Wheatley v Salmon

The approach to fact finding

1. Each of Adele, Gregory and Danielle gave evidence and was cross-examined. There was no contemporary written or independent testimonial evidence of the contested events.
2. This case is an archetypal example of one which invokes these well-known judicial observations about fact finding relied upon by Mr Katsoulas: "Where a party seeks to rely upon spoken words as a foundation for a cause of action the conversation must be proved to the reasonable satisfaction of the Court. This means that the Court must feel an actual persuasion of its occurrence or its existence. In the absence of some contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent likelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court": BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd [2019] NSWSC 421 at [51] per Hammerschlag J. "[H]uman 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 for ordinary human experience": Watson v Foxman & Ors; Commonwealth Bank of Australia v Foxman Holdings Pty Ltd (Receiver and Manager Appointed) & Ors (1995) 49 NSWLR 315 at 318 per McClelland CJ in Eq. "Recurringly claims come before the Equity Division of proprietary estoppel in dwellings arising out of informal arrangements within families … Notwithstanding the family context and the informality which comes with that, such claims should be carefully and critically examined, and the law of proprietary estoppel does not readily ratify keyhold tenure and word-of-mouth conveyancing around the kitchen table. The present case has characteristics which are fairly often encountered; the arrangements alleged were oral and were made long ago, the terms in which they were made are shown by evidence which could not produce high confidence of its detailed accuracy, and there is poor corroboration, or in the present case no corroboration of the promise. It would be easy for imprecise or casual discussion to pass through the interpretation of an interested person into a recollection of a concrete assurance or promise. There is great wisdom and public interest in the legislation which requires conveyances of interests in land to be evidenced in writing, and it cannot become a matter of course for that wisdom to be circumvented": Hampson v Hampson [2010] NSWSC 217 (Hampson) at [16] per Bryson AJ.

The witnesses

1. Each of the witnesses' evidence was obviously coloured, to borrow the words of McClelland CJ in Equity, by perceptions of self-interest as well as conscious consideration of what should or could have been said.
2. Adele, who is 70 years of age, was a voluble witness given to long and not always responsive answers. She made no attempt to disguise the fact that she had a strong sense of grievance against her brother. Her constant refrain throughout her evidence was "He owed me" (referring to Gregory). As I understood her evidence, this also referred back to other money she had loaned to Gregory and lost before he had established MM. I have no doubt that state of mind coloured all of her dealings with Gregory at the relevant time. It is that state of mind which explains why the Court is satisfied on the balance of probabilities and finds that when Gregory said words to the effect that he and Danielle were buying an investment property in which she (Adele) could live, Adele translated that into a belief (or as she accepted - a "hope") that she would be the owner of the Property. Adele's evidence was so strongly coloured by her sense of entitlement and grievance that I am unable to accept her as a witness whose recollection of critical events is reliable.
3. Danielle is a 59 year old retired senior Queensland public servant. She equally did not attempt to disguise her dislike of Adele, which was evident in an email which she sent to Adele in 2007 describing her as an "evil bitchface". Danielle sought to distance herself from Adele and downplay her (Danielle's) knowledge of Gregory's business affairs in connection with MM. This led to parts of her evidence being strained and not credible, but only about what might be termed peripheral matters. These included, for example, her attempts to resist accepting that at least one reason for her and Gregory's family home being owned by her was to protect their assets, or resisting the proposition that she made a number of small payments totalling $19,200.00 over three years to help Adele.
4. However, I have no doubt based upon my assessment of Danielle in the witness box, her evident antipathy to Adele and the inherent likelihood and coherence of her evidence, and find, that: 1. She initially opposed allowing Adele to live in the Property rent free because it would defeat the purpose of the Property being an investment by depriving herself and Gregory of an income that could be applied to the mortgage and thereby build up equity in the Property. 2. She eventually agreed to allow Adele to live rent free in the Property to appease Gregory's family, in particular Gregory's mother Mary who had asked her to "consider letting [Adele] live in the [Property] until [she] is on her feet again". 3. She would never have agreed to give title to the Property to Adele.
5. Gregory is a 65 year old retired businessman. Similarly to Danielle, he sought to distance himself from Adele, downplaying any notion of affection between the siblings. He also tried to minimise any sense of indebtedness or responsibility by him for her situation. His recollection of events suggested that Adele did things to his benefit without much - if any - prompting by him, such as providing the guarantee to MM and searching for properties for his investment portfolio. When asked whether he felt any sadness "to see a family member like [Adele] lose their home and end up with nothing" he responded that he did not. He conceded that he perhaps felt "a little" pity for Adele but not much because he believed it was her fault that she lost her home at New Brighton.
6. Nevertheless, despite his lack of empathy for Adele, based upon my assessment of Gregory in the witness box, the inherent likelihood and coherence of his evidence, and the fact that it reflects what occurred in relation to the Property without complaint by Adele, I am persuaded, and find, that: 1. The Property was acquired as part of a planned property investment portfolio for him and Danielle. 2. He suggested that Adele be allowed to reside in the Property rent-free to appease his mother and to "calm down" Adele. 3. He never intended for Adele to live in the Property forever nor to give title to the Property to Adele. 4. He did say to Adele in relation to the Property words to the effect of "If you take care of the day to day up-keep and pay for your utilities, you can stay in the house rent free until you get yourself up on your feet."

