Craig v Craig (No 2) - [2015] SADC 162

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CRAIG v CRAIG & ANOR (NO 2)
[2015] SADC 162
Judgment of His Honour Judge Slattery
27 November 2015
EQUITY
The plaintiff failed in his actions for orders that he was entitled to declarations of legal and beneficial interest in a property at Glandore. The property was purchased by the defendants using their own funds, from funds secured by mortgage, and some funds gifted to them by the plaintiff and his late wife, Wanda, the parents of the first defendant. The gift was made to the defendants in consideration of them providing accommodation to the plaintiff and Wanda free of any cost or charge for their life and in consideration of the defendants providing a level of care to the plaintiff and Wanda consistent with their needs from time to time. The plaintiff was born in 1922 and Wanda was born in 1916. Wanda passed away in 1997 and the plaintiff continued to live alone in the Glandore property until 2012.
In 2012 the plaintiff, who was then aged 90 years, was unable to remain living at the Glandore property because of the absence of a functioning air conditioning system; he moved into a house that he owned jointly with another son, Konrad. The plaintiff did not return to the Glandore property to live. The defendants continued to maintain the Glandore property in the expectation of the return of the plaintiff.
Whether and to what extent, the 1984 agreement between the parties constituted a personal obligation upon the defendants enforceable in equity.
Whether the defendants are in breach of their personal obligations and whether equity would provide an award of damages for breach of the personal obligations.
Held:
1       The agreement between the parties constituted a personal obligation upon the defendants enforceable in equity.
2       The defendants are in breach of their personal obligations.
3       The defendants personal obligations may be enforced in equity by an order for compensation.
4       The plaintiff is entitled to an award of compensation.
5       Compensation assessed.
Muschinski v Dodds (1985) 160 CLR 485; Gill v Gill (1921) 21 SR (NSW) 400; McEvoy v McEvoy [2013] NSWSC 1162; Rodda v Ian Rodda Pty Ltd (No 2) [2015] SASC 128, considered.

CRAIG v CRAIG & ANOR (NO 2)
[2015] SADC 162
JUDGE SLATTERY

By judgment dated 17 July 2015[1] I made a finding that the plaintiff John Craig and his late wife Wanda provided to the defendants the amount of $70,000 in 1984 as a gift for the purposes of the purchase by the defendants of a property at Glandore, disposed as two homes on one title.[2] The $70,000 gift provided by the plaintiff and his late wife to the defendants was also made in consideration of the defendants providing an assurance to the plaintiff and his late wife that they would be accommodated at the Glandore property rent free and cost free for their lives. These undertakings were given as personal obligations and included an obligation that the defendants would provide support and care to the plaintiff and his late wife Wanda during their respective lives. I made findings that the presumption of resulting trust, if it arose, was rebutted, that a constructive trust did not arise as a matter of law and that the plaintiff did not own any legal or beneficial interest in the Glandore property.
[1] Craig v Craig [2015] SADC 109.
[2] Commonly described as 35 and 35A Glengyle Terrace, Glandore.
At paragraph [237] et seq. of my judgment, I raised the issue of whether the personal obligations arising between the plaintiff and the defendants are enforceable in equity and whether there are remedies available to a Court which may order compensation for failure to fulfil the obligations or for a decree of specific performance of the obligations. Paragraphs [227]-[229] of my judgment are as follows:-
[227] I return to the question of the nature of the gift that I find was made by the plaintiff and Wanda to the defendants in 1984. There is no evidence of a condition having been imposed on the defendants, the breach of which will lead to forfeiture. I would treat the assurances that were given to the plaintiff and Wanda by the defendants in 1984 as amounting to equitable personal obligations upon the defendants to perform the condition.
[228] These personal obligations are enforceable and the remedies available to the court include an order for compensation or, if necessary a decree for specific performance. I am also of the view that although the question is always one of fact concerning what assurances were given, generally and in intra familial relationships made for the benefit of (for example) ageing parents, the rule of equity affords flexibility to the court in deciding what may be necessary to be done to satisfy the assurances that were given. As an example, one matter about which a court will have an interest is the need to make proper arrangement for the comfortable living of, for example, a man of 93 years, such as the plaintiff.
