Donis & Ors v Donis

[2007] HCATrans 609

[2007] HCATrans 609

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M61 of 2007

B e t w e e n -

VICTOR DONIS, ROSA DONIS AND STEVEN DONIS

Applicants

and

SUSIE DONIS

Respondent

Application for special leave to appeal

KIRBY J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 5 OCTOBER 2007, AT 11.44 AM

Copyright in the High Court of Australia

MR P.J. RIORDAN, SC:   If the Court pleases, I appear with my learned friend, MR A.P. TRICHARDT, for the applicants.  (instructed by Michael Flemming & Associates)

MR N.J. O’BRYAN, SC:   If the Court pleases, I appear for the respondent.  (instructed by Pearce Webster Dugdales)

KIRBY J:   Yes, Mr Riordan.

MR RIORDAN:   Your Honour, the application in this case we contend raises an important issue being, what is the correct approach to be adopted by a court in determining the appropriate remedy in cases of equitable estoppel?

KIRBY J:   There is no dispute as to the principles involved?  There is no dispute as to the legal principles governing the entitlements of the respondent?

CRENNAN J:   Giumelli v Giumelli.

MR RIORDAN:   Yes.  The dispute is, to put it without.....point on it, whether or not, the principles having been established of equitable estoppel, then in approaching the question of remedy, is the prima facie position that the plaintiff should have fulfilment of his or her expectation?  That is what we say is the issue.

KIRBY J:   I was just really referring to that passage in paragraph 377 of the primary judge’s reasons, where his Honour said:

the case was run on the facts on the basis that the applicable legal principles were those stated in Giumelli v Giumelli and Flinn v Flinn.  There was no debate as to those principles.  I was left to resolve the facts and then apply the principles to the facts found. 

Do you agree with that summary of what his Honour said?

MR RIORDAN:   To the extent that there was any concession, there was ‑ ‑ ‑

KIRBY J:   I am not saying there was a concession.  I am just seeing whether he understood correctly the matters that were in dispute before him.

MR RIORDAN:   I am unable to say, sir, whether or not the issue of the prima facie entitlement to remedy was debated before him.  The question of the fact that there must be a representational promise, there must be substantial detriment were matters which were considered to be uncontentious.  In fact, his Honour, in coming to the assessment he did, did not say that Giumelli stood for the proposition that prima facie the remedy is the fulfilment of the plaintiff’s expectation.  He did not say that.  The Court of Appeal inferred that he had done so and decided that he was right in doing so.  That is what we say gives rise to the question of principle. 

KIRBY J:   It is just that as the primary judge described it it does not stand out as a special leave matter because if it is an argument on the facts, “I was left to resolve the facts”, that is not something which the High Court of Australia would normally get involved in. 

MR RIORDAN:   Plainly the facts had to be sorted out, but then the remedy also had to be sorted out and on the facts, there is no question there was a hot issue as to whether or not the representations were made and whether or not substantial detriment.  We say his Honour’s comments only go to those matters which had been the hot issues in the case, there is no question about that.

KIRBY J:   Anyway, you proceed to put your submissions in the way that you wish to put them and we might then have some more questions. 

MR RIORDAN:   Thank you, your Honour.  Following on from that, there is no question that those issues his Honour took to be decided were the factual issues and that the learned trial judge decided them and decided that in fact promises had been made.  He decided that substantial detriment had been suffered.  There is no contest made in this Court or in the Court of Appeal with respect to those findings which we say that his Honour the learned trial judge’s comments were in reference to, the issues in dispute in the case. 

CRENNAN J:   Except the respondent had an equitable interest.  The debate is really about quantum, is it not?

MR RIORDAN:   The case is really about the approach to quantum.  Plainly that impacts on quantum, your Honour, but we say that the question which is unresolved in Australia and there is conflict about is how the court approaches it and, in particular, whether there is a prima facie position and, in particular, as this Court of Appeal has found and the New South Wales Court of Appeal has since found, that the prima facie position is that there is fulfilment of promise.  In this case, in substance, the learned trial judge provided fulfilment of the promise and that has been upheld by the Court of Appeal.  The Court of Appeal upheld that on the basis that in fact that was the prima facie entitlement of the plaintiff.

KIRBY J:   There is no cutting across of jurisdiction of the federal Family Court of Australia in this case, is there?  There is no federal issue in the case?