Legal principles in relation to proprietary estoppel by encouragement

General Legal Principles

1. The parties agreed that the elements to establish a proprietary estoppel by encouragement were conveniently summarised by Blue J in Carter v Brine [2015] SASC 204 (Carter): "[326] The elements of estoppel by encouragement are: 1. a representation by the defendant to the plaintiff that the plaintiff has or will have a proprietary interest in property owned wholly or partly by the defendant (representation); 2. the plaintiff forms an assumption that he or she has or will have a proprietary interest in that property (assumption); 3. the conduct of the defendant in making the representation causes or materially contributes to the formation of that assumption by the plaintiff (reliance); 4. the plaintiff takes action in change of his or her position in reliance on that assumption (inducement); 5. the plaintiff would suffer detriment if the defendant were permitted to depart from the assumption (detriment); 6. it would be unjust or unconscionable for the defendant to depart from the assumption (unconscionability)."
2. The present case will be considered against each of those elements.

Principles Related to Uncertainty

1. Particular attention was given by the parties to how certain a representation must be, especially in circumstances where no property had yet been identified or come into the ownership or possession of the representor. Mr Crossland submitted for Adele that it was not necessary for the representation to be completely certain because, in context, it was reasonable for Adele to have relied on it.
2. Mr Crossland directed the Court to Sullivan v Sullivan & Ors [2006] NSWCA 312 (Sullivan) in which the defendant wrote in a Christmas card to his sister that he promised to provide her a home to live in "for as long as you like". Mr Crossland placed particular reliance on the decision of Handley JA (in dissent), who said: "[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. This principle is not relevant because her brother's Christmas card defined her interest. 'The quality of the assurances which give rise to the claimant's expectations' is an important factor: Jennings v Rice [2003] 1 P & CR 100, 112, 114 per Robert Walker LJ."
3. Mr Crossland conceded during the course of argument that the representation in Sullivan was more certain than in the present case. In fact, the contrast between the alleged representation in this case and Sullivan is quite stark, as Hodgson JA's repetition at [58] of the trial judge's findings demonstrates: "3 On Christmas Day 1995 the first defendant gave the plaintiff a Christmas card. Its front page was headed "With Love Dear Sister" and contained the start of a verse, which continued over another two pages, which elaborated upon how specially she was regarded. An unprinted page of the card had various small pictures of houses, of the kind one finds in brochures advertising real estate for sale, stuck to it. It also contained a handwritten letter as follows: "This is your Christmas present. Donna & I & you & Nathan ASAP will look for a home of your/our choice for you to live in as long as you like. It'll be a modern & good quality home in a good location for schools transport etc. You won't have to pay any rent for the first 12 months & at that time we'll consider your financial situation and have you pay a minimal comfortable rent from then on. We want you to look at it as your home & take pride in it accordingly. You can do 'almost' anything you like to it, modifications design, painting etc & make it your style. Naturally, as the owners we will want you to abide by certain basic conditions which I'm sure you'll agree with, but it is you [sic] home for life. Now I say the following causiously [sic] & cannot promise that what I'm about to say will happen, but it's possible that after a period of time Donna & I would consider our & your situation & if we feel it appropriate would allow you to buy the home off us at a realistic & reduced payment schedule. Julie, this comes from our heart, we have been fortunate financially & want to share some with you & make life a little more comfortable for you & the kids. Love from Robert & Donna X" Donna is the first defendant's wife 4 The plaintiff thanked them effusively, and the first defendant said "Donna and I are happy to do this to get you out of the Housing Commission and to give you something you couldn't give to yourself and the children." 5 The first defendant says that at the time of giving her the card he said: "For the first year, I won't charge you any rent. After that, I will charge you a small rent based on your financial situation. We will expect you to keep the place properly maintained.""
4. Mr Crossland nevertheless submitted that the assurance in the present case could still be considered reliable because it was made during the "important occasion" of a family meeting after longstanding complaints by Adele and Mary.
5. Mr Crossland also directed the Court to these observations by Hodgson JA (with whom McColl JA agreed) in Sullivan: "[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 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. [86] In the present case, even though there was some uncertainty as to conditions on which the appellant was to occupy the house, it was clear that the rent was to be favourable ("minimum comfortable rent") and that there were to be no more than reasonable conditions as to the care of the property. The appellant gave direct evidence that she did give up her Housing Commission accommodation in reliance on what was thus represented or promised; and plainly this was what the first and second respondents intended she should do, and it was reasonable for her to do it. In those circumstances, in my opinion the representation or promise was sufficiently certain."
6. Reliance was also placed upon Flinn v Flinn & Anor [1999] 3 VR 712; [1999] VSCA 109 (Flinn) in which Brooking, Charles and Batt JJA said: "[80] … [A] promise may be definite in the sense that there is a clear promise to do something even though the something promised is not precisely defined, and this has always been recognised in the cases. Although the speech of Lord Kingsdown in Ramsden v Dyson (1866) L.R. 1 H.L. 129 was in gracefully expressed dissent, his statement of the law has long been accepted as authoritative. This is what he said (at 170-1): 'The rule of law applicable to the case appears to me to be this: If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, and upon the faith of such promise of expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation … If, at the hearing of the cause, there appears to be such uncertainty as to the particular terms of the contract as might prevent a Court of equity from giving relief if the contract had been in writing, but there had been no expenditure, a Court of equity will nevertheless, in the case which is above stated, interfere in order to prevent fraud, though there has been a difference of opinion amongst great Judges as to the nature of the relief to be granted. Lord Thurlow seems to have thought that the Court would ascertain the terms by reference to the Master, and if they could not be ascertained, would itself fix reasonable terms. Lord Alvanley and Lord Redesdale, and perhaps Lord Eldon, thought this was going too far; but I do not understand any doubt to have been entertained by any of them that, either in the form of a specific interest in the land, or in the shape of compensation for the expenditure, a Court of equity would give relief, and protect in the meantime the possession of the tenant.' [81] This passage has been cited time and time again …"
7. Their Honours in Flinn also listed a number of examples from case law, most of which are not binding on this Court and do not require recitation except to state they were matters in which promises that were not "unambiguous", "clear" or "unequivocal" were upheld (at 738-44).
8. Mr Crossland also referred to the decision of Meagher JA, with whom Macfarlan JA agreed, in DHJPM Pty Ltd v Blackthorn Resources Limited [2011] NSWCA 348 where his Honour stated: "[56] Whether a representation or promise has created or encouraged an expectation which if relied on would be sufficient to give rise to an equity obviously depends upon the circumstances including the nature of the relationship between the parties and whether they contemplate that any interest to be granted or promise to be performed is to be created by a binding contract."
9. The thrust of this statement, in Mr Crossland's submission, was that persons who are not lawyers often make promises or representations in a more informal manner. They may be more prone to making uncertain statements, especially in a family context. However, in my respectful view, this is exactly the type of conduct about which Bryson AJ urged caution in Hampson.
10. On the issue of whether a property was required to be within the ownership or possession of the representor at the time of the representation, Mr Crossland referred the Court to the Canadian case of Cowper-Smith v Morgan 2017 SCC 61; [2017] 2 S.C.R. 754 (Cowper-Smith) where it was stated: "[35] … An equity arises when the claimant reasonably relies to his detriment on the expectation that he will enjoy a right or benefit over property, whether or not the party responsible for that expectation owns an interest in the property at the time of the claimant's reliance. Proprietary estoppel may not protect that equity immediately. It may not protect the equity until considerable time has passed. If the party responsible for the expectation never acquires a sufficient interest in the property, proprietary estoppel may not arise at all; where there is proprietary estoppel, there must be an equity, but not vice versa. When the party responsible for the expectation has or acquires a sufficient interest in the property, however, proprietary estoppel attaches to that interest and protects the equity … Ownership at the time the representation or assurance was relied on is not a requirement of a proprietary estoppel claim."
11. Mr Crossland also had recourse to Van Dyke v Sidhu [2012] NSWSC 118 (Van Dyke) which led to Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19. That the property in that case was promised subject to a subdivision meant that, technically, it was yet to come into existence at the time the representation was made.
12. During the course of argument, it was conceded by Mr Crossland that there was a distinction between Cowper-Smith and the present case. In that case, the property was already known to the parties as it formed part of the promisor's deceased mother's estate. In the present case, not only was the Property not owned by the defendants at the time of the representation, but its entire existence was unknown to everybody involved. The same distinction is applicable to Van Dyke, where the property to be subdivided was known.
13. Mr Katsoulas submitted for Gregory and Danielle: 1. The representation "was not sufficiently certain because, according to Adele's own submissions, it conveyed several possible alternatives. The alternatives were: 1. Gregory would purchase a house for Adele to own; 2. Gregory would allow Adele to live permanently in a house; or 3. Gregory would provide Adele with a permanent place for secure accommodation (which was in substance the same as the second alternative). 1. Additionally, the representation could not be sufficiently certain because the Property in question was not contemplated by the parties at the time it was allegedly made. There was a gap of more than three years from the initial representation before the Property was identified and purchased.
14. In his written submissions, Mr Katsoulas directed the Court's attention to the principle in Legione v Hateley (1983) 182 CLR 406; [1983] HCA 11 at 436 that a representation must be clear and unambiguous.
15. On the issue of whether a property was required to be within the ownership or possession of the representor at the time of the representation, Mr Katsoulas emphasised the elements of a proprietary estoppel as set out by Blue J in Carter at [22] above. The first element requires that a representation is made in respect of a property that is "owned wholly or partly by the defendant".
16. The cases put forward by counsel for both the plaintiff and the defendants demonstrate that a representation need not be exact in its terms, but it must still be sufficiently clear so that it can be reasonably relied upon. In cases of ambiguity, the Court should look to the lower limit of what could be reasonably understood to determine whether this accords with what was relied on by the representee.
17. Crucially, where the representation relates to a proprietary interest, the property in question does not necessarily need to be owned by the representor at the time it is made. However, at the very least, the property must still be identifiable as the subject matter of the representation at the time that it comes into the ownership of the representor. In my respectful opinion, a representation which states no more than "I will buy you a house" is too uncertain to be reasonably relied upon unless there are other factors that allow the Court to determine the basic features of the house that would satisfy the representation: is it a two-bedroom bungalow or a substantial house on acreage? Even if the words "I'll buy you a house" were said, for the reasons advanced by Mr Katsoulas recorded in [36] above the Court would not find that to be sufficiently certain to establish even a "lower limit".

Was there a representation by the Defendants to the Plaintiff that she would have a proprietary interest in a property?

1. There was disagreement between the parties about the substance and meaning of the alleged representation by Gregory to Adele.

