Kramer & Anor v Stone

[2024] HCATrans 63

[2024] HCATrans 063

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S53 of 2024

B e t w e e n -

HILARY LORRAINE KRAMER

First Appellant

JAIME FERRAR

Second Appellant

and

DAVID LINDSAY STONE

Respondent

GAGELER CJ
GORDON J
EDELMAN J
GLEESON J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT HOBART ON WEDNESDAY, 11 SEPTEMBER 2024, AT 10.04 AM

Copyright in the High Court of Australia

MR N.C. HUTLEY, SC:   If the Court pleases, I appear with my learned friends MR S.H. HARTFORD DAVIS and MR M.O. PULSFORD for the appellants.  (instructed by Walker & White)

MR P.D. HERZFELD, SC:   Your Honours, I appear with MS H. BENNETT and MR S.D.D. PUTTICK for the respondent.  (instructed by Lane Associates : Lawyers)

GAGELER CJ:   Thank you, Mr Herzfeld.  Mr Hutley.

MR HUTLEY:   Thank you, your Honour.  Essentially, this appeal involves two propositions which might be described as cascading.  Firstly, in the field of proprietary estoppel by encouragement, the equity arises in favour of an intended donee, but from the conduct of the donor after the making of the voluntary promise by the donor, it is that conduct by encouraging the donee to act upon the promise which makes it unconscionable for the donor to resile from his or her promise.

This ground is 1(a) of the notice of appeal.  It mirrors the formulation of Chief Justice Mason and Justice McHugh in Corin v Patton (1990) 169 CLR 540. That is in the joint book at volume 1, tab 4, the relevant page is page 139 citing Olsson v Dyson.  The second proposition is, in a case where the only conduct of the donor after making the voluntary promise is said to be knowledge of detrimental reliance.  Constructive knowledge is not sufficient to satisfy that requirement – that is ground 1(b).

We propose to firstly address the facts as found by the trial judge in the relevant analysis undertaken by the Court of Appeal before turning to the two grounds.  Can I take your Honours shortly through the facts.  As your Honours will appreciate, the case concerns a property of approximately 100 acres in the Colo River in New South Wales.  I will use the convention adopted at trial in naming the parties by their Christian names.

Under a will of 1 November 2011, Dame Leonie left that property to the first appellant, her daughter Hilary.  Dame Leonie died in April 2016.  She provided by that will a legacy of $200,000 in favour of David.  That was, of course, subject to CPI increments.  The proceedings were commenced in 2007 by David alleging, as your Honours appreciate, that Dame Leonie acted unconscionably in failing to leave in her will the property to him.

Background – as your Honours appreciate – is a share farming agreement.  If your Honours go to the core appeal book at page 9, your Honours will see at paragraph 10 that the:

share farming agreement –

was:

made between Dr Harry –

Dame Leonie’s husband:

and David in 1975 –

The terms were as pleaded in paragraph 11 on that page, and the terms were found in accordance with that pleaded term, subject to variations of the quarterly payment, which ultimately increased to $1,500, and your Honours will see that at core appeal book 43, paragraph 93.  As your Honours will see at core appeal book 79, paragraph 160:

That agreement was terminable at the will of either party –

at most on reasonable notice.

GORDON J:   What paragraph is that please, Mr Hutley?

MR HUTLEY:   Paragraph 160, your Honour.  Turning to core appeal book 30, paragraph 70, last sentence, his Honour described the agreement as:

more of a collaboration than a conventional share farming agreement.

That was maybe taken as in comparison to the agreement which existed between David’s father and Dr Harry, which your Honours will see referred to at paragraphs 60 to 65, which his Honour described – and the share farming agreement between David and himself as on more favourable terms, and your Honours see that at paragraph 71.

GAGELER CJ:   Mr Hutley, President Ward went through the facts in some detail and explained the findings of the primary judge.  Are you departing in any way from her summary?

MR HUTLEY:   I am not departing in any way, I am merely setting out the background.  I can pass over them if your Honours do not need to be introduced to them.  I was proposing to go through some of them, and some of the comments made upon it to contextualise the questions.  We have summarised, in effect, the central characteristics of the representation and the circumstances in which it was made in paragraph 3 of our outline.  I was not proposing to take your Honours through the details of those, but I propose to take your Honours shortly through, but if your Honours would be more assisted by ‑ ‑ ‑

GAGELER CJ:   You take your own course, Mr Hutley.

MR HUTLEY:   Yes.  But we are not seeking to depart from any finding of fact.

GORDON J:   There is no dispute the representation was made.

MR HUTLEY:   None whatsoever.

GORDON J:   So, we just need to go to the terms of the representation.

MR HUTLEY:   Yes, your Honour, but this case is unique in all the what we call unfulfilled promise cases.  There was one statement never repeated, never adverted to, no change of conducted in reliance of it, apparently, to external appearances.  It was just one statement made, as the court said, in what might be called “highly emotional circumstances”, namely, immediately after the death of her husband, which, as the witness said, came “out of the blue”, never repeated, never adverted to, but relied upon, and we do not challenge the reliance.

EDELMAN J:   And made in circumstances which it was known that it would be relied upon.

MR HUTLEY:   That is paragraph 193.  Your Honour, we say that does not matter.  We say the Court of Appeal did not rely upon that in its reasoning process because they held that it was sufficient that the promise was made and there was reasonable reliance.  So, as a matter of ratio, the Court of Appeal says, it is sufficient that there be a promise which constitutes the encouragement with reasonable reliance.

So, that observation – which was not a finding made by the trial judge, but more a deduction that the Court of Appeal made from the trial judge’s reasoning, which we would take issue with as a matter of deduction, but even if your Honours accepted it, on our central submission, that would not matter because of the requirement for conduct after the promise.

BEECH‑JONES J:   Just to go back to the matters you were listing, which is once‑off emotional circumstances, on any view, they might go to reasonable reliance, would they not?  That has been held against you.

MR HUTLEY:   Your Honour, we do not challenge reasonable reliance.  Of course, as Sidhu says, there can be reliance – may have to be necessary for the detrimental conduct, but it does not have to be sufficient, in the sense it just can be one of a number of causes.  The Court of Appeal found that the promise caused David to not leave the property, and we do not dispute that.

GLEESON J:   Mr Hutley, is it agreed between the parties ‑ ‑ ‑

MR HUTLEY:   I am sorry, your Honour, this court makes it a little hard to hear.

GLEESON J:   Is the full relevant conduct that is said to be unconscionable comprised in the representation so that the standing by for the subsequent 23 years has nothing to do with the assessment of unconscionability?