MR RIORDAN:   No.

KIRBY J:   The relationship between the respondent and her husband had broken down, I think. 

MR RIORDAN:   Correct.

KIRBY J:   Has that gone to the Family Court for resolution of the entitlements of their property within the provisions of the Family Law Act?

MR RIORDAN:   It has and it has not been resolved.  This proceeding has taken place before ‑ ‑ ‑

KIRBY J:   It is common ground, is it, of the parties that there is no, as it were, superior federal issue that is presented by the Family Law Act which should have taken priority over the State law issue presented by the law of equity?

MR RIORDAN:   The underlying issue which is unresolved is whether or not ‑ ‑ ‑

KIRBY J:   In this Court we live with the Constitution all the time, so you keep your eye on constitutional issues and federal issues and I just did not see any reference to them in the papers presented in this application.

MR RIORDAN:   It was not part of this application as to whether or not, for example, the determination of the Court of Appeal as to what equity required to be done in the circumstances would cut across, for example, section 79 of the Family Law Act which entitled ‑ ‑ ‑

KIRBY J:   All right.  We will proceed on that basis and assume that there is no federal question to be resolved.

MR RIORDAN:   Yes.  I think that is the position the parties would take. 

KIRBY J:   Is that your position also, Mr O’Bryan?

MR O’BRYAN:   Yes, it is, your Honour. 

MR RIORDAN:   In this case the promise that was found to have been made at or about the time of the engagement and marriage was that the plaintiff would get 25 per cent of the parents‑in‑law matrimonial property.  The marriage lasted something less than three years but at the expiration of it the plaintiff claimed from the parents‑in‑law that they were obliged to make good.  The court fixed on the figure of $600,000 as the amount that equity required.  In this case they did not impose a constructed trust as such because it was not necessary because the property had been sold by the time it went to trial. 

What the trial judge did for the purpose of fulfilling the promise was to merely pick a date at which the property should be valued and, in essence, he picked a date halfway between the date of separation and the date of the sale of the property.  That was of some significance because this property had, during the period of time that had expired, gone up some 10 times.  It had had an extraordinary increase as a result of its position on the outskirts of Melbourne.  It is contended that the $600,000 was calculated by reference to an incorrect approach by the learned trial judge because he did so without reference to the detriment – that calculation was the timing – and he did so, we say, in circumstances where it was disproportionate to the detriment. 

We say the root cause of that error of the learned trial judge and the Court of Appeal was that these errors were – because the courts proceeded on the basis that the balance of equitable estoppel having been established and about which there was no contest, the prima facie position was that the plaintiff was entitled to fulfilment of the expectation.  We contend that was an error and we contend it was an error, again in the Court of Appeal, where Justice Nettle, with whom the other judges of the court agreed, expressed the view that that was the result of the decision of this Court in Giumelli.

We say that on a proper reading of Giumelli that is not correct.  It starts with a proposition that certainly by the time this Court has made its decision in Verwayen, whilst there were various reasons given by the justices of that court, one thing that stood clear was that, at the very least, of six of the seven judges none of them were putting the proposition that fulfilment of a promise was a prima facie entitlement in equitable estoppel.  It was put by Justice Deane but we say by none of the other judges.  From that time the acceptance seemed to be that the position was that the Court should approach the proposition as, what is the minimum equity required to make good the position of the plaintiff?  That was the contention in Giumelli.

KIRBY J:   Your clients had made a profit of 3.6 million, had they not, on the sale of the property?

MR RIORDAN:   The purchase price was 350,000 and the sale price was 3.6 million or 3.7 million – 3.79 million.  It was in fact payment over a number of years so it may have been a bit less than that, your Honour.  For the purposes of principle, there was a very substantial profit that the parents, the first two applicants, had made.  There is no question about that. 

KIRBY J:   The respondent is their daughter‑in‑law or ex‑daughter‑in‑law and their grandchild?

MR RIORDAN:   Yes, that is so.  The grandchild is not a party.  I am not sure your Honour was suggesting that.  The respondent is their daughter‑in‑law, formerly at least.

KIRBY J:   But she has the custody of the grandchild, I think. 

MR RIORDAN:   Correct. 

KIRBY J:   It just did not strike me, on my understanding of the applicable principles in Giumelli, as a particularly generous order on the part of the primary judge.  It did strike me as very much an evaluative factual matter which is one where I am not sure the High Court could value‑add it.  We might have seven values added.

