Giumelli & Anor v Giumelli

[1998] HCATrans 369

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P55 of 1997

B e t w e e n -

GIOVANNI GIUMELLI and ROSA GIUMELLI

Appellants

and

ROBERT JOHN GIUMELLI

Respondent

GLEESON CJ

McHUGH J
GUMMOW J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON WEDNESDAY, 21 OCTOBER 1998, AT 9.34 AM

(Continued from 20/10/98)

Copyright in the High Court of Australia

GLEESON CJ:   Yes, Mr McCusker.

MR McCUSKER:    May it please your Honours, I referred to an article in the 1998 Law Quarterly Review yesterday.  I have brought five copies of that as promised or threatened.  If I can hand those up, your Honour.

GLEESON CJ:   Thank you.

MR McCUSKER:    Yesterday, your Honours, there was some discussion about what occurred at the Court of Appeal when the matter of the constructive trust was raised.  The reference, I do not think I gave your Honours, is at page 869 of volume 4 of the appeal books where Justice Ipp referred to it and said - it is at line 35 and following:

The allegations made in the statement of claim were capable of setting up a constructive trust.  In my view, it should have been apparent to the respondents that the appellant’s claim could be put either on the basis of a promissory estoppel or a constructive trust.  Senior counsel for the respondent was not able to suggest how the respondents would have conducted their case differently had they been warned expressly that they were facing a claim for a constructive trust and in my view, had this occurred, there would have been no change in the presentation of the respondent’s case.

GLEESON CJ:   What do you understand to be the difference between putting the case one way rather than the other?

MR McCUSKER:    Your Honours, I said yesterday, I think it is a distinction without a difference.

GLEESON CJ:   Then why did the majority bother?

MR McCUSKER:    I think that it simply shows the degree of confusion that exists, with respect, in this area.  The Baumgartner and Muschinski line of reasoning was based on a factual circumstance where there was no promise.  There was the view that there was unconscionability.  It was not based on a broken promise but on the insistence by the legal owner of the property on retaining full legal rights when the other party had contributed to the property.

GUMMOW J:   By way of a joint venture of some sort?

MR McCUSKER:    Precisely, your Honour.  Now this was not such a case.  This was not a joint venture in that sense.  This case was mounted and run from beginning to end on the basis of a promise, the non‑honouring of which would have been unconscionable in the circumstances because of the detrimental reliance.

KIRBY J:   But the suggestion that was made yesterday by Mr Castan was that the constructive trust being the a remedy, you look at a wider range of factual data and that in order to fashion a constructive trust that would be appropriate to resolve the problem, you would be, in effect, going into all of the evidence that was relevant to the partnership arrangements.

MR McCUSKER:    Yes, I appreciate that, your Honour.  The remedy was there claimed in the prayer for relief was always sought.  The distinction that the Full Court majority seemed to be drawing was between the remedy and what my learned friend, Mr Castan, referred to as the substantive issue of constructive trust along the lines of Muschinski v Dodds.

We say that in the circumstances of this case, although I certainly accepted the invitation of the Court of Appeal to argue and did argue the constructive trusts line - that is substantive constructive trust - this case has always been one in which a conveyance of a property has been sought and, as a prelude to that, a claim for expiration of a constructive trust of that property and the trustee then being called upon to convey the property.

GLEESON CJ:   Maybe one thing this case has in common with some of those constructive trust cases about de facto relationships is that this case also might demonstrate the incompleteness of an analysis which views the relations between the parties in purely commercial terms.

MR McCUSKER:    That is so, your Honour, and we say that that was the flaw in Justice Nicholson’s reasoning where, having found the promise in the clearest of terms, the detrimental reliance on the promise, he then got to a point of saying there was no detriment in that there was no evidence in accounting terms of a financial loss by remaining in the partnership as compared with having gone, perhaps, to work for his father‑in‑law or for Alcoa.

Now that was viewing it at the end of the day in a commercial way, that is the detriment, and the Full Court unanimously took the view, in our support, that that is too narrow a view of what is meant by detriment in these circumstances.  The case is analogous in its facts to many other cases in which the relief given in equity has been the conveyance of the promised property.

GUMMOW J:   Now that, I think, is the problem here and I think you have to face up to the possibility anyway, on a contingent basis, that you might not hold that order for a conveyance and that there will be some other and lesser form of relief of a monetary kind charged on – it would have to be the whole of this land, I suppose, because you could not subdivide it notionally.  Then the question is for what is the money value and what allowance is going to computation of value and I do not know the answer to that.

MR McCUSKER:    Yes.  It is impossible, it is totally unquantifiable because here was a young man who was faced – really he was at crossroads and he was given a choice by his parents, “Stay on and we will give you what we have always promised you.”  This was not an isolated promise in 1981.  This was a promise that was described originally as a general promise and then what was called the second promise came and then, finally, it crystallised into a promise to convey the lot with the existing orchard and the area where the new orchard was to be established and it was only after the third promise that he did establish that orchard on the evidence.

KIRBY J:   Is it the third promise only that you rely on?

MR McCUSKER:    We do, your Honour, because that is the clearest of the promises.

KIRBY J:   That is the one that is found.

MR McCUSKER:    It is wrong to ignore the background to it.

KIRBY J:   That is true but the one for which you seek the fashioning of an equitable remedy is the third promise.

MR McCUSKER:    Yes, it is, your Honour, yes.

KIRBY J:   I think you are just going to have to face up to Justice Gummow’s question because, you see, there is a problem in equity fashioning the remedy that was fashioned here which really ignores the claims in equity of brothers, Tony and Steven.

MR McCUSKER:    Your Honours, I understand what your Honours are putting to me.

KIRBY J:   All quantification in damages or even the charges are difficult.  I mean, look at defamation cases and look at loss of an eye or loss of libido and all that sort of thing.  It is very difficult to quantify but courts have to do it.  You have to face up to Justice Gummow’s question, I think.

MR McCUSKER:    Your Honour, I do in this way.  First, there was no evidence that Tony ever had any claim on this property.  Tony, the eldest brother, had left many years before.  He left, on the evidence, because of a somewhat similar dispute between he and his parents regarding his choice of a bride.  That is similar to that that occurred in 1985 between Robert and his parents over his choice of a bride.  There was no suggestion that Tony had any claim whatever on this property.

So far as Steven is concerned, I will take your Honours to some evidence to show that first, there was no claim by Steven.  Steven worked as an employee on wages and received his full wages right through until June 1984 when Steven became, for the first time, a partner.

KIRBY J:   There may be no legal claim because (a) he was not a party but (b) his physical claim is asserted by his asbestos shed on this property in which he lived, his home.

MR McCUSKER:    The asbestos shed, your Honour, was simply provided for his accommodation as an employee.  It was constructed - the evidence is at 3 appeal book, page 455, I think, to 456 at the top under the heading “Old Transportable House”:

In about 1975 my father, my brother Tony and I jointly purchased an old house in Dwellingup Township.

In about August/September of 1976 we transported the house to the Dwellingup farm using the services of a private contractor.

This was not Steven.

At this stage the house was fully transportable and was placed on stilts on the Dwellingup property.

He describes it and what Tony, he and his father then did and that thereafter he lived in that house until 1981 and Steven’s occupation of that house was, at least until 1984, simply as an employee.  Your Honours, there has been no claim asserted by Steven although he was a witness in the proceedings on behalf of the present appellants.