MR HUTLEY:   The court made no – in fact, that is why I wanted to go through the findings, your Honour.  The trial judge said there had to be something more than the conduct, and he found it in constructive notice of the detrimental conduct.  That is, the fact a reasonable person, he found, in the position of Dame Leonie ought to have realised there was a probability that David was remaining on the property by reason of the promise.  That is how he characterised it.  The Court of Appeal ‑ ‑ ‑

GLEESON J:   So, now you are talking about Dame Leonie’s state of mind after the promise.

MR HUTLEY:   Quite.  That was not a statement, that was a kind of constructed state of mind.  Yes, if your Honour is directing to at the time, the only possible finding about state of mind is what we say is the deduction in 193 by the Court of Appeal.

GLEESON J:   What I am trying to clarify in my own mind is, what is the scope of the unconscionable conduct?

MR HUTLEY:   Well, we would say there is none, but as we understand what the Court of Appeal said was sufficient, insofar as they say unconscionable conduct is now an independent – as it were – element, lies in the fact of the encouragement by the promise, followed by the detriment.  The unconscionable conduct strictly lies in the failure by Dame Leonie to leave the property to David by will.

EDELMAN J:   I do not want to take you out of turn, but at some point in your submissions will you take us to why you say paragraph 193 is not part of the ratio of that decision?

MR HUTLEY:   I am happy to, your Honour, and I am going to come to what her Honour the President said was required.  If it is part of the ratio, our point remains the same, for reasons which will become apparent.

GORDON J:   Can I add to that list, then, that you ‑ ‑ ‑

MR HUTLEY:   I am sorry, your Honour, the ‑ ‑ ‑

GORDON J:   That is okay.  I will speak up very loudly.  Can I add to that list Justice Leeming’s assessment of the same question at the end of his reasons as well, because that addresses the same point.

MR HUTLEY:   Yes.  I will come to both of them – their reasoning.

GORDON J:   I think the three of them go together.

MR HUTLEY:   Yes.  I accept that, your Honour.  Now, just to – again, so your Honours have the whole picture, at paragraph 17 at core appeal book page 10, the primary judge sets out the three pleaded representations.  The primary judge in terms did not find – not in terms – that the first and second representations were made ‑ ‑ ‑ 

BEECH‑JONES J:   Sorry, what paragraph was that, again, Mr Hutley?

MR HUTLEY:   Paragraph 17, core appeal book 10, your Honour.  That was remarked upon by the President at core appeal book 183, paragraph 35, and core appeal book 211, paragraph 130.  But as the primary judge observed at paragraph 162, at core appeal book 79:

Dame Leonie could only be bound by such assurances as she may have made to David, and her conscience could only be burdened with the need to act in accordance with her assurances.

Therefore, only the third representation matters.  Now, there was a positive finding of the assurance, and that is at paragraph 249, as your Honours have observed.  The President at paragraph 47, at core appeal book 186, said that this is to be understood as a finding that the representation had been made, as set out in David’s affidavit, and the terms of that, your Honours, we have set out in paragraph 2 of our outline.

GORDON J:   Can I just understand that – is that to suggest that we have a different finding by the Court of Appeal in relation to the representation?

MR HUTLEY:   No.

GORDON J:   I do not understand what the significance is of referring to that aspect in outline of argument paragraph 2.

MR HUTLEY:   I just wanted to make absolutely – we just wanted to make clear, because some of the terminology – that there is a specific finding, as that is what was said in terms.  That is what was said, that is all that was said, and I just wanted to make it clear that that is all that was said.  That is the full extent, we say, of the entirety of the conduct by Dame Leonie.  Nothing else.

GLEESON J:   I think you said it was that conduct and then the failure to leave the ‑ ‑ ‑ 

MR HUTLEY:   Quite.  As conduct, but in effect, as – yes.

GLEESON J:   But the standing by in the period between, you say, is not part of the unconscionable conduct.

MR HUTLEY:   Well, standing by assumes one’s knowledge of reliance, and there is no finding of knowledge of reliance during that period.  None.

GORDON J:   You will come to the authorities about the requirement for knowledge?

MR HUTLEY:   Yes, I certainly will, your Honour.  I certainly will.  Now, that takes us to paragraph 3 of our outline, and we have set out there the circumstances which have been found which we say make this case quite unique.  In fact, to the extent that there is a reference there in (g) to the fact that David often told people he enjoyed living and working on the farm, in fact, the evidence was he told Dame Leonie that matter.  Although that is not referred to in the judgment, we have copies of the relevant pages of transcript.  I have shown them to my learned friend, and if I could hand those up ‑ ‑ ‑ 

GAGELER CJ:   What is the purpose of this, Mr Hutley?

MR HUTLEY:   I am sorry, your Honour?

GAGELER CJ:   Why are we looking at this?

MR HUTLEY:   Because we want to make clear, your Honour, that this case is so unique and points up the need for encouragement after the communication, because without it, we say, there can be no fixing of the conscience, for a series of reasons which we will come to, and every case has had that aspect.  So, to all outward appearances, after one communication, in the circumstances which took place, which I will come to in a minute, the respondent treated Dame Leonie in exactly the same way as before or after.  It was ‑ ‑ ‑ 

BEECH-JONES J:   Mr Hutley, I have to say, other than the statement that the promise was made, it was reasonably relied on, a finding that there was knowledge it would be, and as you say, an absence of finding of knowledge that it was been, they seem, if I could say, just jury points, are they not? 

MR HUTLEY:   I am sorry, I am ‑ ‑ ‑

BEECH‑JONES J:   Just jury points.  They are just bound up in those four ‑ ‑ ‑

MR HUTLEY:   If the Court takes the view, that is it.  I will not trouble any further. 

BEECH-JONES J:   I am only speaking for myself; I cannot speak for anyone else.

MR HUTLEY:   I will not take it any further, but that is what we were seeking to make clear.  We say our purpose in setting out those facts – which your Honour might seek, some are jury facts – is when compared to all existing proprietary estoppel cases, being the inherent cases, this case is wholly unique:  a single assurance made out of the blue in highly emotional circumstances, never repeated, which had no outward manifestation to all appearances, other than the continuing performance of the shared farming agreement which David had already been performing for some 13 years without complaint and, in fact, with declaration, as to his enjoyment of it – that is why I was making reference to that – in circumstances where there was no outward appearance of any consideration by David of the possibility of his leaving or a desire to leave. 

Now, the significance of all this is that the inherent cases, with their very different facts, have afforded no opportunity to consider how unconscionability is to operate when the facts are stripped of the usual adornments of repetitive conduct and encouragement after the initial communication, called “the promise”.