Adele's submissions

1. It was submitted for Adele that Gregory had made representations to her on two separate occasions. The first occurred in late 2007 at a family meeting held at the home of Adele and Gregory's parents. During that meeting, Gregory gave a presentation to the family to the effect that he and Danielle intended to create a property investment portfolio. He had prepared a spreadsheet as part of the demonstration. During the meeting, Gregory said words to Adele to the effect of "I will buy you a house". The second occurred in 2010 during a telephone conversation between Gregory and Adele in which it is alleged that he said "I'll buy you a property". Subsequent to this, the Property was identified and purchased, and Adele moved in.
2. The meaning conveyed by the alleged representations was, in Mr Crossland's submission, that: 1. Gregory and Danielle would purchase a property to be held on trust for Adele until such time as the title was transferred to her; or 2. Alternatively, Gregory and Danielle would purchase a property but would provide Adele with an interest in the form of "secure permanent accommodation" which could be transposed to a new property should the Property be sold.
3. Mr Crossland emphasised that Adele had, on numerous prior occasions, demanded that Gregory purchase a house for her in recompense for the loss of her home at New Brighton. That these demands ceased upon Adele moving into the Property favoured a conclusion that what was promised was in similar terms. This was supported by Gregory's admission of having entered the arrangement with Adele for the purpose of appeasing Adele and Mary.
4. Mr Crossland also drew attention to the statements made by Gregory under cross-examination that the defendants' next investment property could be somewhere else in Australia, and that Adele might be able to move there as caretaker. However, this was not a proper reflection of the exchange with Gregory in the witness box, which was in the nature of a speculative discussion and in which Gregory gave explicit evidence that he never said anything of this nature to Adele.

Gregory and Danielle's submissions

1. The defendants denied there was ever a representation put in the terms alleged by Adele in 2007 or 2010. To the extent he said anything to Adele, Gregory said it was words to the effect of "We're going to buy an investment property and you can live in there". The meaning conveyed by the alleged representation was, in Mr Katsoulas' submission, that: 1. The Property was purchased by Gregory and Danielle for investment purposes and they held the entirety of both the legal and beneficial entitlement; and 2. Adele was permitted to reside at the Property as a caretaker.
2. This was supported by the fact that, during the period of Adele's occupation of the Property, Gregory and Danielle continued to pay the mortgage, council rates, strata levies and insurance. They also remained the recorded owners on the Owner's Corporation Strata Roll with the power to make final decisions about the Property. To the extent that Adele could exercise decision-making authority over the Property, she only did this as a proxy holder for Gregory and Danielle.
3. Mr Katsoulas also submitted that Adele's own actions were inconsistent with her case because Adele had not: 1. Sought to have the title transferred to her, nor to have her interest in the Property officially recorded. 2. Disclosed her alleged interest in the Property to anyone, but especially to any relevant body corporate or government agency. Adele's own evidence under cross-examination was that she had in fact done the opposite by consistently explaining to other residents in the development which included the Property that her brother owned the Property and she resided rent-free as repayment for a business loan to him. 3. Offered to contribute to any of the outgoings, such as strata levies, council rates or insurance. Adele's explanation for this was that the sum of money she felt was owed to her by Gregory exceeded the purchase price for the Property and it was fair that the remainder should be repaid in the form of the other outgoings. There was no evidence as to whether this was ever discussed or agreed upon between the parties.