MR RIORDAN:   That might be so, your Honour.  We say that the High Court does have a role in this case because, if the High Court wishes that the prima facie remedy be the fulfilment of a promise, then we say it should say so.  We say clearly it does not say so in Giumelli.  That is the way this has gone forward.  Whilst your Honour says that it is not a particularly generous award ‑ ‑ ‑

KIRBY J:   That was just my instinctual reaction to it.  That does not really matter.  The question is, is there error on the ‑ ‑ ‑

MR RIORDAN:   It might be very important in this application, your Honour. 

KIRBY J:   Is there error on the part of the Court of Appeal in the application of Giumelli principles?

MR RIORDAN:   We say yes, very distinctly and precisely, and it is starting to suffer from repetition, but because we say that since Verwayen, the High Court has made it perfectly plain that the approach to the remedy of equitable estoppel is not – prima facie that the estoppel is – is that the remedy or the promise is fulfilled.  That is now becoming the law of this country on the basis of, we say, an erred interpretation of Giumelli.  Giumelli dealt with an entirely different proposition, in our submission, because there the appellant went forward saying that there was no place for the fulfilment of a promise in the remedy of equitable estoppel.  Any court was restricted to identifying the minimum equity, a detriment and compensating the detriment.

CRENNAN J:   But is that really right?  I mean, there are dicta, are there not, including in Flinn v Flinn, that what is required to satisfy the equity on any particular set of facts has to be determined by reference to all the circumstances of the case and that, I am bound to say, seems to me to be exactly the approach that was adopted by Justice Hansen when he came to his task of calculating the amount.

MR RIORDAN:   I am sorry, your Honour.  My submission was unclear.  I was saying that is what the appellant said in Giumelli, that that was the restriction on the Court and what the High Court found in Giumelli that was wrong.  So, with respect, your Honour is right.  The proposition I was putting was wrong.  It was the appellant’s proposition that it said Verwayen forecloses the fulfilment of promises by reference to the circumstances and the High Court in Giumelli said, no, it does not, it does not foreclose it.  It did that by reference to the judgments ‑ ‑ ‑

CRENNAN J:   How do you identify an error in this case in the court below in the context of what we now agree is the principle to be derived from Giumelli v Giumelli?

MR RIORDAN:   Because of the fact that the court started from the proposition that the fulfilment of a promise is the prima facie entitlement of a person equitable estoppel.  We say that is the error.  It is a question of swinging from Verwayen where everybody said it is now a minimum equity, such as it got to the stage in Giumelli saying the court cannot go beyond it, and the Court in Giumelli said, no, it is not right.  It can go beyond it and it was never foreclosed by Verwayen.  It has now swung across to the other extreme, saying, okay, fulfilment of the promise is now the prima facie position.  We say that it is a reference to all of the circumstances.  It is a search to find what good conscience requires the promisor to do, but there is no prima facie position that good conscience requires fulfilment.  We say that this case has ‑ ‑ ‑

KIRBY J:   Surely it depends on the case.  There may be a case where good conscience does require fulfilment but there may be cases where it does not and it is a matter of determination of what good conscience requires in the facts of the particular case, just as the primary judge said he was endeavouring to find here. 

MR RIORDAN:   That is our point, with respect, your Honour.  It is on the facts of every case sometimes it will be appropriate, sometimes it will be inappropriate, but as the Court of Appeal has said perfectly plainly, there is not a prima facie entitlement to it.  It would depend on the facts of the case.  We come to this Court because we say the Court of Appeal stands against the proposition that your Honour the learned presiding judge put to me and that is that you look at the facts of each case.  We say that is what Giumelli said and we say that the Court of Appeal in Victoria has misunderstood Giumelli. 

The Court of Appeal in New South Wales in Sullivan has misunderstood Giumelli, and without intervention by this Court, the proposition put to me will not be the law but you look at the facts, sometimes it is appropriate, sometimes it is not.  It will rather be the proposition that was put by Justice Deane in Verwayen, that prima facie you get the lot.  It may be in some cases you do not but prima facie you get the lot and we say that is an error of principle and it is that simple error of principle we say, unless this Court corrects it, it will proceed because with the New South Wales Court of Appeal and the Victorian Court of Appeal taking the position, it just does not depend on all the facts.