GLEESON J:   Do you accept that “the promise”, or the assurance, is more than a statement of present intention?  That was the finding, was it not?  That, although the primary judge did not compare the characterisation of the representation with a statement of present intention, he talked about the possibility.  But you are stuck, are you not, with the finding that this was an assurance or a promise? 

MR HUTLEY:   It was a promise.  It was like, I will leave you the house.

GLEESON J:   But it is not just a statement of present intention. 

MR HUTLEY:   No, it has been characterised.  That is the finding of fact, we do not challenge that.  I accept it is a promise. 

GORDON J:   I do not mean to cut through it, you accept there is a representation ‑ ‑ ‑

MR HUTLEY:   I do apologise, your Honour.  It is very hard to hear.

GORDON J:   It is unusual for my voice not to carry.  We will try again.  You accept there is a representation, we are going to leave you the house; you accept that there has been reliance and detrimental reliance.  Your principle and, as I understand it, only complaint – I am maybe oversimplifying it – is that there was no subsequent positive reinforcement or repetition of the promise.  That is it.  You say that is an essential requirement for this brand or branch of estoppel, and that this case is the only case to have ever reached that conclusion. 

MR HUTLEY:   No.  We say, in effect, the authorities in this case, particularly by reference to the Hogben Case, which has been approved over a number of times in this Court, makes clear that the Olsson v Dyson criterion of conduct – after, by way of encouragement – has been applied with respect to incomplete gifts, and we say a promise to give is just an example of an incomplete gift and, in fact, has always been treated that.  We have given your Honours recently a reference to the second edition of Halsbury’s, which says the classic variety of an incomplete gift is to promise to leave somebody something. 

EDELMAN J:   But in equity an incomplete gift takes effect when the donor does everything that is within the donor’s power to do, and it takes effect then immediately, irrespective of detrimental reliance.  This is a different doctrine, this is a doctrine which is concerned – whatever one might call it and whatever jargon like “unconscionability” one might wrap up around it – with detrimental reliance, arguably knowledge that a statement might be detrimentally relied upon.

MR HUTLEY:   But Olsson v Dyson was a communication of a gift.  It was a communication of a gift which was detrimentally relied upon by the individual; was made by the donor, as the Court found, intending it to be completed and understood by the donor to have been completed, yet this Court said without an act of encouragement.  Separate from the act of incomplete gift, there could not be a Ramsden v Dyson estoppel. 

In every case which this Court has ever considered – and I take the most recent, classic one of Sidhu v Van Dyke, that was exactly the circumstance.  In fact, in that case the Court referred to Justice McPherson’s judgment in the case I referred to approvingly, which says that, in essence, for – as it were to be unconscionability – there has to be some act post the gift, other than detrimental reliance, otherwise you have really got to the point where the Court is simply enforcing incomplete promises without any consideration solely on the basis of detrimental reliance, which may be wholly unknown to the promisor that there is any act.  The mere fact that one makes a promise – the nature of a promise, merely makes a promise, and you may actually intend to carry it out – does not follow at all that you intend that somebody rely upon it, or you understand that any person is relying upon it.

In fact, that is the ordinary experience of life and that is why we say the fundamental principle in Olsson v Dyson is and has always been an important one.  It, also, of course – the encouragement after the gift has a number of aspects.  One, it seizes upon the conscience because it is actively telling the promisee to rely.

GLEESON J:   So, there are two forms of encouragement:  there is encouragement to believe the promise and there is encouragement to rely on the promise.

MR HUTLEY:   Quite. 

GLEESON J:   But it is theoretically possible for both of those forms of encouragement to exist in a single promise, a single representation, surely.

MR HUTLEY:   The difficulty – and we say what lies at the heart of the problem – is that there is no way of knowing, externally from the point of view of the promise, whether there is presence – one or the other – and there is no way of fixing upon the conscience, we say, of the promisor unless the promisor has done something, and that can be active or standing by with knowledge, seeing or bringing about and recognising an act of detrimental reliance by the promisee, otherwise you end up in the position – in effect, the equity disappears into what you might call – it is no longer an estoppel with unconscionability, it is, in effect, a kind of a misleading promise with reliance. It is section 18 ‑ ‑ ‑

EDELMAN J:   Mr Hutley, you keep speaking about “unconscionability”.  This Court said, a number of times, since I think Garcia v National Australia Bank, that unconscionability is a label which expresses a conclusion rather than a process of reasoning.

MR HUTLEY:   I accept that, your Honour.  That is why we say that the unconscionability lies in the cases from Olsson v Dyson in the fact of standing by that leads to the conclusion.  It is not sufficient to merely make a promise which is relied upon.  I accept that, your Honour.  One can say it is the characterisation of the conduct, but if merely – as it were – a promise – or we would say, necessarily, a purported gift plus detrimental reliance – would be sufficient, then unconscionability lies – is no more than a conclusion that reliance, unknow to the person, unexpected, what have you, is sufficient to make it inappropriate to depart from the promise.

If that is the case the law has just moved to the integration of estoppel completely, which this Court has usually stood against, and turned it into a form of misleading and deceptive conduct, but not even misleading and deceptive conduct because you may have reasonable grounds to believe, at the time you are making the promise, that you are going to comply with it.  It is, in effect, a promise which leads to reliance and leads to relief.

GLEESON J:   Does that mean that you disagree with McFarlane’s characterisation of the elements of the estoppel?  In the materials that we were given in part E, as I understood his elements were “promise” and “detrimental reliance”.

MR HUTLEY:   No, he refers to the activity after the event.  Is that Justice McPherson your Honour is referring to?

GLEESON J:   Not Justice McPherson – McFarlane.

MR HUTLEY:   Yes.  Can I come to those cases?  I have been taken off my line, but that is where we are going.

GORDON J:   Can I ask one question, then I will be quiet.  If you go to core appeal book 105 at paragraphs 249 to 251, this is in the primary judge’s reasons for judgment.  You accept 249, that the representation was made.

MR HUTLEY:   Yes, your Honour.

GORDON J:   You accept 250, detrimental reliance.  You accept the first sentence of 251.

MR HUTLEY:   Yes, that is part of the detrimental reliance.

GORDON J:   So, we are down to dispute about the second sentence in 251.

MR HUTLEY:   Yes.  His Honour did not find actual knowledge, his Honour found she ought to have known.

