H, AW v K, S
[2021] SASC 128
•11 November 2021
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
H, AW v K, S
[2021] SASC 128
Judgment of the Honourable Auxiliary Justice Bochner
EQUITY - TRUSTS AND TRUSTEES - EXPRESS TRUSTS CONSTITUTED INTER VIVOS - QUISTCLOSE TRUSTS
ESTOPPEL - ESTOPPEL BY CONDUCT - ACT, OMISSION OR ASSUMPTION - REPRESENTATION GENERALLY
GIFTS - GIFTS INTER VIVOS
ESTOPPEL - ESTOPPEL BY CONDUCT - PROMISSORY ESTOPPEL
FAMILY LAW AND CHILD WELFARE - DE FACTO AND OTHER RELATIONSHIPS UNDER STATE LEGISLATION
RESTITUTION - GENERALLY
The parties commenced a personal relationship in about August 2014, during which the applicant gave the respondent, amongst other things, large sums of money and a luxury motor vehicle. When the relationship broke down, the applicant sought the return of the money remaining in the respondent’s bank account and the motor vehicle, on the basis that they were not gifts, but that the respondent held the moneys on a special purpose trust for the applicant, and the motor vehicle remained his. The respondent asserted that the money and the motor vehicle were gifts to her. She further claimed that the parties were in a de facto relationship within the meaning of the Family Law Act 1975, and sought a declaration accordingly.
Held: the applicant's claim is dismissed; the respondent's cross-claim is dismissed.
Family Law Act 1975 (Cth) S 4AA; Social Security Act 1947 (Cth), referred to.
Lynam v Director-General of Social Security (1983) 52 ALR 128; Jonah v White [2011] FamCA 221; Dakin & Sansbury [2010] FMCAfam 628; Sinclair v Whittaker [2013] FamCAFC 129; Clarence & Crisp [2016] FamCAFC 157; Nolan v Nolan [2003] VSC 121; Corin v Patton (1989-1990) 169 CLR 540; Muschinski v Dodds (1985) 160 CLR 583; Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; Toovey v Milne (1819) 106 ER 514; Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491; Compass Resources Ltd v Sherman [2010] WASC 41; George v Webb & Ors [2011] NSWSC 1608; Twinsectra Ltd v Yardley & Ors [2002] 2 AC 164; Zapletal v Wright 1957) TasSR 211; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Commonwealth of Australia v Verwayen (1990) 170 CLR 394; Franklin v Manufacturers Mutual Insurance Ltd (1935) 36 SR (NSW) 76; Commercial and General Corporation Pty Ltd v Manassen Holdings Pty Ltd [2021] SASCFC 40; Legione v Hateley 1983) 152 CLR 406; Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 2) [2021] NSWCA 93; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Saleh v Romanous (2010) 79 NSWLR 453; DHJPM v Blackthorn Resources Ltd (2011) 83 NSWLR 728; Manassen Holdings Pty Ltd v Commercial & General Corporation Pty Ltd [2019] SASC 171; Commercial and General Corporation Pty Ltd v Manassen Holdings Pty Ltd [2021] SASCFC 40, considered.
H, AW v K, S
[2021] SASC 128Introduction
The applicant is a dual Australian American citizen, who travels extensively for his work. In May 2014, he visited a European car dealership (“the dealership”), where he met the respondent, who worked there. They engaged in a series of text messages and telephone calls, which led to the development of a relationship between them. Over the period of their relationship, the applicant transferred large sums of money into the respondent’s bank account, which allowed her to rent a house for herself and her son, first one in Gilberton and then one in North Adelaide, cut back on her hours of work, pay for her son’s school fees, and lead a more affluent lifestyle than she had been able to afford on her own earnings. As the applicant travelled widely and spent a limited amount of time in Adelaide, much of the relationship between the parties was conducted by text message and telephone call.
The relationship between the applicant and the respondent broke down, between about October 2018 and January 2019. On 7 February 2019, the applicant sought urgent orders from the Court for a freezing order over the respondent’s bank accounts. He sought a declaration that the respondent held the sum of $87,000 on trust for him, and sought delivery up of a Mercedes Benz motor vehicle, furniture and jewellery, which were in her possession. In the alternative, he sought restitution of the sum of $87,000, and damages for conversion or detinue of the other items.
In his statement of claim, the applicant pleaded that he and the respondent had made an arrangement in 2014, by which he would make payments to her, with which she would lease a house where she and her son would reside, and where he could stay when he visited Adelaide and store some belongings. He would also purchase a motor vehicle which would be kept at the house, and which the respondent would be able to use when the applicant was not in Adelaide. He further pleaded that, in December 2018, he and the respondent mutually agreed to terminate the arrangement, at which time it was agreed between them that the respondent would vacate the house by 1 February 2019, and return to him the balance of funds in her bank account, the car, and the furniture in the premises. He pleaded that the respondent has retained the money, the car and the furniture and has not vacated the premises. At trial, he did not press the claims in respect of the furniture, clothes and jewellery and pursued only the money and the motor vehicle. It was agreed that the respondent had vacated the premises, shortly after this action was commenced.
In respect of his trust claim, the applicant says that the money that he advanced to the respondent is subject to a Quistclose trust, as it was advanced to her for a specific purpose, and so remained beneficially his. He submits that the primary question underlying each of his causes of action is one of intention, in regard to both the money and the motor vehicle. At no time did he intend either of these things to be gifts to the respondent, and while the respondent’s subjective belief should be considered, it is not conclusive.
In her defence, the respondent pleaded that she and the applicant met in May 2014, and commenced an intimate relationship in about August 2014. She pleaded that the applicant established a place of residence in Adelaide with her and her son, and maintained this joint residence until the breakdown of their relationship in January 2019. During their relationship, the applicant represented to the respondent that he would meet all of the costs associated with renting a house on their behalf, which house would be rented in her name alone. He further represented that he would support the respondent financially, and to this end, made substantial deposits into her bank account at various times throughout the relationship.
In respect of the motor vehicle, the respondent pleaded that it was a gift to her on Valentine’s Day 2017. She further pleaded that the applicant was estopped from seeking repayment of any moneys, given the representations made to her by the applicant that he would support her financially. She pleaded that she had placed reliance on the representations made to her and would suffer detriment if the applicant were permitted to resile from them.
The respondent also filed a cross-claim. She sought a declaration that she and the applicant were de facto partners within the meaning of s 4AA of the Family Law Act 1975. She also pleaded that it would be unconscionable for the respondent not to make good the representations made by him that he would meet the rental payments and costs associated with the premises. She alleged that she was in a position of special disadvantage vis-à-vis the applicant by reason of the fact that she had previously been in an abusive relationship, she lacked financial independence, and she was significantly younger than him. She further pleaded that he is estopped from resiling from these representations, because of her reliance on them.
The trial of this matter proceeded over some nine days. At trial, the ownership of the money and the motor vehicle remained the outstanding issues in dispute between the parties on the applicant’s claim. The main issue in contention on the counter claim was the existence of a de facto relationship.
The evidence
Each of the witnesses, including the applicant and respondent, gave their evidence in chief by way of affidavit. The applicant gave evidence himself, and called two other witnesses, CR (“Mr R”), the respondent’s former partner, and JMO (“Mr O”), the respondent’s current partner. Mr R and Mr O were called as rebuttal evidence, and not as part of the applicant’s primary case. As well as giving evidence herself, the respondent called her mother, DFM, her son, IK, Gary Antoniou, a salesman at Mercedes-Benz Unley, and Dr Wendy Raymond, the landlord of the North Adelaide house rented by the respondent.
Over the course of their relationship, the applicant and respondent exchanged over 5000 text messages. Indeed, the text of 5468 messages was exhibited to the respondent’s affidavit of evidence in chief. Only those messages that were put to a witness during cross examination were tendered. In considering this matter, I have not had regard to the many hundreds of messages that were not put to witnesses and therefore not tendered.
I did not find either of the parties to be satisfactory witnesses. In cross‑examination, the applicant tended to preface his answers with words such as, “I’m going to say…”, “I will say…”. The respondent submitted that I should find, as a result of these types of prefaces, that the applicant was not straightforward in his evidence. She further submitted that the applicant was not truthful in his evidence about whether the money and the cars were gifts, and that there were significant inconsistencies in his evidence, such as referring to both the Gilberton and North Adelaide properties as “our home” in various communications, but then denying that they were his places of residence in evidence.[1]
[1] See for example R16, SK 60 at p 1599-1600 and 1603.
I do not make any adverse findings in respect of the applicant’s evidence as a result of the way he introduced many of his answers. I regard this more as a mannerism that did not betoken evasion or lack of candour. There were, however, various inconsistencies in his evidence, particularly with some of the communications between the parties during the relationship. I will deal with the more significant ones in the course of this judgment. Overall, they have caused me to doubt the truth of much of the applicant’s evidence, which I frequently found to be evasive and unhelpful.
I also consider that the applicant was not truthful in all of his dealings with the respondent. He lied to her about his age.[2] He also lied to her towards the end of their relationship when he told her that he had caused a woman to go to prison when she stole money from him. He misled the respondent when she raised her concerns with him that she was being followed, in that, while he told her (correctly) that his lawyer had not arranged surveillance of her, he did not tell her that he had done so himself, and he in fact encouraged her to believe that she was paranoid about this.[3]
[2] See, for example, R16, SK60 and T172.13-20.
[3] See R16, message no 5403.
While the applicant generally gave his evidence unemotionally and calmly, it was clear that he felt deeply aggrieved at the conduct of the respondent, and in particular at what he regarded as her lack of gratitude. The applicant, both through his evidence, and through the communications between the parties that were tendered in the course of the trial, presented a picture of a person who thinks very highly of himself and his generosity, and one who would struggle to accept any level of responsibility for the breakdown of the relationship. He presented as a person who, while being generous, required that generosity to be frequently acknowledged, and as one who was prepared to use his wealth both to reward and punish those who pleased or, conversely, displeased him. He was clearly very hurt by the breakdown in the relationship, which he appeared to see as a sign of ingratitude on the part of the respondent, and I consider that this reaction coloured his evidence and influenced the way he remembered, or recounted, various events. I also consider that he deliberately down played or minimised various aspects of the relationship, to present a picture that the relationship had more in common with a friendship and a business transaction, rather than a committed relationship. This has led me to treat his evidence with caution. Into this category, I place, amongst other things, the applicant’s evidence that marriage was never contemplated by the parties, and his evidence in respect of his relationship with IK. I conclude that the applicant’s evidence was unreliable in many respects, and that he deliberately downplayed many aspects of the relationship to assist his claim. In other respects, his answers were evasive and calculated to obfuscate. His answers in relation to the respondent’s obtaining a tattoo are an example of this.[4]
[4] T1147.29-148.11.