McHUGH J:   Can I tell you what is troubling me?  My impression is that if this conveyance took place as was promised, nevertheless a partnership would continue and the land would be worked for the benefit of the partnership.  If this land is now conveyed in accordance with the order below, it would deprive the other parties of the expectation that was present, that is to say, that this land would be available to be worked for the benefit of the family, so to speak, perhaps till the death of the last of the parents.

Now, in those circumstances, and having regard to what has happened that one has gone out of the partnership altogether, can one make an order by way of conveyance and, if not, must not the compensation to your client really have to be connected with the partnership situations so that one would have to run both cases together.

MR McCUSKER:    The land, it is true, was being used for the purpose of the partnership, the promised lot as well as, of course, the balance of the land.  I appreciate what your Honour says about the concern on this but, could I put it this way, if the promise had been fulfilled as the appellants continually reassured the respondent they would fulfil it, indeed, by the end of 1984 there had been a subdivision, true it was not a subdivision to create as large a lot as had been promised, but the subdivision itself had gone through and that was in July 1984 and at the end of 1984 the evidence was that the father said to Robert in response to Robert’s agitation, “I am now going to arrange to transfer it to you” but it did not happen.

Now, if it had happened and then Robert having become the legal owner of the property had continued with his association, which had already started with his wife-to-be to the annoyance of his parents, and there had been a bust‑up, as did occur, could it reasonably have been said by the parents then, “We claim a lien over this land that we have conveyed to you” or “We want it back.  You cannot use it for yourself.”?

McHUGH J:   Not necessarily, but supposing immediately after the land had been conveyed to your client, your client had said to them, “Goodbye, family. I am taking my new bride and we are going to run this for our own benefit.”  It is by no means clear to me that the other members of the family would not have had some equity against your client to restrain that absolute use of the land in that sense, because the expectation of the parties was that the land was going to be used for the benefit of the family.

MR McCUSKER:    There is no evidence of that.

McHUGH J:   I know there is no direct evidence but it seems to me, at the moment, it is as plain as a pikestaff that this was going to be used after the benefit of the partnership.

KIRBY J:   That was why the parents were trying to keep their son, Robert, in the family and were making this promise so that he would not go off to live with the former wife and her father in Perth.  It was to keep them all together.  I think Justice McHugh’s suggestion is inexorable really.

GLEESON CJ:   And it does not need to be supported by any evidence.  That is what is pleaded.  If you have a look at page 17 of volume 1 of the appeal books and the way you explained the promise in the pleadings.  The promise was to transfer the property if your client would agree to stay on then property, agree to continue living on the property and work for the partnership.

MR McCUSKER:    Well, stay on the property and not accept the offer of the job, yes, and in reliance upon that he agreed to continue living on the property.  I accept what your Honour says.  The only point I make when I say there is no evidence of that is that this was not an issue that was ever agitated.

GUMMOW J:   It did not need to be.

MR McCUSKER:    Furthermore, your Honours, the order that has been made is an order which contains within in - I think your Honours were expressing concern about subsequent improvements to the property that have been made, that is since 1985.  The order that has been made is one which enables the parties on an accounting to go back to the court – I will just take your Honours to it.  It is at page 887, paragraph 8 of the order.  It provides:

The parties be at liberty to apply to a single Judge of this Honourable Court for such consequential orders that may flow from the consequences of giving effect to these orders, including, if necessary, the trial of any issues arising from those consequences.

Although I was not involved, my instructions are that the sequence of events was this, that your Honours will see that the date of that order, in fact, is, I think it is about a year after the judgment was delivered.  It is quite a prolonged time.  There was some, I think, negotiation between the parties as to how to deal with the question of improvements and so on and there was also some difficulty in getting back before the same constituted court.

When the matter came on before the court for the making of formal orders, the question of the improvement was then, for the first time, raised, the question of how to account for that.  There was an endeavour made by the present appellants to put forward in affidavit form evidence as to what improvements had been made and so on and as I am instructed, it was for that reason the court was not prepared to simply embark upon examination of new evidence, but for that reason paragraph 8 was inserted so that these matters could be dealt with by the court, that is the consequences flowing from the orders of the court itself.

Those matters were then the subject - and I am personally aware of this - of mediation attempts, that is where the parties were endeavouring to reach agreement on what was an appropriate figure to ascribe to the values or the increase, I should say, in value of the promised lot by reason of improvements since 1985.

Nowhere in all of that was there a suggestion that either Steven or Tony had some form of interest in the promised lot but the question of the way in which the order would finally operate is still open.  It has been left open for determination by a single judge who will examine the evidence, if it cannot be agreed, as to the value of the improvements or the increase in value of the lot resulting from those improvements and then - - -

KIRBY J:   But as I understand it, your client left the property because of the dispute and went to live in Perth.

MR McCUSKER:    Left the property because he was told, “If you go with Julie you cannot stay here.”

KIRBY J:   He left it and is not now living on the property.

MR McCUSKER:    No.

KIRBY J:   I mean, the reality is that, it seems - I suppose it is speculation, but the idea of his going back after all these years to live on an orchard in the neighbourhood of land owned by his parents in which he is at arm’s length seems very, very unlikely.

MR McCUSKER:    His parents live 100 kilometres away.

KIRBY J:   I realise that but this is the land of the parents and in that land his other siblings, presumably, have interests.

MR McCUSKER:    One sibling, Steven, has some expectation in the remainder of the land.  There is some evidence given on that, not only by Robert who said that his father had said that the larger lot would one day be Steven’s but if I could take your Honours to some evidence which ‑ ‑ ‑

KIRBY J:   Can I just say my questions were directing you back to Justice Gummow’s point because, after all these years, he has not lived on this land on an orchard but he has been living in sophisticated Perth.

MR McCUSKER:    Well, not sophisticated Perth, your Honour.  In fact, it is unsophisticated hills district.

KIRBY J:   The notion of going back there and fulfilling the expectation which you pleaded and which Justice McHugh has addressed your mind to seems rather unlikely and therefore, if that is so, then the equitable remedy would seem more rationally to be one of money, sum and charged on the land rather than a conveyance which is trying to put back the status quo ante, something which was 15 years ago, which is very hard to achieve.

MR McCUSKER:    Your Honour, there is not the slightest evidence that Robert is so bitterly estranged from his brother, Steven, that they cannot co‑operate.  My expectation – one’s hope, at least, would be that they could co‑operate as neighbours.

GLEESON CJ:   But this is an order that is supposed to finally settle their legal rights.

MR McCUSKER:    Yes, it is.

GLEESON CJ:   I cannot help thinking that you are placing a little more weight on order 8 than it will bear, Mr McCusker.  If you look at the terms of it, it refers to:

consequential orders that may flow from the consequences of giving effect to –

the earlier orders.

MR McCUSKER:    Yes.

GLEESON CJ:   I would be surprised if a single judge would be entitled under that to say that there should, for example, be an allowance of $10,000 made for some coolrooms and some trees.

MR McCUSKER:    I think that was the intention of it and, certainly, the respondent has always ‑ ‑ ‑

GLEESON CJ:   It might have been the intention but I would rather doubt that it is the effect.

MR McCUSKER:    If that is not the effect, then the matter would have to go back to the Full Court for clarification of the order but that is certainly ‑ ‑ ‑

KIRBY J:   That is not reserved.  All that is reserved is liberty to both parties to apply generally to a single judge.