GORDON J:   We are down to whether or not the facts after the representation was made in the context of detrimental reliance of the kind described in 250 and 251, which is ongoing conduct ‑ ‑ ‑

MR HUTLEY:   I am sorry, when your Honour says – ongoing conduct in reliance?

GORDON J:   Well, it is ongoing conduct in reliance, but it may also have an impact upon the way in which one looks at this element in relation to the conduct of Dame Leonie as well.  When you are talking about the absence, you accepted, I think, it can both be active and, you said, “standing by”.

MR HUTLEY:   Yes, with knowledge.

GORDON J:   We will come back to that.  My question is what is necessary for that in the circumstances of this appeal?  That is the issue.

MR HUTLEY:   Yes, that is precisely right, your Honour.

GORDON J:   That is the only issue.

MR HUTLEY:   Yes.  The Court of Appeal did not follow the approach of the trial judge because they did not rely on constructive knowledge being sufficient.  In fact, they departed from that, and they said solely what one needed was the communication, the encouragement and detrimental reliance.  In fact, they did not say that – they departed from the reasoning of the trial judge by not relying upon a constructive knowledge element, as his Honour did.

GORDON J:   What does 193 of President Ward’s reasons – is that not in a sense a question about inference of knowledge that should be drawn?

MR HUTLEY:   Well, with respect, she said that that can be done, but then she did not do it.  I will come to her Honour’s reasons.  She is quite specific.  Her Honour says encouragement can lie in the promise and the detrimental reliance.  That is it.  That is sufficient, and that is the ratio, as we see it, of this case.

BEECH-JONES J:   Now, 193 as I understand it is not about constructive knowledge of actual reliance but knowledge that it would be relied on.

MR HUTLEY:   Quite.  Her Honour ‑ ‑ ‑

BEECH-JONES J:   But you say that was not part of their reasoning?

MR HUTLEY:   It was not part of their reasoning, and we say it was not part of the expressed reasoning of the trial judge, and we say her Honour deduced it from the trial judge, but of course if one goes to the constructive knowledge reasoning of the trial judge, if the judge had found as a matter of fact she knew it would be relied upon – the 193 finding – it is passing strange that his Honour then moved to a constructive analysis.  That is why we say her Honour’s deduction of ‑ ‑ ‑

EDELMAN J:   It is not necessarily inconsistent.  One can expect that something be relied upon and then never inquire as to whether it actually is relied upon.

MR HUTLEY:   Quite.  Logically, your Honour, but one would expect if his Honour implicitly made the finding of fact, he would refer to that at the time he engaged in the analysis of constructive knowledge.  That is our point.  I accept the logical possibility, your Honour.

GAGELER CJ:   Mr Hutley, you are stuck with paragraph 193 as a finding of fact.

MR HUTLEY:   Well, your Honour, if there is, I will live with 193.  We say, strictly speaking, it is not part of the reasoning, but if your Honour is ‑ ‑ ‑

GAGELER CJ:   Whether it is or not, it is a finding.

MR HUTLEY:   Anyway, I am certainly not going to – your Honour, it is not actually a finding of fact, it is a deduction of what a judge found as a fact, and therefore, strictly speaking, in my respectful submission, it is not a finding ‑ ‑ ‑

GAGELER CJ:   Nor do you have a ground 1(c) in your notice of appeal.

MR HUTLEY:   We do not, your Honour, because we would say it is strictly a notice of contention point, as we have observed from our learned friends’ points, because their Honours did not rely upon it.  If your Honours say that I have to live with it and I have not challenged it and our learned friends do not have to have a notice of contention point, I will move on and I will accept it as a given.  But that, we say, analytically, is what should happen.

Now, I was taking your Honours to the matters.  What his Honour found, and the Court of Appeal found, is detrimental reliance, and we accept that – his non‑departure from the property, should that take place.  We now come to where we are at paragraph 4.  The primary judge said at appeal book 97, paragraph 231:

For an equitable estoppel to arise, the representor must know that the representee has placed reliance on the representation.

That was the trial judge’s finding.

GLEESON J:   Has placed reliance.

MR HUTLEY:   Yes.  Then his Honour went on to find at paragraph 231 – referred to Justice Deane’s judgment in Verwayen – that is in the joint book, tab 1, at page 445 of that judgment.  The primary judge considers there was authority of this Court:

to the effect that constructive knowledge –

of reliance by the representee:

is sufficient.

That is the route his Honour followed.  At court book 99, paragraph 234, at point 5 on the page, the primary judge held, and I quote, that:

subjective knowledge on the part of the representor is not essential, provided that a reasonable person in the position of the representor would understand that it was probably that the representee was engaging in the conduct in the expectation that the representation would be realised.

At paragraph 241, at page 102, according to his Honour, a finding of unconscionability did not require a finding of dishonesty.  At paragraph 245, last sentence, he observed that:

it is not necessary for the representor to have any intention or subjective appreciation that the representee is acting on the faith of the assurance, if the representee is aware of circumstances that make it objectively reasonably apparent that the representee is so acting.

That was the principle upon which his Honour acted.  Unlike the Court of Appeal, the primary judge did not proceed on the basis that encouragement in the sense of original promise, coupled with reasonable detrimental reliance, was sufficient.

That is how his Honour viewed it, and that had to be viewed in the light of his Honour’s findings.  Again, if I might trespass, I do not want to engage in jury advocacy, but there are some facts made which are necessary to appreciate, we submit, as to the status of the inquiry as to unconscionability.  If your Honours go to paragraph 214, court appeal book 92:

the time at which these events occurred was exceptional, in that Dame Leonie had recently experienced the loss of her husband –

At paragraph 242, last sentence:

An assurance that was a life changing event to David may well have been a much less significant event in Dame Leonie’s mind, given it was made in the highly emotional circumstances of Dr Harry’s recent death.

Then at 214, the last sentence, he said:

It is also possible that, in the ensuing years when Dame Leonie continued to pursue the activities that led her to exceptional eminence in society, the significance of any statement that she made to David may have diminished in her own recollection.

Then at 246, his Honour mentions that:

There are incomplete and unexecuted draft wills . . . in 1996 and 1999.

Dr Harry having died in 1988.  There were also wills in 2000, 2003 and 2006, and each will only made provision for a legacy.  At 247, his Honour said that the wills:

tend to show that Dame Leonie may not have had in mind from as early as 1996 that she had given any assurance to David that she would leave the Colo Property to him in her will –

And at 134, court appeal book 55, the primary judgment sets out some evidence about a conversation she had with Dame Leonie, and at paragraph 135, his Honour relevantly says:

if the conversation occurred in these terms, it was inconsistent with Dame Leonie believing or remembering that she had made a binding representation to David –

At 241, in rejecting the argument that the court needed to find that Dame Leonie acted dishonestly when she decided to leave the farm to Hilary, one of the examples his Honour gave – that is at the third‑to‑last sentence, around about point 4 on the page, he said:

The representor may have forgotten that the representation was made or what its terms were.  The probability of the latter is likely in the light of Dame Leonie’s diagnosis of dementia.