I had considerable concerns about the respondent’s evidence. In my view, she lied on oath on a number of occasions, and this has led me to view her evidence with caution.
Perhaps the most obvious example of the respondent’s lying on oath is in respect of her studying law at University. In her trial affidavit, the respondent said the following:
Al told me that I should stop studying my Law Degree. He told me that I did not have a passion for the law and that he knew many lawyers and that they worked 24 hours 7 days and only earned pennies in comparison to his income and that was no way for me to spend my time now I was with someone successful. By not continuing my studies I accrued a large $40,000 (approximately) HELP debt that I will have to continue to pay off for decades to come without the possibility of ever being able to practice (sic) in my field of study…At that time, I was studying for a Bachelor of Laws and Legal Practice. He told me that a Law Degree would not make me happy and that I did not need to pursue my goal to become a lawyer because he would always support me and so I withdrew from studies.[5]
[5] R16, [563].
It became clear in the course of the respondent’s cross-examination, that she was not actively studying law at any time during the course of her relationship with the applicant. During her cross-examination, a number of text messages, in which she represented to him that she was studying for exams or doing assignments were put to her. These included message 4 dated 31 May 2014, where she said:
…I would love to take you up on your offer of dinner, it would be a welcome break from the monotony of my week and a welcome distraction from studying for exams.:)
Message 143, dated 24 August 2014, where she said:
…And have a Uni assignment myself due on Thursday that I am yet to start but have had to do readings for…
And message 1567, dated 15 June 2016, where she said:
We are both ensconced in exams for next week.
The applicant subpoenaed the respondent’s enrolment records from the University which revealed that the respondent had last successfully completed a subject as part of a law degree in 2012, and while she had enrolled in a number of subjects in 2013, she had withdrawn from these.[6] In addition, they showed that she had failed a number of subjects in 2007, 2009 and 2012, and withdrawn from others in 2008, 2009, 2010, 2011, 2012 and 2013. The respondent maintained in her oral evidence that she had been enrolled in a number of subjects in 2014, which did not appear in the records, but was unable to produce any evidence of this enrolment, or recall what subjects she had enrolled in. She admitted that she had lied to the applicant, when she represented to him that she was continuing to study law after 2014. It is clear that she lied in her trial affidavit, and also in her affidavit filed in the Family Court of Australia where she said:
75.In or about 2014 the de facto husband told me to give up my law degree because it would not make me happy…
76.The de facto husband constantly pressured me to cut my work commitments, asserting that I only needed to rely on him. I agreed to give up my job at [the clothes store] and I stopped studying my law degree…[7]
[6] A17.
[7] R58.
The lie is not that the applicant persuaded or attempted to persuade her to give up her law degree (which I accept), but the implied statement that she was actively undertaking a law degree at that time and that the applicant’s persuasion or pressure was a material factor in her decision to abandon it. While the respondent may have been enrolled in subjects for her law degree in 2014 and withdrew from them before they could appear on her enrolment records, it is clear that at no time during her relationship with the applicant was she actively studying for a law degree. I do not accept that her failure to complete a law degree was the result of the applicant’s representations, importuning or persuasion.
I find that the respondent also lied in respect of her evidence that the applicant proposed marriage to her. In respect of proposals of marriage, she said in cross-examination:
Q. Are you telling this court you thought that was a proposal.
A. I think he might have thought it was - certainly if nothing else, a sign of commitment.
Q. I'm not asking about what he thought. Did you consider that a proposal.
A. I did at the start. I mean, again, there was that initial shock, so I -
Q.He thought he engaged to you, on the third time you met - he proposed to you on the third time you met him.
A.He's a very outgoing personality, so there was a lot that was - everything moved really quickly in the first few weeks. You know, it was only three months before we had a home together, so at that stage, there wasn't much that surprised me. But that certainly was - I was taken aback by that gesture.
Q.You're telling this court that you considered that a proposal, and that you were engaged from that point with [the applicant], is that your evidence.
A. I think I considered it a sign of commitment.
Q. Certainly not an engagement.
A. More so a commitment at that stage.
Q. And certainly not a proposal.
A. The way that he conducted it, it felt a little bit like a proposal.
Q. Did you tell anyone he proposed to you.
A. I did mention it to my mum later on.[8]
[8] T365.23-366.11.
She later agreed that none of the rings that he gave her was an engagement ring. Later, in her evidence, the following exchange occurred:
Q. That's your evidence from yesterday.
A. Yes.
Q.You agreed that if [the applicant] proposed to you at any time during your relationship you would have included that in your trial affidavit.
A. Yes.
Q. And so he didn't propose to you at all. Do you agree with that.
A.There was some situations that were a little bit more than just a commitment in my mind, but no technical.
Q. Didn't propose to you, you agree.
A. Yes.
Q. Looking at Exhibit A31 produced, can you turn to p.12 of that document.
A. Yes.
Q. Can you just have a read of para.45 to yourself.
A. Yes.
Q.You say in that 'In the first year our relationship the plaintiff proposed marriage to me'.
A. Yes.
Q. You agree that's incorrect.
A.He did propose marriage but as you said, it was - we made some small plans and then it didn't materialise, so it was -
Q.You agree that he didn't propose marriage to you at all throughout the entirety of your relationship; you've just given that evidence.
A. Yes.[9]
[9] T507.20-508.9.
She further said:
Q. At any stage during your relationship did [the applicant] propose to you.
A. I took that as more than a commitment that the first presentation of the ring.
Q. At any point in your relationship did [the applicant] ask you to marry him.
A. Again, I took that as more of a commitment - no.
Q.So the truth is he didn't ask you to marry him and the statement made at para.45 is incorrect.
A. Yes.[10]
[10] T510.11-510.20.
The respondent made a further assertion that the applicant had given her an engagement ring, which she conceded in cross-examination was not true:
Q.Looking at the affidavit of Angela Claire Ferdinandy produced; do you have that in front of you.
A. Yes.
Q. Can you turn to p.4 of that.
A. Yes.
Q. Just read para.7.8.
A. Yes.
Q. You asserted at that point that [the applicant] gave you an engagement ring.
A. Yes.
Q. That's not true.
A. No.[11]
[11] T520.1-520.12.
It is clear that the respondent lied on numerous occasions about proposals of marriage and being given engagement rings.
I also note that the respondent said for the first time during cross-examination that she purchased a wedding dress in late 2014.[12] She had made no mention of this in her trial affidavit or in her affidavit prepared for the purpose of the Family Court proceedings. As this was mentioned for the first time in cross-examination, I have concluded that this did not in fact occur.
[12] T499.30.
Having said that, I have concluded that there was some discussion of marriage and wedding dresses between the parties; if that were not the case, there would be no explanation for the following text messages:
Applicant:A gay friend in London sent me This and Wondered if The was The Valentino Wedding Dress We Had in Mind -lol-U do remember THAT white, lace dress I like-Shhh-…[13]
Respondent: That is a beautiful dress.. And though I don’t want a church wedding, I don’t know if showing that much underwear is suitable for the occasion;)[14]
[13] SK41 message no 620.
[14] SK41, message no 622.
To be clear, I reject the respondent’s evidence that the applicant proposed to her, gave her an engagement ring, and that she bought a wedding dress. I also reject the applicant’s evidence that marriage was never contemplated between them. I accept that there was a discussion or discussions between the applicant and respondent about getting married, and wedding dresses.
I note that the respondent did not change her address with any government institutions, nor did she advise Centrelink or the Australian Tax Office that she was in a de facto relationship. Further, she continued to apply yearly for the School Card, despite giving evidence that she simply did not cancel it. The applicant urged me to treat this evidence as evidence of the fact that she did not consider that she was in a de facto relationship with the applicant; I do not consider that it can be taken as any indication of her own belief as to the nature of the relationship with the applicant. I consider, however, that it is evidence of the fact that the respondent is prepared to lie where there is a financial advantage to her to do so.
The applicant urged me to find that the respondent had lied in her evidence that she had sold items on Ebay in order to repay money to the applicant. I am not prepared to make this finding. Although the respondent could not produce any independent evidence of this fact, it is referred to in contemporaneous text messages between the parties.[15]
[15] R16, SK41, messages 684, 687 and 689.
During his final submissions, the applicant urgent me to find that many aspects of the respondent’s evidence were lies, including evidence about what finger she wore her rings on and whether she needed the applicant’s assistance to obtain a rental property because she had no rental history. I make no finding in respect of these matters. They are matters where the parties gave conflicting evidence and given my findings on the credibility of each of them, I prefer neither one nor the other.
I have reached the conclusion that the respondent was prepared to embellish her evidence and, indeed, lie where required to assist her case. Given my findings of credibility in respect of both the applicant and respondent, I have sought to rely, where possible, on independent evidence, and on the contemporaneous communications between the parties during the relationship.
Before I leave the evidence of the respondent, it is necessary to address an incident that occurred at the conclusion of the luncheon adjournment on the first day of the trial. The applicant urged me to find that the incident was engineered by the respondent to embarrass and humiliate him, and to interfere with the orderly conduct of the trial. When the incident was brought to my attention, the respondent gave a number of undertakings in respect of it while denying involvement in it. She was not questioned about it during her evidence. In the circumstances, I am unable to reach any conclusion as to the instigator of the incident and I make no adverse findings against the respondent in respect of it.
I also note that the applicant urged me to make adverse findings about the respondent as a result of statements in her affidavit of evidence in chief in respect of her sexual relationship with the applicant. I decline to do so. Those statements were not admitted into evidence and I make no findings of any type in respect of them.
I turn now to the other witnesses.
The respondent’s son, IK gave evidence. Generally speaking, I found IK’s evidence to be unhelpful. While I consider that he did his best to be truthful, I formed the view that he was anxious to support his mother. His evidence was that he had always lived with her, and had last seen his biological father when he was eleven years old. He had no desire to see his biological father, because he was violent towards him, and threatened his mother. It is clear that IK met the applicant at an impressionable time in his life, when he did not have a father figure, and was easily impressed by wealth and its trappings. Thus, I consider that his recollection of events and the evidence that he gave were somewhat skewed by his close relationship with his mother and a natural desire to protect her, and by the fact that he met the applicant at a formative time of his life.
I place little weight on the evidence of the respondent’s mother, DFM. Her affidavit of evidence[16] tended to give the impression that she met the applicant on numerous occasions, and had spent considerable time with him. She said, for example, “I first met [the applicant]…”[17], “[the applicant] told me a bit about his life on the occasions we met.”,[18] and “On the first day I met him…”.[19] In her cross‑examination, however, it became clear that she met him only once. I can only conclude that these statements in her evidence in chief were made so as to give a misleading picture of her familiarity with the applicant. As a result, I place little weight on her observations about the relationship between the applicant and respondent, and the applicant and IK. I also consider that DFM was somewhat defensive and evasive in the answers that she gave. I place little weight on her evidence.