[229] The effect of my decision is that the plaintiff continues to have the right to occupy number 35A rent free and cost free for his life. Properly construed, and in context, this court would view this obligation as being greater than merely paying the outgoings on the property comprising number 35A. If necessary, the court will hear the parties further on this matter.
The plaintiff now brings an application dated 22 September 2015 in the following terms:-
INTERLOCUTORY APPLICATION
The Plaintiff, John Craig, seeks the following orders or directions:
1.   The Court quantify an amount to be paid by the Defendants in performance of their equitable personal obligation to the Plaintiff as found in paragraphs [227]-[228] of the Judgment delivered on 17 July 2015, such sum to include interest at a rate determined by the Court compounding at yearly rests.
2.   Judgment for the amount so quantified.
3.   Costs.
4.   Such further or other orders as this Honourable Court deems fit.
The plaintiff thus seeks the quantification by the Court of the amount payable by the defendants to the plaintiff in performance of their equitable obligations. This interlocutory application evidences an election by the plaintiff to seek damages rather than the remedy of specific performance.[3] Regardless of the nature of the remedy sought it is always necessary for the Court to make a determination that an equitable obligation exists and that its breach attracts a remedy from the Court in the exercise of its discretion. Having made his election to seek for a payment of compensation, the plaintiff relies upon the decision of Pembroke J in McEvoy v McEvoy (No. 2).[4]
[3] Muschinski v Dodds (1985) 160 CLR 485 at 605-606 (Brennan J), 624-625 (Dawson J); Gill v Gill (1921) 21 SR (NSW) 400 at 407.
[4] [2013] NSWSC 1162 at [6]-[7].
In the principal judgment in that case,[5] Pembroke J held that the defendant was the holder of land on trust for her son and daughter in law as to one half share. The issue generally revolved around the ownership of land and the contribution of the parties and their obligations to one another. Pembroke J also held that the plaintiffs were subject to an equitable personal obligation to make a payment to the defendant of an amount to be agreed or determined.[6]
[5] [2012] NSWSC 1494.
[6] Ibid at [38]-[40].
In his judgment Pembroke J made a distinction between a personal obligation creating an interest in property which, if not performed, will mean that the property interest held by the obligor (to the obligee) will fail or be forfeited and one which merely creates a personal obligation which, if unfulfilled, gives rise to a right in equity for compensation. His Honour identified the difference at paragraphs [3] and [4] of the judgment[7] as follows:-
[3] The acquisition of an interest in property may, depending on the particular circumstances, be subject to a condition. In some cases, the characterisation of the events, or the construction of the language, giving rise to the creation of the interest in property, may indicate that the very existence of the interest is conditional - with the result that if the condition is not performed, the property interest will fail or be forfeited. In other cases, the condition will be treated as merely creating a personal equitable obligation to fulfil it. In such a case, the obligation may be enforced in equity by an order for compensation, or where appropriate, by a decree of specific performance.
[4] This difference has been frequently explained. See for example, Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 605-6 (Brennan J) and 624-5 (Dawson J); Williams v Williams [1897] 2 Ch 12 at 19 (Lindley LJ) and O'Sullivan Partners (Advisory) Pty Ltd v Foggo [2012] NSWCA 40 at [96] - [99]. In Gill v Gill (1921) 21 SR (NSW) 400 at 407, Harvey J addressed the difference in the context of a conditional gift pursuant to a will:
In some cases the court may see that what the testator intended was to attach a charge or trust upon the property, in other cases it may conclude that a personal liability alone is intended. The view taken would depend on the language used to describe the obligation, the nature of the property given to the obligee, and the nature of the obligation. In cases where the obligation is merely personal in its nature, calling for the personal activity of the obligee it may be the court could not effectively secure its specific performance; there is no reason why, in such cases, the Court should not mould the remedy so as to give a remedy by way of damages for the breach of the [equitable obligation].
[7] [2013] NSWSC 1162.