Now, there are other findings – and I will not go through them, and our learned friends have referred to them – Dame Leonie considered leaving the property to David, but his Honour has expressly found that none of those were necessarily attached to any recollection of the promise.  Those are at 115 to 118, 134, 204, 207 and 242.  Thus, we accept there is no finding that she had forgotten, but there is no express finding that she remembered at any point in time.  That is one of the odd curiosities of a principle which allows for non‑encouraging conduct after the event.

One point about encouragement is it makes clear to demonstration, objectively, that the promisor recalls the promise and seeks to encourage the representee, or the promisee, to act in reliance upon it.

GORDON J:   Is that an answer to the last sentence in paragraph 234 of the primary judge’s reasons?

MR HUTLEY:   Yes.  In any case, the paragraph starting – exactly, your Honour.  That leads into that.  The finding was that:

Dame Leonie . . . ought reasonably to have assumed –

et cetera, as his Honour goes on.  That appears to be because there is this reference a few lines up to:

the income earned by David from the farming operation was consistently so irregular and meagre compared to the amount of arduous work –

et cetera.

GLEESON J:   A lot of this is not being very specific about when the assumed state of mind existed.  Is that a finding about the income earned by David before the representation or after, or both?

MR HUTLEY:   Your Honour will find a – his Honour did a lengthy – and I will just get the paragraph numbers, they escape me – set out all the income earned over a relevant period, or for a substantial period of time.  This one, I think, was strictly referrable to the period after, but there was nothing different, as we understand it, from the period after to the period before.  I will just have that checked, though, your Honour.  There was nothing said to be different, as it were, after than before.

We have set out in our submissions in chief, the judge’s judgment is somewhat ambiguous as to whether David’s meagre and irregular income was a circumstance from which a reasonable person would have known that David was staying on the property, but it does not matter – his Honour made the finding of constructive notice, which we do not challenge as a matter of fact, save from as a matter of law.

In the Court of Appeal, the leading judgment was delivered by the President, with whom Justice Leeming agreed, subject to some matters of elaboration, and Justice Kirk agreed with both judgments.  For present purposes, we need address only the Court of Appeal’s reasoning in relation to grounds 3 and 4 of the appeal.  Now, we are up to paragraph 5 of our submissions.  At core appeal book 217, at point 3 of the page, her Honour has a heading “Ground 3”.

BEECH‑JONES J:   What page was that, sorry, Mr Hutley?

MR HUTLEY:   Page 217, your Honour.

BEECH‑JONES J:   Thank you.

MR HUTLEY:   Which broadly corresponds with ground 1(a) in this Court, i.e., is it necessary that there be encouragement after the representations?  Your Honours will see at core appeal book 217, paragraph 154, that reliance was place below on Olsson v Dyson, and at core appeal book 218, paragraph 155, upon quotation by this Court in Giumelli of the observation of Justice McPherson in Riches v Hogben.  At core appeal book 218, paragraph 157, your Honours can see it was put to them that:

the primary judge erred in failing to find that a necessary element of the cause of action in estoppel by encouragement is encouragement, “after” the making of the representation –

The President rejects that ground at core appeal book 221, paragraph 166.  In the middle of that paragraph, her Honour construes the primary judge as have concluded that:

the making of the third representation by itself amounted to the requisite encouragement –

At core appeal book 221, paragraph 167, second sentence, her Honour observes that:

The authorities to which I have earlier referred make clear in my opinion that the act of inducement or encouragement in an estoppel by encouragement case may simply be the making of the representation itself.

We submit the authorities – and your Honour goes back – do not justify that conclusion in establishing an estoppel by encouragement.  We will come to that.  Ground 4 in her Honour’s reasons is addressed at the bottom of core appeal book 221, commencing with the heading:

is actual knowledge of detrimental reliance required?

After setting out the competing contentions of the parties and obiter observations at, we say, 192 to 196 – which your Honour the Chief Justice has told me is now not obiter but to be accepted, and I take that as a given – concerning Dame Leonie’s knowledge and the intention at the time of making the promise, at core appeal book 229, paragraph 197, the President identifies the relevant issue as being whether it is necessary in an encouragement case that:

the defendant have actual knowledge of the acts undertaken in (detrimental) reliance –

It is important to note the parentheses in the second to fourth sentences of that paragraph, where her Honour identifies the working hypothesis upon which she is approaching the ground, i.e., that the necessary element of encouragement is otherwise established by the promise.  We submit that that is contrary to what is required for such doctrine – for the doctrine to apply and for which, we say, Olsson v Dyson stands as authority.

GORDON J:   Sorry, I do not understand.  Could you just put that proposition again?  What is wrong with paragraph 197?

MR HUTLEY:  

there has been an express or implied representation made by the defendant capable of establishing the necessary element of encouragement) –

We say that is the error, we say it cannot.  We say a promise alone – a promise of a gift, as with an incomplete gift alone, cannot constitute the encouragement for estoppel alone.  There has to be activity afterwards.  Otherwise, you are simply enforcing an incomplete gift.

GORDON J:   Just so I am clear, when you say you need more, the President goes on to say:

knowledge of the acts undertaken in (detrimental) reliance –

That is, knowledge by the representator.  Your proposition is narrower.  Your proposition is that there must be conduct by the representator.

MR HUTLEY:   Can I say in certain circumstances – not being these – a knowledge of acts in reliance – that is, knowledge that they are in reliance on your promise – may be sufficient because one then moves into what is sometimes called estoppel by acquiescence; one stands by with knowledge that someone is relying upon your assurance.  That is upon which equity fastens to come to the conclusion – I accept what your Honour Justice Edelman has said – of unconscionability.  That is what makes it unconscionable, i.e., as in the classic Dillwyn v Llewelyn‑type circumstances of making the gift and knowing the child is building the property on the next – or on the basis of the gift.  Not the gift itself, the purported incomplete gift, but knowing that they are relying on the gift and acting to their detriment.

EDELMAN J:   So, two representators in identical circumstances make representations by promise to two representees, both the representors intend that the representee rely on the statement to their detriment, representator number 1 ‑ ‑ ‑

MR HUTLEY:   There was no finding here that she intended that they would rely to their detriment.