[16] R34.
[17] Ibid, [23].
[18] Ibid, [25].
[19] Ibid, [27].
I consider that Wendy Raymond was a truthful witness and I accept her evidence.
I also consider that Mr Antoniou, Mr O and Mr R were reliable witnesses, although I place little weight on Mr Antoniou’s evidence. It was clear that he did not have much independent memory of this interactions with the parties, save for what was recorded in his notes.
The parties and their backgrounds
The applicant was born on 16 September 1958 and holds dual citizenship of Australia and the United States of America. He gained Australian citizenship in 1999, although says that he did not tell the respondent that he was an Australian citizen. When in Australia, he spends the majority of his time in New South Wales or Queensland. He holds a New South Wales driving licence.
The applicant is self-employed and travels for work in Australia, the United States and Europe. He is able to work remotely using a smart phone and a computer. As well as owning a residence in Point Piper, New South Wales, the applicant also has a residence in Pebble Beach, California.
The applicant has never been married, nor does he have children.
The respondent is an Australian citizen who was born in Adelaide in 1984. She has a son, IK, who was born in 1999. She left school when she was in year 11 because she was pregnant. The respondent has worked in various occupations and commenced, but did not complete, a Bachelor of Laws and Legal Practice. At the time she met the applicant, the respondent was living with IK at her father’s home in the Adelaide Hills and worked as a part‑time sales consultant at the dealership and a designer clothes store (“the clothes store”). The respondent obtained an order for sole parental responsibility in respect of her son when he was ten years old, because of his father’s violent disposition. From that time, she had no contact with him and IK has had no contact with him since he was eleven years old.
In 2006, the respondent completed the equivalent of year 12 through Open Access UniSA. She applied to University to commence a Bachelor of Laws and Legal Practice, and started this degree in 2007. At this time, she was also working in her then partner’s business. She ceased working in this business in 2008, when that relationship broke down. She commenced working at the dealership in 2009, initially on a casual basis in the marketing department.
In 2012, the respondent moved to a sales role at the dealership. In 2011, she commenced working part time at the clothes store, and at the time that she met the applicant, was employed on a permanent part time basis at both the dealership and the clothes store. She says that she resigned from her position at the clothes store at the request of the applicant.
The commencement of the relationship and the relationship generally
The parties first met in May 2014 at the dealership while the applicant was looking to buy a car for a business he had in South Australia. The applicant subsequently sent a box of T-shirts to the respondent and a colleague, along with a photograph of himself and his mother. The respondent was told by her colleague that the applicant wanted her to contact him directly to thank him for the gift and she did so on her personal phone after work. While the applicant was at the dealership, the respondent saw a copy of his driver’s licence. This recorded his date of birth as 16 September 1969, rather than 1958, the true year of his birth. She says that she was unaware of the applicant’s true age until the commencement of this action.
The parties then commenced communicating via text and telephone. The applicant began sending the respondent flowers and other gifts on a weekly or fortnightly basis, and would telephone her at work every few days.
In June 2014, the applicant invited the respondent to have lunch with him in Sydney at Doyles. He purchased business class airfares for her, and arranged for her to be collected from the airport. He booked a room in a five star hotel for her use during the day. She did not stay the night in Sydney, but returned to Adelaide the same day.
Very soon after the lunch at Doyles, the applicant contemplated an ongoing relationship with the respondent. He wrote a letter to her, dated 24 June 2014, in which he said:
Again, I am happy to put it in writing that whatever positive changes I wrought, I will make sure that financially, you WILL have them for, say, at least, the next five years. Please let me explain…
For example, the attached about the Homes in Beaumont. I want the house in YOUR name. there will be no mortgage, so it will, technically, by Yours. And, the same with the Bentley. I want it in YOUR name only; and I buy them for cash…
Practically, I promise to set up a house account with our names and to keep a few hundred thousand there. This way, if there are ANY requirements or repairs to the house or car, for example, you will have access to enough money to do it all…
Butt (sic), in addition, I will give you one of my Amex Centurion Supplementary Cards, with your PERSONAL code, which means I don’t even have to know – so, you can charge whatever you want-and ALL of the bills are mine – forever…
More importantly, I will set up an account with the Local Caltex Stations, The Local Woolworths, Coles and IGA, for example. So, all you do is show up. And, of course, all of the Rates, Electricity, Gas, Gardening, etc, on Beaumont, will be paid AUTOMATICALLY, from by Citibank account in NYC…
All of THIS is to ensure that you never, ever, have to be concerned if something happens to us just how you would cope. As I have already added a codicil to my will on The Rembrandt supply, to add another would be simple…
Yes, I will be happy to state that should something terrible happen to me that if will be ALL Yours without conditions.[20]
(capitalisation in original)
[20] R16 at p1581.
Initially, the parties discussed the applicant’s purchasing a house for the respondent and IK to live in; the reference to the “Homes in Beaumont” is a reference to this.
The applicant agreed that this communication amounted to representations that he would provide for her, that she could charge whatever she wanted to his Amex card, that he would pay her household expenses and he would provide for her in his will. He denied, however, that the provision of financial support would be unconditional, or that any other gifts to her would be unconditional. In cross‑examination, the applicant said that he could no longer recall what was meant by the reference to “the Rembrandt Supply”, nor could he recall the contents of his will at this time. The applicant’s evidence was that he made these representations to the respondent as part of his attempts to “woo” her. Both parties agreed that they did not discuss the purchase of a property after about early 2015.
On 25 June 2014, the parties had a second date in Melbourne. The applicant paid for airfares for the respondent to Melbourne and dinner and hotel accommodation. They went to the ballet.
The applicant wrote to the respondent a second time in June. Although the letter is simply dated “June 2014”, it is clear from its context that it was written after the letter dated 24 June 2014. In this second letter, he said:
Of course, you and I will continue our discussion on our Home in Wattle Grove or Beaumont and our Bentley. God knows how many time I must put it in writing before your scream: I got it, Big Al: You will make sure they are mine….
However, again, let me add they will be in your name, so just in case you no longer find me sexually attractive – lol – or if the God Awful Proverbial Bus Happens – You and [IK] would be set. Again, I am a man of my word….[21]
(capitalisation in the original)
[21] R16, SK 58.
The applicant next invited the respondent to spend a weekend in late July with him in Sydney, and paid for business class airfares and hotel accommodation for her. He did not invite her to stay at his Point Piper residence. During the weekend, the applicant took the respondent shopping at Bondi Junction. He bought her a Cartier watch, and while the watch was being resized, he presented her with a ring.
On the second night of the weekend in Sydney, it became clear to the respondent that the applicant would like to have sex with her. She asked the applicant to sleep on the couch, which he did. The parties did not have sex that night.
When the respondent returned to Adelaide after that trip, the applicant sent an email to her to clarify the nature of their relationship. He told her that he did not believe that she should have accepted his invitation to travel to Sydney or expensive gifts if she did not want to be intimate with him. Subsequently, the respondent apologised to the applicant. The parties commenced their sexual relationship in Adelaide in about August 2014.
Over the course of the relationship, the applicant gave the respondent four rings, including the one that he gave her during the second trip to Sydney in 2014. The significance of the rings was a matter of dispute between the parties. The respondent said that they were signs of commitment. The applicant gave a number of reasons for the purchase of the rings during his cross-examination:
Q.During that visit to Adelaide when you commenced a sexual relationship with [the Respondent], do you recall purchasing a ring for [the Respondent] from James Thredgold Jewellers.
A. Yes.
Q.Do you recall asking [the Respondent] to wear that ring finger as a sign of commitment.
A. It is called Mackenzi Guptill effect.
Q. Could you explain what you mean by that.
A.It is that single women, in order to deter some men from approaching them wear a ring on their wedding finger. That was the discussion.
Q.I want to suggest to you that there was no discussion to that effect and that you asked [the Respondent] to wear the ring you purchased from James Thredgold Jewelers on her ring finger as a sign of commitment to you.
A.Now, I'm going to say no, and say these conversations did not happen as sequentially as you might try to make them. That there was an ebb and flow about what happened but there was nothing, except the idea of repelling men. That was the major reason.
Q.So do you admit that you represented to [the Respondent] she should wear the ring to repel other men.
A. As she complained that other men had always approached her.
Q. Do you ask her wear it to repel other men.
A. Yes.
Q. Do you deny that you asked her to wear the ring as a commitment to you.
A.No I have not denied that. I have said it could be part of a conversation that might have lasted three days.
Q.So is it fair to say that you wanted her to wear the ring, one, to repel other men, and two, to show her commitment to you.
A.In addition to making her fingers look beautiful, in addition to feeling special. There could be a million reasons why that was so.
CONTINUED
Q.But your reasons were, as I understand your evidence, 1, to show a commitment to you.
A. Going to say yes.
Q. 2, to repel other men.
A. Yes.
Q. And 3, to make her fingers look beautiful.
A. Yes. Three of 189 reasons.[22]
[22] T83.11-85.7.
During the relationship, the parties did not acquire any assets together. The leases for the properties were in the respondent’s sole name, as were the motor vehicles. They did not open a joint bank account; the deposits by the applicant were made into the same account into which the respondent received her salary and Centrelink payments. The respondent never visited the applicant’s house in Pebble Beach California, or in Point Piper, nor was she invited to do so.
The applicant only met the respondent’s parents on one occasion each, and she never met any member of his family. He never met her friends. She did not invite him to any significant family events. Similarly, the applicant never introduced the respondent to his family and friends, nor did he tell his friends about her. The parties never spent Christmas together.
The parties’ living arrangements
During the early stage of the parties’ relationship, the respondent lived with her father and her son at her father’s house in the Adelaide Hills. The house did not have mobile phone reception, and it was difficult for the parties to communicate. The applicant suggested that he rent a house in Adelaide where she could live with her son, and where he could stay when he was in Adelaide. There were a number of discussions about this over the course of about a week, during which the applicant told the respondent that he would provide the funds and references for the respondent to lease premises. He would pay for the rent and all of the furnishings for the house. He told the respondent to put the lease in her name. It was the applicant’s case that this was so that she would build a rental history. It was the respondent’s case that the lease was put in her name as the applicant did not want the exposure of having a property in his name.
In October 2014, the respondent leased a townhouse in Gilberton. She remained living in this property until December 2015. During this time, the applicant visited her seven or eight times, for approximately three nights each time. The applicant would also sometimes stay in a hotel, and the respondent would visit him there. It was the respondent’s evidence that the applicant would stay at a hotel from time to time as she wanted IK’s introduction to the applicant to be a gentle one, and once IK was familiar with him, he no longer stayed at a hotel. It was the applicant’s evidence that he continued to stay in hotels from time to time.
