Sakellis v Vourlos

Supreme Court of NSW|2018-12-13|Before: Davies J

Judgment

The plaintiff is the owner of a property at 578 Pittwater Road, North Manly. The defendant was married to the plaintiff's niece who died on 29 July 2010. The defendant has occupied the North Manly property since either June/July 2015 (according to the plaintiff) or since mid-2016 (according to the defendant). The precise date does not matter for present purposes.
By letters dated 18 December 2017, 1 February 2018 and 13 April 2018, solicitors acting for the plaintiff wrote to the defendant requiring him to vacate the property by dates specified in those letters. The defendant remains in the property.
The plaintiff commenced proceedings on 6 June 2018 seeking possession of the property.
The defendant defends the proceedings on the basis of a proprietary estoppel. He asserts that the plaintiff represented that he, his wife and children, could live in a property that she owned at 11A Edgecliff Esplanade, Seaforth for the rest of their lives. After some problems between the defendant and his son, the defendant said that the plaintiff represented that he could move to another of her properties being the North Manly property. He understood that his right to live there was on the same basis as had been represented to him in respect of the Seaforth property.
He points to two aspects of detriment that he alleges gives rise to the estoppel. The first is that he gave up low cost subsidised housing that he and his family were renting in North Ryde in order to move to the Seaforth property on the basis of the plaintiff's representation. Secondly, he says that he has expended various amounts of money and labour on both the Seaforth property and subsequently the North Manly property.
By a notice of motion filed 16 November 2018 the plaintiff sought summary judgment for possession of the property. By an Amended Notice of Motion filed in court at the hearing of the motion, the plaintiff seeks, in the alternative to summary judgment, that the Defence be struck out pursuant to UCPR r 14.28. The defendant opposed the further relief being heard because of the shortness of notice (the defendant's solicitors were only notified two days before the hearing of the motion), and because the basis for that relief was a lack of congruity between the pleading in the defence and the evidence of the defendant.

The Defence

The Defence relevantly pleads: 19. In or around 2008, the Plaintiff made the following representations to the Defendant and his wife: (a) that the Plaintiff would make available the Seaforth Property for occupation by the Defendant, his wife and their children; (b) neither the Defendant nor his wife would have to pay any rent; (c) both the Defendant and his wife would be able to live in the Seaforth Property for the remainder of their natural lives; (d) if the Seaforth Property ceased to be available for occupation by the Defendant and his wife, the Plaintiff would provide alternative accommodation at another property owned by the Plaintiff for the remainder of his natural life; and (e) the Plaintiff would ensure that the Defendant and his wife always had accommodation in a property owned by the Plaintiff. (together, the Representations) Particulars (i) The Plaintiff is the aunt of the Defendant's wife. (ii) The Plaintiff initially approached the Defendant and his wife in 2008, after the Defendant and his wife had moved into the Subsidised Property through the Plaintiffs niece after locating them through Facebook. (iii) The Representations were oral and made on several occasions in the first half of 2008. (iv) The Plaintiff made the Representations to the Defendant individually and jointly to him and his wife. (v) The first time the Plaintiff made the Representations was when she visited the Defendant and his wife at the Subsidised Property for the first time. The day following that meeting, the Plaintiff took the Defendant to inspect the Seaforth Property. The Representations were repeated on subsequent dates by the Plaintiff to the Defendant and the Defendant's wife. (vi) The Representations were also repeated in front of the Defendant's children. (vii) Further details as to when and where these Representations were made will be provided prior to trial.