In the case at bar, I have set out in my judgment the basis upon which I have decided that although the defendants are entitled to remain as registered proprietors of the Glandore property, a condition attaches to that entitlement requiring them to provide accommodation to the first defendant’s parents for their lives and to provide care to the first defendant’s aging parents outside of what may usually be described as ordinary intra-familial arrangements.
There are a number of facts and issues which inform this latter obligation of “care” as it may be described. In 1986, Wanda Craig, the mother of the first defendant was already suffering from ill health associated with a number of medical conditions. She was apparently aware of her (relatively) increasing frailty. She wanted to relocate from the Prospect house to be near family and in sufficient proximity to them so that she could call upon them for support. The defendants were primarily to provide that care and support.
After moving into No. 35A, the plaintiff and Wanda set about improvements to the house; two of the most important were renovations to the wet areas of the house and the installation of a ducted air conditioning system. Those changes were directed at the increased level of comfort and convenience desired by the plaintiff and Wanda. In 1997 Wanda passed away following a long period of illness.
The evidence about the needs of the plaintiff in the period of, say, two years before 2012 is scant. Perhaps little more need be said than, by that time, the plaintiff was 90 years of age and may be assumed to need a level of comfort and care consistent with the usual frailties of someone of that age. It is in that background that the whole of the evidence is to be assessed.
One aspect of the evidence is that Ronald Craig knew that the ducted air conditioning system did not operate by the end of 2012. The evidence is that rather than arrange for a replacement, Ronald Craig arranged for a portable air conditioner to be purchased by the plaintiff. This was an evaporative cooler that, as the name suggests, required a constant refilling of water so that it would work.
In December 2012, the defendants took their family on a holiday to the USA. After that time, the relationship between the plaintiff and the defendants broke down. During that time (and beforehand) the plaintiff was unable to live in the Glandore property because the air conditioning unit did not work. The defendants knew of this fact. At paragraphs [126]-[127] of the principal judgment, I said as follows:-
[126] There had been communication between John and Ronald after Ronald and his family returned from overseas in December 2012. When Ronald returned, he went to see his father and his father was very upset. He told Ronald that he could not live there anymore because the air conditioning did not work and he told Ronald that he had a plan in place and that he would find out soon enough. Ronald had no idea that John had purchased a house jointly with Konrad.[8]
[127] When Ronald, Sharon and the family went on their holiday to the USA in December 2012, they knew that the air conditioning in 35A was not working properly. At that time, the plaintiff was 90 years of age. Ronald said that he took his father to Harvey Norman to buy an air conditioning unit for the bedroom. This would have been a standalone evaporative unit. Ronald could not explain why he did not take his father to see an air conditioning supplier to get a replacement for the ducted system. John paid for the air conditioner that was bought at Harvey Norman. This payment was inconsistent with the evidence given by the defendant Ronald, who said that upon receipt of the $70,000, he told his parents that they would never have to pay for anything more for that property and that they would be able to live there rent free and obligation free. Ronald said that was consistent with the terms of their discussion. He also agreed that there was never any agreement or discussion about when for example John or Wanda might have needed to move into a nursing home or where they might have changed their mind about entering into the relationship or there was a relationship breakdown.[9]
[8] T77.37-T78.
[9] T148.
The effect of the evidence of Sharon Craig was she always understood that from 1984, when the plaintiff and Wanda came to live at Glandore, the defendants were required to pay all of the outgoings of the Glandore property and with the increasing frailty of the health of Wanda Craig, that greater care and attention would need to be given to Wanda Craig by the defendants as time progressed. It is quite obvious in an ordinary family situation, that where there are aging parents with failing health, greater attention and assistance would need to be given to those parents. But this situation was different from the ordinary because the intention of Wanda Craig was to have her family around her for support, sustenance, care and reassurance. This was necessary due to her ongoing failing health. The position is really little different for John Craig because he needed the maintenance of the physical circumstances of the home even if he did not need the same level of care as Wanda.