The parties had separate bedrooms, and never slept in the same room. The applicant worked during the night as this was when the stock markets in the United States and Europe were open. He would come into the respondent’s bedroom when the markets closed and spend a few hours with her then. It was at these times that their sexual interactions would take place.
The applicant never gave the address of the Gilberton property as his address to any person or organisation. The respondent also did not provide this address to official institutions such as banks, government institutions or her son’s school. She continued to use her father’s address for these things. The respondent attributed her failure to do this to ignorance and convenience.
When the applicant first asked the respondent for a key to the Gilberton property, she complained, “Every man and his dog has a key to this place.”
At the conclusion of the applicant’s first visit to the Gilberton property, the respondent asked him to take his clothes away. She told the applicant that her parents might visit and she did not want them to know that she was in the arrangement with him. This escalated into an argument, during which the applicant asked the respondent to return the money, car (which I will come back to), jewellery and other items that he had purchased for her, and for her to vacate the Gilberton property. She did not do so and the parties reconciled.
In December 2015, the lease at the Gilberton property expired and the respondent rented another property in North Adelaide. During the period at the North Adelaide property, the respondent continued the pattern of visiting the applicant approximately seven times each year, for around three days each visit. Again, he would sometimes stay in a hotel, rather than with the respondent; during these times, the respondent would visit him at the hotel.
As with the Gilberton property, the parties had separate bedrooms at the North Adelaide property and never slept in the same bedroom. The applicant never gave the address of the North Adelaide property as his address to any person or institution; nor did the respondent, who continued to use her father’s address. The applicant made many changes to the North Adelaide property, including installing a safe, blinds, a fence, gates, and storage. The applicant continued to make regular cash deposits into the respondent’s bank account. The parties never shared a bank account and the applicant never told the respondent how much money or property he owned, or how much he earned. In the same way, the respondent never told the applicant how much she earned, and he never asked. The applicant was aware that the account into which he paid money for the respondent was the same account into which her salary was paid.
The applicant asked the respondent on numerous occasions for a key to the back entrance to the North Adelaide property, as well as a clicker for the garage. The respondent refused to provide him with these, although she did give him a key to the front door. I note that she says she was not able to give him a clicker for the garage, as the landlord only gave her one, which she needed herself. There was also a security gate next to the garage, which the respondent refused to give the applicant the key to. She never gave him the WIFI password at either the Gilberton or North Adelaide properties. The respondent frequently referred to the applicant as a guest at the North Adelaide property.
There was a dispute between the parties about whether the respondent performed household tasks for the applicant. I find on balance that the respondent did perform household tasks for the applicant, including preparing meals, laundry and cleaning.
The physical relationship between the parties
The sexual relationship between the parties commenced in about August 2014. Sexual relations usually occurred between 4 and 6am after the applicant had finished his work. It was the evidence of both parties that although sex was an element of the relationship, it was never a significant factor for the couple. The parties would only have sex once during each of the applicant’s visits, and they never slept in the same bed. The applicant says that from some time in 2015, he viewed the relationship more as a friendship than as a romantic relationship.[23]
[23] T226.10-22.
The applicant says that the respondent never instituted any affectionate contact with him and was never affectionate to him in front of her son. This was denied by the respondent.[24]
[24] See, for example, T624.29-625.4.
It was the evidence of both parties that they did not kiss on the mouth after 2015. The respondent developed a cold sore and the applicant became concerned about contracting herpes from her. I note that this is contrary to the evidence given by IK, who said:
Q.So when I asked you before, would it be a surprise for you then to hear that your mother has given evidence in these proceedings that they did not kiss on the lips from 2015 onwards.
A. That's definitely not true. From 2015, sorry you said?
Q. Yes.
A. Yeah, I doubt that.
Q. So if you mother's given that evidence, that's not true.
A. Yeah if she has, I don't think so.[25]
[25] T589.26-35.
In my view, nothing turns on this. This evidence of IK, however, also calls into question the evidence of the applicant, that the respondent never showed any signs of affection to him in front of IK. I consider this another instance where the applicant has sought to downplay the closeness of the relationship between him and the respondent.
The sexual exclusivity of the relationship between the parties became a matter of some moment during the trial. It was not in dispute that the respondent was in a relationship with Mr R at the time that she met the applicant. She told the applicant that it was “complicated” and that she was in the process of extricating herself from the relationship. Her evidence was that, save for one caveat, she and Mr R did not have sex after she met the applicant. The caveat was in respect of New Year’s Eve, 31 December 2014. The respondent spent the evening at Mr R’s house and drank excessively. She said that she has no memory of what occurred that evening, and woke in the morning to find herself lying, fully clothed, on Mr R’s bed, with him beside her. Because she had no memory of what had occurred, she was unable to say whether they had sex or not. In any event, her evidence was that she continued to see Mr R until about October 2014 (save for the New Year’s Eve event), and that he had visited her two or three times at the Gilberton premises. The respondent conceded that she did not tell the applicant that she continued to see Mr R during this time, nor did she tell him that she spent New Year’s Eve at his house. She said that she had no further contact with him after January 2015.
On 2 January 2015, Mr R contacted the applicant and told him that he and the respondent had been together at the Gilberton premises in September 2014, that they had spent the 2014-2015 New Year’s Eve together and that he had spent the night with her in bed. The applicant confronted the respondent about this, and she told him that nothing had happened.
In his evidence, Mr R said that the respondent had been living in Gilberton for four to five months when their relationship ended. He was aware that the respondent was also in a relationship with the applicant towards the end of their relationship. He confirmed telephoning the applicant.
Mr R said that he has had no contact with the respondent since early 2015. He said that he did not have sex with her at the Gilberton property, and they did not have sex on New Year’s Eve 2014-2015. He said that they did not have sex at all during 2014. I accept this evidence.
The respondent was frank in her evidence that she commenced a relationship with Mr O in about October 2018.
It was the applicant’s evidence that he did not see anyone else during the course of the relationship with the respondent. This evidence was not challenged.
I conclude that the applicant and the respondent were in a sexually exclusive relationship from June 2014 until October 2018.
The motor vehicles
In August 2014, the applicant bought a white Mercedes motor vehicle (“the white Mercedes”). His evidence was that he kept a vehicle in cities that he visited regularly and he wanted one for his use in Adelaide. The respondent’s evidence was that the applicant considered that the vehicle that she was driving at that time was unsafe, and he wanted a safe vehicle for her to drive. The applicant arranged for the respondent to test drive a vehicle and to choose the colour. The white Mercedes was registered and insured in the respondent’s name, although the applicant paid the purchase price and the related ongoing expenses. It was the applicant’s evidence that it was agreed between them that he would retain ownership of the white Mercedes, and the respondent would drive it when he was not in Adelaide. It is the respondent’s evidence that the white Mercedes was a gift to her.
In early 2017, the applicant arranged to replace the white Mercedes for another vehicle, a black Mercedes (“the black Mercedes”). He did this through Mr Antoniou at the Mercedes dealership without reference to the respondent. He arranged to have the black Mercedes delivered to the respondent on Valentine’s Day with two dozen roses, two cards, and a box of chocolates. The vehicle had a large black bow on the bonnet. The respondent had several photographs of herself taken with the vehicle, which she sent to the applicant.[26] This vehicle was also registered in the respondent’s name, although the applicant paid for it. At delivery, Mr Antoniou, who delivered the vehicle, completed the paperwork with the respondent, for the trade in of the white Mercedes and the transfer of the black Mercedes into her name.
[26] R 48.
Mr Antoniou gave evidence at trial. He has worked for Mercedes Benz for some twenty-seven years, with nearly fifteen of those as a sales representative. He has never met the applicant although he has spoken to him on the telephone on a number of occasions. He has met the respondent numerous times. Mr Antoniou did not have a strong independent recollection of the events surrounding the purchase of the two motor vehicles; he was assisted, however, by his own contemporaneous notes, which allowed him to recall events in more detail. His memory remained vague in respect of any conversations that he had with either party.
In respect of the white Mercedes, Mr Antoniou recalled that he dealt with the applicant by telephone. At the applicant’s request, he put the car in the respondent’s name, and the applicant paid for it on his American Express account. His evidence was that it was his impression that the white Mercedes was a gift from the applicant to the respondent. He said:
As far as I understood it was a call just to say it was a gift for a girlfriend and we just went through the motions over the phone of negotiating the deal and organising a delivery time for her, just to hand over the car.[27]
[27] T663.4-8.
He continued:
It’s the first time I’ve seen a guy buy a girl a car before. You know, it was a gift.[28]
[28] T663.34-35.
In respect of the telephone call initiating the purchase of black Mercedes, Mr Antoniou said that he recalled that the applicant:
Just wanted it to be a surprise gift for Valentine’s Day…[29]
[29] T665.14-15.
In respect of the arrangements for the purchase and delivery of the black Mercedes, he said:
Well, firstly, it had to be a surprise for Valentine’s Day; there were some gifts – I had to organise to get some roses; get the windows tinted; clarifying if the car had floor mats; and it had a full tank of fuel; what number plates to put on it; if there’s any Formula 1 events coming up, can I organise some tickets; same with Mercedes-Benz fashion show; and remove the badging off the back of the car. And the top-right is the credit card number for the deposit. In fact, sorry, not a deposit, that’s full payment ‘cos there’s no deposit listed so it was a full payment.[30]
[30] T666.23-33.
He went on:
No. 1, keep it quiet, so don’t blow the surprise – that was the main thing.[31]
[31] T667.1-2.
Mr Antoniou confirmed that, while the contract of sale and the tax invoice for the black Mercedes were in the respondent’s name, the applicant paid for the vehicle.
In cross-examination, Mr Antoniou confirmed that he was unable to recall the exact words used by the applicant in the conversations that he had with him; he did, however, remember what he was asked to do. At the conclusion of his cross-examination, the following exchange took place:
Q. So it was the case that Big Al was negotiating with you, for the trade-in of the white Mercedes and the purchase of the black Mercedes. He wanted it delivered on Valentine’s Day, he wanted it to have red roses and he wanted it to be a surprise. And really that’s all you remember.
A. Yes.[32]
[32] T683.18-24.
On receiving the black Mercedes from Mr Antoniou, the respondent sent the following text message to the applicant:
Oh my god!!!..I am so massively overwhelmed. This is the most amazing gift I could possibly imagine. I am shaking..Poor Gary, I had no idea what to say and am still shaking…I don’t know how you did it but I am sooooo grateful…Wow. Happy Valentine’s Day..xxx[33]
[33] SK 41, message no 510.
In cross-examination, the applicant conceded that he realised that the respondent believed that the black Mercedes was a gift.[34] He continued to deny that it was a gift.
[34] T169.34-37.
I will return to the question of the ownership of the white Mercedes and black Mercedes in due course.