Consideration

1. The Court does not accept Adele's evidence that on two occasions Gregory said to her words to the effect of "I'll buy you a house". This is because Adele's version of events does not logically accord with the surrounding circumstances as presented by herself and the defendants. I make this finding for these reasons: 1. As is out in [17] above, the Court does not find Adele to be a witness whose evidence on essential matters can be relied upon. 2. Adele accepted under cross-examination that she had made strident requests over a period of years that Gregory should buy her a house which he had consistently refused. 3. There was a lengthy delay of more than two years between the alleged representation in late 2007 and its repetition in 2010. 4. Adele made no complaints or demand to Gregory and Danielle about having her alleged interest officially recognised. 5. Adele did not represent herself to others as having any entitlement to the Property beyond residing rent-free in repayment of a business loan. Nor did she mention to others that she was promised title to the Property or that she expected to obtain it. 6. Adele gave evidence that she had spoken to several lawyers about whether she had any interest in the Property. Under cross-examination by Mr Katsoulas, she gave evidence that she did not disclose any promise made to her by Gregory to any of the lawyers. While laypersons cannot be expected to come to lawyers with a full understanding of the events that would establish a cause of action, Adele's failure to mention it strengthens the overall conclusion that any representation was not made in those terms.
2. However, Adele's case must also fail if the Court accepts her evidence at face value. Context is everything and it was Adele's own affidavit evidence that at the family meeting "I will buy you a house" was not all that was said. At the time of the alleged representation in 2007 it was understood by Adele that Gregory and Danielle were looking to build a property investment portfolio. Adele's own evidence was that the words "I will buy you a house" and "We're [Gregory and Danielle] going to buy a property and build up a property portfolio" were said to her at the family meeting by Gregory. When taken together, they are incompatible with the notion that Adele was being promised title to the Property.
3. There is also the difficulty identified in [40] above that, of itself, the representation "I will buy you a house" was too uncertain. It provides no guidance as to the type of property to be purchased, let alone whether it was intended for Adele to obtain ownership or simply to live in. If it was merely for Adele to live in, it is also silent on how long that would be for.
4. Property purchased as part of a property portfolio or investment conveys that the property could be sold to realise the investment but generally not in the short-term. At its highest, the two sentences "I will buy you a house" and "We're [Gregory and Danielle] going to buy a property and build up a property portfolio" said in the course of the one meeting could only mean that Adele was entitled to live in the Property as long as it was held by the defendants.
5. Adele's own evidence under cross-examination again confirms this: 1. Gregory never mentioned or promised to give her the title deeds. The highest the proposition could be put by Adele was that "he never said he wouldn't". It became clear in the course of evidence that Adele understood that to be the case (emphases added): "HIS HONOUR Q. So if you knew they were buying [the Property] for their investment portfolio, is what you're saying to me when you say "my place", that is to say a place in which they would let you live, but which they owned? A. Yes, but originally I thought that they should have sold their investment property and paid me out, it was their choice to get a mortgage and when they weren't prepared to do that, I thought, "Right, well, this gives them an opportunity to make money on their investment property and then when they retire, they will sort out the money and I will get the deeds to the property. Q. But they never said anything - A. Call me naïve, but that's what I thought. Q. But everything you've just told me, just to be clear, was that something they said to you or was that just your assumption? They didn't - A. No, no, but they never said - they said, "We will buy you a property". Greg said, not Danielle, Greg said, "We - I will buy you a property". Q. I understand that, but you've also said to me that you understood that they were buying that property as part of their investment portfolio. A. Yes. But that - but that was only - that was later. But originally I wanted them to just buy me a place and this, I thought, was a reasonable compromise. Instead of them giving me the money to buy a place, or buy me a place in my name, that I was allowing them to use that - the equity for a while. (T49:27-49) … Q. But I'm just trying to understand. You understood at the time that this property was bought by them that it was them buying the property for them, that is to say, to be owned by them, but you were going to be allowed to live in it. Is that right? A. Yes. But I thought that they would be buying numerous properties and therefore they would have enough equity to be able to give me the property for - it was only 282,000. Q. But madam, what I'm trying to understand is everything you've just said to me, sensible as it may be, is your assumption. There's nothing I've said where they have said that to you. That's right, isn't it? A. Yeah. Q. They never said "We're going to build up all this huge property portfolio and eventually we'll be able to pay you out," something like that. They never said anything like that. A. But he knew that - but I'd always said, "You owe me a house. You owe me." Q. I understand that's what you kept saying. But the fact is that they never said to you anything about building up a huge property portfolio from which one day you would be paid out. That's what you just told me you thought. A. Because they wouldn't discuss anything with me. Q. I understand that. So, therefore, what you've just told me is simply your assumption. That's all I'm trying to understand. A. True. (T50:13-39) … MR KATSOULAS Q. You agree that Mr Salmon never said to you that he would make the deed available to you? A. I agree. But he said he would buy me a place. If it was me, I would've said, no it's only - it's only temporary until you get on your feet, or you know, it's - it's - we may have to sell at some point. None of that was ever mentioned." (T68:48-50; T69:1-3) … MR KATSOULAS Q. You understand that - sorry, your evidence is what now, that Mr Salmon and Ms Anderson in fact found [the Property]? A. I don't know. I don't know. That's in their affidavit. And I'm - I'm saying, maybe that's happened, and Danielle doesn't understand or was not told, like I wasn't told because Greg said "Go out and find a property". HIS HONOUR Q. Isn't that entirely consistent, madam, with your finding a property in which you could live but that would be owned by Greg and his wife? A. That's right, if they were