The defendants were not able to explain why it was that in 2012, in the knowledge that the air conditioning system of 35A (occupied by the plaintiff) had broken down that they would leave the plaintiff to survive an Adelaide summer with a portable evaporative air conditioner in his unit. In my view, this conduct constitutes a failure of the personal obligation upon the defendants. This is the position for a number of reasons. At the most basic level, the difference between a portable unit and a fully ducted air conditioning system is so stark and obvious it needs no further explanation. That difference also separately informs the difference between what the defendants now considered to be their ‘care’ obligation in 2012, compared to the burden that they accepted in 1984. It is only necessary to state that after John complained to Ronald about the breakdown of the ducted system, Ronald Craig arranged for the ‘mobile’ replacement for which the plaintiff paid. The defendants paid for the power supply to No. 35A. In those circumstances, it is of little benefit to the defendants to say that an arrangement was made for the plaintiff to stay with Konrad Craig during their absence overseas, if this was his wish.
After the plaintiff went to stay with Konrad Craig, he remained at those premises after the return of the defendants and their family from overseas. In my view, John Craig was entirely justified in making that decision to stay with Konrad Craig.
In that background I turn to the question of whether, in equity, the plaintiff is entitled to an assessment of damages in his favour following the breach by the defendants of their personal obligations to the plaintiff. I am satisfied that the conduct of the defendants amounted to a breach of their personal obligations to the plaintiff. That finding then requires me to consider whether and if so what damages may be awarded to the plaintiff in respect of that breach.
In undertaking that exercise I would adopt the same approach to the assessment of this amount as was taken by Pembroke J in McEvoy. At paragraphs [6]-[7] of his judgment, Pembroke J said as follows:-
Approach to Assessment
[6] I said in my principal judgment that fixing a money sum that represents the amount of the plaintiffs' equitable personal obligation was 'not a matter requiring mathematical or actuarial precision'. The exercise is not one of taking accounts. Rather, the object is to mould an appropriate equitable remedy to meet the circumstances of the case and satisfy the demands of justice. Where an equity has arisen in favour of one party, the court may define the interest (or the amount) that satisfies the equity. The discretion is broad and flexible. However it must be exercised judicially. One aspect of that principle is that there must be a reasonable evidentiary basis for the relief ordered: The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107 at [3]; (2009) 39 WA 1.
[7] On the other hand, even on the taking of accounts, the court need not adhere to standard procedures and formal court processes, or insist on strict proof, where the benefits of doing so are outweighed by the time and expense involved. This is especially so where the parties are not wealthy, the amounts not great and judicial fastidiousness may cause hardship and delay. In such a case, in order to achieve a just outcome, it may be necessary to balance the relativities and to adopt a sensible and pragmatic approach: Ide v Ide [2004] NSWSC 751 at [24] - [26] per Young CJ in Eq; Hons v Hons [2010] NSWSC 247 at [127] - [128].
I accept the submissions of the plaintiff that he was entitled to occupy number 35A and be provided with services for the rest of his life. This will vary according to age and requirements. In 2012, the plaintiff was 90 years of age when he left number 35A to go and live with Konrad. At that time, the plaintiff took the steps which led to the genesis of these proceedings. He did not, for example, separately seek any remedy consistent with his entitlements following the defendants’ breach of their personal obligations. A balance must be struck between the fact that the plaintiff was justified in leaving number 35A to live elsewhere at the height of a hot Adelaide summer and the fact that, contemporaneously, he took steps to create the division between he and the defendants which culminated in my judgment of 17 July 2015.
The plaintiff elected to bring the action seeking the benefit of declaratory orders from the Court and he has failed in that application. The Court must be realistic in its assessments. Once commenced, these proceedings have led to a hardening of positions on both sides and perhaps the inflammation of long forgotten familial grievances. It would be unrealistic to think that the plaintiff would return to live at No. 35A whilst these matters remained unresolved. To an extent, the plaintiff has been the author of his own position and all of these matters must be weighed in the balance.