MR McCUSKER:    Yes.  Well, there is no reason why a single judge, your Honour, could not refer the matter, under the powers that he has, to the Full Court for clarification so, your Honour, I accept that whichever way one ‑ ‑ ‑

KIRBY J:   The question Justice Gummow asked you was a question incontingently.  I mean, your main thrust is you got the promise; the promise has been upheld; the promise was partly effected by the steps for the subdivision.  A court has heard this all and upheld your promise.  You are entitled to it.  You want to hang on to it but you have got to face the possibility that a court would say, in view of all these problems that are being raised with you, you are not going to hang on to the promise.

Therefore, the Court is asking for your help as to what your fall-back position is in that circumstance or is that a job for this Court or is that a matter which this Court would say, “Just too many problems.  We set aside the order that is made.  It is not appropriate in all the equities and it is not appropriate in all the developments that have occurred over such a long time back to the primary judge or a primary judge to determine the matter in the nature of a charge.”  Leave them to sort it out.  I mean, it is an horrendous idea that this long litigation would go back yet once again but if you cannot help us to a simple solution that may be all that happens if you lose your primary argument.

MR McCUSKER:    Yes, there is no simple solution to what is a difficult, complex problem, your Honour.  I cannot, for example, suggest that the fall‑back position might be a lien to secure X dollars because it is simply unquantifiable.  This is the reason, we say, that the courts from the time of Dillwyn v Llewelyn onwards – there are examples referred to in our outline of submissions - I think it is paragraph 8 at page 9 - for example Green v Green, where the order that has been made has been to give effect to the promise.

There has been no quantification of the detriment and, indeed, although I accept what your Honours say about damages always being quantifiable this really is not a damages case.  This is a case where it is, we say, unconscionable for the promise not to have been fulfilled.  It is not the fault of the respondent that it was not fulfilled in 1984 as he was continually present for it to be fulfilled. 

KIRBY J:   So your best argument is that paragraphs 8 and 9 are sufficient to allow a single judge of the Supreme Court to adjust what flows in terms of improvements to the land in the meantime and any other consequences that require adjustment.

MR McCUSKER:    Yes, that is so and we further say, your Honours, that this question does not come before your Honours on the leave to appeal.  The terms of the notice of appeal and the leave to appeal do not, in our submission, encompass this kind of issue and, indeed, if it had, one would have expected to see in the appeal books material relevant to it but it is not there.  For example, the reasons of the Full Court in making the order that it did, one can see nowhere specified in the notice of appeal, which starts at page 889, anything which relates to this kind of problem.

As we apprehended until we saw the appellants’ outline of submissions where this matter was touched upon, and not only touched upon but references to how many trees had been put on the orchard since this matter was coming before this Court essentially on a special leave point concerning the true nature of equitable estoppel and constructive trust and the interrelationship of those two doctrines but at this point, the court below has not finished making its orders.  There is no order, in final terms, that is the consequential orders, relating to this kind of problem.

KIRBY J:   Why is not ground 4 of the grounds of appeal sufficient?

On the evidence and having regard to the findings of the learned trial Judge the majority of the Full Court was wrong in law in holding that a constructive trust requiring a conveyance of the promised lot to the Respondent should be imposed in the circumstances - - -

MR McCUSKER:   Well, you would have to read on, your Honour, because the reasons given then are directed to detriment:

(a)  the conduct of the Appellants was not unconscionable –

no change suffered.

(b)  further, and in any event, equitable relief by way of constructive trust is only available to the extent that it would unconscionable for the Appellants as legal owners to retain the property and it was not unconscionable – - -

GUMMOW J:   What do you say about paragraph 74 of Mr Castan’s submissions and what he says on page 23 about relief sought?

MR McCUSKER:    The concession made at the hearing, your Honour, was – I looked at it - it was a concession made by Mr Fajgenbaum that he could not resist an order, I think the words were “that the respondent was entitled to the house with the curtilage”.  In fact, that is not what the order of Justice Nicholson gave the respondent.  It gave him the house with the land immediately underneath which was valued at, I think, $74, with respect, an extraordinary result because that could hardly have been the intended promise.

KIRBY J:   That seems a very unreal order.

MR McCUSKER:    Yes.

KIRBY J:   I mean, the notion that you just get the house and the land.  That, to me, seems completely unrealistic.

MR McCUSKER:    That was never the intention.

KIRBY J:   Whatever, wherever you put the perimeter it would be beyond the ‑ ‑ ‑

MR McCUSKER:    It must have been at least the common intention – of course, Robert’s case was that the – and there was evidence that Justice Nicholson, with respect, simply did not see, when he said there was no evidence to support Robert’s claim that he was promised the house and the orchard as the second promise - it was clear that he was prepared to accept Robert’s evidence but he just said in his reasons that he could find no support in the evidence for Robert’s claim as to the second promise being the house and the orchard.

GUMMOW J:   I think it comes to this, probably.  Is your position that if you do not hold the Court of Appeal order for an absolute conveyance, you get no relief?

MR McCUSKER:    No, your Honour, certainly not.

GUMMOW J:   We just allow the appeal and set it aside and dismiss the suit?

MR McCUSKER:    That, with respect, would be unjust.

GUMMOW J:   Yes.

MR McCUSKER:    Clearly unjust, but the question that your Honours have asked me to consider is if that conveyance is not to take place, what is the alternative?

GUMMOW J:   Well, the only alternative at the moment seems to be that you are suggesting is that you lose everything.

MR McCUSKER:    No, I am not suggesting that.  I am simply seeking to adhere to the order that was made giving effect to the promise coupled with the prospect that there will be some form of lien on the property in favour of the appellants to secure to them any increase in value in the property resulting from the improvements that they have carried out.

If your Honours were of the view that the conveyance could not stand, it would be clearly our submission that then the land, the whole of the land, should be charged with a lien in favour of the respondent to secure to him such quantifiable detriment, quantifiable not simply in dollars and cents in terms of the loss of money, but quantifiable also in terms of damages for lost opportunities.  That would be an exceedingly difficult task but it is one which, as your Honour, I think, said, is engaged in from time to time by the courts in any event.

That is our fall-back position, that we would say that this Court ought not interfere because there is no, at this stage, order which shows that there is an injustice or an equity in the conveyance taking place.  There is still the prospect, very clearly the prospect, in our submission, that the conveyance will be coupled with some form of charge in favour of the appellants to secure whatever, ultimately, is determined to be the increase in value. 

If your Honours were minded to take the approach that has been, as it were, mooted then our submission would be that the order should be, as I have said, a lien or charge in favour of the respondent over the whole of the land.

GLEESON CJ:   Now, can we just be clear about order 8.  You say that the purpose of order 8 was to deal with the attempt that was made by the appellants to prove that there had been increases in the value of the land by way of improvements and otherwise over the period up to the making of the decree and that the response of the Full Court to that was not to get involved in the detail of that evidence but to make an order that would permit a single judge to give effect to a charge of the kind you have just mentioned.

MR McCUSKER:    Yes, yes, that is right and there have been, since then, attempts to agree on the extent of the value of the improvements.

GLEESON CJ:   Would the single judge be entitled under order 8 to go any further than creating a charge to compensate the appellants for the value of those improvements?

MR McCUSKER:    I think not, your Honour.  I do not think that the single judge would have the power to, as it were, reverse the order of the court.  Could I mention, your Honours, coming up to one point of your Honours’ concern about the respondent living here in sophisticated Perth and not back at the property.  In fact, I am instructed he lives and has lived ever since, two kilometres from the subject property.  He is a close neighbour in country terms.  There has not been any warfare to date so there is no reason to think that his getting the promised lot is going to be something that is unworkable.

GLEESON CJ:   How far is this from Perth?

