Supreme Court of WA|2000-09-25|Before: Owen J

Witham v Witham [2000] WASC 236 (25 September 2000)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : WITHAM -v- WITHAM [2000] WASC 236

Estoppel - Promissory estoppel - Arrangements between proprietor and a relative concerning farming land - Representation by proprietor that relative could have possession until land sold - Representation by proprietor giving relative right of pre-emption at reduced price - General principles of promissory estoppel - Representations must be clear and unambiguous - Contract between contract law and estoppel in certainty of terms - What constitutes detrimental reliance - Estoppel on occupancy right - No estoppel on pre-emption

Equity - Equitable estates and interests - Right of pre-emption - Different to option to purchase - Right of pre-emption confers no interest in land - Whether grantee has equitable interest in land after right of pre-emption triggered - Depends on terms of bargain

Bank Negara Indonesia v Hoalim [1973] 2 MLJ 3

Brikom Investments Ltd v Carr [1979] 1 QB 467

Canas Property Co Ltd v KL Television Services Pty Ltd [1970] 2 QB 433

Crabb v Arun District Council [1976] 1 Ch 179

Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305

Dixon v Kennaway & Co [1900] 1 Ch 833

Donaldson v Freeson [1934] HCA 13; (1934) 51 CLR 598

Drexel Burnham Lambert International NV v El Nasr & Anor [1986] 1 Lloyd's Rep 356

Fung Kai Sun v Chan Fui Hing [1951] AC 489

Goldsworthy v Brickell [1987] 1 Ch 378

Gollin & Co Ltd v Consolidated Fertilizer Sales Pty Ltd [1982] QD R 435

Greasley v Cooke (1980) 1 WLR 1306

Greenwood v Martin's Bank Limited [1933] AC 51

Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298

Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101

Knights v Wiffen (1870) LR 5 QB 660

Laird v Birkenhead Railway Co (1859) Johns 500; 70 ER 519

Lisdale Nominees Pty Ltd v Elkharadly [1979] VicRp 10; [1979] VR 84

Low v Bouverie [1891] 3 Ch 82

McCathie v McCathie [1971] NZLR 58

Moorgate Mercantile Co Ltd v Twitchings [1976] 1 QB 225

Newbon v City Mutual Life Assurance Society Ltd [1935] HCA 33; (1935) 52 CLR 723

NGL Properties Pty Ltd v Harlington Pty Ltd [1979] VicRp 11; [1979] VR 92

Nippon Menkwa Kabushiki Kaisha v Dawsons Bank Ltd (1935) 51 Ll L Rep 147

Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146

Pierson v Altrincham Urban Council (1917) 86 LJ KB 969

Riches v Hogben [1986] 1 Qd R 315

Trenorden v Martin [1934] SASR 340

United Overseas Bank v Jiwani [1977] 1 All ER 733

Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741

1 OWEN J: This is an action by a registered proprietor of farming land for recovery of possession of the land from the defendant, who occupied it under a lease, the term of which has expired. By way of counterclaim, the defendant says that she was led into an expectation that she would be permitted to occupy the land until it was sold and that it would be unconscionable for the plaintiff to evict her. The defendant also says that she has an option or a right of first refusal to purchase the property and that the plaintiff is estopped from denying the existence of such a right.

2 It is a very difficult case. It is made all the more so because it is a dispute between members of a family who have already suffered more than a fair share of misfortune.

3 In 1956 the plaintiff married Brian Witham ("Brian"). Shortly after they were married, the plaintiff and Brian moved to a farming property near Cranbrook, which Brian had purchased from his father. In June 1957 they commenced operating the farm in a partnership called "BA & BF Witham" ("the Cranbrook partnership"). There were three children of the marriage. Wayne Witham ("Wayne") was born in January 1958, Grant Witham ("Grant") in June 1960 and Delma Witham ("Delma") in June 1963. In 1974 and 1976 respectively, Wayne and Grant joined the Cranbrook partnership.

4 At some time Brian and the plaintiff formed the intention that additional properties should be acquired so that, eventually, each of the boys would have a farm to work. In November 1978 a property was purchased in Narrikup in the four names. In 1979 Wayne married and the plaintiff and Brian moved to develop and live on the Narrikup property. In 1980 the plaintiff moved to a house in Albany and obtained employment there. She continued to assist in the development and running of the farming properties, along with Brian and Wayne, while Grant was occupied completing an apprenticeship as a motor mechanic.

5 In 1984 the Narrikup property was sold. After paying out debts there was a small surplus that was invested in a residential property in Albany. In 1985 Wayne separated from his wife. He moved to Albany to live with the plaintiff. He obtained employment with Homeswest. Through his employment he met, and formed a romantic attachment with, the defendant. They married in 1987 and moved to a property they had purchased in Home Road, Albany.

6 On 26 November 1994 the plaintiff, Brian, Wayne and Grant had entered into formal articles of partnership concerning the farming venture. The Cranbrook property was not big enough to support all four partners (and families). They decided to sell Cranbrook and buy two smaller properties, one for each of the sons. Wayne wished to return to a farming life.

7 In 1987 a property, called "Arronville", was purchased for $75,000. The funds were obtained from a number of sources including the plaintiff, a Bank and the Cranbrook partnership. After discussions between the partners, it was decided to purchase the property in the names of the plaintiff and Wayne as tenants in common in equal shares. That was done. A separate partnership, called "the Arronville Pastoral Co" (of which the plaintiff, Brian, Wayne and Grant were all members) was formed to conduct the farming operation on the Arronville land and some adjacent land which the partners leased. Wayne was responsible for the day to day operation of the Arronville project. The Arronville partnership was dissolved in 1989.

8 In 1988 or 1989 a second property, called "Woodside", was purchased for $215,000. Again, the funds were garnered from a variety of sources. The property was registered in the joint names of Brian and Grant as joint tenants. Grant resumed working on the properties when Woodside was purchased.

9 In 1990 the Cranbrook property was sold. As I have already said, the Arronville partnership had been dissolved in 1989, although Wayne continued to use the partnership name for a business that he was running with the defendant. In May 1992 the Cranbrook partnership was also dissolved. I will describe the negotiations and terms of the dissolution later. The partnership name continued to be used by the plaintiff and Brian until May 1994. It seems that the dissolution arrangements were never properly finalised.

10 In 1992 certain distressing family problems came to light. The nature of the problems is not relevant to the issues that I have to decide, save to say that it meant the end of the marriage between the plaintiff and Brian and caused the other family members, particularly Delma, to become estranged. It could also be said that the problems made the task of finalising the affairs of the Cranbrook partnership even more difficult. The problems were compounded when, on 13 February 1993, Wayne was killed tragically in a tractor accident on Arronville.

11 On 6 November 1987 Wayne had executed a Will in which, among other things, he devised his interest in Arronville to the plaintiff. In due course, in accordance with the terms of the Will, the plaintiff became the sole registered proprietor of Arronville. Since then, the plaintiff has carried out improvements on the Arronville property by way of fencing, pasture improvement and the development of water points.

12 In April 1994 the plaintiff and Brian formally separated. Brian went to live at Woodside. In 1995 Brian went to prison and was not released until some time in 1996. In 1995 the plaintiff and the defendant entered into a sharefarming arrangement for the operation of Arronville.

13 In or about March 1996 the plaintiff agreed to lease Arronville to the defendant for one year commencing on 1 April 1996 at a rental of $3,500 per year and with an option to renew the term for a further year. A lease document (which is dated 22 July 1997 but which, I think, was signed on 22 July 1996) ("the Lease") was executed. Various conversations between the plaintiff and the defendant after the death of Wayne, and particularly during the negotiations for the Lease, are at the heart of the defendant's claim that she was afforded an option to purchase or a right of first refusal to purchase. I will return to this issue later. During 1997 the defendant exercised the option to renew the term.