The defendant's evidence

The relevant parts of the defendant's affidavit are these: 30. During that visit, I recall that Ms Sakellis expressed surprise at the condition of the North Ryde Property and said words to the effect of: Ms Sakellis: "What house is this?" 31. Ms Sakellis then said words to my wife and I to the effect of: Ms Sakellis: "I've got a house for you." … 36. When we arrived at the Seaforth Property, Ms Sakellis said words to me to the effect of: Ms Sakellis: "This is your house." 37. During this visit, Ms Sakellis and I discussed the North Ryde Property. During that discussion, we exchanged words to the effect of: Ms Sakellis: "This is your house to live in." Me: "If we are to move to Seaforth and live in this house, [my wife] Antonia and I will need to provide notice to [Link Housing] and terminate our residential tenancy agreement. I can stay in [the North Ryde Property] for the rest of my life under the current lease." Ms Sakellis: "Do not worry about it. Forget about that place. Come live in Seaforth, the house is yours! If I ever pull the house [at the Seaforth Property] down, then I will move you to another house I own." 38. Based on: (a) the statements made my Ms Sakellis to my wife and I during her visit to the North Ryde Property, which I set out at paragraphs 30 to 33 of my Affidavit above; and (b) the subsequent conversation I had with Ms Sakellis during my first visit to the Seaforth Property, which I set out at paragraphs 36 and 37 of my Affidavit above, I understood that Ms Sakellis had offered to provide the Seaforth Property to my family and I, rent free, for the duration of my life and that of my wife. … 41. Over the next three months, I returned to look at the Seaforth Property a number of times. Ms Sakellis accompanied me on at least one of those trips. During that trip, Ms Sakellis again said words to me to the effect of: Ms Sakellis: "[the Seaforth Property] is your house." … 47. My residential tenancy agreement with Link Housing terminated around 6 April 2009. I would not have terminated my residential tenancy agreement with Link Housing and given up the right to live at the North Ryde Property at a subsidised rent under a secure tenure if I thought that I would only get to live at the Seaforth Property or another property owned by Ms Sakellis on a temporary basis or only while my children lived with my wife and I. … 57. In or about 2011, Ms Sakellis approached me and said words to me to the effect of: Ms Sakellis: "I want to talk to you about a new property that I am thinking of buying. My intention is to demolish [the Seaforth Property] and your family will need another property to move into." 58. In or about 2012, I accompanied Ms Sakellis on a number of trips to look at suitable properties. On one of those trips, Ms Sakellis took me to inspect the property at 578 Pittwater Road, North Manly (North Manly Property). Subsequently, I visited the North Manly Property by myself. Soon after my visit, I spoke with Ms Sakellis and said words to the effect of: Me: I love the property, you should buy it." 59. A few days later, I accompanied Ms Sakellis' now ex-partner to inspect the North Manly Property. After we inspected it, Ms Sakellis bought the house. 60. At around this time, Ms Sakellis spoke to me regarding the North Manly Property and said words to me to the effect of: Ms Sakellis: I intend to renovate [the North Manly Property] so that you and your family can live in it. I want to install two separate electricity metres and two separate entrances, so you can live on the ground floor and your kids can live on the second storey. I will renovate the double garage and make a huge bedroom for you. You will love it." My move to the North Manly Property 61. Sometime during the first half of 2016, I had a falling out with my son, Sebastian Vourlos. Shortly thereafter, I discussed the falling out with Ms Sakellis. 62. Ms Sakellis said words to me to the effect of: Ms Sakellis: "Why don't you move into [the North Manly Property] and live there?' 63. At the time, the tenants of the North Manly Property had recently vacated the property. 64. Based on: (a) my understanding of Ms Sakellis' offer to provide the Seaforth Property to my family and I, rent free, for the duration of my life and that of my wife, for the reasons set out in paragraph 38 of my affidavit above; and (b) the discussions I had with Ms Sakellis about the reasons why Ms Sakellis was purchasing the North Manly Property, referred to at paragraphs 57 and 60 of my affidavit above; I understood that Ms Sakellis was offering to allow me to live at the North Manly Property for the remainder of my life.