KIRBY J:   Well, I am not sure that they do that.  They simply say that, in the particular case, an approach by way of a prima facie rule is the fulfilment of the obligations of conscience.

MR RIORDAN:   No, with respect, they do not.  They do not say in a particular case the prima facie position is, they say with equitable estoppel or, more precisely, with proprietary estoppel in this case.

KIRBY J:   Of course, in the end the role of courts, including this Court, is to correct judgments and orders and if one were of the view that the judgment of the Court of Appeal of the Supreme Court of Victoria were correct, then we would not normally grant special leave simply to dabble in their reasoning.  That is why my earlier statement is relevant, that if I think this is rather a modest response to conscience, you have a bit of an impediment as far as I am concerned.

MR RIORDAN:   That is why I said it might become more relevant when your Honour suggested it was not. 

KIRBY J:   After all, they have this very large kitty, this is their daughter‑in‑law, this is their grandchild that she has the custody of and looks after and she came into their family and had expectations as a consequence of what was said to her, so quite a small proportion of a large sum. 

MR RIORDAN:   But normally, your Honour, in society daughters‑in‑law do not actually get entitled to the parents‑in‑law nest that they have saved over their life.  That is not a normal entitlement.  You are normally limited to ‑ ‑ ‑

KIRBY J:   But it is not just their daughter‑in‑law, it is their daughter‑in‑law with their grandchild. 

MR RIORDAN:   True, daughter‑in‑law and grandchild but still, normally the daughter‑in‑law ‑ ‑ ‑

KIRBY J:   Their blood, their genetics.

CRENNAN J:   You are not challenging the equitable interest in any event.

MR RIORDAN:   We are not challenging an equitable interest, no, we are not.  We are saying it should have been remedied in another way.  Effectively it should have been remedied by allowing the Family Court, possibly an estoppel, for example, against denying that the husband at least had an entitlement to half the property, which then would have enabled the Family Court, like all other wives with blood children, she would then have got her entitlement under the Family Law Act.  We are suggesting, with respect to what your Honour has said, that in fact in a three‑year marriage it is not going to be anything in the realms of 600,000, it is nothing in the realms of it.  The fact that the parents may have been successful in their matrimonial home going up so much in value would not normally impact substantially on the entitlement. 

CRENNAN J:   But you have agreed this was not a Family Court dispute.

MR RIORDAN:   Yes.  I am really just challenging, with respect, his Honour saying that he thought it was a modest sum.  I was saying that, as a matter of law, whatever one might think the grandparents should endow on their grandchildren as a matter of law it cannot be part of the entitlement of the daughter‑in‑law and child to access to the grandparents’ assets.

KIRBY J:   Yes.  Is there anything else you want to say?  You have put it as persuasively as it can be put, I think, Mr Riordan. 

MR RIORDAN:   I think my time is out.

KIRBY J:   Yes, thank you.  The Court does not need to hear you, Mr O’Bryan.  Though it is always a pleasure to hear you, we do not need your assistance on this occasion.  The reasons of the Court and the orders of the Court will be given by Justice Crennan.

CRENNAN J:   The applicants seek special leave to appeal against a decision of the Court of Appeal of the Supreme Court of Victoria dismissing their appeal from a decision of Justice Hansen in the Supreme Court.

Justice Hansen held that the respondent was entitled to equitable relief against the applicants and made an order as to the amount sufficient to satisfy the respondent’s equity in the circumstances of the case.  The applicants do not challenge the existence of the respondent’s equitable interest.  They only challenge the approach taken to calculating the amount awarded by Justice Hansen.

It was common ground between the parties that no relevant federal legal question was presented as to the rights and entitlements of the respondent under the Family Law Act 1975 (Cth).

The applicants’ submissions are firmly based on the facts of this case and there is no challenge to settled principle set out in Giumelli v Giumelli (1999) 196 CLR 101. There was no error by either the primary judge or the Court of Appeal in the application of those principles to the facts of this case. There is no question suitable for the grant of special leave to appeal and the interests of justice do not require such a grant.

Special leave is refused with costs.

MR RIORDAN:   If the Court pleases.

MR O’BRYAN:   If the Court pleases.

KIRBY J:   Adjourn the Court now until Monday, 22 October 2007 in Perth, Western Australia.

AT 12.07 PM THE MATTER WAS CONCLUDED