14 By the time the term of the Lease expired, relations between the plaintiff and the defendant had soured. In January 1998 the plaintiff decided to put the property on the market. She telephoned the defendant and offered it to her for $360,000. I will describe in some detail a little later the discussions that then ensued. It is sufficient to say at this stage that the defendant considered that the figure of $360,000 was far in excess of its true value. At the end of January 1998 the plaintiff entered into an agency agreement with Wesfarmers to sell the property. As at the time of trial, no offers had been received.

15 The term of the Lease expired on 31 March 1998. The defendant refused to give up possession and litigation was threatened. The plaintiff served a formal notice to vacate and, when that was not complied with, a writ was issued. In June 1998 the defendant obtained an injunction restraining the plaintiff from taking possession. Since then, the defendant has remained in possession of Arronville under an arrangement by which she has been paying $736.27 per month to cover rent and outgoings.

16 For the purposes of the trial, the parties agreed that the market value of the property as at January 1998 was $290,000 and, as at the time of trial, it was $295,000.

17 The plaintiff's claim is relatively simple. She asserts that she is the registered proprietor of Arronville and that she leased the property to the defendant in accordance with the terms of the Lease. The plaintiff pleads that the term expired on 31 March 1998 but, despite demand, the defendant has failed to yield possession of the property to the plaintiff. In the prayer for relief the plaintiff claims possession the property, mesne profits and interest.

18 The defendant admits most of those allegations but denies that the plaintiff is entitled to the relief claimed or to any relief. It is, therefore, convenient to concentrate on the defence and counterclaim because it was on the allegations contained in that pleading that issue was essentially joined.

19 The defendant's case can be seen in two, or possibly three, broad categories. First, in the defence the defendant says that she "assumed or expected that she would be permitted to remain in possession of the land until the land was sold". I will call this the "occupancy assumption". The plaintiff induced her to adopt the occupancy assumption and she acted in reliance on it by entering into the Lease, exercising the option to renew the term and buying some cattle. It would, the defendant asserts, be unconscionable and to the detriment of the defendant to allow the plaintiff to deny the occupancy assumption.

20 The second category is what I will call the "pre-emption assumption". The defendant pleads that from shortly after her husband's death she "assumed or expected that if the plaintiff ever decided to sell the land the defendant would have a right to purchase the land at a price equivalent to half the market value of the land or alternatively at a reduced price". The defendant also pleads that the plaintiff induced her to adopt the pre-emption assumption and that she acted in reliance on it. The pleading asserts that the plaintiff told the defendant she had decided to sell the land and offered it to her for $360,000, which was well above the market price. Accordingly, it would be unconscionable and to the detriment of the defendant to allow the plaintiff to deny the pre-emption assumption. It can be seen that within the pre-emption assumption there are two possibilities. The first is that the right to acquire the property would be at "half the present market value". The second is that the defendant could buy the property "at a reduced price".

21 In her prayer for relief the defendant seeks relief against forfeiture. She also seeks:

"B. A declaration that the plaintiff is estopped from denying that the defendant has an option, or alternatively a right of first refusal, to purchase the land at a price equivalent to half the market value of the land.

C. Alternatively, a declaration that the plaintiff is estopped from denying that the defendant has an option, alternatively a right of first refusal, to purchase the land at a reduced price."

22 There then follows some consequential prayers for injunctive relief and, on certain scenarios for the sale of the land, equitable compensation.

23 I have said that there is a possible third limb of the defendant's case. It is contained in par 23 of the counterclaim. It relies on essentially the same factual base as pleaded for the pre-emption assumption but then says:

"...the [defendant] has an equitable interest in the land being an option to purchase the land at half the present market value of the land or alternatively at a reduced price."

24 It is in this context that the references in the prayers for relief to an "option" must be understood. The way that the evidence came out, I do not think the defendant was alleging that the plaintiff had, as a matter of contract, granted to her an option to purchase in the classic sense. Rather, I think that the argument is simply an extension of the alleged right of first refusal to purchase. I will deal with the issue in more detail later but I understand the argument to be based on the juridical nature of the interest that the beneficiary of a right of pre-emption has once the right has been triggered. I say this because of the evidence that the defendant gave towards the end of her cross-examination when she said: "I believed that after the lease agreement I would be given the option to purchase the property if she wanted to sell at that time" [emphasis added]. In her re-examination the defendant said that she expected the plaintiff to offer the property to her for sale at the end of the Lease but that she would not be able to force the plaintiff to sell. Paragraph 7 of the defendant's further and better particulars of defence and counterclaim dated 10 August 1998 supports this view. There would, of course, be other problems arising from a lack of writing.

25 It is common ground that the Arronville property was generally referred to by the family as "Wayne's block" and Woodside was known as "Grant's block". This is consistent with the evidence given by the plaintiff that the idea was for each of the sons eventually to own a property. In relation to each purchase, funds were taken from the Cranbrook partnership to pay part of the purchase price. It is also to be noted that funds the property of the plaintiff (either solely or jointly with Brian) were also used to assist in the purchases. In relation to Arronville, the plaintiff paid the deposit of $20,000 from her own resources.

26 Wayne was primarily responsible for the development and operation of Arronville. He was assisted by Brian, who had some cattle grazing on the land. The defendant also assisted in the management and development of the property. She and Wayne had intended to purchase the cattle that were on the property but after his death she did not have the money to continue with the purchase. After 1991, Wayne and the defendant used the Arronville partnership through which to operate their farming interests at the Arronville property, the leased land in the same vicinity and a sharefarming venture with a man named Bob Reid.

27 After Wayne's death, the plaintiff and Brian continued to operate the farming venture on Arronville. Brian largely kept the property going and the defendant helped him out whenever necessary. At the time of his death, Wayne and the defendant had 200 or so sheep on the property. It is possible that Brian may also have had some sheep. The defendant's sheep were eventually sold but it is not clear from the evidence when the sale took place.

28 Between April 1995 and April 1996 the plaintiff and the defendant jointly conducted a farming operation at Arronville on a sharefarming basis. The defendant's evidence, which I accept, was that they had an equal share of the cattle. The plaintiff paid most of the bills but they kept accounts of money expended during that time and it was agreed that at the end of the period there would be an accounting and a division of the expenditures. The defendant had some cattle on Reid's property. Reid wanted to purchase those cattle from her. In 1995 the plaintiff provided the defendant with an opportunity to buy the herd that was on Arronville. This she did by using the proceeds from the sale of her cattle to Reid. She paid for the cattle in two instalments, one in July 1995 and the other in July 1996. She also purchased a bull to build up the herd. Most of the physical work necessary to conduct the farming operation was done by the defendant and her friend Jamie Back. The plaintiff went to the property from time to time to check on stock.

29 The defendant occupied the Arronville property and conducted cattle farming operations on it as a lessee from 1 April 1996.

30 In November 1991 a meeting was held to discuss the terms of the dissolution of the Cranbrook partnership. It is not entirely clear from the evidence who was present. Notes, which bear a date 4 November 1991, were taken by Wayne and they went into evidence as exhibit 6. The calculations appear to have been constructed on the basis that the whole of the value of Woodside was attributable to Grant and the whole of the value of Arronville to Wayne. The note seems to suggest that Grant would get Woodside and its cattle and plant and Wayne would get Arronville and its cattle and plant. Brian would receive $84,767 from the "partnership split up" and Grant would owe Wayne $42,385. The notes are signed by each of Wayne, Grant and Brian. They were not signed by the plaintiff because, in her words, she was not getting anything out of the arrangement.