EDELMAN J:   Or have knowledge that the representee is likely or expect that the representee will rely to their detriment on the statement.

MR HUTLEY:   Actually, the finding here was would rely upon it, not to their detriment.  The actual finding, if one is going to 193, is a very precise finding.

EDELMAN J:   But the only reliance could be detrimental reliance in the circumstances of the share farming agreement.

MR HUTLEY:   Can I say, I may rely upon the fact that my parents were going to leave something to me because I believe them, I may not have affected my conduct in any way.  To rely on promises from your loved ones does not entail that you act to your detriment in any way.  In fact, if it did, you could never talk to your children.  So, the finding at 193 – I accept the finding, but it does not say they knew she would act to the – the actual finding, if we go to 193 ‑ ‑ ‑

EDELMAN J:   So, you understand it as a finding that there was knowledge there would be reliance in some completely unspecified way, perhaps entirely divorced from the share farming agreement.

MR HUTLEY:   Believed it would happen – that is relying on – that is the finding, your Honour.  It is not a finding that we knew they would rely upon it to act to the detriment, the conduct.  The finding is in the first line of 193.  Of course, her Honour found at 195 of having a:

difficulty seeing an evidentiary basis for an inference that the deceased intended the promise to be relied upon (and certainly not that it would be relied upon by the respondent choosing to remain on the Property) –

In effect, the finding at 193 is a very narrow one, and we say it is an everyday experience that people believe promises will be complied with, non constat that they do any acts in reliance upon it.  The ratio, if we could return to her Honour’s decision on this point, can be seen in the second sentence of paragraph 199 at core appeal book 230:

Knowledge of acts in reliance on the representation (or assumed state of affairs) is a necessary element for a proprietary estoppel by acquiescence (since it is the knowledge and standing by that engages the conscience of the party sought to be estopped) but it is not a necessary element where the representor’s conscience has been sufficiently engaged through the encouragement made by the representation in the first place.

That is why say her Honour has found encouragement is a reaction by the person to whom the promise – how they take it.  It has nothing to do with the state of mind of the promisor.  That is why we say her Honour’s ratio is, if you do an act of encouragement by way of promise, irrespective of your state of mind, and somebody acts to their detriment, that is sufficient to give rise to a conclusion whereby relief can be made, removing the property from the ownership of the representor.  Her Honour’s reasoning is repeated in the second sentence of paragraph 200 at core appeal book 231:

The encouragement on the part of the representor in making the representation appears to be sufficient to satisfy the requirement of unconscionable conduct (where there has in fact been reasonable reliance on the representation such that there would be detriment if the representor were permitted to resile –

So, it is a very simple test now; promise, reliance.

GORDON J:   Detrimental reliance. 

MR HUTLEY: Sorry, plus detriment. That is it, and we say, as I have said before, that has created an equitable rule much broader than section 18 of the Australian Consumer Law.

BEECH-JONES J:   Section 52, as you would put. 

MR HUTLEY:   Can I say your Honour is so gracious.  That is what the ratio is, we say, of her Honour’s reasons.  That is why we say 193 does not matter, and because of the very limited finding that her Honour made that is why her Honour did not think it mattered.

GORDON J:   You do not actually challenge, though, the part at the top of page 231, the end of 200, to which you have just taken us to.  Would you have accepted, in the course of argument, that one can have a representation which itself is sufficient for all your elements? 

MR HUTLEY:   No, I did not, your Honour; I said there has to be an act afterwards.  I do not accept – that is the whole point of Olsson v Dyson.  They said “conscience” is not fixed by what you might call the act constituting the incomplete gift, and we say the act constituting the incomplete gift is either the port of transfer, which is unsuccessful, or the promise, which we say is to leave, which is also an incomplete gift.  There has to be more. 

GORDON J:   I assume you are going to come to the analysis of Justice Leeming at 251, which is directly contrary to that.

MR HUTLEY:   Yes.  His Honour’s example your Honour is talking about.  We say, with respect, his Honour’s example makes the point.  If you left, and you did not know anything about it and you were not ‑ ‑ ‑

GORDON J:   It is not knowing anything about it, it is knowledge and what the “it” is, and that is why it is actually important.

MR HUTLEY:   I accept that, but his Honour’s predicate in that example, which I will come to, was two people:  one says, build upon my land; another person says, you can build upon my land and leave.  Now, his Honour is assuming there is not what you might call wilful blindness to the facts, just as somebody leaves and does not know what has happened; another person, somebody makes the promise and sees what is happening.  We say that is the complete difference.  That is the complete difference, and that is what the cases have always distinguished. 

Because if you have the former, the equity to complete an incomplete gift, essentially, is gone once there is detrimental reliance, and that is contrary to authorities of this Court, and I will come to those in a minute.  It is that simple, we accept that.  That is why we say his Honour’s example – if your Honours are against us and say his Honour’s example is there – but we say that is it, and we say that the same point can be seen in his Honour’s judgment at 255 in the third sentence; core appeal book 255, paragraph 287.

We say the Court of Appeal’s judgment now stands for the authority for the proposition that a donor’s conscience is sufficiently engaged – accepting your Honour Justice Edelman’s remark as to what that means – for the purposes of proprietary estoppel by encouragement in their form of the initial voluntary promise, coupled with reasonable detrimental reliance even if the donor is ignorant of that reliance.  This, effectively, collapses unconscionability into the element of encouragement and in a sense is established in effect solely by detrimental reliance, because it has not traditionally been thought to be unconscionable to make promises that you do not fulfill.

Can I now turn to the ground precisely.  That is paragraph 6 in our outline.  We submit that the authority in this Court makes clear that for an equity to arise in the species of proprietary estoppel in Dillwyn v Llewelyn, there must be conduct of the donor after the making of the voluntary promise.  Your Honours are no doubt familiar with Dillwyn v Llewelyn, but at the risk of trying your Honours’ patience, can I take your Honours to volume 3 in the joint appeal book, tab 19. 

The facts are, in effect, what we all learned at law school, that the donor wishing his second son to reside near him had signed a written memorandum purporting to give a farm to his son, so it was a failed gift case.  Again, using the pages in the joint book, if your Honours go to 1285 to 1286 – 767 to 768.  Whilst the gift was ineffective to convey title to the farm, the donee:

took possession of the farm and built a residence –

at a significant expense with the donor’s knowledge and approbation; what is actually called “assent and approbation”. 

EDELMAN J:   Where are you reading from? 