willing to - I felt as though that they owed me cash or something. But if it wasn't possible that I was willing to work with them to get a mortgage, and then when the equity came, they had a few properties they could divide off the deed for [the Property] for me when Greg retired. And that was - that was a hope. I - I tell you, I was so close to total panic. Q. I understand it was your hope, but just to be clear, is everything you've just said to me and assumption or hope that you made for yourself rather than based on anything you were told by Greg? A. No, but everybody in the family - everybody believed that this was Greg finally standing up and doing the right thing for me and buying a place for me. That's what I - I was - I was so excited. And when he rang me at Mary Maher's place, as I said, I had - I - I have a psychologist that I go see - Q. Madam, I'm going to stop you because your answer really isn't helping me. What I want to be quite clear about is that everything you told me that you've just described as your hope was, in fact, your hope, that is, something you assumed for yourself - A. But - but, of course, that was - Q. Please let me finish my question. A. Sorry. Q. Rather than being based on Greg ever actually having said to you, "I am going to buy you a house that you will own". A. Well this all happened at Tanglewood two years after the meeting in Kingscliff at my mum's place. So for two years, I believed that's what was going to happen. And it wasn't until - Q. That what was going to happen, that you were going to - A. That he was going to buy me a place. I discussed it with all my friends, everyone, and it wasn't - Q. Buy you a place to live in or to own? What you've described to me sounds like your assumption. A. That's - that's Greg with weasel words. That's all I can say, that he - he has manipulated, gaslighted me, controlled me for 20 years." (T94:40-50; T95:1-39) 1. Adele accepted that if the Property was sold, she understood that she would have to relocate. This was evident in the following exchange (emphases added): "KATSOULAS Q. It was your understanding, wasn't it, that at some stage when Ms Anderson and Mr Salmon were required to sell the [Property], that you would have to move out? Is that right? A. I didn't know it was a requirement that they were going to have to sell it, because the whole point was to try and get equity in the place. So, you know, selling - selling, renting it out, doing anything else was never mentioned, ever. Q. But you understood that if they wished to sell the property, you would need to move out, is that right? A. I understood it was the legal position that Greg had placed me in. Q. That doesn't answer my question, does it? A. It comes from my heart, I'm sorry. My head would probably agree with you. Q. So your understanding was that if Ms Anderson and Mr Salmon needed to sell the [Property], you would be required to move out. Is that right? A. That would be right. My problem was where to? Where does someone in my position - who can't rent commercially? There's no room in retirement communities, there's no room in the over 55 places. I've been out there, I've looked at real estate from Hobart to Mosman, out to Mt Isa." (T104:35-50; T105:1-5). 1. When asked by Mr Katsoulas when she first believed that the defendants were going to give her title to a house, Adele responded "I don't know". However, it was clear at several points throughout her evidence that Adele felt the defendants owed her a significant debt, stating (emphases added): "MR KATSOULAS Q. So it's your position that whilst you were living at the [Property], Greg still owed you? A. Of course. Q. And when would Greg stop owing you? A. I was hoping when he retired and he sold his investment property, that he would pay out the Property. I thought I was helping them build up equity to buy further investment property. I thought I was doing them a favour. They could have sold the investment property in the beginning and not own a mortgage and given me the Property and therefore not have had to pay the rates, or the levies. Q. So even though Mr Salmon and Ms Anderson had allowed you to live in the Property, your understanding was that at least Mr Salmon still owed you? A. I thought Greg had mentioned something to Danielle and they both went away on a holiday and left me with winding up the business, and that cost them a fortune and nearly - cost me a fortune. (T27:5-22) … A. … I felt as though that they owed me cash or something. But if that wasn't possible that I was willing to work with them to get a mortgage, and then when the equity came, they had a few properties they could divide off the deed for [the Property] for me when Greg retired. And that was - that was a hope. I was so close to total panic." (T94:48-50; T95:1-4)
6. Although Adele gave oral evidence that when she asked Gregory about the prospect of her moving to a new apartment in 2017, there was no mention that the defendants would bear responsibility for finding her another home.
7. Hearsay evidence of the wishes of Adele's late mother is also relevant albeit not decisive given the inability to test its veracity. Bearing in mind the reduced weight to be given to that evidence, the Court is nevertheless satisfied that an arrangement that Adele would be able to live in the Property while it was held by Gregory and Danielle as an investment was consistent with the evidence of Mary's wishes at [19(2)] above.
8. To the extent that Adele expected to gain title to the Property, the Court finds that was certainly her hope. Adele made numerous statements during cross-examination, including the statements referred to at [53(3)] above, that it was her desire that she would obtain title to the Property, but the Court also finds this was not based on anything Gregory had actually said to her. She never asked for the title to be transferred after she moved into the Property. Nor did she take steps to ensure a transfer would eventually occur.
9. In many ways, this case exemplifies what Bryson AJ referred to in Hampson at [15] above. The parties entered into an informal family arrangement of which the details were sparse to solve an immediate problem: accommodation for Adele. However, there was no agreement as to how long Adele could reside at the Property, or what would happen to her if and when Gregory and Danielle decided to sell it. There is already difficulty for the Court to infer a proprietary interest in such cases. That difficulty became insurmountable when Adele accepted that obtaining title to the Property was her own hope or assumption and not referable to anything she had been told by Gregory.
10. It was common ground that Danielle never made any representation to Adele and that all relevant communications occurred between Adele and Gregory. The plaintiff submitted that Danielle nevertheless consented to and agreed with the representation, a conclusion implied by her knowledge of the surrounding circumstances. It is unnecessary to determine exactly what Danielle knew or to what she had consented, because the Court has found that a representation was not made in the terms alleged by Adele.