31 These arrangements were not put fully into effect. For example, they record that Brian was to be paid a sum of $30,000 from the partnership account. The evidence of the plaintiff was that this was not done.

32 The defendant gave evidence that at around this time Wayne told her he had discussed with his parents the possible transfer to her of the plaintiff's share in Arronville. However, the money that would be required for stamp duty and so on would better be spent on improvements to the property and nothing was done about the transfer. The plaintiff denied that such a conversation had taken place. She said the only conversation she had with Wayne about it was when he told her he was relying on her to leave her interest to him in her Will. The possibility of the land being transferred is consistent with the apparent attribution in the dissolution notes of the entire value of Arronville to Wayne. However, it probably doesn't matter a great deal because, even on the defendant's testimony, it was decided not to process the transfer.

33 During 1992 there had been revelations about the family problems to which I have obliquely referred. The plaintiff's mother died in the same year. The plaintiff acknowledges that she was in a distressed state and was on medication. Wayne's death was "one thing on another" and in the ensuing period she was not thinking "at her clearest". From 1994 on, the plaintiff had the added difficulty of having to cope with the divorce proceedings, which included property settlement matters, and later with Brian's incarceration.

34 I mention this because it has an effect on credibility. I must decide what evidence I accept. In general terms I was impressed by the defendant as a witness. She gave her evidence clearly and was prepared to concede matters, even where it was against her interest, when it was necessary to do so. On the other hand, I had difficulty with the reliability of some of the evidence given by the plaintiff. I am not suggesting that she was being deliberately dishonest. However, it was apparent to me that she had developed an intense dislike for the defendant. Until some time in 1997 the plaintiff and the defendant had enjoyed a good and mutually supportive relationship in what must have been, for both of them, trying times. It would be mere speculation as to why, given the common tragedy that they had suffered, in or about 1997 the defendant lost the support of the plaintiff. Some suggestion was made in the evidence that the plaintiff took a set against the defendant because of the latter's relationship with Jamie Back. The plaintiff said that rumours about the defendant and Back had hurt her but had not damaged the relationship. I must accept that evidence. It was also put to the plaintiff that she had simply changed her mind because in 1997 or 1998 her estrangement from her daughter Delma ended and she wanted to use her assets to benefit Delma. There is no doubt that the plaintiff did wish to offer financial support to Delma. However, she denied that this had caused her to change her mind about the arrangements with the defendant. I cannot go behind the denial.

35 Counsel for the plaintiff questioned the defendant about the terms of the caveat and accompanying statutory declaration that she had lodged against the title to the Arronville property in February 1998, after the plaintiff had put it on the market. The estate or interest claimed is: "an implied resulting or constructive trust particulars of which are set forth on the statutory declaration of the caveator". In the statutory declaration the defendant says that she and her co-executor transferred Wayne's half share to the plaintiff under the terms of the Will "on the understanding that the half share in the land would be owned on trust for [her] in consideration of [her] not exercising [her] rights to seek money owing by [Grant] to [Wayne]" and not "exercising [her] rights as a dependent spouse". On the evidence now adduced no such claim could be sustained. I will deal in more detail shortly with the moneys due by Grant and possible claims by the defendant as a dependent spouse. It is sufficient to say at this stage that the statutory declaration was drafted by the defendant's solicitor and I accept that she might not have had a full understanding of its implications. After the service of a notice under s138B of the Transfer of Land Act 1893, the caveat lapsed and no attempt was made to renew it. Counsel for the plaintiff put it to me that the lodging of a caveat with a "false" statutory declaration was conduct that should count against the defendant because of the maxim that she who seeks equity must do equity. The caveat was lodged on legal advice and as a matter of urgency shortly after the property was put on the market. In the circumstances, and given my overall impression of the defendant, I am disinclined to think that the lodging of the caveat in the form in which it was tendered so offends conscience that it should count against her, either by way of entitlement to relief or as going to credibility.

36 On balance, however, the combination of the plaintiff's personal feelings for the defendant and her health and personal situation in the years after 1993 lead me to believe that her recollection of some events may have been clouded. As a general statement, where the evidence of the defendant and the plaintiff is in conflict, I prefer the evidence of the defendant.

37 It must be recalled that in January 1987 the marriage between the defendant and Wayne had been solemnised. In August 1987 the Arronville property was purchased by the plaintiff and Wayne as tenants in common in equal shares. In November 1987 Wayne executed a Will in which he left his interest in the Arronville property to the plaintiff but otherwise made the defendant his main residuary beneficiary. The defendant first saw the Will shortly after it was executed. She was aware that the interest in Arronville had been left to the plaintiff and thought it was because the plaintiff had paid the deposit. Wayne died in February 1993.

38 The defendant's evidence was that in the week following Wayne's death, and while funeral arrangements were being made, she had a conversation with the plaintiff at her (the defendant's) home in Albany. Her evidence was:

"[The plaintiff] said words to the effect that she had considered transferring Wayne's share in the land to me. She also said that in any event she would allow me to purchase the land at a reduced price."

39 In cross-examination she conceded that she was in shock and grief at the time and that "property matters were the last thing [she and the plaintiff] would want to be bothered with". It was put to her that the plaintiff had not used the words "reduced price". However, the defendant was adamant that those words had been used. There is no definite evidence of other conversations between them about the future of the property in the period from 1993 to 1995.

40 On 29 August 1995 probate of Wayne's Will was granted to the defendant and Grant. The defendant testified that at about the same time, she had a further conversation with the plaintiff in which she asked whether the plaintiff was still contemplating transferring Wayne's share in the property to her. The plaintiff had said words to the effect:

"Not at this stage, but if I ever sell the property, I'll sell it to you at a reduced price. ... I have stated in my will that if anything happens to me you will be able to purchase the property from my estate at a reduced price."

41 The plaintiff denied that she had ever considered transferring Wayne's share in the property to the defendant. She said that in the week following Wayne's death she would not sell the property there and then. She would not sell it "from under [the defendant's] feet" because there were livestock belonging to the defendant on the property. This is probably a reference to the defendant's sheep and perhaps to some cattle. I think the plaintiff probably did say words to the effect that she had no present intention of selling the land and would not do so precipitously. However, for the reasons given, I prefer the defendant's evidence about the plaintiff's indication that she had considered transferring the interest to the defendant.

"As a result of these conversations with [the plaintiff], I believed that she would sell the land to me at a future date for a price equivalent to half the value of the land or at a substantial discount."

43 The reference to "these conversations" is to the discussion at the defendant's home in the week following Wayne's death and the statement made by the defendant at around the time when probate was granted. There is no evidence of a statement attributed to the plaintiff in which she said words to the effect that she was giving the defendant an option or right of first refusal to purchase the property "at a price equivalent to half the market value of the land". Even on the defendant's testimony, there was no statement made by the plaintiff that she would sell the property to the defendant at half its value. Indeed, in cross-examination the defendant conceded that the plaintiff had never used the phrase "market value". When asked why she had formed the belief, she said: "It was probably the first conversation that we had had at my home that [the plaintiff] had said she considered transferring Wayne's share of the property into my name". Wayne's share was, of course, a half share. But it is common ground that in the August 1995 conversation the plaintiff told her that she was not then considering such a transfer.

44 This was something that I raised with counsel during closing addresses. Counsel for the defendant conceded that it was not the strongest part of the defendant's case. Even were I to accept that the defendant assumed that she could acquire the property at "half the present market value", there was no sufficient evidence on which I could base a finding that the plaintiff had said or done anything to induce the defendant to adopt that assumption. Nor would I be justified in finding that the plaintiff knew or intended that the defendant would rely on the assumption.