MR HUTLEY:   This is on pages 1285 to 1286, at the bottom of the page, your Honour, 767 over to 768, it will say: 

This was done with the knowledge and approbation of the testator, and Plaintiff had ever since continued to occupy the residence, but no conveyance of the –

et cetera.  If your Honours go over to 1286 in the report, joint book of authorities 768, and your Honours go down to about point six on the page:

About the rules of the Court . . . A voluntary agreement will not be completed or assisted by a Court of Equity, in cases of mere gift.  If anything be wanting to complete the title of the donee, a Court of Equity will not assist him in obtaining it; for a mere donee can have no right to claim more than he has received.  But the subsequent acts of the donor may give the donee that right or ground of claim which he did not acquire from the original gift.

And then it goes on.  If one goes down, and if your Honours note at about point 8:

I cannot doubt that the donee acquires a right from the subsequent transaction to call on the donor to perform that contract and complete the imperfect donation which was made.  The case is somewhat analogous to that of verbal agreement not binding originally for the want of the memorandum in writing signed by the party –

et cetera.

GORDON J:   Can we just stop and look at that bit that you have just read out, for a moment.  We have A putting B in possession of the land:  give it to you, build a house on it, house is built, large sum of money expended.

MR HUTLEY:   With the knowledge and approbation of the donor.

GORDON J:   And what are the subsequent acts, on your analysis, in that case?

MR HUTLEY:   In effect, in that case, it is the encouragement to do it and standing by while it is done with knowledge that the person is, in effect, relying upon the fact that he – the son – had been given the property.  Not the mere act of giving, not the mere act of reliance, but the conscience engaged by the, in effect, where it says “knowledge and approbation”.  Now, if your Honours go over to 768 ‑ ‑ ‑ 

GAGELER CJ:   I think that was where we were.

MR HUTLEY:   On 768, Lord Westbury explained the case as “somewhat analogous” to part performance, as your Honours see.  Now, at 1287, 769 in the book of authorities, the Lord Chancellor held that the donor’s entitlement to the farm arose – and this is at about point 4:

by virtue of the original gift made by the testator and of the subsequent expenditure by the Plaintiff with the approbation of the testator, and of the right and obligation –

et cetera.  Now, your Honours will have seen the reference to valuable consideration originally wanting.  That idea was later remarked upon by Justice Kitto, that the doctrine of consideration was playing a role here as one of two concurrent lines of reasoning.

BEECH‑JONES J:   This was a present gift case, and not a future gift case.

MR HUTLEY:   Yes, your Honour.

BEECH‑JONES J:   But you say that is no different, do you?

MR HUTLEY:   Yes, and I will come to cases which have been approved of in this Court which say it is the same.  We say the equity to not perfect a gift applied quintessentially to a promise to leave something by will.  Now, that concept of an unwillingness to fulfil a voluntary promise was a concept that failure to fulfil a promise did not constitute equitable fraud or unconscionable conduct.  That goes back, of course, to Jorden v Money in 1854.  Your Honours will see that in the joint book of authorities, volume 3, tab 23.

EDELMAN J:   Just before you move over from Dillwyn v Llewelyn, the effect of the orders in Dillwyn v Llewelyn, as I understand it, was that the plaintiff was entitled at common law to the legal rights to the property.  Is that right?  It was effectively a declaration of common law rights.

MR HUTLEY:   Could I just check the order, your Honour:

to vary the decree . . . and to declare, by virtue –

I am not sure it was a declaration of common law, and:

the Plaintiff is entitled to have a conveyance from the trustees of the testator’s will –

that is consistent with it being a Saunders v Vauriter bare trust.  I am not sure it is necessarily a determination of a common law conveyance.  In fact, it is really an entitlement to have it transferred.  I think it is of true equitable – and it is an equitable declaration.  So, I do not think that is the case, your Honour.  I do not think they say it was held by the – because, obviously, the title was vested in the trustee, so it was an order for conveyance, but that was consistent with it being a bare trust consequent upon the conduct.

As I said, this all goes back to Jorden v Money in 1854.  That is in in volume 3, tab 23, commencing at 893 in the book.  The relevant passage is at 907, in the speech of the Lord Chancellor at about point 5, where he says:

if she had said . . . “I mean to give you everything I am worth in the world; I promise to do so” her not doing so, is no fraud in the sense in which these cases speak of fraud; it is no misrepresentation of a fact which the party is afterwards held bound to make good . . . it seems to me –

et cetera, and then it goes on.  He says, simply, that lies in contract, and that formed the basis of a distinction which ruled, as your Honours know, for some period of time.

Now, this idea has modern currency in relevance.  In Waltons Stores v Maher – that is in volume 2 of the joint books, tab 15, commencing at 639, in the joint judgment of Sir Anthony Mason and Justice Wilson at page 406 in the report, 658 in the book, it says:

As a failure to fulfil a promise does not of itself –

Your Honours will see that – “The foregoing review”.  And then it goes:

As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promise changing his position . . . does not bring promissory estoppel into play.  Something more would be required.  Humphreys Estate suggests that this may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party.

And then it goes down ‑ ‑ ‑

GLEESON J:   Is there a relevant distinction there between promissory estoppel and proprietary estoppel?

MR HUTLEY:   Your Honour, in Waltons v Maher, there they are dealing with the cases dealing with proprietary estoppel.  This was part of a movement taking place within the Court of considering whether there would be an integration – there would be, in effect, one doctrine.  That has since not had too happy a future, but the important point here is they are dealing with the very sort of case with which we are concerning, and the Court is observing “something more” was required.

So, the reference to promissory estoppel has to be looked at in the context of the inquiry which was taking place, of course, in that particular case, which was where you were not transferring title, you were, in effect, creating a lease.  But that, we say, is correct.

BEECH‑JONES J:   The sentence at the end of that paragraph, based on the United States Restatement, it would be applicable to this case if paragraph 193 was taken as knowledge of detrimental reliance, would it not?

MR HUTLEY:   The difficulty is, your Honour, they have expressed it in terms of:

a reasonable expectation on the part of the promisor that his promise will induce action or forbearance –

and if that was the case, and if one read 193 to mean they expected it would be detrimentally relied upon, then yes.  But that is specifically rejected in this because, in fact, one of the consequences of where, if the Court of Appeal’s judgment is right, one has really moved to the United States’ position – if not gone beyond it – because there does not have to be:

reasonable expectation on the part –

will be relied upon.  All we would say is the Court of Appeal says if there is a promise and reliance, that is sufficient.  We say Chief Justice Mason and Justice Wilson rejected that line.