MR McCUSKER:    It is 100 kilometres from Perth and the distance between the two properties is 100 kilometres so it is almost a triangle and, as I say, the respondent lives two kilometres from the Dwellingup property, the promised lot, and has lived there all the time he is working on an orchard so he has not succumbed to the delights of sophistication.

Your Honours will see in the evidence that Robert was – in fact, it was the evidence of Mr Merlo, who was an expert horticulturalist, that he trained Robert and found Robert to be the most adept at orchard work and, indeed, allowed Robert eventually to take over all the pruning and all of the grafting of the trees so this is a man who is looking to have fulfilled - admittedly it is a long time ago but it is not his fault - a promise that he would have this lot conveyed to him.

McHUGH J:   See, you might get more out of a monetary order than you would out of the land, of a conveyance.  For example, it occurs to me that one order that might be made in your favour might be a share of the earnings of the anticipated profits from the partnership in relation to this land for a specified period of years, perhaps contingent upon the joint lives of the parents plus the value of the land as at that date discounted by its present value today.

MR McCUSKER:    It may be, your Honour, although I can, with respect, see as many problems being created out of that kind of result as there are at the moment because there would be questions of policing the operation of a partnership and so on.

McHUGH J:   No, no, one has to make an estimate.

MR McCUSKER:    I see.

McHUGH J:   If one were to close the books right now and then, one has to make some estimates, what are the likely earnings of this business, let us say over the next decade.  What would his share of it be discounted to present values plus the fact that it will not be expected that the land would be his to do what he liked at the end of the joint lives but since he is going to get a monetary payment for it now that you would have to discount the value as at that date back to the present.

MR McCUSKER:    Yes.  One must not overlook though the fact that the parents are getting on in years.  The evidence was that they had talked about Robert getting a block.  This is the promised lot.  The other lot being eventually to go to Steven, they did not say when, and themselves retiring.

McHUGH J:   Yes.

MR McCUSKER:    So this is something which ought to be brought into the scale of things if you were talking about moulding order of that nature.

KIRBY J:   But essentially you take your stand on the promise and you say that unless this Court can say that there is an error of principle in the order that has been made and, in particular, having regard to paragraph 8, then really the moulding of the equitable relief is a matter for either the primary judge or for the Full Court and this Court should not get into the intricacies and details and, in particular, should not consider any order which would put the parties into constant haggling, such as would perhaps be the case if an order of the kind Justice McHugh was contemplating were to be made.

MR McCUSKER:    Yes.  It certainly would create more, I think, haggling as your Honour put it. 

KIRBY J:   It does not have a clean - and, presumably, this was in the mind of everybody below to have a clean cut and - - -

MR McCUSKER:    I would have thought so, your Honour.

McHUGH J:   That is what I actually had in mind, that there would be a monetary sum paid today but which would take into account all those various factors.

MR McCUSKER:    Yes.

McHUGH J:   The other side of the coin is that you, in effect, get the land with, what I will call the business on it, and the appellants are deprived of any share of that business over the next few years.

MR McCUSKER:    Well, that is true but again that was – although I take your Honour’s point that the expectation was he would stay there and they would not fall out, they have fallen out.

McHUGH J:   Yes.

MR McCUSKER:    If they had honoured their promise before the falling out, then that situation would be.

McHUGH J:   Well, I know it is, but in many ways it is like the case of the person who conveys property to somebody on the expectation that they will be able to live in the property for life.

MR McCUSKER:    Yes.

McHUGH J:   And then there is a falling out and you get the same sort of problem.  It is much the same here.  Equity would intervene in such a case to protect the person who transferred property on the understanding that they were going to have a life interest in it.  Likewise here, it might be said, that the appellants, although they were going to transfer the property, nevertheless, were going to have, perhaps, a lifetime interest in the earnings of that property.

MR McCUSKER:   Possibly so, your Honour, yes.

McHUGH J:   There are varieties of combinations.

GLEESON CJ:   There is nothing in this present order, is there, that obliges the appellants to account to the respondent for the profits made from this land up until the date of conveyance?

MR McCUSKER:   No, but that has also been the subject of discussion since the order was made as to what offset there should be in respect of profits derived from the ‑ ‑ ‑

GLEESON CJ:   Yes, but the more you say these things can be worked out by mediation, the more problems you indicate in the order.

MR McCUSKER:   Well, mediation or, ultimately, by a court order, which would ‑ ‑ ‑

GLEESON CJ:   Would order 8 cover that too?

MR McCUSKER:   Yes, yes, we say it would, or it should.  Certainly that is the way in which we have approached it, that the question of profits ought to be brought into account.

GUMMOW J:   But that should have been explained in the reasons for judgment.

MR McCUSKER:   Your Honours, the reasons for the Full Court making the order that it did about a year after it delivered its reasons and, I am told, after a debate before the Full Court, are not in the appeal book.

GLEESON CJ:   Can we see them?

MR McCUSKER:   I do not have got them, your Honour.  The reason, as I say, for that is that it was not a subject which was, as I understood it, to form part of this appeal.  Although it is the appellant’s task to ‑ ‑ ‑

GLEESON CJ:   But we do have before us their orders.

MR McCUSKER:   Of course, your Honour.

GLEESON CJ:   In order to understand the orders that they made, I gather from what you say, we may need to see some additional reasons. 

MR McCUSKER:   Yes, that is so.

McHUGH J:   There are so many problems with this.  Under the partnership suit, one is entitled to a share a profit until the date of dissolution of partnership, which is now some time ago.  What about the profits that have been earned by the appellants, if any, out of this business, up to the present time.  Your client has been deprived of them. 

MR McCUSKER:   That is so.

McHUGH J:   And there are all these problems that ‑ ‑ ‑

MR McCUSKER:   Could I just, I hope to make it ‑ ‑ ‑

KIRBY J:   His partnership claim is still awaiting hearing, of course.

MR McCUSKER:   It is almost resolved, your Honour, the partnership claim, because the summary judgment that was given by Master Bredmeyer awarded what appeared, on the face of the counts, and there is still some further dispute as to some depreciable items, and so forth, but the ‑ ‑ ‑

McHUGH J:   But that only takes up to when?  What period?

MR McCUSKER:   Up to 30 June 1986.

McHUGH J:   Eighty-six.

MR McCUSKER:   Yes.

KIRBY J:   Is that when he retired from the partnership?

MR McCUSKER:   That is when he has been declared as having retired from the partnership.

KIRBY J:   So he has no interest in the partnership after that?

MR McCUSKER:   From that time on, no.

McHUGH J:   So there are 12 years of, perhaps, profits earned out of this land which he has been deprived of.

MR McCUSKER:   That is so.

McHUGH J:   This order does not deal with that.

MR McCUSKER:   Well, one of the ‑ ‑ ‑

KIRBY J:   Is that open to him to pursue in the partnership suit?

MR McCUSKER:   No, no it is not.

KIRBY J:   So, if that is to be found anywhere, either he waives it or it is to be found in order 8.

MR McCUSKER:   Yes, and we have thought it is to be found in order 8.  It may be elsewhere, my learned junior is - at 887 there is a provision for accounting pending delivery up, but that does not cover the period from 1986.  No, so it is order 8 or it is nothing.