45 The sharefarming arrangements between the plaintiff and the defendant had commenced in April 1995 and the formal lease arrangement commenced in April 1996. On a number of occasions between 1995 and 1997 the defendant raised the matter of the property with the plaintiff. In cross-examination the defendant agreed "that [she was] never satisfied that [she] got a really definite answer from the [plaintiff]". This is in accord with the plaintiff's evidence which was to the effect that the defendant had asked her on occasions what she was going to do with the land "and I said I wouldn't really honestly know what I would do with it - and I didn't".

46 The defendant gave evidence as to why the arrangement changed from sharefarming to a lease. She said that in 1995 and 1996 the plaintiff was insecure about her own future and what might happen "down the track". The plaintiff was concerned about the ramifications of the disclosure of the family problems to which I have referred and about the possibility of a property settlement in relation to the breakdown of her marriage. Consent orders had been made under the Family Law Act in July 1994 in which, relevantly, the plaintiff obtained the Arronville property and the assets and liabilities of the Cranbrook partnership and Brian received Woodside. However, the plaintiff was unsure about what Brian would want to do when he was released. The defendant said that it was the plaintiff who initiated the idea of moving to a lease arrangement. The plaintiff had come to the defendant indicating that she could no longer carry on the farm and would have to lease it. At that time the defendant had acquired the cattle on the property and had paid the first instalment. She thought it would be therapeutic for her to continue with the work that she and Wayne had started on the farm. A lease would give her the opportunity to see whether running the farm was what she really wanted to do. I do not think there is any material difference between the plaintiff and the defendant on these issues.

47 In July 1996 the lease arrangement was reduced to writing. The plaintiff told the defendant that she had received advice from Wesfarmers as to the rental value of the land. It was said to be worth between $16 and $30 per acre and the Wesfarmer's suggestion was that it be leased for $22 plus $8 per acre for fertilizer. The plaintiff and the defendant met Mr Berry, their accountant, and he drew up the Lease document. After describing the parties, it says:

"Period of Lease - 1st April 1996 to 31st March 1997.

Renewal Option - A further twelve months 1st April to 31st March 1998.

Sale of Property - [The defendant] to have first right of refusal.

Payment - shall be in two equal payments of $1,750 each on 1st July and 1st January.

Fertilizer - Seven tonnes of fertilizer are to be supplied and applied by [the plaintiff] and payment of the supply and applications is to be met by [the defendant]."

48 The rental was worked out at $20 per acre for 175 cleared acres (the whole property being thought to be 200 acres). It is common ground that both parties considered it to be a favourable deal for the defendant. Although it is not strictly relevant, it turns out that the entire property is 218 acres, of which 195 acres is cleared.

49 It is the defendant's evidence that during the negotiations the right of first refusal was discussed. The plaintiff indicated to her that she would sell the property to the defendant at a reduced price and that she would consider terms. Despite its length, I will set out a passage from the cross-examination of the defendant which comprises what I regard as the clearest exposition of the evidentiary base for the occupancy assumption and the pre-emption assumption:

"Could I ask you to have a look at the lease. ... I take it, correct me if I'm wrong, that you read this document when you signed it?---Yes.

You considered yourself, did you, at the time you signed it, that you were entering into an agreement, a written agreement? ---Yes.

You have agreed to lease these premises for a year, with an option for a year, and yet you say that you thought you would be able to remain at the property for a longer period. Is that your evidence?---That's correct.

You didn't seek to have the terms of this lease go beyond a year and that option period, did you?---No. I had questioned Betty about what was going to happen at the term of the lease and because of the Family Law Court proceedings at that time she wasn't really sure what was going to be happening.

When you say you thought that you could stay on beyond the formal terms of the lease period, on what terms did you ...?---Well, I thought we would have a similar sort of lease agreement for another term.

You thought that you might enter into another formal agreement at the end of that lease term?---Well, I also believed too at the end of that term that Betty may sell me the property. I mean, that was my understanding of the first right of refusal.

You say you thought that the term in there about a first right of refusal was one where Betty would have to offer you the land at the end of the lease. Is that what you're saying?---I certainly thought it was an option, yes.

You expected an offer to be made to you at the end of the lease, that the land would be sold to you. Is that what you're saying?---Yes.

You haven't given any evidence that Mrs Witham had said anything to that effect to you?---That was my belief of the first right of refusal.

All right, that was your belief, but you're not saying Mrs Witham gave you that belief, are you?---Well, she told me that if ever she was to sell me the property she would offer it to me first.

Yes, but she didn't give you any undertaking to sell it at any particular time, did she?---No.

No, and in fact you have just given evidence that you were unsure at the time that you signed the lease what Mrs Witham's intentions were?---Yes.

You certainly, at the time you entered into the lease, didn't have any thought in your mind that you would definitely be able to extend the lease when it expired? ---Betty had always said to me that I could stay on the property for as long as she owned it.

If you entered into another lease with her at the end of that ...?---Yes.

If you entered into a further lease with her?---I wasn't really sure what was going to happen at the end of that time?---No."

50 This was one of the occasions in her evidence that the defendant said that the plaintiff had told her that she could remain in possession of the land for as long as the plaintiff owned it. At several places in her evidence-in-chief the defendant says that this was her belief. But that is a little different to actual testimony about a conversation to that effect.

51 There is another relevant conversation about which evidence was given. In late 1995 or early 1996 the plaintiff and the defendant were in a car returning from the property. There was a conversation about the farm. The defendant said to the plaintiff words to the effect that she did not see why she should have to pay for Wayne's half of the property. It was common ground that the plaintiff did not respond to that comment. The defendant also said in evidence that she knew at the time that the plaintiff was expecting her to pay for Wayne's half of the farm. Given that fact and given also that she knew that the plaintiff had paid the deposit for the purchase of Arronville, and that this was why the property was put into the joint names in the first place, it is a little difficult to see a basis on which the defendant could say that she assumed it was the plaintiff's intention that she could acquire the land for half its value.

52 There is another piece of relevant evidence. The following is a passage from the cross-examination of the defendant:

"It's the case, isn't it, that Mrs Witham had said to you at about the time of the lease that she was considering the possibility of Mr Witham, Brian, having something to do with Arronville after he [returned]. Is that right?---Yes.

She did even put to you the possibility that perhaps a house might be built on the property for Brian?---Yes, and as I was working at Homeswest at the time - we are still currently redeveloping an area called Mount Lockyer and there's a lot of the old homes there are being sold off for purchase and removal and we had also discussed that idea of maybe putting a house on Arronville.

The idea was, as expressed to you by Mrs Witham, that perhaps Brian would live on there and lease the land?---Well, I think the option was there for Brian and as we weren't really sure what was going to happen with Brian on his [return], I didn't have a problem with him living on Arronville.

You foresaw that as a possibility---Yes. I think it's something that perhaps Wayne would have liked as well."

53 The evidence was that the running of a farming operation on Arronville did not demand the full time presence of the operator. Accordingly, the possibility of Brian returning to live on Arronville is not inconsistent with the defendant's case. Obviously, it would not have been possible for both Brian and the defendant to have leased the land given the terms of the Lease. However, that is not necessarily inimical to the assertion made by the defendant that she could have continued to have a right of occupancy after the expiration of the Lease on "a similar sort of lease agreement for another term". A little later in these reasons I will touch on the law relating to promissory estoppel. One of those principles is that it is not always unconscionable for a person to resile from a representation. Given that such a prospect was clearly in contemplation, this may have been such a case, although the relevant events did not happen. It has, however, nothing to say about whether or not the representation was made in the first place.

54 The plaintiff did not dispute the existence of a right of first refusal. In cross-examination she said:

"So if you had for some reason decided to sell or wanted to sell the land in 1996, you would have given Tanya the opportunity to buy it?---Yes, if she wanted to buy it. She could have, if I had to sell it, yes."