Submissions

The plaintiff accepted that the issue of whether representations were made, and what those representations were, is a triable issue and cannot be determined on a summary judgment application. The plaintiff submitted, however, that if the defendant's evidence was taken at its highest, it did not justify the finding of a proprietary estoppel in the manner alleged in the defence.
In that regard, the plaintiff submitted that the representation alleged by the defendant, found in paragraph 19(d), was that if the Seaforth property ceased to be available for occupation by the defendant and his wife, the plaintiff would provide alternative accommodation at another property owned by the plaintiff for the remainder of his natural life. The plaintiff submitted that taken at its highest, the estoppel claim cannot succeed because: (a) the representation is not to the effect that the defendant can remain at this specific property, and if the defendant wishes to seek relief to establish an entitlement to be housed in a property owned by the plaintiff, he should seek that by cross-claim; (b) the defendant's account in his affidavit at paragraphs [31], [36] and [37], does not marry up with the pleaded representation because there is no reference to the occupation being "for life"; (c) every account given by the defendant of the representation at paragraphs [31], [36] and [37] is to the effect that the accommodation was being offered not just to the defendant but to the defendant and his wife; (d) the alleged condition precedent to the right of the defendant to reside at the North Manly property is not supported by the evidence because the condition precedent was said to be: "If I ever pull the house down, I will move you". The plaintiff submitted that the Seaforth property has not been pulled down; (e) the representation does not contemplate the current fact scenario, namely that the defendant's wife died many years ago and the defendant has fallen out with his children such that he is currently not residing in the Seaforth property.
The plaintiff in her written submissions asserted that the evidence cannot support the factual proposition that the defendant would have to wait five to ten years for alternative accommodation. The plaintiff submitted that the defendant should have filed a cross-claim seeking the only relief available to him on the evidence, namely, the right to stay in the North Manly property for a limited period, perhaps three months or so, until he obtained subsidised housing.
However, in oral submissions, the matter of detriment was said to be connected with the strike-out of the pleading and not summary judgment. This was because, when the evidence concerned with the present availability of low-cost housing was considered, it showed that the defendant could never obtain the only relief he effectively claimed, that is, the right to reside for life in the North Manly property.
The plaintiff submitted that the component of detriment alleged by the defendant cannot be made out. The plaintiff submitted that the defendant did not have a right to live in the North Ryde property for life. At most, the terms and conditions of the tenancy entitled the defendant's family to reside at that property in accordance with its terms. Those terms included that, to the extent that the defendant's family reduced in number, the defendant would be required to vacate that property and move to something smaller if still eligible.
The defendant submitted that it is not appropriate as the plaintiff asserted in her written submissions to treat the issue of detrimental reliance as if it were a separate question to be determined on a summary judgment application. The defendant submitted that principles governing the Court's discretion to grant summary relief, and the requirement in the authorities to undertake a broad enquiry into all the circumstances of the case to determine unconscionablility, pointed strongly against granting summary judgment on the question of detriment alone.
The defendant submitted that the authorities make clear that the ingredients of proprietary estoppel cannot be subdivided into discrete compartments. The defendant submitted that where the plaintiff accepted that the content of the alleged representations was a triable issue, that concession was itself enough to defeat a summary judgment application.
The defendant submitted that the Court of Appeal's decision in Sullivan v Sullivan [2006] NSWCA 312 was a complete answer to the motion for summary judgment.
The defendant submitted that, in any event, the defendant in fact had security of tenure in the social housing he lived in because the evidence from Mr Wyngaard of Link Housing established that that organisation would generally not terminate a tenant's lease unless the tenant breached housing policies, became ineligible for social housing, or if there was a significant change of government policy.

Determination

The principles which determine a summary judgment application are well known. In the context of a summary dismissal application they were recently summarised by Gleeson JA (Beazley P and Barrett JA agreeing) in Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 at [196]-[200]: [196] It is not in dispute that "great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his cause by the appointed tribunal": General Steel Industries Inc v Commissioner for Railways (NSW) (General Steel) [1964] HCA 69; 112 CLR 125 at 130 (Barwick CJ). [197] More recently in Agar v Hyde [2000] HCA 41; 201 CLR 552, Gaudron, McHugh, Gummow and Hayne JJ said at [57]: "Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." [198] Subsequent authorities have reaffirmed that formulation: see Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; 226 CLR 256 at [46]; Spencer v Commonwealth at [24]. [199] In Shaw v New South Wales [2012] NSWCA 102, Barrett JA (with whom Beazley, McColl, Macfarlan JJA, and McClellan CJ at CL agreed) expressed the test for summary dismissal as follows at [32]: "The question is...whether the claims in question are so obviously untenable or groundless that there is 'a high degree of certainty' that they will fail if allowed to go to trial; and whether this is one of the 'clearest of cases' in which the court may accordingly intervene to prevent the claims being litigated." [200] Further, that assessment is to be made taking the plaintiff's case at its highest. The party applying for summary dismissal must accept the truth of all allegations in the statement of claim, and the ranges of meaning which the assertions of fact in the statement of claim are capable of bearing: Penthouse Publications Ltd v McWilliam (Court of Appeal (NSW), Priestley and Meagher JJA and Wardell AJA, 15 March 1991, unrep); Agius v New South Wales [2001] NSWCA 371 at [24].
In my opinion, the plaintiff demonstrates no basis for obtaining either summary judgment or a strikeout of the defence for the following reasons.