The evidence of the plaintiff is that the Australian Life Tables (2010-2012) provide that the life expectancy for a male aged 90 years was 4.21 years. The plaintiff also provided evidence that the average rental for an equivalent unit was $308 per week and $349 per week for an equivalent house. The plaintiff also claims a cost of provision of services to him at $25 per hour. There is no evidence that any services were provided to the plaintiff apart from those services provided to him by Konrad, another of his sons. The question of the value of care is also problematic. I put to one side the fact that by 2012 the level of care provided had abated. The issue is what is the evidence of the need for care. There is a paucity of evidence on this topic. It is to be expected that a man of 90 years will need some level of care. My observations of the plaintiff were that he was slightly dismissive of the need for care; there were mentions in the evidence of a carer who, it was inferred, provided assistance to the plaintiff: a person (unidentified) attended Court from time to time but the plaintiff referred to this person with some derision. There was in the end very little evidence on which to base any findings. Doing the best I can, an overall allowance may be made, but only on the most general of bases in the amount of $3,000. I am not prepared to make any allowance in relation to services. Balanced against that decision is the fact that the defendants have maintained the premises, and continued to pay for the cost of those premises including all outgoings of the premises since December 2012. On one view, this was the obligation of the defendants in any event. However, as the defendants point out, they had not attempted to use the premises at No.35A for commercial gain and they have maintained the premises in the expectation of the return of the plaintiff. That has not occurred. My finding that it could not be expected that the plaintiff would return to No. 35A must be balanced against this fact.
The evidence before me is that the plaintiff now resides in a nursing home. I have no evidence concerning the arrangements made for the maintenance of the plaintiff in the nursing home and that is now a fact which is to be taken into account in weighing an appropriate amount to satisfy the plaintiff’s personal obligations.
In McEvoy, Pembroke J identified that the exercise being undertaken by me is not an exercise in arithmetical accuracy.[10] It is not an accounting exercise.[11] In the end, it is necessary for me to decide the amount which I think, in the exercise of my discretion, is a sufficient and appropriate amount to satisfy the plaintiff’s equitable personal obligations to the defendants in the events which have occurred.[12]
[10] At paragraph [14].
[11] Ibid.
[12] Ibid.
In making my calculation, I have taken into account the fact that in December 2012, the plaintiff was left alone in occupation of premises at Glandore which were not suitable for a man of his age. He sought accommodation elsewhere. The failure of the defendants to render the premises suitable for the occupation of the plaintiff is a breach of their equitable personal obligations. The rights of the plaintiff were complicated by the fact that he then commenced the proceedings which meant that the question for consideration became whether or not the plaintiff was entitled to a declaration of a legal and beneficial interest in the Glandore property. That division between plaintiff and defendant renders to zero the possibility of the plaintiff ever returning to live at the Glandore property. This is a matter of ordinary commonsense.
Having left the Glandore property, the plaintiff lived in a house of which he was a registered proprietor. He lived there for a period of time. He was a mortgagor of that property but whether or not he made any contributions to that mortgage is unknown. No evidence was led from the other mortgagor, Konrad Craig in relation to what arrangements had been made with his father concerning his occupancy of the house in Flagstaff Hill of which he was a registered proprietor.
There is a further complication. Because of the failure or inability of Konrad Craig avoid a state of penury the Flagstaff Hill house was sold to the girlfriend of Konrad Craig. It is not clear whether, and to what extent, the conduct of Konrad Craig led to the loss of that asset and, consequentially, the change of the plaintiff’s position from that of an owner to a renter of that property.
In the end, I think it is clear from the evidence that the plaintiff would never return to the Glandore property to live irrespective of any steps taken by the defendants to repair that property and render it in a fit state for habitation by a man of between 90 and 93 years of age. There is no evidence that the defendants made any ongoing capital expenditure to repair the house and, for example, to replace the air conditioning system that had been installed by the plaintiff and his late wife after 1984.
There are considerations that fall on both sides of this question. All of these competing considerations have been weighed in the balance and have been taken into account by me. There is no arithmetic certainty here and in the end it is a matter for judgment. That includes making a provision for ‘care’.
Doing the best I can, and keeping clearly in mind that my task is to make a calculation of what I think is a sufficient and appropriate amount to satisfy the defendants’ equitable personal obligations to the plaintiff, I have made an assessment of compensation including for care in the amount of $35,500. Consistent with authority,[13] I allow prejudgment interest on that sum in the amount of $1,750.
[13] Rodda v Ian Rodda Pty Ltd (No. 2) [2015] SASC 128 at [35]-[41].
I will hear the parties as to costs.