What assumption did Adele make and did Gregory cause her to make that assumption?

1. Exactly what Adele was caused to assume by what she alleged had been said to her had not been specifically pleaded. The failure to do so, and the inability to be able to articulate what she had assumed, steadily emerged during the hearing as a fundamental problem in Adele's case. In my respectful view, it is entirely explicable as a consequence of the vagueness or ambiguity of "I will buy you a house" without more. Was it that Gregory and Danielle would buy a house that Adele would live in but not own and, if so, live in for how long? Or were Gregory and Danielle making a gift to her of a house for which they would pay and of which she would be the unencumbered registered proprietor and, if so, when would she obtain that title?
2. The question of what she assumed was not really confronted in her case until Adele gave evidence under cross-examination that any assumption that she would obtain title in the Property was nothing more than her hope. This is evident in the transcript extracts set out at [53] above.
3. On the final day of the hearing, the plaintiff sought to file a second further amended statement of claim. The proposed second further amended statement of claim still did not specifically address the matter of Adele's assumption. That application - and its refusal - is dealt with at [81] to [86] below.
4. Mr Katsoulas, for the defendants, submitted that Adele's evidence made it perfectly clear that she understood that what she had was a right to occupy the Property and that right was revocable. Anything else was not based on what was said to her by Gregory.
5. Mr Katsoulas also drew attention to the fact that, despite being asked on multiple occasions, Adele was unable to specify when she formed the view that she would receive title in the Property, except to say that she had not formed the view in response to the current proceedings. She did not communicate to anyone that she expected to receive title to the Property. Nor could it be said that the defendants encouraged Adele to form any such view because she had never communicated anything about obtaining the title to them.
6. In light of the lacuna in Adele's pleadings, and the evidence given by Adele at hearing, the Court accepts Mr Katsoulas' submissions. To the extent that Adele formed an assumption, the Court finds this was only that she could occupy the Property while the defendants continued to hold it. This was not an assumption that she would have a proprietary interest in the Property and is the only assumption that could be sensibly made consistent with the two things which, on her own evidence, she had been told by Gregory.
7. The Court also finds that Adele's belief that she would receive title in the Property was a consequence of her own hope and not caused or materially contributed to by anything Gregory had said to her. This means that there was no reliance by Adele that would satisfy the third element of estoppel by encouragement identified by Blue J in Carter set out in [22] above.