The representations

In challenging whether the evidence given by the defendant supports the representation made, the plaintiff isolates the representation in paragraph 19(d) and ignores the other sub-paragraphs which together are said to amount to the representations. In particular, the plaintiff overlooks paragraph 19(e) of the Defence which is a representation that the plaintiff would ensure that the defendant and his wife always had accommodation in a property owned by the plaintiff.
The plaintiff also overlooks paragraph 57 of the defendant's affidavit which alleges the plaintiff said to him that she intended to demolish the Seaforth property and that the defendant and his family would need another property to move into. What then follows in the defendant's affidavit in relation to the purchase of the North Manly property and what was subsequently said to him is capable of providing evidence that, in effect, the North Manly property was being substituted for the Seaforth property and, in that way, bears out the alleged representation that the plaintiff would ensure that the defendant and his wife always had accommodation in a property owned by the plaintiff. All of the matters said by the plaintiff in her submissions relating to the proof of the particular representation, involve issues of fact including inferences from statements made and acts done by the plaintiff.
As counsel for the defendant submitted, when the court comes to look at the words that were spoken between the parties, it does not examine it as a written contract would be construed. Rather, the enquiry is whether in the light of what was said and done, there was reasonable reliance by the promise to that person's detriment, and whether it is unconscionable for the promisor to depart from the representation made.
In Sullivan v Sullivan Handley JA said at [16]: A proprietary estoppel by encouragement may be established where the conduct of the party estopped did not define the interest the other party was to expect: Plimmer v Mayor of Wellington (1884) 9 App Cas 699, 713; Flinn v Flinn [1999] 3 VR 712 CA, 738-9, 742, 743; Gillett v Holt [2001] Ch 210 CA, 226 per Robert Walker LJ.
Hodgson JA said at [84]-[85]: [84] It has been said that in some respects at least more certainty is required for an estoppel than for a contractual variation (Woodhouse AC Israel Cocoa Limited SA v. Nigerian Produce Manufacturing Co. Limited [1971] 2 QB 23 at 60, Legione v. Hateley (1983) 152 CLR 406 at 436-7); but it is also the case that a promise or representation may support an estoppel even though it is not sufficiently certain to operate as a contract (Australian Crime Commission v. Gray [2003] NSWCA 318 at [184]-[200], Galaxidis v. Galaxidis [2004] NSWCA 111 at [82]-[94]). [85] Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit.
In Watson v Foxman (1995) 49 NSWLR 315 McLelland CJ in Eq said at 318-319: In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. … What I have said above as to the cause of action based on s52 of the Trade Practices Act (or s42 of the Fair Trading Act) is equally applicable, mutatis mutandis, to the causes of action based on contract and on equitable estoppel (with the added requirements, in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee).
It is only possible to determine precisely what representations were made, the nature and extent of any reliance, and whether subsequent conduct was unconscionable after a trial where witnesses are cross-examined. It is only in those circumstances that "subtle nuances" can be discerned and proper inferences drawn from statements made and acts performed. Whether it was "reasonable for the representee to interpret it" as the defendant did, can only be determined after a trial. No firm conclusions can be reached on those matters on an application such as the present one.
In my opinion, the representations pleaded are capable of being found on the basis of the evidence given by the defendant. That is not to say that they will be found. But it cannot be said that they are incapable of being found. In that way, I cannot find that the defendant's defence based on the representations alleged is hopeless, unarguable or doomed to fail.
In the same way, I do not consider that it is possible to reach any firm conclusion on the material available that the representation was confined to an offer to the defendant and his family, in contradistinction to an offer to him alone. Counsel for the plaintiff accepted that evidence to that effect was disputed. It was not clear if this submission went to a summary judgment point or to a pleading point but, whichever it was, it cannot be determined on this type of interlocutory application.