The financial arrangements between the parties
It is not in dispute that, at the time that the parties met, the respondent had limited financial resources. She was living with her father in his house in the Adelaide Hills while she saved sufficient money to pay the bond to rent a house for her and IK. The applicant began transferring money into the respondent’s bank account not long after their second date in Melbourne.
The evidence shows that the respondent was at first reluctant to provide her bank account details. In text messages, the applicant said, on 20 June 2014:
Please SMS me The Bank Details – And Then we’ll Talk of Your [IK] and Study New Schedule…[35]
[35] SK 41, message no 27.
The following day, he sent this message:
…Pls don’t make me beg anymore – Pls simply SMS thru yr bank details – Tonite…[36]
[36] SK 41, message no 29.
On 23 June 2014, the respondent replied:
I didn’t want to forward any details to you just yet…Don’t be upset with me..Your generosity is amazing and so very appreciated. I absolutely trust you will follow through on your word, and consider myself so lucky to be the recipient of your affection…I just really want to get to know you just a little bit more.[37]
[37] SK 31, message no 31.
The applicant first made a deposit into the respondent’s bank account on 30 June 2014. At this time, the respondent was living at her father’s house and it would be some months before the parties agreed to find a house for the respondent to rent.
In about August 2014, the applicant gave the respondent a supplementary card to his American Express Centurion account. The items charged to the card were billed to the applicant’s account. It was the applicant’s evidence that he asked the respondent to return the card to him after about five months because she had abused it.[38] It was the respondent’s evidence that she returned the card because it had or was about to expire, and that he gave her another one, which she never used.[39]
[38] T231.34 – T232.3.
[39] T421.19-21.
Over the course of their relationship, the applicant transferred the following sums into the respondent’s bank account:
30 June 2014 $99,001.03
8 August 2014 $99,999.99
25 February 2015 $99,999.01
14 July 2915 $99,001.03
24 November 2915 $99,999.99
31 August 2016 $99,999.03
3 April 2017 $79,000.03
17 September 2017 $83,001.23
5 January 2018 $51,003.99
1 May 2018 $37,001.99
26 October 2018 $65,007.99
Total $913,015.31
All of the respondent’s major expenses, including rent, outgoings related to the house, IK’s school fees, and her clothes and food were met from the bank account into which these deposits were paid. Her salary and Centrelink payments were also paid into this account; thus, there was intermingling of the moneys that she earned, those she received by way of Centrelink payments and those transferred by the applicant. Throughout her evidence, the respondent maintained that the monies were hers to be used at her absolute discretion. It was the applicant’s position that he oversaw the amounts that the respondent spent, but was not concerned about what she spent the money on.
The evidence of the applicant about the level of oversight that he had over the respondent’s spending, and her discretion to spend money as she saw fit was contradictory and confusing. During his cross examination, he said the following:
Q.You had some significant disagreements over the amount of [the Respondent]'s spending in 2015.
A. Yes.
Q. You wanted her to be comfortable.
A. Yes.
Q. And you wanted her to be able to buy nice things.
A. Yes.
Q. And you wanted her not to have to worry about the private school fees for her son.
A. Yes.
Q.And you knew that [the Respondent] was spending the moneys that you provided on matters such as nice clothes, school fees, rent, bills and other incidental items.
A. Yes.
Q. You respected [the Respondent].
A. Yes.
Q. And you trusted she wouldn't spend money gambling or at the Casino.
A. Yes.
Q.And when you had disagreements about the spending in 2015. It wasn't what she was spending the money on it was the amount.
A. Yes.
Q.And when you made the deposits into her account you gave her, in effect, complete freedom and autonomy to spend what she spent the money on.
A. I'm going to say yes, but there were expectations.
Q.Sometimes you did ask [the Respondent] to provide you an estimate of how much money she needed.
A. Twice.
Q.But for the most part you kept [the Respondent]'s accounts topped up to a certain level.
A. Yes.
Q. You wanted [the Respondent] to have a fortunate life.
A. Yes.
Q. And you regarded yourself as a generous guy.
A. Very.
Q.So, although you kept an eye on the amount of the expenditure you didn't analyse in detail what she spent the money on.
A. Never.
Q. Or what items she bought.
A. Never.
Q.And it was in that way that she really had complete discretion over the expenditure of those moneys.
A. Yes.
Q. And if I could just take you to para.35 of your affidavit.
A. Yes.
Q. And I think I've taken you yesterday to those first two transactions in 2014.
A. Yes.
Q. That was before there were any rental premises.
A. In June 2014?
Q. The June 2014 and August 2014 payments.
A. That is correct.
Q.And then there were three payments that I've taken you to this morning in February 2015, July 2015 and November 2015.
A. Yes.
Q.And then there's another series of payments that have been made on 31 August 2016 in the amount of 99,999.03 and on 3 April 2017 in the amount of 79,000.03.
A. Yes.
Q. And 17 September 2017 in the amount of 83,001.23.
A. Yes.
Q. And 5 January 2018, in the amount of 51,003.99.
A. Yes.
Q. And 1 May 2018 in the amount of 37,001.99.
A. Yes.
Q. And on 26 October 2019 in the amount of 65,007.99.
A. Yes.
Q.And those payments like the earlier payments again were made by you so that [the Respondent] could spend the money on matters such as nice clothes, school fees, rent, bills and all the other matters we've been talking about this morning.
A. Yes.
Q. Incidental items.
A. Yes.
Q. With her complete discretion over the expenditure.
A. Yes.[40]
[40] T104.8-106.13.
Later, he said that, following an argument over the respondent’s spending habits in December 2015, he asked the respondent to provide an account of her spending and made a demand for the return of monies and items which had been purchased. This led to the return of the sum of $85,000.00 by the respondent, on the following dates:
9 December 2015 $70,000.00
9 December 2015 $5,000.00
15 December 2015 $5,000.00
29 December 2015 $5,000.00
Total $85,000.00
After they reconciled, the applicant asked the respondent to send him a budget on which he would then base future payments to her. He referred to this as a “formula”. The following exchange took place in relation to the various transfers of moneys and the formula:
Q. And those deposits were made to keep her bank account at a certain level.
A. Yes.
Q.And I want to suggest to you your intention in making those deposits was to provide moneys for [the Respondent] to use freely in her discretion.
A. No.
Q.Well you accepted yesterday that you didn't exercise any control over what she spent the money on.
A. No I did not.
Q.And you were more concerned with the amount of money that she spent than what she spent the money on.
A. On occasion I was, yes.
Q.So when you made the deposit of the money it was hers to spend as she saw fit, what you were looking at is how often you were having to make the deposits in terms of the amounts.
A.We had agreed on the amount of money that it would take to maintain the places in which it is that she lived. Yes.
Q. And this formula, you haven't referred to that formula in your affidavit.
A.I thought I had at some point but it was agreed, the No.65 which is No.35 is not just a number from a hat. She said 'I have $35,000 in my account'. She told me that and I deposited 65. She told me she had $63,000 on 1 May and I deposited 37. She told me she had $49,000 on 5 January and I deposited 51,000 etc.[41]
[41] T218.13 – T219.2.
In re-examination, the following exchange about the formula occurred:
Q.You were asked the question about the formula and it was put to you by me learned friend that you'd not referred to the formula before in your affidavit. If [the applicant] could be shown Exhibit A3, his affidavit. Could I ask you to turn to para.31.
A. Yes.
Q.The last line reads 'We argued by telephone and text message'. It talks about text messages there and then the sentence continues on. You see that there's a reference to $2,556 per week on the top of p.7.
A. Yes.
Q. Is that a reference to the formula.
A. Yes.
Q. How did that sum $2,556 per week arise.
A. I was told - that number was arrived at by [the Respondent].
Q. And how did it come about that that number was arrived at by her.
A.She had added all of the expenditures that were necessary that were often accrued over a period of time and then divided it by month, week. That's how.
Q. So, she advised you of that figure.
A. Yes.
Q. And that became the foundation for the formula.
A. Yes.[42]
[42] T223.3-26.
Examples of the budget prepared by the respondent were tendered as R5 at page 10, and A9 and A10. It was the applicant’s evidence that the payments that he made into the respondent’s bank account were on the basis of the formula. He said that these messages were examples of the formula which set the budget for the period in question. He asked the respondent to advise him when the balance in her account reached a certain level, and he would then top it up accordingly.
The applicant explained that his claim of $87,000 was based on the formula. He said:
Q.And that she would return to you the balance of the funds advanced to her that have not yet been used for rent, agreed at the sum of 87,000.
A. Yes.
Q. How did you come up with that figure.
A.There was a formula that said that she would have about $100,000 in her bank account and whenever that account was reduced through expenditures on the premises, [IK]'s school fees and her daily living, and it was reduced to numbers of 75, 50 or $25,000, that she would simply say to me 'I have $25,000 in the account' and I would transfer 75,000. But on many occasions, as you can see, I just transferred 99,000 and towards the end, the last amount that I transferred was her telling me that she had 35,000 and I transferred 65,000 and then when she no longer wanted to continue in the relationship, I worked out a formula that said 'Over this period of time, me being generous, you could have spent up to $13,000, therefore, please return the 87,000', in the formula.
Q. So the 87 was a figure that you came up with.
A.The 87 was a figure that if she had honoured what we had agreed to would have been in the account, yes.
Q. You accept that the 87,000 was a figure that you came up with.
A. Based on a formula that she and I had agreed on, yes.
Q. When do you say that formula was agreed.
A.That formula was agreed from day one, that's why it was no gift at any time. 'This was the amount of money that you would need to spend, spend the money on the maintenance of your life, your son's life, etc., and whenever it got to a certain number, simply tell me the number and I would top it up'. It was formulaic.
Q. I want to suggest to you that the 87,000 is an amount that you demanded she return.
A.I worked out based on the formula that the last deposit that I made and the amount of money that she told me was in the account, that based on the number of days between my deposit and when she said she would leave, that generously speaking, that I said she would have spent about $13,000. It was much less. It might have been 7.[43]
[43] T194.9-195.12.
Throughout her evidence the respondent was adamant that she had complete discretion to use the moneys deposited into her bank account by the respondent. In respect of the formula, the respondent said:
Q.There was a formula arrived at in terms of how you were to spend [the applicant]'s money you agree.
A.Yes, there was a sort of loose arrangement that I would notify him when the funds were depleted.
Q. A figure of approximately $2,500 per week was arrived at you in 2014 you agree.
A. We did discuss that, yes.
Q.How do you maintain that anything [the applicant] gave you was a gift in light of that formula.
A.I didn't strictly adhere to the formula anyway. I don't quite know how to answer that. Yeah, I'm sorry, I don't quite know how to -[44]
[44] T637.19-30.