55 She rejected outright the suggestion that she had ever said she would sell at a reduced price. On two occasions in her evidence-in-chief the plaintiff said that when the Lease was being negotiated she told the defendant that if she (the plaintiff) decided to sell the property the defendant could buy it "at market value less the agent's commission payable". The defendant denied that any reference had ever been made to a reduction based on agent's commission or that the words "market value" had been used. It is not entirely clear from the plaintiff's cross-examination whether she was contending that she had actually mentioned to the defendant that the "reduction" would be tied in some way to a commission or whether that was simply something she had in her mind. This passage from her cross-examination illustrates the problem:

"And that you repeated that assurance that you would sell the land to her at a reduced price in 1995?---I wouldn't have said a reduced price. I would have said a little bit less or something like that, meaning the commission.

You knew full well that she believed she would be able to buy the land from you at a reduced price when you signed the lease agreement with her?---It would be just less commission, not a reduced price. There's a difference between a reduced price - what do you mean by 'reduced price'?"

56 In relation to the possibility of a terms contract, the suggestion in cross-examination that the plaintiff's consideration of offering terms was momentary only is difficult to reconcile with another aspect of her evidence-in-chief. In it she told of a conversation in April 1997. The defendant had telephoned her and said: "we had better get things sorted out about me buying the farm". The plaintiff said she told the defendant she was not ready to sell it and was not sure she ever would sell it. She continued: "At around that time I also told her I would not sell it to her on terms". At that stage the Family Law proceedings between the plaintiff and Brian were continuing and the defendant offered to act as a mediator to assist them in reaching a resolution.

57 There is some independent evidence to support the defendant's contention that the phrase "reduced price" was used by the plaintiff. In his evidence-in-chief, Brian said:

"After Wayne died [the plaintiff] told [the defendant] in my presence that [the defendant] could lease [Arronville] and could buy it at a reduced price in the future."

58 He was unable to say when this conversation took place but it was before he went to prison. Under cross-examination he was adamant that the words "reduced price" had been used. I have looked closely at his evidence, bearing in mind the obvious antipathy existing between Brian and the plaintiff. However, I accept his evidence.

59 Grant's evidence did not really touch on the point because he did not testify to hearing the plaintiff say words to that effect. I will deal a little later with a conversation between Grant and the defendant in a different context. There is one other aspect of Grant's evidence that I will mention now. He recalled a conversation at an "around the table meeting" between himself, the defendant and the plaintiff at which the plaintiff had said the defendant would have to buy her half out of Arronville at some time in the future. This was a reference to the plaintiff's share, not Wayne's share. The conversation might have taken place within a month or two after Wayne's death. The evidence is vague and is not particularly consistent with the trend of the other evidence. I have not given it any weight.

60 In line with my general approach to credibility, and given Brian's evidence, I accept the defendant's evidence that the plaintiff did use the words "a reduced price". The evidentiary base is much too uncertain for me to make a finding as to what was meant by selling the property "on terms". However, in my opinion, that evidence is of some assistance because it shows that the plaintiff had it in mind to allow the defendant to acquire the property on favourable terms, making it more likely that she had used the phrase "reduced price", as the defendant contended she did.

61 It is clear that the plaintiff had contemplated the analogy to agent's commission as a way of giving a benefit to the defendant. On 27 September 1994 the plaintiff executed a Will. In it she gave to the defendant the right to buy the Arronville property for 90 per cent of its value at the date of her death as determined by an independent licensed valuer. She explained how the figure of 90 per cent was arrived at. She said that she had consulted a solicitor and told him that the defendant could buy the property at its assessed value less commission. She accepted the solicitor's advice that it would be easier for the executors if it was put at 90 per cent of assessed value because "commission is roughly 10 per cent". I have no reason not to accept that explanation. I note also that the defendant said, and I accept, that the first time she saw the plaintiff's Will of 27 September 1994 was when she was in the witness box at trial. For sake of completeness, I should add that on 20 November 1997 the plaintiff made a new Will in which she made no provision for the defendant. The effect of the new Will is that the Arronville property will go to Grant (one quarter) and Delma (three quarters).

62 The defendant's evidence in cross-examination was that she purchased from the plaintiff the cattle that were on Arronville before she entered into the Lease. They were paid for in two instalments, one in July 1995 and the other in July 1996.

63 On 29 August 1995 probate of Wayne's Will was granted to the defendant and Grant. There were various discussions about the winding up of Wayne's estate. Grant, Brian, the defendant and the plaintiff executed a deed of family arrangement which is undated but which was stamped on 19 October 1995. The plaintiff says that she didn't sign it until early 1996, after it had been stamped. It probably does not matter a great deal when the plaintiff signed it as she does not dispute its contents. The deed deals only with items of plant and equipment which were used in the farming enterprises. It allocated particular items of plant and equipment to each of the four signatories and provides for Grant to pay $1,500 to the defendant to achieve equality.

64 The deed recites that there was a dispute between the parties as to ownership of the items. The evidence was not clear as to the nature of the dispute. However, it probably arose because in his Will Wayne left his interest in the Arronville partnership to the plaintiff, Brian and Grant. It is to be recalled that at the time when Wayne executed the Will (November 1987), the four of them were the members of the Arronville partnership. However, by the time of his death the Arronville partnership consisted of Wayne and the defendant. The November 1991 arrangements for the dissolution of the Cranbrook partnership (to which exhibit 6 relates) include Wayne assuming ownership of plant valued at $20,880.

65 Importantly the deed does not deal with the ownership of the properties (Arronville or Woodside) or with the amount of $42,385 due by Grant to Wayne (or more accurately, by this time, to Wayne's estate, the residuary beneficiary of which was the defendant).

66 At around the same time, the executors of Wayne's Will transferred Wayne's interest in the Arronville property to the plaintiff. The transfer was registered on 23 October 1995.

67 Late in 1996 Brian returned to the area. So far as I am aware he did not seek to live at Arronville or to operate the farming enterprise conducted on it. On 4 February 1997 he applied to re-open the Family Law property settlement. He had issued a subpoena calling on the defendant to give evidence on his behalf. However, the dispute was settled and consent orders were filed on 12 November 1997. The settlement involved the plaintiff paying Brian $35,000 and transferring to him some land, a vehicle and some other chattels.

68 I wish now to return to the amount of $42,385 due by Grant to Wayne under the terms of the November 1991 arrangements. I should say at the outset that neither Grant nor anyone else disputed that Grant had assumed a liability for this amount under those arrangements. In his evidence-in-chief Grant said that one day he and the defendant were in the waiting room of the solicitor handling the estate. The defendant told him not to worry about the $42,000 because she and the plaintiff had an agreement that the defendant would get Arronville in the future at a reduced price. On the strength of that, Grant testified, he no longer felt under an obligation to pay the money to the defendant because the defendant had waived it. The evidence that the defendant told Grant of an arrangement she had made with the plaintiff about Arronville is not probative of the existence of the arrangement. It is only probative of the fact that the defendant made a statement to that effect.

69 The plaintiff's evidence-in-chief was that when Brian re-opened the Family Law matter, there was a suggestion that the $42,000 debt was an asset of the marriage. The plaintiff said she wanted to find out more about it and telephoned the defendant to see if anything had been done to collect the money. She said that the defendant said to her: "I'll never get it from Grant". The defendant also told the plaintiff that she didn't care about the money and would rather the plaintiff and Brian have it than Grant. The defendant gave a different version of these events. She says there was a family discussion some months after Wayne's death. The plaintiff, the defendant, Grant and Brian were present. The defendant said she told those present that she did not want the $42,385 as the plaintiff had agreed to let her have the land at a reduced price and she would therefore receive a benefit from the Witham family. In answer to a question that I posed to her, the defendant described the conversation in this way. The plaintiff said to her: "what about the $42,000 that's owed by Grant?". The defendant replied: "I was happy to forgive the money owed by Grant as long as I would be able to purchase the property at a reduced price".