Detriment

In relation to the question of whether the defendant's leaving the North Ryde housing amounted to a detriment, what was said in Sullivan v Sullivan has clear application to the present case.
In his judgment Hodgson JA said: [81] Also, the primary judge was literally correct to say there was "no evidence what if any security of tenure she had in the Housing Commission house", but that was not the end of that issue. The appellant had waited about seven years for that accommodation, and had been in that accommodation for about five years; and in my opinion the Court can take judicial notice that the Housing Commission generally does not evict tenants without good reason. In those circumstances, it was in my opinion wrong to decide the case on the basis that security of tenure of the Housing Commission accommodation had not been proved. … [89] The next issue is whether there was relevant detriment. Whether or not this is an independent element in making out an estoppel, the existence or otherwise of detriment is plainly relevant to any question of unconscionability. … [93] In my opinion, the circumstances of the promise, the giving up of Housing Commission accommodation in reliance on it (this being both reasonable and intended by the first and second respondents), the expenditure of $6,300, and the detriment in losing the promised accommodation and not readily being able to go back to Housing Commission accommodation, is sufficient to justify a finding that the respondents' conduct in requiring the appellant to vacate the house in six weeks was unconscionable, and to justify consideration of what relief would be justified.
Justice Handley said: [5] The voluntary promise made by the appellant's brother in his 1995 Christmas card is quite clear. He promised to provide a home for his sister "to live in as long as you like" which was to be her "home for life". She was living with her then three children in a Housing Commission house at 11 Citrus Close, Wyoming paying a subsidised rent. She had been on the Commission's waiting list for about seven years before 1990 when she obtained this accommodation. … [7] Detrimental reliance on the brother's promise occurred when the appellant moved out of her Housing Commission house. Further detrimental reliance occurred when she committed money, time, and labour to repainting the inside, carpeting the bedrooms, laying tiling, and renovating the bathroom. The trial Judge found that the direct cost of this work was some $6,300, but the appellant's time and labour are just as important: Eves v Eves [1975] 1 WLR 1338 CA, 1342; Grant v Edwards [1986] Ch 638 CA, 656, 657.
There is a clear factual dispute, and probably a legal dispute, about whether or not the defendant had a right to remain living at the North Ryde property for life. Such a factual dispute can only be determined at a final hearing. However, the outcome of that factual dispute is scarcely relevant in the light of what was said by the Court of Appeal in Sullivan v Sullivan in relation to detriment arising from a person giving up that form of housing to move to a property promised to them by a plaintiff.
There is also a factual dispute about the time it may take for the defendant, if evicted from the North Manly property, to find and be accepted for subsidised housing. There was some concentration on this issue at the hearing of the motion, but it is a matter relevant only to the extent of the relief that might be granted to the defendant if a proprietary estoppel is found. The plaintiff submitted its relevance went to whether, in the absence of a cross-claim, the defendant could possibly succeed, when his only claim in the defence was a right to stay for life in the North Manly property. In that way, the plaintiff submitted, the detriment alleged (being deprived of subsidised housing for the rest of his life) is not supported by the evidence.
In my opinion, the defendant has no obligation to file a cross-claim. He seeks to defend the plaintiff's claim for possession by relying on an estoppel. He says that the effect of the estoppel is that he is entitled to reside in the North Manly property for life. If it is found for any reason that a right to reside in that property for life is not the relief to which he is entitled, provided an estoppel is established, the Court will mould the relief to what is found to be the effect of the representation. In Sullivan v Sullivan Handley JA at [20]-[26] discussed the way relief may be moulded and noted at [25] that subsequent events may even enlarge an equity claimed. I accept that Sullivan v Sullivan was a case brought by the person claiming the estoppel, but I do not consider that the remarks made concerning relief in that case are not equally applicable where possession is resisted on the basis of an estoppel. I consider that the decision of Rein J in Bushby v Dixon Holmes Du Pont Pty Ltd (2010) 78 NSWLR 111; [2010] NSWSC 234 at [27]-[28], [30] and [33] supports that view. Although Rein J was dealing with equitable estoppel, I consider that what his Honour said is equally applicable to proprietary estoppel.
I certainly do not consider, in the light of those authorities, that any failure to file a cross-claim to claim some lesser relief means that the defendant's defence is hopeless or unarguable. Nor is it a basis for striking out the pleading relating to the detriment on the basis of all of the evidence. As I have noted, there is a clear factual dispute on the evidence concerning detriment, both as to the defendant's rights at the time he lived in the North Ryde property, and to any rights he may have to re-obtain subsidised housing.

Conclusion

The plaintiff fails to demonstrate that she is entitled to summary judgment and that she is entitled to an order striking out any part of the defendant's defence.
I make the following orders: 1. Dismiss the plaintiff's amended notice of motion filed 13 December 2018. 2. The plaintiff is to pay the defendant's costs of the motion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 December 2018

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