When their relationship was in its final days, the respondent sent to the applicant a text message saying:
“I have no claim and never will claim any of your money. I will return all that is in my account as well as statements proving it was not gambled, spent on drugs or wasted on clothes.”[45]
[45] SK41 message no 5395.
The applicant’s relationship with IK
Both of the respondent and IK gave evidence that IK and the applicant had a close relationship, and that IK regarded him as a father figure. It was the applicant’s evidence that he did not have a close relationship with IK and that he was surprised to hear IK say that he regarded him as a father figure. He said that he had dinner with IK and the respondent on only one occasion, and was not invited to IK’s 18th birthday party, school events, or his high school graduation, despite paying his school fees. It is not disputed by the respondent or IK that the applicant was not invited to his 18th birthday party or his high school graduation.
IK gave evidence that he went out to dinner with the applicant and his mother on three or four occasions during the relationship. I accept this evidence. IK was able to name the restaurants where they ate and provide details about these occasions. He said:
[The applicant]’d more often go out to dinner with mum. He’d take her to very nice restaurants and I’d stay home. Because my time with [the applicant] was mainly in the house and we’d have take-away and things and mum would cook him dinners quite often as well.[46]
[46] T591.22-26.
It is clear that the applicant was very generous to IK and made substantial contributions to his school fees and related expenses, and paid for excursions, holidays and gifts for him. He also paid for a friend to accompany IK on a trip to the Australian Open and gave money to another friend. I also accept that IK must have spent a substantial amount of time with the applicant, as he would have been present at either the Gilberton or North Adelaide premises whenever the applicant stayed there. I find that his relationship with IK was neither as close as that deposed to by IK and the respondent, nor as distant as that deposed to by the applicant. I consider that this is one of the areas where the applicant has sought to downplay the extent of his relationship with the respondent.
The end of the relationship
It was the respondent’s evidence that the relationship began to breakdown from about May 2018. She formed a friendship with another man, Mr O, in about August or September 2018 and gradually started developing feelings for him. They commenced a sexual relationship in October 2018. In mid‑December 2018, the respondent told the applicant that she wanted to end their relationship. At around the same time, she began having her salary paid into a different account, rather than the one into which the applicant made deposits. She says that, after she received the first letter from the applicant’s lawyer, she arranged to have her salary paid into her son’s bank account.
It was the applicant’s evidence that at first he attempted to reconcile with the respondent; by mid-January 2019, however, he accepted that the relationship was over. In his evidence, he maintained that the relationship was brought to an end by the respondent, despite his pleading in the statement of claim that it was ended by mutual decision. In my view, nothing turns on whether the relationship was ended by the respondent, or by mutual agreement. I am also of the view that it is difficult, if not impossible to pinpoint an exact date when the relationship ended.
On 14 January 2019, the respondent told the applicant that she thought she was being followed. The applicant, on 16 January 2019, denied that he had asked his lawyer to arrange surveillance on her. In his oral evidence, the applicant conceded that he had, himself, arranged to have surveillance carried out on her, by a private investigator, between about 25 December 2018 and 12 January 2019. He said that the investigator advised him that the respondent was having an affair. On 16 January 2019, the applicant sent the following message to the respondent:
Nice Try, [applicant]: Now, it’s I- Who is getting rid of You…
No, it’s NOT I Who brayed: It’s not YOU-It’s Me…
Do You Think I’d spend over 101K On [IK]’s Education….
If I thought – For no apparent reason to me – You’d have Him Being Both Disrespectful and Ungrateful to me-, These Days….
Do u think I’d spend a Half million dollars in rent – So U cd be safe- To walk away….
Without as much as: This is what’s wrong with our relationship and HOW do we go about correcting it?...
THIS is Not how life Works- So, as it’s obvious you want OUT….
There must be some Responsibilities You have – If I have Done – NOTHING – to You – EVER….,
So, plz let me know When- And I’ll gladly show up- As I’m Not a Loser….
Butt (sic), U can’t just USW me and my hard-earned money- Then say: F’ Off…
Cheers, [47]
(capitals in original)
[47] SK41, message no 5415.
The respondent replied:
I understand that, that is not what I meant. I know you are not getting rid of me. You have been nothing but kind and supportive even though you have been hurting.
And I have not used you, I care about you. If I was to continue our relationship without communicating my feelings to you, that would be using you.xx[48]
[48] SK41, message no 5416.
Both parties agreed that from this time the communications between them became increasingly acrimonious.
It was the applicant’s evidence that he did not know, at the end of the relationship, whether or not the respondent would have difficulty meeting the rent and other payments associated with the North Adelaide premises.[49] In respect of moving out of the North Adelaide premises, he said:
Q.When the relationship ended at the end of January 2019 did you turn your mind to the question of the ongoing expenses in respect to the [North Adelaide] property other than the lease.
A.I know you choose not to hear this. I offered her 'Please leave. I will take care of the expenses regarding the lease and [North Adelaide]. I offered her that. I said 'You leave, take your clothes and I will take care of it' and her defence was 'I have to stay here because of my name on the lease' and I explained to her that 99% of people who break leases, they leave, they do not stay in the property when they break a lease, anywhere in the world. They leave. And the people who own the property then have to chase those people in order to collect outstanding rents and the extended period for which it is that a lease was signed for which it is that the owner has a right to expect the rent that was going to be collected. And I guaranteed all that. I said 'I will take care of this, just take your clothes and leave amicably'. I said that to her.[50]
…
A.I'll answer your question. If she had left, at the time that I asked her to leave, amicably and she had taken only her clothes, none of this would be happening. None of this violating my privacy, speaking of my sex life, none of this. I wouldn't care less about who she slept with when she said we were in an exclusive relationship, none of this would have happened. She would have left. I would have made arrangements with the landlord. I would have made a deal with the landlord. I would have paid the landlord and none of this would happen. Look at the pages. Come on. It's exhausting.[51]
[49] T144.1.
[50] T151.23-152.5.
[51] T153.25-36.
In effect, his evidence was that, if the respondent had moved out of the North Adelaide premises and left behind all of the furniture, jewellery, the black Mercedes and the other items that had been purchased with his money, he would have met all of the outstanding payments in respect of the lease. As he put it:
…she decided she wanted to end the relationship and she decided that she wanted to stay in a place that I had provided, so I thought it was inconsistent to say “I don’t want to be bothered with you”, but to continue to enjoy my largesse.[52]
[52] T205.23-27.
In respect of the ending of the relationship, the respondent said:
Q.After falling out with [the applicant] in January 2019 you agreed to pay [the applicant] back for everything.
A. No.
Q.You didn't say to him words to the effect of, I have no claim and never will have any claim over your money.
A. I think that might have been in a text message, but again it was a particular time, so.
Q. You agree you said that or you don't.
A.I do, but I considered the money in my account to be, again, for my disposal at that time.[53]
[53] T528.32-529.3.
She further said:
Q.When [the applicant] asked you on numerous occasions throughout this text exchange that he requested his $87,000 back you never corrected him.
A. No, I didn't.
Q. You never told him you didn't have the money to pay it.
A. No, by this point I was scared enough. He said he was -
Q. That's not my question.
A. Yes.
Q. You never told him.
A. No, I didn't.[54]
[54] T535.17-27.
She also gave evidence that she considered that the applicant was a threat to her and that he posed a risk to her safety.[55] She said:
A.He had me followed, he denied it. He knew that people were following me. He knew that I had an abusive ex- partner that I didn't know the thereabouts of. He knew that - he specifically said he'd send a man to the house and I didn't know who this man was. He gave me no details. He made demands for cash. He told me to leave the house with everything but the clothes on my back. He made demands for gifts that he'd given that he told me were gifts. I was beside myself. It wasn't a nice situation to be in. I was being - these messages were just being launched at me left, right and centre. I was trying my hardest to vacate. I was trying to negotiate with agents. I was trying to secure somewhere else for me to live. Like we didn't have anywhere else to go. It was not a nice situation. He told me he sent someone to gaol previously from an office that he worked in. I wasn't comfortable with any of this. I wasn't sleeping, I wasn't in a good way.
Q.Throughout those text messages I've just taken you to you agree [the applicant] said on various occasions that he wanted you to go peacefully.
A. Peacefully on his terms and his terms only.[56]
[55] T538.6-29.
[56] T535.36-536.20.
On 7 February 2019, the applicant filed an urgent application for a freezing order over the respondent’s bank accounts and the black Mercedes. The affidavit supporting the application portrayed the relationship between the parties as a business relationship and made no reference to the personal relationship between them. The freezing order was subsequently discharged on 8 March 2019. In my view, the applicant deliberately sought to mislead the Court as to the nature of the relationship between them in this affidavit. The respondent commenced proceedings in the Family Court of Australia on 6 March 2019, seeking orders for division of property and spousal maintenance.
The parties’ cases
I have already outlined the cases set out in the statement of claim and the counter-claim. On the applicant’s claim, the first matter that remains to be resolved is whether the black Mercedes was a gift to the respondent. The second matter is whether she must return the moneys he had transferred to her, either because they were given to her on the basis of a Quistclose trust, or on the basis she must make restitution of them as moneys had and received. The quantum of the claim in respect of the moneys is $87,000; this is on the basis of what the applicant says should have remained in the respondent’s bank account in January 2019, on the basis of the formula. In the alternative, he claims the amount that actually remained in her account at the termination of the relationship. I will refer to this as the applicant’s money claim.
On the respondent’s counter-claim, the outstanding issues are whether the parties were in a de facto relationship within the meaning of the Family Law Act, whether the black Mercedes was a gift to her, and whether the applicant is obliged to meet the payments arising on termination of the lease of the North Adelaide property. I will refer to this last question as the respondent’s money claim.
I have already set out my findings in respect of the credibility of each of the witnesses who gave evidence.
I will deal first with the question of whether the parties were in a de facto relationship, then with the question of the black Mercedes, followed by the applicant’s money claim, and the respondent’s money claim.
Were the parties in a de facto relationship?
Section 4AA of the Family Law Act provides:
Meaning of de facto relationship
(1) A person is in a de facto relationship with another person if:
(a)the persons are not legally married to each other; and
(b)the persons are not related by family (see subsection (6)); and
(c)having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Paragraph (c) has effect subject to subsection (5).
Working out if persons have a relationship as a couple
(2) Those circumstances may include any or all of the following:
(a)the duration of the relationship;
(b)the nature and extent of their common residence;
(c)whether a sexual relationship exists;
(d)the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e)the ownership, use and acquisition of their property;
(f)the degree of mutual commitment to a shared life;
(g)whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h)the care and support of children;
(i)the reputation and public aspects of the relationship.
(3) No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship.
(4) A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
(5) For the purposes of this Act:
(a)a de facto relationship can exist between 2 persons of different sexes and between 2 persons of the same sex; and
(b)a de facto relationship can exist even if one of the persons is legally married to someone else or in another de facto relationship.