70 The defendant also testified to the telephone call about which the plaintiff gave evidence. However, the defendant's version is that the plaintiff asked her whether she was happy for the $42,385 to be paid to Brian and her. The defendant said that at the time she did not fully understand what the plaintiff meant but told the plaintiff that she did not want Grant to pay her at that time. I think this is consistent with the evidence she gave about the conversations between herself and the other family members.

71 Neither Brian nor Grant gave evidence to assist in deciding this conflict. In line with my general views of credibility I prefer the evidence of the defendant. However, there is another aspect of this issue that may have some importance and I will mention it now. It comes from the cross-examination of the defendant, where this exchange occurred:

"It would be fair to say, wouldn't it, that in your own mind you had never waived your right to receive that money from Grant, have you?---I have never waived my right to receive it, but I had advised Grant that I didn't want the money, under the belief that I would receive the property at a reduced price.

But Grant wasn't selling the property to you, was he? ---No.

So in your mind you believed you could still pursue that money from Grant?---I could, yes."

72 As I have already said, at some stage during 1997 the relationship between the plaintiff and the defendant soured. It is illustrated by an event that took place when the defendant was exercising the option to renew the term of the Lease. The plaintiff visited the defendant to collect a rent cheque. Some discussion took place about the farm and the plaintiff said to the defendant words to the effect: "You aren't really a Witham". The defendant responded: "Well, when you think about it, neither are you". This has to be seen against the background that both the plaintiff and the defendant had a sentimental attachment to the land. This is not surprising since the family had been instrumental in developing it and it was the place where a person who was their son and husband, respectively, was tragically killed. The plaintiff explained that her comment was made in relation to the defendant not being a "Witham" by blood. It is a reasonable inference, I think, that the comment was brought about in the context of a conversation about keeping the land in the family.

73 That is not to say, of course, that there was an intention or understanding that the property would never, on any account, be sold. It is common ground that there had been conversations about the possible sale of the property. Indeed, that is at the very basis of the arrangements for the right to pre-emption, which both parties accept existed.

74 The plaintiff's evidence was that once the Family Law proceedings had been finalised she decided to put Arronville on the market. She had depleted her capital to pay Brian and the costs associated with the proceedings and needed new funds. She also felt a responsibility to provide financial support for Delma. She said that she obtained an appraisal from Mr Tutt of Wesfarmers. When Tutt and the plaintiff inspected the property they were accompanied by Kenneth Butcher, the plaintiff's brother-in-law. Butcher gave evidence and confirmed that at the inspection Tutt told the plaintiff "the property was probably around $1,700 an acre, which amounted to roughly $350,000" and that she should ask about $10,000 to $15,000 more. This is not evidence of the true value of the property. However, it is independent support for the plaintiff's evidence that she sought and obtained an appraisal which indicated a sale price of $360,000 to $365,000. I accept that evidence.

75 It is common ground that on a day in January 1998 the plaintiff telephoned the defendant and told her she had decided to sell the land and that the defendant could buy it for $360,000. At the end of their respective testimonies, I asked each witness to relate to me what they recalled about the conversation. The plaintiff's version was as follows:

"As best you can recollect, what did you say to Tanya in that telephone conversation about the price at which she could have it? I think that's the wording you used, 'She could have it.' What did you say, as best you can recollect now?---I don't know whether I said she could have it or I'd be putting it on the market for 360. I'm not dead sure. To be honest with you, I'm not. I can't - because I never thought I'd ever have to think about it again I suppose. I can't remember the exact words I used, no. I'll be honest with you, I can't remember the exact words.

All right. So is this the sequence of events or is this your best recollection now: you got a verbal market appraisal from Mr Tutt. He said 350 or 360. You discussed that with your sister and brother-in-law. You decided you would have to sell the property. You phoned Tanya and you said to her either, 'I'm going to put it on the market for 360' or 'I'm putting it on the market and you can have it for 360.' She expressed concern, shock, whatever, it doesn't really matter. You told her that she should think about it. Two or three weeks later on a Saturday she came to your place and said, 'Can I get the property valued'?---Mm.

You gave that permission and then some time later in the mail you received a valuation showing the property to be worth about 200,000?---Yes.

What happened after that?---Well, the next thing I got in the mail I think was a caveat. I put it on the market for 370 because you always negotiate - you can always come down but you can't go up when you put something on the market. Knowing farmers, they always try to barter with you.

The authority to the agent to sell is dated 27 January 1998?---Yes.

When would you put the Saturday visit that Tanya made to you in connection, in a timing sense, with that, the time when you signed this agency to sell? Was it before, was it after, was it at the same time?---It was before I put it on the market. It would be about a week before, I would say, or during the following week. I put it on the market after Tanya - of the Saturday Tanya came around."

76 The agent's authority went into evidence as exhibit 20. It is addressed to Wesfarmers and is dated 27 January 1998. That was a Tuesday. It gives Wesfarmers an agency for 90 days to sell at a price of $370,000.

77 The defendant's version of events is a little different. I asked her:

"... to the best of your recollection now, what were the words used by Betty Witham when she telephoned you sometime in January 1998 indicating that the property either had been or was going to be placed on the market?---Okay. Betty phoned me and said that she was going to list the property to be available for sale. She offered me the property at $360,000. I had said to her I didn't believe the property to be worth that amount of money and I then also said to her, 'What about the discount or reduction in price that you had promised me?' She then replied with, 'Because of the Family Law Court proceedings costing me around about $50,000, I could no longer give you that reduction in price.' She had also mentioned on that occasion that she would have to pay capital gains on this. I also felt a little upset by that, thinking, 'Why would you pay capital gains when you had offered to let me have the property at a reduced price?' I didn't think that was really fair. I then offered her $200,000 for the property and she has said to me it had been worth far more than that when she had had the valuation done in 1997. Then at that stage I think I said, 'Well, perhaps we should have the property valued.'

So your suggestion to her that you would be prepared to pay $200,000 for the property came in that same telephone conversation, did it?---Yes.

And the telephone conversation ended with you suggesting that there may be a need to get a valuation and I think you said Mrs Witham agreed to that?---Yes. "

78 It is the case that a sworn valuation of Arronville had been carried out in 1997 for the purposes of the Family Law proceedings. It showed the property to be worth $240,000. I do not think there is any dispute that between the time of the telephone conversation and the Saturday morning meeting the defendant received an appraisal which came in at about $215,000 to $220,000. She showed it to the plaintiff. Back was present at the Saturday morning meeting. He corroborated the defendant's evidence that her appraisal was shown to the plaintiff that morning (rather than being mailed some time later as the plaintiff suggested). According to the defendant the meeting ended with an agreement that they may need a further valuation. The defendant expected there to be further discussions.

79 The defendant testified that on the Monday following the Saturday meeting she spoke to Tutt who told her that the plaintiff had placed the property on the market. She says that she was shocked by this as she thought there would be further discussions. She took legal advice which was the catalyst for the lodging of the caveat. However, the defendant's evidence was that she still hoped to reach a compromise. Tutt had told her that he thought the plaintiff would offer the property to her at around $300,000 but she conceded that this was not put to the plaintiff. Once again, where there is a difference in the version of events, I prefer that of the defendant.

