my opinion, somewhat exaggerated her level of ignorance of the work which was carried out by Con in the Green Street property during the 1990s and early 2000s. On occasions, she was steadfast in denying knowledge of a fact which might adversely affect her case. Thus, she maintained that neither the solicitor, Mr Kenna, nor Con, ever discussed with her the contents of the affidavits sworn by Mrs Easton, and indeed she maintained that she had never seen that affidavit herself. In light of the issues which were fundamental to the proceedings brought by Christina, I find that evidence of Mrs Loulatzis to be incredible. It was contradicted, in that respect, by the evidence of Tracy Loulatzis, who said, in cross-examination, that she was told by Stella of the existence and contents of that affidavit. Similarly, Stella downplayed the relationship between Con and Irene in the early 1990s to an exaggerated extent. The tenor of the plaintiff's evidence was that the relationship between the two was nothing more than that of friends, and that Irene in fact played an insignificant role in Con's life at that time. For reasons which I shall set out later, I do not accept that that is an accurate description of the state of the relationship between the defendants at that time.

[118]

112 As I have stated, I have taken into account Con Loulatzis's constitutional difficulties in assessing his demeanour in the manner in which he gave his evidence. Nonetheless, I found his evidence to be unreliable and unsatisfactory. On important issues his evidence was contrived and exaggerated. He contradicted himself, and often gave self-serving responses which defied credibility. For example, he was clearly keen to lay an appropriate foundation for the promise which he alleged Stella made to him in 1990, that if he married Irene and settled down, he would own the house. For that purpose he exaggerated the nature of and extent of his relationship with Irene at that time, and in the period which immediately followed. If anything is clear from the evidence, it is, I consider, beyond dispute that there was no relationship, other than that of friendship, between Con and Irene, before they rendezvoused overseas in 1988 or 1989. Yet at one stage, in his cross-examination, Con sought to maintain that Stella and he had had discussions about he marrying Irene before he went to Europe. Equally, I consider that his evidence concerning the nature of the relationship between himself and Irene, and any discussion as to marriage between the couple, to be exaggerated, when Con gave evidence relating to their relationship in the early 1990s. The tenor of Con's evidence was that there was discussion, not only between himself and Irene, but between their respective parents, and between themselves and their parents, as to upcoming nuptials. The only question which had been put to Stella in cross-examination (and which was denied by Stella) was that she had expressed the desire that if any marriage had taken place, the first ceremony should be in the Greek Orthodox church, followed by a second ceremony in a Catholic church. Con's evidence concerning the nature of his relationship with Irene was not, I consider, reflected to the same extent even by the evidence of Irene, nor by the evidence of any other of the witnesses.

[120]

114 In addition, there were numerous occasions when the evidence given by Con Loulatzis differed markedly from matters which have been put on his behalf to the plaintiff's witnesses in cross-examination. Often the additional matters stated by Con in his evidence added a layer of embellishment to what had been put on his behalf in cross-examination of the plaintiff's witnesses. For example, Con stated that Stella, in the early 1990s, had discussions with Irene's parents concerning a proposed marriage between Irene and Con. That had not been the subject of any questions asked of Stella in cross-examination. Similarly, when Con gave evidence about the telephone call he made to Stella after he found the notice to quit in his letter box in 1995, he said that his mother, when asked about the document, said "I don't know what you're talking about". However, when Stella was cross-examined, it was not put to her that she professed ignorance about the document when Con raised it with her on the telephone. Again, when Con gave evidence about a contretemps which he had with valuers who wished to inspect the Green Street premises for the purpose of the matrimonial proceedings between Stella and Lollis, he said that Stella, on that occasion, had reassured him by guaranteeing that his interest in the Green Street property would be taken into account in the matrimonial settlement. That matter was not put to Stella in cross-examination. On another occasion, when giving evidence about the impeding divorce proceeding between Stella and Lollis, Con volunteered that, on one occasion while they were in the driveway of the Green Street property, Stella looked at him and said "I'm going to fix that sister of yours first, I'm going to fix Con Lollis, and then I'm coming after you". It had not been put to Stella in cross-examination that she had made such a threat. When Con Loulatzis gave evidence as to the making of that threat, it seemed to me that it was a contrived effort by him to counter the evidence of his mother that, on the conclusion of the mediation between Christina and herself, Con had made a similar threat to her.