When 2 persons are related by family
(6) For the purposes of subsection (1), 2 persons are related by family if:
(a)one is the child (including an adopted child) of the other; or
(b)one is another descendant of the other (even if the relationship between them is traced through an adoptive parent); or
(c)they have a parent in common (who may be an adoptive parent of either or both of them).
For this purpose, disregard whether an adoption is declared void or has ceased to have effect.
It was completely unclear from the respondent’s pleadings, written and oral submissions which representations made by the applicant were said to be representations of fact and which were said to be representations of future intention. It appears, however, that she sought to rely on either or both in a fairly indiscriminate way to achieve two ends: the first, that the applicant is precluded from seeking recovery from her of the moneys remaining in her bank account at the end of their relationship; and the second, that the applicant must pay to her the liabilities she has incurred as a result of relying on his representations, which led her to commit herself to financial obligations that she could not afford without his assistance. As a result, I will not address individual representations, but the picture that they present, as a whole.
At the outset it is necessary to deal with the applicant’s submission that promissory estoppel does not give rise to a positive cause of action. Relying on case such as Saleh v Romanous[140] (“Saleh”) and DHJPM v Blackthorn Resources Ltd[141] (“DHJPM”), the applicant submitted that a promissory estoppel cannot give rise to an entitlement to relief by way of equitable damages or compensation.
[140] (2010) 79 NSWLR 453.
[141] (2011) 83 NSWLR 728.
A submission to this effect was dealt with by Doyle J in Manassen Holdings Pty Ltd v Commercial & General Corporation Pty Ltd[142] (“Manassen”). After discussing the decisions in Saleh and DHJPM, he said:
While not ultimately a decisive consideration in either case, it can thus be seen that both Saleh v Romanous and DHJPM Pty Ltd v Blackthorn Resources Ltd contain support for an approach to promissory estoppel that confines its operation to that of a negative restraint upon the exercise or enforcement of existing rights.
An application of this approach to the present case would be fatal to the plaintiffs’ case in promissory estoppel. There is no basis for any proprietary estoppel in the present case, and hence the plaintiffs’ case in equitable estoppel must be confined to one founded in promissory estoppel. But as framed by the plaintiffs, it seeks to enforce what I have found to be the defendant’s non-contractual promise that the daily fee would continue to accrue. As such, the plaintiffs rely upon their contended promissory estoppel as a source of the right to be paid, rather than as a mere negative restraint upon the defendant’s enforcement of some existing legal right to avoid payment.
However, the difficulty with the defendant’s reliance upon this approach is that even in New South Wales there appears to be an acceptance that the law is not settled, and that the views expressed in Saleh v Romanous and DHJPM Pty Ltd v Blackthorn Resources Ltd may not be determinative of the issue.[143]
[142] [2019] SASC 171.
[143] Ibid, [212]-[214].
He continued:
In South Australia, the Full Court of the Supreme Court appeared to accept that there is scope for promissory estoppel to operate positively as a source of legal rights in Whittle v Parnell Mogas Pty Ltd, albeit that the majority (Vanstone and Layton JJ) held that the contended estoppel had not been made out on the facts. Vanstone J held that the estoppel failed because the evidence did not establish an assumption or belief that the parties were “bound by an agreement”, and that “[m]erely acting in the hope, assumption or expectation that an agreement will be reached does not give rise to an estoppel.” Layton J held that the lack of clarity as to the terms of the postulated contract, and the existence of a pre-condition to that contract, significantly hampered the contended estoppel. In her Honour’s view, the estoppel failed because there was no assumption that an agreement had been entered into. Debelle J, on the other hand, in dissent as to the outcome, not only upheld the contended estoppel, but did so on a basis that might be said to reflect a relatively broad view of the positive operation of promissory estoppel. In particular, his Honour proceeded on the basis that the terms of the postulated lease had been agreed and that it was sufficient that the party claiming an estoppel believed there would be a contract and that its execution was a mere formality.
I do not intend to canvass the numerous authorities that have addressed the issue at any greater length than what I have already done. However, by way of general summary, I observe that my consideration of the authorities suggests that the differences of view have generally arisen from differing analyses of the joint judgment of Mason CJ and Wilson J, and the judgment of Brennan J, in Walton Stores (Interstate) Ltd v Maher. The confinement of promissory estoppel to a negative role has generally been predicated upon an approach that emphasises Brennan J’s reasons, and treats those reasons as drawing a distinction between promissory estoppel and proprietary estoppel, and as confining any positive operation to the latter. The proponents of a positive operation for promissory estoppel on the other hand, have tended to approach Brennan J’s reasons on the basis that his Honour was addressing both the proprietary and promissory forms of estoppel, when his Honour allowed for equitable estoppel to operate in cases where there was an expected rather than existing legal relationship between the parties. Proponents of the positive operation for promissory estoppel also emphasise the broader terms in which Mason CJ and Wilson J articulated the operation of equitable estoppels including promissory estoppel.
In my view, there is no necessary conceptual or legal barrier to the plaintiffs’ claim in promissory estoppel. While I accept that promissory estoppel is essentially negative or preclusionary in nature, I do not think that this necessarily prevents an estoppel from arising in a case such as the present where the plaintiffs rely upon an assumption founded in a postulated legal relationship (here, a contract). Reflecting the approach of Ward CJ in Eq in the passage extracted above from her Honour’s reasons in CPB Contractors Pty Ltd v Rizzani De Eccher Australia Pty Ltd, and assuming a postulated legal relationship that is sufficiently identified and defined in the evidence, recognition of such an estoppel would not involve creating rights entirely in the abstract. Rather, it would involve merely precluding a party from denying that it is bound by a postulated contract or legal relationship, and hence would be consistent with the essential nature of a promissory estoppel. In my view, assuming the other elements of the estoppel are made out (namely an assumption by the proponent of the estoppel, induced by the other party, and relied upon by the proponent to their detriment such that it would be unconscionable for the other party to now resile from the assumption), then there seems no reason in principle or policy for distinguishing between promises as to the exercise of existing legal rights and promises as to the exercise of rights under a postulated legal relationship. And in my view, that is so regardless of whether the postulated legal relationship is in respect of land. Importantly, I consider that both the reasons of Mason CJ and Wilson J, and the reasons of Brennan J, in Walton Stores (Interstate) Ltd v Maher, as well as the weight of subsequent authority around Australia, do not support the drawing of such a distinction.
While thus accepting at least some positive operation for promissory estoppel, I consider it appropriate to exercise caution in giving effect to this positive operation so as to ensure that promissory estoppel does not operate to outflank or undermine the well-established principles of contract law. This concern was evident in the reasons of Brennan J in Walton Stores (Interstate) Ltd v Maher, and in particular in his Honour’s emphasis upon the role of detrimental reliance and unconscionability. As his Honour said:
The qualifications proposed bring the principle closer to a principle the object of which is to avoid detriment occasioned by non-fulfilment of the promise. But the better solution of the problem is reached by identifying the unconscionable conduct which gives rise to the equity as the leaving of another to suffer detriment occasioned by the conduct of the party against whom the equity is raised. Then the object of the principle can be seen to be the avoidance of that detriment and the satisfaction of the equity calls for the enforcement of a promise only as a means of avoiding the detriment and only to the extent necessary to achieve that object. So regarded, equitable estoppel does not elevate non-contractual promises to the level of contractual promises and the doctrine of consideration is not blown away by a side-wind. Equitable estoppel complements the tortious remedies of damages for negligent misstatement or fraud and enhances the remedies available to a party who acts or abstains from acting in reliance on what another induces him to believe.
Similar concerns have been evident in other authorities through their emphasis, in applying the elements of promissory estoppel, upon ensuring that the relevant assumption is identified and established with clarity, that the reliance upon that assumption was reasonable and induced by the defendant, and that the detriment suffered or to be suffered by the plaintiff is of a nature and extent sufficient to make it unconscionable for the defendant to depart from the relevant assumption.[144]
(citations omitted)
[144] Ibid, [218]-[222].
Neither party referred to Manassen in their submissions; indeed, the respondent provided almost no answer to the applicant’s submission in this regard, save to refer to the decision of Brennan J in Waltons Stores where he said:
If it be unconscionable for an owner of property in certain circumstances to fail to fulfil a noncontractual promise that he will convey an interest in the property to another, is there any reason in principle why it is not unconscionable in similar circumstances for a person to fail to fulfil a noncontractual promise that he will confer a non-proprietary legal right on another? It does not accord with principle to hold that equity, in seeking to avoid detriment occasioned by unconscionable conduct, can give relief in some cases but not in others.[145]
[145] (1988) 164 CLR 387, 426.
At the time of the trial in this matter, Doyle J’s decision in Manassen was on appeal. The Full Court delivered its judgment on 24 September 2021;[146] while the appeal was allowed in other respects, the Court dismissed a notice of contention dealing with this aspect of his judgment. Livesey J said:
In an appropriate case promissory estoppel can operate as a positive source of legal rights, and the findings made by the trial Judge were open to him. While there is some authority against the trial Judge’s approach, there is ample authority to support it.
In my view, whilst an estoppel does not create a legal relationship or generate any new cause of action a court of equity may, in appropriate circumstances, preclude a party from denying that a legal a relationship has arisen. In that type of case, the parties become bound to the postulated legal relationship, such as an intended contract or lease, and their obligations are then governed by reference to that postulated relationship.
In particular, in my opinion, it was open in this case to find that, assuming that a sufficiently identifiable postulated legal relationship existed on the evidence, the recognition of a promissory estoppel did not involve creating legal rights in any abstract sense. Rather, the estoppel would simply preclude a party from denying that it is bound by that postulated legal relationship. It is no bar to recognition of the promissory estoppel that it might be said to have a positive, rather than merely negative, effect: at bottom, the estoppel precludes the unconscionable or unjust abandonment of the assumption which the defendant induced the plaintiffs to make. The approach taken in Ausotel v Franklins, Ashton v Pratt and CPB Contractors Pty Ltd v Rizzani De Eccher Australia Pty Ltd should be followed in South Australia.
The trial Judge was therefore, with respect, correct to find that “there seems no reason in principle or policy for distinguishing between promises as to the exercise of existing legal rights and promises as to the exercise of rights under a postulated legal relationship”, even where the postulated legal relationship concerns something other than land. This finding is supported by the reasons of Mason CJ and Wilson J, and Brennan J in Waltons Stores (Interstate) Ltd v Maher which precluded denial of the existence of a contract, the terms of which were otherwise fully agreed.[147]
(citations omitted)
[146] [2021] SASCFC 40.
[147] Ibid, [181] – [184].