80 The defendant's case rests on the principles of promissory estoppel. I will interrupt this consideration of the evidence to say something about the law of promissory estoppel and about some legal principles touching on rights of first refusal in so far as they are relevant to the defendant's cause of action. I should say at the outset that I appreciate that there is authority for the proposition that estoppel does not of itself constitute an independent cause of action, although it does "set the stage" for a cause of action that otherwise exists: The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 per Deane J at 436-40. However, where, as here, the defendant is relying on principles of estoppel both as a defence and to found a counterclaim, it is convenient, even if not strictly accurate, to refer to it as a cause of action.

81 In Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1998) 164 CLR 387 Brennan J described the essential elements of equitable or promissory estoppel in these terms, at 428-29:

"In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise."

82 Equity comes to the relief of the person who made the assumption on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption: Waltons Stores per Mason CJ and Wilson J at 404.

83 It is to be remembered that prior to Waltons Stores, it was not certain whether promissory estoppel operated outside a pre-existing contractual relationship: see Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 at 435. However, following Waltons Stores, (and even if it is necessary to go back to the conversations immediately following Wayne's death) it is no bar to the defendant succeeding in relation to the occupancy assumption that there was no pre-existing contractual relationship.

84 If the basis for an estoppel argument is a promise, it must be clear and unambiguous: Legione at 436-37. Indeed the word "unequivocal" has been used: Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23 at 60. This is because there must be an inference drawn that the statement was intended to affect the legal relations between the parties. It does not follow that the words must be such that they cannot possibly be open to constructions. But it is essential to show that the statements were of such a nature that they would have misled a reasonable person: Western Australian Insurance Co Ltd v Dayton [1924] HCA 58; (1924) 35 CLR 355 at 375. The onus lies on the person asserting the estoppel to establish these elements: China-Pacific SA v Food Corporation of India [1981] 1 QB 403 at 429.

85 It seems that at least the same type of certainty as to terms is required to support an estoppel argument as is necessary for the enforcement of a contract. In The Law of Contract, Grieg and Davis, the authors say this, at 156: "At present, there is a slight preponderance of authority in favour of a higher level of proof being required for promissory estoppel than is necessary for a contractual undertaking". In Cheshire and Fifoot's The Law of Contract, 7th ed (Aust), the authors say, at par 2.3: "The need for certainty parallels, or is possibly more stringent than, the requirement for certainty in contract formation". Legione, at 435-37, is cited as authority in support of that proposition.

86 A case which is of some assistance is Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582. In Austotel there was an exchange of letters between a developer and a supermarket operator for the latter to take a lease in a new project. Later on in negotiations, the store size was increased but no agreement was reached on the rent to be charged in respect of the enlarged premises. At first instance the court found that no binding agreement to lease had been entered into but that the developer was estopped from denying the existence of such an agreement. The Court of Appeal overturned that decision. Priestley JA was in dissent as to the result but it is clear that Kirby P agreed with his Honour's explanation of the law. Priestley JA, at 604, described Waltons Stores as a case "where there was no dispute about any of the terms of the agreement" and contrasted it with a situation where "a plaintiff, despite being unable to point to some agreement which, although unenforceable, contains precise terms describing what he expected from the defendant, has nevertheless been held to be entitled to equitable relief of a proprietary kind". Priestley JA thought that it would be possible to extend the scope of promissory estoppel as explained in Waltons Stores to cases of the latter kind. He expressed the principle in this way, at 610:

"For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable."

87 Kirby P expressly agreed with that proposition. All members of the court held that because there was no agreement on a vital term, namely the rent, there was no binding contract and this precluded the supermarket operator (even though it was able to establish reliance and detriment) from succeeding in an estoppel argument based directly on enforcement of the agreement. This is because all that equity could do is prevent the promisor from denying the existence of the "agreement" which was not a legal agreement at all. However, the members of the court disagreed on the application of an alternative estoppel argument. This argument was that there was conduct of the developer which made it unconscionable for the developer to withdraw from the negotiations for the lease. Kirby P pointed out that the parties had been playing "cat and mouse games" and had deliberately refrained from reaching final agreement on the rent question. Rodgers AJA thought the supermarket operator had failed to demonstrate with any precision the conduct of the developer which made it unconscionable for it to withdraw from negotiations. Priestley JA thought that it was unconscionable because, in all the circumstances, the supermarket operator, while not finally committed in a legal sense, was, as a matter of practicality, bound to proceed.

88 The approach of Kirby P to the resolution of the ultimate question is, I think, illustrative of the difficulties in this case. After commenting that the parties had "reserved to themselves a right to avoid legal liability" by not reaching a consensus on rent, his Honour said this, at 586-87:

"The failure of the parties to negotiate this vital element in their arrangement drove [the trial Judge when determining the relief to be granted] to decide the additional rent by reference to evidence called from three valuers. ... It illustrates, in my view, the difficulty inherent in the conclusion which his Honour reached. The court was then required, by reference to evidence, to fill the gap which the parties had never themselves got round to closing because of (amongst other reasons) the deliberate decision [to refrain from reaching a consensus on rent]." [emphasis added]

89 In my view it follows from the reasoning in Austotel that the fact that the claimant cannot point to an agreement as to the precise terms of the arrangement is not of itself a bar to the grant of equitable relief of a proprietary kind. However, it seems to me that some care needs to be exercised in such circumstances. I think, although it is not put this way in Austotel, it is a reflection of, or is at least consistent with, the proposition that to found an estoppel, the representation must be clear and unambiguous.

90 In some ways it is not surprising that the courts do not readily enforce in equity an agreement that would be unenforceable at law due, for example, to lack of certainty. In Austotel, Rodgers AJA said, at 621:

"It is necessary to emphasise and keep in mind the proper reluctance of courts to complete an agreement for commercial parties in circumstances where at least one of them has deliberately held back from so doing. The judicial approach to implied terms in commercial contracts, and fiduciary duties in commercial contexts, supports the need for caution in the field of law presently under consideration."

91 In the same case, at 586, Kirby P had this to say:

"The wellsprings of the conduct of commercial people are self-evidently important for the efficient operation of the economy. Their actions typically depend on self-interest and profit-making not conscience or fairness. In particular circumstances protection from unconscionable conduct will be entirely appropriate. But courts should, in my view, be wary lest they distort the relationships of substantial, well-advised corporations in commercial transactions by subjecting them to the overly tender consciences of judges. Such consciences, as the cases show, will typically be refined and sharpened by circumstances arising in quite different relationships where it is more apt to talk of conscience and to provide relief against an offence to it."

92 I readily accept that this is not a case of "substantial well-advised corporations in commercial transactions". It is essentially a family dispute about a property which is a significant family asset. The parties did not have the benefit of legal advice when they were negotiating and implementing the lease arrangements. More is the pity for that. From that perspective the dispute may well be said to have evolved in "circumstances arising in quite different relationships where it is more apt to talk of conscience". Nonetheless, the question still arises whether the arrangements envisaged by the parties are such that it could be said that a departure from them can clearly be seen as unconscionable. Courts must also bear clearly in mind the note of caution expressed by Deane J in Muschinski v Dodds [1985] HCA 78; (1986) 160 CLR 583. His Honour said, at 615, that equitable relief (in that case a constructive trust) will be granted only where it is "warranted by established equitable principles or by the legitimate process of legal reasoning, from ... the conceptual foundation of such principles" and that it is not to be used as "a medium for the indulgence of idiosyncratic notions of fairness and justice".