Your Honours, I do not know whether it is going to be of assistance, but I would like to direct your Honours’ attention to the evidence of a Mr Merlo, who was, as I say, the horticulturist and whose evidence was accepted, together with that of Mr Godridge, by the learned trial judge.  In fact, it weighed quite heavily with him.  Your Honours will have seen, in his reasons, Justice Nicholson referred to the evidence of neighbours regarding the promise.  At 578 ‑ ‑ ‑

CALLINAN J:   Mr McCusker, just before you do that, could you answer this question for me.  Say, that it was thought that an order of the kind that was made by the primary judge was, in substance, the correct order, what do you say is the land - the definition of the land, which should be valued, bearing in mind that the land that has been valued apparently corresponds precisely with the perimeter of the house which strikes me as very improbable, but what do you do?  How far beyond the perimeter of the house do you go, for the purposes of making evaluation, if the trial judge’s judgment is, in substance, to be restored?

MR McCUSKER:   Your Honours, the evidence regarding the second promise, which was given by Robert, seems to have been overlooked by the learned trial judge.  He gave evidence that the second promise was a promise of the house and the orchard.  His Honour did not say that that was not believed or accepted.  He simply said he could find no evidence to support the second promise, and what we say, in short, is that the second promise itself was of the house and the orchard behind it.

CALLINAN J:   Leaving that aside, say, that, in substance, the primary judge’s judgment is the correct one.  The figure is $71 for a parcel of land that obviously nobody would ever have contemplated would be the limits of the parcel of land.

MR McCUSKER:   No.

CALLINAN J:   What are the limits?  That is what I want to know, assuming it is not the orchard, assuming it is a curtilage, if you like, for the house, for the residence.

MR McCUSKER:   Yes.

GLEESON CJ:   And how are you going to get to the house?

MR McCUSKER:   Well, you have to have access to the house, and so it could not have been reasonably in the contemplation of the parties that there would simply be a small surround to the house, because that would still leave it landlocked.

CALLINAN J:   That is the point.  I am not suggesting that you were to be given the house, on the primary judge’s order, but you were to be given a monetary equivalent for it.  It seems to me that that monetary equivalent is not enough, because there has to be some curtilage - not an orchard, but perhaps some curtilage which has to be taken into account for the purposes of reaching the money sum.

MR McCUSKER:   Yes.

CALLINAN J:   There may not be very much.  At $71 for a house site, it might only be another $70, I do not know.

MR McCUSKER:   No, I do not think it would be, your Honour.  This is, of course, rural land so it is unlikely that it could be subdivided to, say, the traditional 1000 metres or less lot.  The common ‑ ‑ ‑

CALLINAN J:   I gather there is just no evidence on this.

MR McCUSKER:   No evidence as to what a smaller curtilage would be.  There was evidence that the promise was of the house and the orchard.  That is, there would be a ‑ ‑ ‑

CALLINAN J:   I know that, but that does not deal with my point.

MR McCUSKER:   No, it does not.  No, I cannot assist your Honour.

CALLINAN J:   There was no evidence that you might have got a subdivision if you had a subdivision of a hectare or two hectares and, therefore, that might be the appropriate amount of land to value as being an appropriate curtilage for the purposes of fixing the sum to be paid.

MR McCUSKER:   No.  What his Honour did was to say, “Well, I can only find evidence from Robert”, because he accepted Robert’s evidence “that he was promised the house.  So I will take that literally, as the house with the land immediately beneath it”, which was $71 of land.

KIRBY J:   But, if the Court is of the view that that is a very unreal interpretation, even of the promise as a first promise, then, really, the notion that that be restored, which the primary application of the appellants, is a not acceptable solution.

MR McCUSKER:   No, but it was ‑ ‑ ‑

KIRBY J:   How could it possibly be that it would be just the house, with just the land underneath it, no access to it?  Who would ever contemplate that that would be what would be promised?  It is absurd, with every respect to Justice Nicholson, and that is what the appellants ask us to restore.

MR McCUSKER:   Yes.  Well, at one stage, at least on the application for special leave, I understood them to be saying “and the curtilage”, which would mean more than simply the land underneath.

KIRBY J:   That is very generous.  What, a few little garden plots, but still no access?

MR McCUSKER:   I do not know what that means.

KIRBY J:   It is absurd.

MR McCUSKER:   No.  Could I mention this, too, your Honours.  On the appeal, one of the grounds of appeal was directed to that, but, in any event, that order, as it stood, was wrong – that is in respect of the second promise, as it was called – and a further alternative point that was raised, and an alternative order to the conveyance of the promised lot, which encompassed the house, but was of the subdivided lot, that is the lot that actually has been subdivided off, it is a smaller area.

I think I misled your Honours yesterday when, I think, Justice Callinan mentioned the area of the promised lot.  The area of the subdivided lot was 22 point something hectares, which is about 56 acres.  The area of the promised lot which would encompass the house is, therefore, something greater than that, I think, greater than they gave us, something in order of 80 acres plus.  There is no direct evidence as to what area the ‑ ‑ ‑

KIRBY J:   So, it is about 30 hectares.

MR McCUSKER:   About 30 hectares.

KIRBY J:   And that is the orchard plus the home in which the respondent lived.

MR McCUSKER:   That is right, your Honour, yes.

KIRBY J:   And the line is drawn at a point very close to the southern boundary, or rather, to the south of the home.

MR McCUSKER:   That is right.  Because there was no precise point identified as to where the line was to be drawn, it was simply said a lot to include the house and the orchard, the ‑ ‑ ‑

KIRBY J:   It is like the Pope’s line, of just a swath was put through the ‑ ‑ ‑

MR McCUSKER:   The Full Court ‑ ‑ ‑

GLEESON CJ:   That is how Western Australia came to be here, is it not?

MR McCUSKER:   I beg your pardon, your Honour?

GLEESON CJ:   The line that was referred to between Spain and Portugal also defines Western Australia, I believe.

KIRBY J:   Yes, I am indebted to the Chief Justice for advising me.

MR McCUSKER:   It may well have been, your Honour.  A very nice line it is too.  Your Honours, the court took the minimalist approach in this and, with respect, an appropriate approach.  They said, “as close to the house as the authorities will permit”.

GLEESON CJ:   Where is there a case that is closest to this, where equity, with all of these imponderables, has nonetheless provided relief of this kind to uphold the promise, and has said, “To repair the detriment, this is what will be done and we acknowledge that there are imponderables, but that is what is required to remove the blot on conscience”?  What is the closest case?

MR McCUSKER:   I cannot name a case, your Honour, where there has been ‑ ‑ ‑

GLEESON CJ:   Is that not against you then.

MR McCUSKER:   Not really, your Honour.

GLEESON CJ:   Does that not cause the concern that all of these, the swath of the line, the uncertainty of where it is, the ‑ ‑ ‑

MR McCUSKER:   As to that, your Honours ‑ ‑ ‑

GLEESON CJ:   There is a that case in Western Australia, is there not, where the line  ‑ ‑ ‑

MR McCUSKER:   Yes.  His Honour Justice Callinan referred me yesterday to a case of South Coast Oils v Look Enterprises Pty Ltd (1988) 1 Qd R 680, where the court there enforced an agreement where the contractual obligation did not identify, in precise terms, the metes and bounds of the area but simply did so by reference to what was to be developed, and ‑ ‑ ‑

KIRBY J:   Parties, in their promises do not generally get down to metes and bounds.

MR McCUSKER:   No, no.  So here we say that there is no uncertainty about an undertaking, a promise to create a lot which will contain the house and the orchard, not only the old orchard, but the new orchard which Robert had himself developed after the third promise.

GLEESON CJ:   Mr McCusker, have you covered most of the points you wanted to raise this morning?