How did Adele change her position in reliance on an assumption?

1. It was pleaded that Adele took these actions in reliance on whatever it was she had assumed: 1. Refrained from seeking legal advice about her rights against Gregory for the money and property she lost when MM went into administration, and then refrained from commencing legal action against him; and 2. Spent approximately $13,279.00 for improvements and maintenance to the Property.
2. The latter proposition cannot stand. First, there is nothing in Adele's evidence that her assumption that she could reside in the Property while the defendants remained the owners required her to make such expenditures. Adele stated under cross-examination that she thought she was being helpful to the defendants and ensuring the Property's value would increase by doing so. Second, that Adele paid for maintenance on the Property is perfectly explicable on the basis that she resided at the Property in a caretaker role (as was contended for by the defendants).
3. The former proposition requires further consideration. During cross-examination, Adele gave evidence that she spoke to Mullins Lawyers in late 2007 about recovering the funds she had lost from Gregory. To her credit, she never suggested that she did not understand what she was doing when she guaranteed MM's obligations. Her evidence was that she was advised that she had no cause of action against Gregory. There was also this exchange (T102:22-8): "Q. Now, you would agree that the reason why none of those lawyers told you you had an interest in the Tanglewood property is because you never told them that Greg would give you title in the Tanglewood property. Isn't that right? A. Look, I don't think that the title was mentioned. It was casual. I mean, we're talking family here. We're not talking of me sitting down in an office situation across a desk with a lawyer. This is my brother."
4. Adele had earlier given this evidence of the two "main" reasons why she did not pursue her legal rights against Gregory as one of his creditors (T81:6-25): "Q. Part of the reason why you did not sue Mr Salmon is because you believed that if a judgment was enforced against him by Leonard's that he'd go bankrupt. Is that correct? A. I thought Lenard's would either bankrupt him or he would pre-empt it and bankrupt himself. Q. That's the reason why you didn't A. Because he had been bankrupt before. Q. That's the reason why you didn't commence proceedings against Mr Salmon. Is that correct? A. Partly. The other reason was that I thought that if I made a public display of taking Greg to court, if Lenard's found out about it, they would be watching and they would step in and - and not let any assets come to me, they'd want it to - for them because they had the judgement. That was my understanding. Q. So those were the only two reasons that you decided not to sue Mr Salmon? A. Let me see, I'm sure there's more. They were the main ones that I can recall at the moment."
5. The important feature of these answers is that Adele did not suggest that anything Gregory may have told her was one of the reasons ("main" or otherwise) she did not sue Gregory.
6. It was Mr Crossland's submission that the fact there were multiple reasons that Adele abstained from pursuing her legal claims against Gregory was no barrier to a finding that she had acted in reliance on the representation she alleged of "I'll buy you a house". The critical issue was whether the promise made was a significant factor in that decision. Mr Crossland drew the Court's attention to the decision of Emmett AJA (McColl and Macfarlan JJA agreeing) in Priestley v Priestley [2017] NSWCA 155 where his Honour said: "[136] The question is not whether the promisee or representee acted, or desisted from acting, solely in reliance on the promise or representation of the other party. Rather, the question is whether the conduct of the representee or promisee was so influenced by the promise or representation that it would be unconscionable for the promisor or representor thereafter to enforce her or his strict legal rights."
7. Mr Katsoulas placed emphasis on the fact that Adele had received advice from solicitors in 2007 that she had no cause of action against Gregory. He submitted that the legal advice, and the fact that Gregory might be unable to satisfy any judgment against him, were the true driving factors in her decision.
8. The Court accepts Mr Katsoulas' submissions. Adele gave clear and confident evidence about the "main" factors that influenced her decision and could not recall any others. These related to concerns that she would be unable to recover what she was owed from Gregory's bankrupt estate. Even assuming in her favour that the representation that Adele alleged had been made may have had some bearing upon her decision to cease pressing any legal claim against Gregory, in circumstances where she was given the opportunity to give reasons and did not refer to it, the Court is not satisfied that it was enough of a factor in her decisionmaking that it would be unconscionable for Gregory and Danielle to enforce their legal rights in relation to the Property. Adele has failed to demonstrate on the balance of probabilities, or at all, that her change of position - not suing Gregory and thereby now having lost her right to do so because it is statute-barred - was done in reliance on any assumption for which Gregory was responsible. It follows from this that the fourth element in the cause of action identified by Blue J (see [22] above) has also not been proven.