I am prepared to find, therefore, that promissory estoppel can operate as a positive source of legal rights, where the parties are operating in accordance with a postulated legal relationship. In order for the respondent to obtain relief in this regard, she must first, identify clearly the relevant assumption that established the postulated legal relationship between them, second, establish that her reliance upon that assumption was reasonable, third, that it was induced by the defendant, and fourth, that the detriment suffered or to be suffered by her is of a nature and extent sufficient to make it unconscionable for the applicant to depart from the relevant assumption
It is the respondent’s case that the applicant represented to her that he would support her financially, including by paying her rent and other costs associated with the North Adelaide premises. By his representations, he induced her to act on or adopt the assumption that he would so support her. She acted on or adopted that assumption, by entering a lease that she could not otherwise afford. The applicant knew that she had done so. If the applicant did not continue to fulfil the expectation or assumption, that he would meet the costs associated with the North Adelaide premises, the respondent would suffer a detriment. The applicant has failed to act so as to avoid the detriment to the respondent, that detriment being the incurring of the liabilities in the sum of $23,790.75, which the respondent said arose on the termination of the lease.
In my view, the representations made by the applicant to the respondent were representations of future intention and are sufficient to ground a promissory estoppel in defence of any claim by the applicant for the repayment of the moneys given to the applicant during the course of the relationship. The applicant acknowledged in cross-examination that he made the representations pleaded, and that he intended the respondent to rely on them. He was aware that she had, on the basis of his representations, committed herself to financial liabilities that she could not otherwise afford and that if he resiled from those representations, it was reasonably likely that the respondent would suffer a detriment, in that there was a reasonably probability that she would become liable for expenses that she could not afford without his financial assistance. Given the representations made by the applicant throughout the relationship with the respondent, I conclude that it would be unconscionable for the applicant to resile from those representations in any claim that he brought against the respondent, in the event that it can be shown that she suffered a detriment as a result of relying on them.
Before I consider the question of detriment, I must consider whether the assumptions created by the applicant’s promises are sufficient to give rise to a cause of action, as described by Doyle J in Manassen. I have already found that the representations made by the applicant are sufficient to ground an estoppel, in defence of an action brought by the applicant. To be clear, I have found that the assumption induced by the representations made by the applicant were to the effect that he would support her financially, including by paying her rent and other costs associated with the North Adelaide premises, that her reliance on the assumption was reasonable, and that her reliance was induced by the applicant. The question to be addressed now is whether the assumption induced by the applicant caused the parties to act in accordance with a postulated legal relationship.
On no view of the parties’ relationship, could it be described as a postulated legal relationship. The relationship was not based on a contract that was assumed to exist between the parties. Indeed, the only “legal relationship” alleged to exist between the parties is that of a de facto relationship. Not only have I found that a de facto relationship did not exist between them, I consider that such a personal relationship is well outside the boundaries of the “postulated legal relationship” envisaged by Brennan J and Doyle J.
Doyle J cautioned against giving effect too broadly to the positive operation of promissory estoppel. Given the current state of the law, I am mindful of that warning, and accordingly, I decline to extend its operation to a situation where a personal relationship, rather than a postulated legal relationship is involved. In the circumstances, the respondent is unable to use promissory estoppel to ground a cause of action. Her cross-claim in this regard must be dismissed.
For completeness and despite my finding that the respondent’s cross-claim must be dismissed insofar as it relies on promissory estoppel, I will consider the question of detriment, as this will go to the respondent’s use of promissory estoppel as a defence.
It is also necessary, for the purpose of promissory estoppel, to determine whether, prior to withdrawing his financial support, the applicant gave the respondent a reasonable warning that the assumption on which she was relying, that he would provide her with sufficient financial assistance to allow her to meet her liabilities, had substantially changed. If the applicant had taken sufficient steps to communicate to the respondent that the assumption would cease to operate, the respondent may be prevented from relying on estoppel. As Bell P said, in Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 2)[148] the obligation:
… to inform a party labouring under a particular assumption that the basis for that assumption had “materially changed”, is one which must be discharged clearly. Unless there is a sufficiently clear communicated correction or a withdrawal of the basis for an assumption which has been made by another party, considerations of conscience may dictate that an estoppel based upon that assumption has continuing effect.[149]
[148] [2021] NSWCA 93.
[149] Ibid, [92].
In making this statement, Bell P was relying on Gaudron J in Walton Stores, who found that the failure of the appellant to inform the respondent that their intention had changed was a “proximate cause of their adopting and acting upon the faith of that assumption.”[150]
[150] (1988) 164 CLR 387, 463.
I will deal with the second matter first. The breakdown of the relationship between the applicant and the respondent occurred over a period of about four to six weeks between December 2018 and mid-January 2019. As with the rest of their relationship, its breakdown was documented in the many text messages that passed between them on a daily basis. Over the period between the beginning of January and about 12 January 2019, the messages from the applicant became increasingly acrimonious; by mid-January, they were openly hostile. On 24 January 2019, the applicant sent the respondent the following message:
S: And U still claim I don’t Know You…
Well, like B4, I Knew I’d have to ask Again- That You walk into yr Bank Today, Friday…
Please, none of your usual ‘excuses’ – and return my hard-earned approximate 87K+ - to my ANZ account-Peacefully…
And, I will arrange for A Removals’ Tuck, To pick up Your Clothes and Half of Isaac’s clothes, Tdy/Tmrw…
As I’ve asked, Plz, Take ONLY that Which You had, When u both left Yr Dad’s…
And The Removalists can be There Today, Friday or Tmrw, Saturday…
Please move on “amicably,” You are a very mean and selfish person…
Please let me know asap which day is best for You to leave my home; This morning…
And not yr lousy behavior of replying ONCE now at almost midnite…
You are an ungrateful woman… You need Not continue to hurt me, from my Home and using my hard-earned Money…
Cheers,[151]
[151] R16, SK41, message 5445.
This appears to be the first time that he asked her to move out of the North Adelaide premises. Later the same day, the respondent said:
You agreed on the 31st for us the (sic) be out of the home and I am more than happy to oblige.[152]
[152] R16, SK41, message 5446.
The applicant denied that there had been agreement that she move out by 31 January 2019.[153] From that point, the demands made by the applicant for the respondent to move out of the North Adelaide premises became increasingly strident, and he demanded that she leave the house without taking any of the furniture, jewellery, watches, phones, or other things purchased by the respondent or given to her by the applicant during the relationship.[154] From that point in time, there can have been no doubt in the respondent’s mind that the assumptions under which she had been operating had changed.
[153] R16, SK41, message 5447.
[154] See, for example, R16, SK41, message 5452, message 5455 and message 5465.
Despite reaching the conclusion that, by the end of their relationship, the applicant had clearly and unequivocally communicated to the respondent that the basis for the assumptions under which she had been living had been withdrawn, I do not consider that communication is sufficient to deny the respondent the benefit of an estoppel in respect of those representations. This is because the time frame given by the applicant within which the respondent was to move out of the North Adelaide premises was unreasonable, in circumstances where she had been living there for more than three years, with her son and needed time to find somewhere else for them both to live.
I must, therefore, determine whether the respondent suffered any detriment as a result of the applicant’s seeking to resile from the assumptions induced by his representations.
The detriment claimed by the respondent is in the sum of $23,790.75. It is made up as follows:
·Amount owned pursuant to the lease $16,046.75
·Final reading – electricity $1,162.00
·Final reading – gas $1,357.00
·Final account – Foxtel $199.00
·Final account – Bupa $472.00
·Final account – iiNet $138.00
·Final account – home and contents insurance $44.00
·Cleaning fee $500.00
The amount outstanding under the lease is not an amount that the respondent has paid. The evidence of the landlord, Dr Raymond, was that she did not pursue the respondent for payment of the outstanding moneys under the lease when she first vacated the premises, because she believed that she did not have the ability to pay the required amount. Her evidence was that she recently made a formal demand for payment because she was advised by her leasing agent that it was possible that the respondent was now in a position to make payment. It appears that her leasing agent was alerted to this action by the respondent’s lawyers. Dr Raymond’s evidence was that, while the respondent remained unable to make payment of the outstanding amount, she would not make any demand or commence any legal action in respect of the debt.[155] It is clear from Dr Raymond’s evidence that her intention is to seek payment under the terms of the lease, in the event that she forms the view that such a claim would not be futile.
[155] T613.7-614.5.
As to the other amounts claimed by the respondent, they have all been paid by her. I do not however, consider that either they, or the sum claimed by Dr Raymond amount to a detriment suffered by the respondent. This finding is a corollary of my finding that the moneys paid by the applicant to the respondent were a gift and not subject to a claim in restitution. While I have found that the moneys were not given for a specific purpose, there is no doubt that one of the applicant’s intentions or motivations in giving the moneys to the respondent, and one of her intentions or motivations in receiving them were to fund her daily expenses. There is no reasons why she should not do so with the money provided to her during the course of the relationship. The expenses that arose through breaking the lease are simply part of her daily expenses and must be funded from the money gifts already given to her. As a result, promissory estoppel is not available to the respondent as a defence.
The respondent’s claim in and defence of unconscionability
That leaves the respondent’s claim in unconscionability. In my view, this must fail. The respondent has demonstrated no special disability of the type envisaged by the High Court in Amadio.[156] In Amadio, Mason J said:
I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.[157]
[156] Supra.
[157] Ibid, 462.
The ability of the courts to provide relief for unconscionable conduct was described by Deane J in the following way:
The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: "the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract" (see per Lord Hatherley, O'Rorke v. Bolingbroke (46); Fry v. Lane (47); Blomley v. Ryan (48)).
(footnotes omitted)
While I am prepared to conclude that the respondent was the weaker party in her relationship with the applicant, on the basis of the significant disparity in their financial positions, I do not consider that this, or any of the other factors pleaded by the respondent, such as her relative youth and inexperience in business matters were sufficient to affect her ability to make a judgment about what was in her best interests, at the time that she entered into the relationship. Further, it was not clear from the respondent’s submissions, either oral or written, what transaction or bargain she was seeking to have set aside as a result of the applicant’s unconscionability. It was not clear to me that the transaction of entering into the lease of the North Adelaide property was the one that she sought to have set aside. Given the complete lack of clarity in this regard, there can be no finding the conduct of the applicant was unconscionable.
Conclusion
I have determined that the moneys and the black Mercedes that the applicant gave to the respondent were gifts, and not subject to a claim in restitution. As a result, the applicant’s claim is dismissed.
I have determined that the respondent neither suffered a detriment as a result of the applicant’s departure from the assumptions that he had induced her to adopt, nor she was the victim of unconscionable conduct on his part. Thus, the respondent’s defence to the claims of the applicant fail on this basis, as does any independent cause of action raised by the respondent in her cross-claim which is reliant on them. Further, I have found that the parties were not in a de facto relationship.
The respondent’s cross-claim is dismissed.
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