[124]

118 With those observations about the witnesses in mind, it is now necessary to make findings in relation to the issues raised by the first defendant's counterclaim. The pleadings underwent a series of amendments throughout the trial. However, the fundamental claims pleaded in the counterclaim remained essentially the same. Paragraph 17 recites the conversation, which the first defendant alleged occurred with Stella in 1990, in which it is alleged that Stella told him that if he married Irene and had children with her she would give Con the house. Paragraphs 18 to 23, on their face, plead that that conversation amounted to a binding agreement, that the plaintiff has breached that agreement, and that the first defendant has suffered damage as a result. However, at the outset of the trial, and again in final address, Mr Kendall made it clear that his client was not pursuing a claim based in contract. Rather, paragraphs 17 to 24 were stated by Mr Kendall, and throughout the trial understood, to contain a claim based on "promissory" estoppel, arising primarily from the oral statement made by Stella to Con in 1990 and which, it is alleged, she reiterated to him when he telephoned her in 1995 after Con received a copy of the notice to quit in the letter box. Paragraphs 25 to 27 plead an alternative claim, based on what has been described as estoppel by acquiescence or encouragement. The gist of that plea is that the plaintiff permitted or encouraged the first defendant to remain in possession of the Green Street property, to meet all outgoings in connection with it, and to carry out extensive repairs, improvements and renovations to the property, in the expectation, encouraged by her, that he would enjoy the sole beneficial ownership of the property. It is alleged that, on the faith of that expectation, the first defendant has remained in possession of the property, has met all the outgoings in respect of it, has carried out extensive repairs and renovations, and has refrained from purchasing a property for himself of a standard similar to the premises at 25 Green Street. Accordingly, it is pleaded that the plaintiff is estopped from denying that the first defendant is entitled to enjoy the sole beneficial ownership of the property.

[154]

140 As I have stated, during that period Stella was visiting the premises on a frequent basis. I accept her evidence that, during that period, she disagreed with a number of the works being carried out by Con, and expressed that disagreement to him. Con's evidence is that she only expressed mild disapproval of his replacement of the front windows in the master bedroom and lounge room, and that she simply queried whether it had been necessary to carry out that work. On the other hand, the evidence of Stella, supported by both Con Lollis and Tracy Loulatzis, is that she was particularly upset about that aspect of the works undertaken by Con. The dispute about the replacement of those two windows is, in itself, of some significance. First, it was, in my view, symptomatic of an underlying difference between Stella and Con as to the style which the house should have, and as to the nature and extent of changes which should be carried out by Con. Stella did not want the work carried out by Con to make any change to the previous character of the house. On the other hand, Con wished to, and indeed did, restore the period features of the house which had been altered by the works undertaken by his father, and, subsequently, by Stella. Stella's opposition to that course was based partly on taste, but, it would seem, at least substantially on feelings of sentiment. The evidence of Stella, supported by Con Lollis, is that she wished the house to retain the character which it had, as a result of works undertaken by her first husband, and as a result of works which she had completed on his demise. For that reason she later (in the late 1990s) was upset that a tree, planted by her late husband in the back yard, had been removed by Con. She was also upset when Con removed tiles from the kitchen which had been chosen and laid by her late husband. Con and Irene stated that not only was Stella content that that work be done, but indeed she physically assisted in carrying it out. I do not accept that that is so. In my view, the evidence of Stella was cogent, and indeed consistent with other evidence, that she stated she was unhappy that the work had been carried out on the kitchen tiles, because they involved disposing of tiles chosen and laid by her late husband. Indeed, in this respect, Con acknowledged that there was at least a "lament" between his mother and himself when he carried out those works. Furthermore, I note that it had not been put to Stella, in cross-examination, that she had physically assisted in the removal of the old tiles. I reject the evidence of Con and Irene that she did so.

[257]

229 It is not necessary for me to enter into the debate as to whether the damages, which are awarded under the principles enunciated in Swordheath Properties, are restitutionary or compensatory, or both. To the extent to which the damages are restitutionary, they are founded on the notion that the trespasser must restore to the owner of the property the benefit derived by the trespasser from the occupation by him of the owner's property. In the large majority of cases, it would be unjust and erroneous to take into account, in favour of the trespasser, expenses and costs incurred by the trespasser in effecting improvement to the property without the permission of the owner. In many, if not most of, such cases the improvements would have enured to the immediate benefit of the trespasser, during the period of the trespass complained of. However, in determining the appropriate amount to be repaid by way of "restitution", that principle could not hold true in all cases. In the present case, Con has expended very significant sums of money, and has himself carried out what he describes as "thousands" of hours of work, restoring and renovating the house. It was not disputed in the trial that the renovations have significantly improved the value of the house. The improvements were carried out with a view to the future enjoyment of the premises. The evidence discloses that, in the short term, they detracted from, rather than enhanced, the user of the premises during the trespass. Most of the benefit of the improvements have not enured to the enjoyment of the premises by Con and Irene during the period of the trespass. If Con were now ordered to pay damages consisting of the market rental of the property, he would be required to do so in circumstances in which he has spent a large amount of money, and worked over a very long period of time, at his own inconvenience, in a manner which will be significantly to the financial advantage of his mother, the plaintiff. In the unusual circumstances of this case, a requirement that Con pay such damages to Stella, undiminished by a fair evaluation of the cost to him of the works undertaken by him in improving the house, could not be regarded as a remedy comprising just restitution by a wrongdoer of the benefits derived by that wrongdoer of his trespass.

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