MR McCUSKER:   I have not, your Honour.  I would like to direct your Honours’ attention, if I could, to just some evidence that was referred to by the trial judge, and which may assist in ‑ ‑ ‑

GUMMOW J:   You took us to 578.

MR McCUSKER:   I took your Honours to 578, and that was the evidence that Mr Merlo towards the foot of that page, evidence which was relied upon by the trial judge for what the promise was, and he says:

He -

that is the father -

told me that Robert would have his house and land that was his and in time Steven would have the rest.

Robert’s first marriage did not last very long –

et cetera, over the page.  And then Robert’s discussion:

I can remember him saying to me “the orchard is my life”.  He was trying to decide whether to leave –

or keep going.  Then to the foot of that page, that is page 579:

After the separation and then the divorce Robert carried on with the orchard.  This was at the time when the new orchard was being developed on the other side of the creek.  Even the orchard on the side of the house was still developing at the time.

So, although it is referred to as the “old orchard” and the “main orchard”, this was still in a developmental stage, as I have said. 

GUMMOW J:   But what does this show?  What does this evidence show?

MR McCUSKER:   I was seeking there to meet your Honours’ concern as to there being, as it were, an existing, well-established orchard that Robert was seeking to get as some kind of benefit or bonus from the partnership.  So at page 580 there is more to the same effect, the hard work that Robert was doing on this property.  This was not just a man, with respect, who was working in a partnership.  He was working seven days a week, very long hours, because he thought this land was going to be his, and that is a very important aspect of the evidence.  Mr Godridge, whose evidence was also accepted by the trial judge, at 587, top of the page:

After Robert’s unsuccessful marriage, he buried himself more so into the orchard.  The house which Robert built was to be his home and he spent many house –

et cetera. 

Everyone including Robert’s family referred to it as Robert’s house.

And then he says:

It was I who expressed concern to Robert that this home was built on his parent’s land.  Robert indicated that eventually the new home would be subdivided with the existing orchard and that title would become his.

KIRBY J:   I do not see why you are reading us this.  You have findings by the primary judge in your favour on all of this.

MR McCUSKER:   Yes, we do, your Honour, but perhaps it needs a bit of fleshing out to see just what was involved.  And, then, over the page, dealing with the question of Steven’s possible interest, at 588, because Steven’s interest simply was not dealt with, was not agitated before the trial judge:

I knew that it was proposed that the land be subdivided and that Robert’s house was to be incorporated on the new block.  I knew that not only because I had been told by Robert but through general conversations and discussions with Robert’s parents ‑ ‑ ‑

CALLINAN J:   How could what Robert told him be admissible?

MR McCUSKER:   Well, it is corroborated.  But going on:

but through general conversations and discussions with Robert’s parents and other family members including Robert’s brother Steven which took place around this time.

And there was another neighbour who gave evidence along the same lines, a man called Fortescue.  So the picture is of a family which is all of the one mind:  “This block is going to be subdivided, and Robert is going to have this block”.  And Robert, in reliance upon that, has worked very hard, indeed, because he thinks that the parents with honour the promise.  Your Honours, I do not think that there is anything further that I have not already covered in this matter.  The question of constructive trust and estoppel we have dealt with, and unless your Honours wish me to agitate that further, I will not.  I think your Honour Justice Kirby, in Bryson v Bryant, expressed a wish for a Luther of jurisprudence to come and codify, as it were, draw these lines of authority together, and I do not profess to be that but, in this case, we say that  ‑ ‑ ‑

GLEESON CJ:   A Luther of jurisprudence? 

KIRBY J:   Yes.  I thought of a Luther.  Perhaps I could think of a Pope.

GLEESON CJ:   Perhaps we need a Savonarola.

MR McCUSKER:   In any event, your Honours, the point I make that in this case the question of a constructive trust and the issue has been raised about that, we say, is really, in the end, illusory.  The real question that was agitated before the Court of Appeal was, was Justice Nicholson wrong in his view that detriment had to be measured in money terms by saying, as it were, a damages claim, as he did, “Because there is no proof that what he got from the orchard is less than what he would have got from working for his father-in-law or Alcoa, I am not prepared to accept that there is a detriment.”  We say that is a very narrow view, and we respectfully adopt what your Honour Justice Gummow said to my learned friend yesterday, and that is, this is not a claim for breach of contract, or this is not a contractual remedy that has been given, this is an equitable remedy, and that kind of approach is inappropriate.  May it please your Honours.

GLEESON CJ:   Thank you, Mr McCusker.

KIRBY J:   There is just one little question.  Mr Castan yesterday did not deal with the formalities arguments.  They are in his written submissions.  Are we just to deal with those on the basis of the written submissions?

MR McCUSKER:   Yes, your Honour.

KIRBY J:   I do not want you to open it up if Mr Castan is not really pressing it, but it was not mentioned at all, but it is in the written submissions.

MR McCUSKER:   It is in our written submissions in response, your Honour, and, in short, we say that the ‑ ‑ ‑

KIRBY J:   You say that you rely on your written submissions, and they did not.

MR McCUSKER:   We do.The Full Court dismissed that argument ‑ ‑ ‑

KIRBY J:   They have lost that point at trial, and in the Full Court ‑ ‑ ‑

MR McCUSKER:   And before the Full Court, yes.

KIRBY J:   You say that the courts below were right.

MR McCUSKER:   Well ‑ ‑ ‑

KIRBY J:   Was there a provision in the orders of the Full Court that was, as it were, subject to any planning consequences, if the subdivision was not permitted?

MR McCUSKER:   Yes there is, yes.

KIRBY J:   I see, very well

MR McCUSKER:   There is a liberty to apply if there is a problem with the plan, but my understanding is that the ‑ ‑ ‑

KIRBY J:   And that goes back to a single judge, but you tell us that under the rules of the Supreme Court of Western Australia that can be referred back to the Full Court, can it?

MR McCUSKER:   I am sure it can, your Honour, yes.  A judge has power to refer a matter to a Full Court, yes, if it is an issue that needs referral.  Your Honour, could I just finally say, two things.  On the question of uncertainty, your Honours may have noticed that Justice Nicholson at one stage, on the question of the uncertainty of the legal concepts, referred to Meagher, Gummow & Lehane at paragraph  1722, where he referred to the comment:

The difficulty in quantifying in legal concepts the interest held out by the donor is not to inhibit the Court in granting relief –

and we have simply taken the liberty of taking an excerpt from that, which I will hand up to your Honours. 

GLEESON CJ:   Thank you.

MR McCUSKER:   One further matter, if I may, your Honours, and that is this question of the nature of the relief being inappropriate because of the factors that we have been discussing was not, in our submission, a question which was before the Court of Appeal.  It was clearly not in the cross‑appeal, it was not raised in that way, and perhaps one could say it would not be in a cross-appeal because there was no order to appeal from in respect of the third promise.

Nor was it contended - and in accordance with the Supreme Court Rules of Western Australia, there is a requirement there be a notice of contention - that the judge’s refusal to make an order giving effect to the third promise should be upheld on some other ground.  That was never brought before the Court of Appeal as an argument, in other words, that the relief claimed ought not to be given in any event, because even if the judge was wrong on detriment, the uncertainties, or the problems associated with the partnership that have been discussed this morning were such that the relief ought not to be given.  That matter was never raised as an issue.  I have taken an extract from the order, if your Honours wish to see it.  That is Order 63, rule 9, dealing with the requirement of a notice of contention, with which your Honours will be well familiar, in any event.

KIRBY J:   Somewhere in his reasons, Justice Ipp says, “Well, this point ought properly to have been in a notice of contention.  It was not, but we will deal with it anyway”.