93 There are four other relevant principles relating to promissory estoppel that I ought mention. The first three relate to the question of detriment, which is the fifth of the points mentioned by Brennan J in Waltons Stores. The first arises from the phrase "detrimental reliance" which is a short-hand way often used to describe the combination of the third and fifth of Brennan J's points. In his outline of submissions, counsel for the plaintiff contended that "a representation made after the detriment will not found an estoppel". While that is technically accurate, I think it may mask the real issue. One of the essential elements of a promissory estoppel is that the representee acts or abstains from acting in reliance on the representation. There must be some act or omission that is established on the evidence. It must also be established that the act or omission occurred in reliance on the representation. It follows as a matter of logic that the act or omission must occur after the time at which the representation was made. But even that is not enough. It must further be established that the representee's action or inaction will occasion detriment if the assumption or expectation brought about by the representation is not fulfilled. That is to be judged at the time when the representor proposes to resile from the representation. In Grundt v Great Boulder Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 Dixon J pointed out, at 674, the real detriment or harm from which equity gives protection is that which would flow from the change of position if the assumption or expectation were deserted that had led to it. This means, I think, that the relevant chronology and elements can be seen in this light. First, a representation is made. Secondly, the representee changes his or her position by doing or omitting to do something that he or she would not have done or omitted to do if the representation had not been made. Thirdly, having so changed position, the representee would suffer a detriment if the representor were allowed to resile.

94 The second point I wish to make about detriment is that it involves questions of degree. It is not any prejudice or misfortune that will ground an estoppel. It must be "real detriment or harm" (Grundt at 674) or "material disadvantage": Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 per Dixon J at 547. In Verwayen Deane J, at 444, referred to detriment using the phrase "significant disadvantage". This question of degree is relevant in two contexts. It is a factor in deciding whether or not the representation is of a type that ought to attract the intervention of equity. If it is, then the degree of harm is relevant also to the fashioning of relief. This is because the primary goal is to avoid the detriment.

95 The third point is that detriment is not confined to financial loss. Personal circumstances and inconvenience may amount to relevant detriment: Verwayen, at 416, 448-49 and 461-62.

96 Finally, it is not the mere fact of resiling from a promise that brings promissory estoppel into play. As Mason CJ and Wilson J said in Waltons Stores, at 406, mere reliance on an executory promise to do something, resulting in the promisee changing position or suffering detriment does not itself justify intervention. Something more is required, namely unconscionability. In Verwayen, Mason CJ returned to that theme, at 416:

"The breaking of a promise, without more, is morally reprehensible, but not unconscionable in the sense that equity will necessarily prevent its occurrence or remedy the consequent loss. In the same way with an estoppel, something more than a broken promise is required."

97 That is all I propose to say about the legal principles of promissory estoppel. I turn now to the relationship between a right of first refusal and an option to purchase. Generally speaking, a right of first refusal does not create an interest in land but an option to purchase does. In Pritchard v Briggs [1980] Ch 338 the court dealt with a written agreement between owners of land that until the death of the survivor of them they would not sell the land "without giving [to the other] the option of purchasing the land". The agreement then set out the price and the conditions applicable to the exercise of the option and settlement. It was held that the agreement to grant the right of pre-emption did not confer on the grantees any present or contingent interest in the land. However, in the course of his reasons Templeman LJ, at 418, made an obiter comment to the effect that if either owner contracted to sell the land in breach of the agreement, it would trigger the right of pre-emption and the other party would "be entitled to buy and would therefore be entitled to an equitable interest".

98 In Pata Nominees Pty Ltd v Durnsford Pty Ltd [1988] WAR 365 P leased land from D on terms that included a provision that if D became "desirous of selling the land" during the term of the lease, P would have a second right of refusal to purchase at the price and on the terms and conditions stipulated by D as being applicable to the sale. D, without first offering the land to P, entered into a contract with X to sell the land to X. D later offered the land to P but P did not take up the offer. P issued a writ in which it claimed, among other things, that once D started to negotiate with X, or at the latest when D entered into the contract with X, that D had become "desirous of selling the land" and that from that time P had an equitable interest in the land. The claim was cast in terms whether X, as purchaser, could claim an interest in priority to that said to have arisen in P under P's contractual right of refusal. However, I think it can legitimately be applied to an argument that, in the circumstances, the triggering of the right of first refusal creates in the grantee an equitable interest that is akin to an option to purchase.

99 Burt CJ (with whom Wallace J agreed) discussed Pritchard but said that he did not find it of any assistance. As his Honour pointed out, at 372, "each case of this kind must ... be decided upon the terms of the bargain". Burt CJ went on to say:

"[These cases] are not to be decided by attaching a label - option, conditional contract or right of pre-emption - to the contractual provisions but by deciding on the proper construction of the agreement precisely what was agreed. I can understand that a right of pre-emption, so-called, upon its proper construction may be a conditional option so that when the condition is satisfied there is a standing and by that time an unconditional offer to sell so that 'the holder of the right of pre-emption would be entitled to buy and entitled to an equitable interest'. But for that to happen it would, I think, be necessary, as was the case in Pritchard v Briggs that the price and the other terms necessary to establish a completed contract to buy and sell be agreed upon and expressed within the provisions conferring the pre-emptive right. If that be the case, then it may be, the condition being satisfied, that the holder of the pre-emptive right could accept what has then become the standing offer and so conclude an agreement which could be specifically enforced. But that is not this case. In this case, the right conferred was a right to purchase 'the said land at the price and upon the terms and conditions which the lessor shall stipulate as applicable to the sale'. So that even if the lessor is desirous of selling so that the condition controlling the right is satisfied, there exists no offer which could, by acceptance, create a contract to buy and sell. It would be necessary first for the grantor to stipulate the price and the terms and the conditions. In other words, it would be necessary for the grantor first, in fact, to make an offer." [emphasis added]

100 Kennedy J agreed in the result. His Honour said that he would not rule out the possibility that P did acquire an equitable interest at the time D decided to accept X's offer. However, he found that by failing to accept the later offer made to it by D, any such equitable interest would have been extinguished.

101 There are some authorities in New South Wales that also admit of the possibility that where a right of pre-emption is triggered by the relevant contingency, the grantee may have an equitable interest in the land by way of an option to purchase: Transfield Properties (Kent Street) Pty Ltd v Amos Aked Swift Pty Ltd (1994) 36 NSWLR 321 per Santow J at 343; Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 per Young J at 526. However, it must be noted that in Beneficial Finance, Young J, at 529, adopted the warning given in Pata that each case must be decided according to the terms of the individual bargain.

102 In the course of discussing the evidence I have given an indication of several findings of fact. It will be convenient now to tie together those findings in so far as they relate to the existence or otherwise of the occupancy assumption and the pre-emption assumption. These are, in effect, my findings on the matters raised in par 5, par 6, par 15 and par 16 of the defence and counterclaim.

103 It is to be remembered that the occupancy assumption is said to have arisen from, at or about the commencement of the Lease, that is, in or about April or July 1996: see par 1 of the defendant's further and better particulars of defence and counterclaim dated 10 August 1998. It also follows from the particulars to par 6 of the defence and counterclaim that the right to continue in possession was a right which flowed from a lease arrangement. Nonetheless, it is important that the events of that time be seen in the context of what had gone before. What follows are some essential findings. It is a summary and is not meant to detract from the more detailed consideration of the evidence which I have already set out.

1. Shortly after Wayne's death, the plaintiff told the defendant that:

(a) she had considered transferring Wayne's share in Arronville to the defendant;

(b) in any event, if ever she decided to sell the property she would allow the defendant to purchase it at a reduced price; and

(c) she would not sell the property there and then but would not sell it from under the defendant's feet because the defendant had livestock on the property.

2. Although the farming enterprise was discussed from time to time thereafter there were, between February 1993 and August 1995, no other significant conversations about the defendant's future so far as concerns the property.

3. At around the time when probate was granted (August 1995) the plaintiff told the defendant that she was not considering transferring Wayne's interest in Arronville to the defendant but:

Witham v Witham [2000] WASC 236

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (285 paragraphs)

Witham v Witham [2000] WASC 236 (25 September 2000)

Parties

Legislation Cited (2)

Cases Cited (21)