The further elements of estoppel by encouragement and relief

1. The result of the preceding findings is that it is not necessary for the Court to go on to consider the last two elements of the cause of action identified by Blue J.
2. However, against the possibility that the matter may go further, I will briefly set out my views on final relief. The existing mortgage over the Property (originally to the Commonwealth Bank and now to ING Bank) and Danielle's interest in the Property (it being accepted she had said nothing to Adele) would have been decisive discretionary factors against ordering a conveyance of the Property to Adele.
3. In any event, as was the case in Sullivan, equity would not have required relief so as to make good a representation, if it had been such, to give Adele unencumbered title to the Property. This is due to an issue of causation or proportionality. On Adele's own case, her loss of her home and her need for permanent secure accommodation were entirely unconnected with the alleged representation and what she had done in reliance on it. She had lost her home at New Brighton several years prior to any alleged representation, an event that came about after the failure of MM. Wherever the fault lay for the business' failure (each party pointed the finger at the other), Adele accepted under cross-examination that she provided the guarantee to Westpac with full knowledge and understanding that she may be forced to give up her home.
4. On her case, what Adele suffered, as a result of the alleged representation and what she did in reliance on it, was the loss of her right to prove as an unsecured creditor in Gregory's estate for the amount he owed her in contribution as a co-guarantor. Had she sued Gregory for contribution, it can be assumed that she would have obtained a judgment and have had to enforce it subject to any secured creditors and the interests of other unsecured creditors. As is clear from [69] above, Adele was acutely aware of this.
5. Furthermore, as Adele herself saw it, her rent free occupation of the Property represented repayment of a debt. As someone seeking equity, she would have to do equity by crediting the value of the 12 year's rent free occupation of the Property that she had enjoyed.
6. In my respectful view, the appropriate relief would, in broad terms, have been to order an inquiry into: 1. The amount Adele had in fact paid to Westpac in respect of which she was entitled to contribution; 2. What was the amount to which she was entitled for contribution (presumably half of the amount she had paid); 3. The market rent for the Property over the period of her occupation.
7. The Court would then have declared that Adele had a charge over all of Gregory's assets in the sum of the amount to which Adele was entitled for contribution less the value of the rent that she had been saved, together with an allowance for interest.

The reasons for refusing Adele's application to file a second further amended statement of claim

1. At the conclusion of evidence, I directed Mr Crossland's attention to the fact that the relief sought by Adele was all or nothing. The only outcome available on the pleadings was that Adele either obtained an interest in the Property or she did not. The relief pleaded was: "1. A declaration that the defendants hold on constructive trust for the plaintiff [the Property]. 2. An order that the defendants (a) make whatever payments to ING Bank (Australia) Limited (ING) are their payment obligations under the mortgage that they gave to ING over [the Property]; or (b) in lieu of making such payments, discharge the mortgage to ING from assets or funds other than those that might be derived from the sale of [the Property]. 3. In the alternative to Order 2, judgment in whatever sum is necessary to discharge the mortgage over the Property. 4. An order that the defendants provide to the plaintiff a signed transfer in registerable form for [the Property]. 5. An order that the defendants take whatever further steps are reasonably necessary to affect the transfer of [the Property] to the Plaintiff …"
2. The following day, Mr Crossland sought leave to file a second further amended statement of claim seeking additional relief. I refused that application and informed the parties that I would include the reasons in this judgment. These are the reasons for refusing the amendment application.
3. The amendment proposed this additional relief: "6. In the alternative, a charge over [the Property] in favour of the plaintiff for the sum of $333,279.79 plus interest from 1 June 2010 to the present (or some different sum or from some different date seen fit by the Court). 7. In the further alternative, judgment in the sum of $333,279.79 plus interest from 1 June 2010 (or some different sum or some different date seen fit by the Court) …"
4. Mr Crossland submitted that leave should be granted. He contended that there would be no prejudice caused to the defendants because the additional relief did not rely on any new evidence.
5. Mr Katsoulas submitted that there were two kinds of prejudice caused to the defendants. These were: 1. The sum of $333,279.79 sought by the plaintiff put in issue the exact amount she was owed. In particular, it raised the question of how much money Adele had paid to Westpac in relation to MM, about which there was not much information before the Court because it had not previously been a central issue. Had the defendants been put on notice earlier in the proceedings that this would be an issue, they would have made inquiries to establish the precise figure. Mr Katsoulas would not merely have relied on Adele's recollection under cross-examination, nor the acceptance of her word by Gregory. 2. The case now sought to be put before the Court claimed a different, wider interest by Adele. Again, Mr Katsoulas submitted he had made forensic choices based on meeting the pleaded case. If that case had included the relief now sought to be added he contended that he would have explored these additional matters in cross-examination, including whether they were within Adele's understanding or any assumptions she had made.
6. The Court accepted Mr Katsoulas' submissions relating to both forms of prejudice. In addition, the amendment application was being made just before final submissions were to commence and there was no evidence which explained either why the application had not been made earlier or why it was being sought to be made so late at all. The absence of such explanations on oath or affirmation, while not of itself necessarily dispositive, was an important discretionary factor which fortified the conclusion that leave to amend should not be granted.

Conclusion

1. The effect of this judgment is that Adele is not entitled to remain at the Property without the consent of Gregory and Danielle. Subject to the next paragraph, the proceedings will be dismissed and the parties will be given an opportunity to address on costs if they cannot be agreed.
2. Furthermore, if agreement cannot be reached about when Adele must vacate the Property, my preliminary view is that the just, quick and cheap procedural course would be to allow the defendants to file a cross-claim for possession. The Court could then make orders for possession subject to allowing the parties to be heard, including on issues of timing and any other conditions.

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: 05 April 2022