MR McCUSKER:   Which reference is that, your Honour?

KIRBY J:   Somewhere in the reasons, one of the judges in the Court of Appeal, I think Justice Ipp, said it, not this point ‑ ‑ ‑

MR McCUSKER:   Not this point.

KIRBY J:   - - - but some other point.  So, it seems that, sensibly, as in all other appellate courts, courts, if they think it is a good point, will deal with it, or even if there is bad point.

MR McCUSKER:   Yes, I think he may have been referring to the question of formalities, which certainly was not raised in the notice of contention.  But this issue was not raised.  The Full Court has simply not dealt with this issue, because it was not before it.

GLEESON CJ:   Are we going to see the reasons for judgment that you say explain order ‑ ‑ ‑

MR McCUSKER:   I have not seen them, your Honour.  I simply say I do not - there would only be a transcript, I would imagine.  My learned friend says he does not think there are any.  I simply say it went before the Full Court, I am told, and there were a discussion and a decision given, but there is no ‑ ‑ ‑

KIRBY J:   But were they drafted and handed up for a consent order?

MR McCUSKER:   Your Honour, in answer to your Honour’s question, we can make endeavours to get a copy of the transcript, if that is of any assistance.

GLEESON CJ:   Thank you.  Yes, Mr Castan.

MR CASTAN:   If it please your Honours, I have just been handed what I think is the transcript of the proceedings at the time when the orders were ultimately made, but ‑ ‑ ‑

GLEESON CJ:   You do not have to deal with this on the run  You and Mr McCusker can provide us with the material - - -

MR CASTAN:   I cannot deal with it at the moment.  I will, however, deal with one aspect of that matter which has been raised, and that is that in the submissions – and I do have the actual outline - a written outline of submissions by the respondents in the Full Court, dealing with the final orders – and there was an express submission that the final orders of the Full Court, in 2.2:

should make provision for the value of the improvements to be assessed prior to the promised lot being transferred to the appellant to the intent that the ascertained value of the improvements should be set off against any amount found to be due to the appellant on account of rents and profits.  In the event of such value exceeding any amount found to be due, then the excess to be recoverable against the appellant as a debt in which regard the respondent shall be entitled by way of security to an equitable lien against the land for the amount in question.

KIRBY J:   Does that not rather bear out Mr McCusker’s submission that as that point was before the Full Court, we should read paragraph 8, if it can bear that reading, as that was intended to encompass that?

MR CASTAN:   It is exactly the opposite as we have understood it.  It was rejected, and point 8 deals only ‑ ‑ ‑

GLEESON CJ:   Do you mean that submission was rejected?

MR CASTAN:   The submission was rejected.  In other words, what was being put was that - - -

GLEESON CJ:   It is not said that it is rejected in the Full Court’s reasons.

MR CASTAN:   We have understood - and I can only put it as instructions, at this stage, and I have not examined the transcript to see how it was dealt with, but what was being sought was to say an allowance should be made, and what was being said was, no, you do not get that allowance.  We have understood order 8 ‑ ‑ ‑

GLEESON CJ:   Let me say this, Mr Castan, there is, as you have seen from the course of argument, a large question in our minds as to the meaning and effect of order 8, and we can only leave it to you and Mr McCusker, after discussing it amongst yourselves, to put to us any material you want to rely on in order to explain to us what order 8 means.

MR CASTAN:   Yes.  At the moment ‑ ‑ ‑

KIRBY J:   You will bear in mind that if you lose the appeal, that it is desirable, from your clients’ interest, that order 8 should carry as much weight as it can carry.

MR CASTAN:   Of course, we are conscious of that.  I simply indicate that we have not taken, at least up to the last few minutes, to have gone that far, and if it goes that far, then at least to that extent, we are reassured, as against the possibility your Honour has canvassed.

Can I also I inform your Honours, and it is probably necessary to inform your Honours, given the discussion that has taken place concerning the question of people living together and the capacity of those to get on together, that the fact is that there have been two injunction applications in this matter in the Supreme Court, one to restrain Robert Giumelli from evicting Steven Giumelli, his wife and his four children from the house, the fibro shack, in 1996, I think it was, which was granted and another – apparently there was something that occurred with an arrival of police to evict him from the house following the orders made by the Full Court, and another injunction before Mr Justice Scott in chambers ‑ ‑ ‑

KIRBY J:   That was after the judgment and orders of the Full Court when presumably Robert thought he was pursing his rights.

MR CASTAN:   Yes, your Honour.

KIRBY J:   And Steven said, “Well, we want it to go to the High Court”.

MR CASTAN:   “We’re going to High Court” and so on.  Yes, precisely, your Honour.

KIRBY J:   No stay was ordered in respect of those orders.

MR CASTAN:   Ultimately that was either stayed or an injunction against enforcement but in some way the status quo was preserved at least as – well, the status quo was preserved.

KIRBY J:   Yes.

MR CASTAN:   The other matter I should mention to your Honours is that an application – there was an order made by his Honour Justice Scott in the Supreme Court of Western Australia which provided that the plaintiff and Mr Steven Giumelli were to be restrained - the plaintiff being Mr Robert Giumelli in the proceedings - from contacting or attempting to contact each other or behaving in a provocative or offensive manner towards each other.  So, this matter has been before the courts in relation to those two issues and is not an easy matter to resolve.  I would not want your Honours to be proceeding on the assumption that is an easy matter to resolve.

The other matters of fact, before I turn to some of the questions that have been raised, just dealing with Pickering Brook, which was referred to as the substantial property and has been the substantial source of – there is no contest that it has been the substantial source of generating partnership income but it is a much smaller property, it is 13 acres in total, and relatively, as it is put, “past its peak”, not having being replanted, the Dwellingup property being so much larger and being the new property that has been developed by the partnership.

There has been some suggestion that there was some concession by my learned friend, Mr Hasluck, appearing for the present appellants, the parents, before the Full Court that no prejudice could be shown concerning the constructive trust argument being raised in the form in which it was.  That is to say, the notion of a Muschinski v Dodds type of constructive trust, an institutional type of remedy based on this common endeavour or joint venture, but in fact at page 68 of the transcript – it is not before your Honours - I am reading from the transcript before the full court – when this matter was raised in the course of argument.  His Honour said:

Mr Hasluck had argued it was not a pleaded issue.  The case was opened on a different basis and argued throughout on a different basis –

and he went on:

It is not a mere academic point.  Had the respondents been aware that the case was going to be presented as essentially a case in constructive trust, I do submit the conduct of the case might have might have been conducted in a different matter.

Justice Rowland asked:

Why in the end if the relief sought is precisely the same based on very similar considerations?

Justice Ipp said:

And what Mr McKerracher said was in closing, not in opening.

Mr Hasluck replied:

That was in closing, that is correct, but certainly his Honour the trial judge said he understood it in that way.

And I think that ‑ ‑ ‑

KIRBY J:   That does not really advance the – that is a sort of protest by an advocate.  It does not advance the Coulton v Holcombe point.

MR CASTAN:   I simply point out that ‑ ‑ ‑

KIRBY J:   You have made your point on that.

MR CASTAN:   Yes.  There was some considerable discussion about what Steven Giumelli’s role was and I should indicate to your Honours that at page 740 – I take your Honours briefly to these passages.  I think it has already been mentioned, your Honours, that he had been working full time for the partnership since 1974, he has lived on this property since 1978 and worked during that period and at appeal book 740 some of his evidence is set out and at line A he says:

My wife and I started living in the transportable house at Dwellingup and it was really a case that from the time Robert left that I was running the Dwellingup property and Mum Dad was running the Pickering property.

GUMMOW J:   He appears to have built the cooling room.

MR CASTAN:   Yes.  He installed posts, he built the coolrooms, he concreted the front shed, he planted 1,000 trees in one year and that was just in 1987, he build a new packing shed in 1989, a new coolroom in 1990 and:

During 1986 we had commenced packing all of the fruit from Dwellingup at the Dwellingup property which had not been done before.

I think this was mentioned by my learned friend that it was transported to Pickering Brook prior to that.

This makes the operation in my view more efficient because there is less wasted transport.  During all of the times that I was doing that work I was improving what I knew to be dad’s land but I was also doing my best to make the partnership operate profitably.

We simply draw attention to the fact that in balancing equities there is a 13 year period since Mr Robert Giumelli left the property that is relevant and to be taken into account.

Perhaps I should deal more pertinently with some of the matters that were raised this morning by your Honours, and in particular, your Honours directed some comments firstly to the finding by his Honour Justice Nicholson relating to the second promise and the finding that a valuation be taken of the house and the land only on which it stands.  Your Honours, that was a classic example of seeking to fashion a remedy for the actual detriment.  This was taken up by your Honour Justice Gummow with me yesterday.

His Honour was not seeking to fulfil the promise and he, we would respectfully submit, correctly, for the reasons I have perhaps over‑enthusiastically put to your Honours yesterday, submit that that is the correct view in this arena, that he was not seeking to fulfil the promise.

KIRBY J:   But how can you say if you are seeking to remedy the detriment of not having the lot that was promised that you give that by giving a completely inaccessible house ‑ ‑ ‑

MR CASTAN:   Because he was not giving an inaccessible house, he was calculating a money sum, and the money sum he was calculating was the amount of money that Mr Robert ‑ ‑ ‑

KIRBY J:   That is very unreal.  How you possibly conceive of a house on the land and then seek to work out what that is worth?  That is such an unreal starting point.

MR CASTAN:   No, your Honour.  With respect, he was not seeking to fulfil the promise to transfer the house; he was seeking ‑ ‑ ‑

CALLINAN J:   But it is not having due regard to the true detriment either by looking to evaluation of a totally unrealistic parcel of land.

MR CASTAN:   The detriment, with respect to your Honours, was the amount of money.  The point about this particular promise ‑ ‑ ‑

CALLINAN J:   I understand that but the amount of money – it is an amount of money attributable to a particular piece of property.

MR CASTAN:   No, it is the amount of money he spent, with respect, your Honour.

CALLINAN J:   Yes, but he spent it in respect of a house on a curtilage.

MR CASTAN:   Well, with respect, another way of dealing with it and perhaps even more pertinent way of dealing with it might have been to say, “I’m not concerned with the house or the curtilage or the land.  The amount of money you spent was $75,000 and I’ll give you $75,000 and interest over the years intervening because that is your loss”, and I think your Honour ‑ ‑ ‑

GUMMOW J:   That is right.  That suggests his Honour was doing something different.

MR CASTAN:   There is more than one way of calculating ‑ ‑ ‑

GUMMOW J:   It would be simple to say it is the money, the interest, that is X plus Y dollars, judgment for that sum, charged on the whole of the land.

MR CASTAN:   Yes, your Honour, and that would be one way of ‑ ‑ ‑

GUMMOW J:   There is no need to call in these valuers.

MR CASTAN:   No.  That would be one way and the other way is to say, “In order to give you the benefit of any potential increase that you might have suffered by reason of spending that money in that way, I’ll give you ‑ ‑ ‑

GUMMOW J:   Then you get into the asset.

MR CASTAN:   “In lieu of interest I’ll give you increases in value of what you spent your money on”.  That is all he has done.  This is a calculation of a money sum.  This is a calculation of a money sum.  This is not fulfilment of the promise.  It harks back to the debate we had yesterday which I will not repeat, about whether you are seeking to compensate for the detriment or you are seeking to enforce the promise.  If you are seeking to enforce the promise, it is utterly unrealistic of course to say a house with the land notionally sort of underneath it, with no path around it, so to speak, but if you are seeking to compensate for the detriment you have actually suffered, it is the money you spent and whatever that money is now worth.

Arguably, the increase in value if it was spent on land; arguably, just interest, on another view.  But all he was seeking to do was compensate for the loss of the money the man had spent on someone else’s land and that is not the same as fulfilling the promise, and I will not go back over that.  But it does not bear the criticism that perhaps has come somewhat forcefully from the Court this morning, given that it is only an attempt to calculate the amount of compensation for the actual detriment, not fulfilling the promise of transferring a house or land or curtilage or anything else.

Your Honours have raised the question of possible ways in which this matter might be disposed of if your Honours take a particular view and, in our respectful submission, it would be appropriate if your Honours were of the view that some calculation needed to be made to fulfil – contrary to what we have put to your Honours –the third promise in some way or to compensate for the failure to fulfil the third promise.  In our respectful submission, one would need to take the value of the land as it currently is, less an allowance for all increases in value of the improvements made by the partnership since 1986 over and above ordinary increases in value due to increases in value of land for inflation and other reasons, and one would also need to make an allowance for the value of all partnership improvements as at 1986 when the partnership ended, and then of course provide for Robert Giumelli’s share of those partnership improvements.  It is those two components ‑ ‑ ‑

GLEESON CJ:   And allow the other way for main profits.

MR CASTAN:   And the other way for main profits is the third element.  It has been referred to in some of the submissions that have been put as an allowance for rent but it is not strictly that.  Now, whether that is extraordinarily complex for valuers to do, given the various components, or whether it can be done simply or whether it can – I hesitate to say one might in some cases say it might be capable of being the subject of agreement, but I hesitate in this case to suggest that that would occur.  I think those are the only matters that I sought to ‑ ‑ ‑

KIRBY J:   I notice that you have not dealt with the formalities issue.  Do we take it that that is seriously in contest in this appeal?

MR CASTAN:   Well, it is in there in the submissions.  Perhaps I should say we do not press it, your Honour.

GUMMOW J:   I think that is wise, Mr Castan.

MR CASTAN:   Yes.  I had left it to the written submissions but it is not pressed.

GUMMOW J:   Yes.

MR CASTAN:   Perhaps what we could do is make copies of the relevant transcript.  This transcript of what occurred before the Full Court at the time when they were finally making the orders and the attempt to persuade them to take into account some of these sorts of balancing issues is something that should be before the Court.  I do not think there are any reasons, as we were debating earlier, but at least your Honours would see the matters that were debated.  Perhaps we could simply undertake to provide copies to the Court.

GLEESON CJ:   Yes, thank you.

KIRBY J:   In answer to me and to Justice Gummow yesterday, you referred to a number of Canadian cases, and I realise that sometimes in this area the Canadian courts have gone off in a slightly different way, perhaps because, as you said yesterday, they have tended to be – and I use your words – more honest about what they are doing, but if there are any more recent Canadian cases – you referred to the Canadian cases of about ten

years ago, I think – that you have come across I would be, for my own part, appreciative to have a look at them.

MR CASTAN:   We will undertake an immediate search, your Honour.

KIRBY J:   That, of course, goes to the ‑ ‑ ‑

MR CASTAN:   If the Court pleases.

GLEESON CJ:   Very well.  We will reserve our decision in this matter.  We will adjourn now to reconstitute.

AT 10.54 AM THE MATTER WAS ADJOURNED