That was in the context of that, but it must be a fortiori in a true proprietary estoppel case.  They rejected the United States’ position – I am sorry, I did not take your Honours to it – at 402, from about point 7 on.

GORDON J:   Did you say 402?

MR HUTLEY:   Page 402.  It is 654 in the joint book, your Honour.  We observe that observations as to inadequacy of mere reliance to do something were quoted with approval by the majority of this Court in Pipikos v Trayans – that is volume 2, tab 11, commencing at page 481, the relevant statement is in paragraph 60 in the plurality judgment.

GAGELER CJ:   Sorry – the page, Mr Hutley?

MR HUTLEY:   I am sorry, your Honour?

GORDON J:   Page 540.

MR HUTLEY:   I am sorry, I do apologise, your Honour, I am constantly saying ‑ ‑ ‑

EDELMAN J:   Page 540 of the report.

MR HUTLEY:   Yes, it is 540 of the report, 499 in the joint book, paragraph 60.

GAGELER CJ:   Thank you.

MR HUTLEY:   That then takes us, if your Honours please, to Ramsden v Dyson.

GAGELER CJ:   Mr Hutley, that might be an appropriate time for us to take the morning adjournment.

MR HUTLEY:   If your Honours please.

AT 11.15 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.28 AM:

MR HUTLEY:   Before the adjournment, your Honours, I was turning to Ramsden v Dyson.  Your Honours will find that in volume 3 of the authorities, tab 29, commencing at 1015.

EDELMAN J:   We are up to 1866 now.

MR HUTLEY:   Your Honour, we are coming.  Coming from your Honour, that is surprising, I thought they were a bit late in the day for your Honour.  Lord Cranworth’s reasoning, your Honours, is concerned with estoppel by acquiescence, but the dissenting reasons of Lord Kingsdown have been referred to many times as setting out:

The classic statement of the ingredients of an estoppel by encouragement –

Refer in the authorities to Justice Handley’s observation in Sullivan v Sullivan, in volume 3, tab 32.  The words were approved, of course, by the Privy Council in Plimmer v Wellington Corporation, volume 3, tab 27.  I will not take your Honours to it.  But if your Honours would go to page 1056, in the speech of Lord Kingsdown.  His Honour refers to the “rule of law” in the second full paragraph.  He says:

If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money –

et cetera.  The object of this, of course, is – as Lord Kingsdown observes – to prevent what was then called a “fraud”.

Can I now turn to the decisions in this Court – straight into the depth of the 20th century.  If your Honours go to Olsson v Dyson, that is volume 1, tab 10, page 442.  The leading reasons are those of Justice Kitto, with whom the Chief Justice relevantly agreed and with whom Justices Menzies and Owen agreed.  If your Honours go to 451 in the book, your Honours can see the facts were that a company was indebted to the plaintiff’s husband and the plaintiff had relied to her detriment on statements by her husband in December 1961 that, quote:

“You can have the £2,000 that I have loaned to Tom”, and –

secondly:

“I will advise Tom to pay the interest to you.”

Tom was the Managing Director of the debtor company.  As your Honours see at 374, over to 375 – 451 to 452 in the book – and at 454, a few months later in February 1962, the plaintiff’s husband told Tom, in the plaintiff’s presence and with her awareness, that he had given the principal to his wife and that Tom was to pay the interest to her in the future.  The company thereafter paid interest to the plaintiff during her husband’s life and also after his death.

The question of the plaintiff’s entitlement arose in the context of the executors of the husband’s estate belatedly bringing an action to recover the principal and interest from the company.  The plaintiff had relied upon her husband’s statements to her detriment by abstaining from taking proceedings under the then Testator’s Family Maintenance legislation.  If your Honours go to 376, in the reasons, which is 453 in the book, and the statement of Justice Kitto:

But there is no equity to perfect an imperfect gift:  because of the absence of consideration a purported assignment, if incomplete as a legal assignment, effects nothing in equity.  True it is that some subsequent conduct of the intending donor, encouraging or inducing the intended donee to act to his prejudice on the footing that the property or some interest in it has become his, may make it unconscionable for the donor to withhold the property or interest from the donee, and equity may on that ground hold the donee to be entitled to the property; but that is another matter, and must be considered separately.

If your Honours go to 455, your Honours will see the reference to the conduct of the father after, which is, your Honours will see – explaining the decision in Dillwyn v Llewelyn:

the conduct of the father after the making of the incomplete gift, together with the son’s expenditure thereby induced, entitled the son in equity to call on the father’s executors “to complete the gift” –

The father’s conduct:

having made an incomplete gift of land to his son for the express purpose of the son’s building a house –

was expressly identified by Justice Kitto to include “conduct” in:

assented to and approved of the son’s proceeding with the building.

If one goes over in the reasons to 456 ‑ ‑ ‑

GORDON J:   What do we make of the alternative, the “other line of reasoning” at the foot of page 378?

MR HUTLEY:   There has always been a history of this other line of reasoning of consideration, but they have always based it also in equitable principle, your Honour.  Your Honours can see that at 379, page 456 of the book, is whilst identifying two concurrent lines of reasoning in Dillwyn, being part performance against binding contract, Justice Kitto explained that:

GORDON J:   So, it was put against you here, as I understand it – and I may be misquoting what Mr Herzfeld said – that one has the representation which you accept was made by Dame Leonie Kramer to David.  One has the context where it is two things:  the long‑established relationship between them, and her knowledge and view of him, which is itself a finding; and then as I understand it, actual knowledge of the promise by her that David would rely on it to keep farming under the share farming agreement.

MR HUTLEY:   Well, your Honour knows the debate about that finding.  We say that is not the finding that was made.

GORDON J:   Put aside – that is a characterisation of 193, read with 244.

MR HUTLEY:   Well, we would say it is a little more than characterisation, but your Honour ‑ ‑ ‑

GORDON J:   Read with 244.

MR HUTLEY:   Well, I have made our submissions in relation to that.

GORDON J:   Yes.

MR HUTLEY:   Well, we say ‑ ‑ ‑

GORDON J:   Assuming that the view is that that is the finding of 193 read with 244, is that not sufficient?

MR HUTLEY:   No, we submit it is simply not sufficient.  There is no equity – inequity, as we say – in the promise, as there is no equity in a gift and, even if you expect that the person would rely upon it, there is no – and they do rely, but there is no evidence that you knew they were relying upon it.  That is where one of the difficulties arose, with respect, when – and your Honour Justice Beech‑Jones and our learned friends got very close to saying this – that in effect the finding at 193 amounted to a finding of known reliance thereafter.

GORDON J:   No, not known reliance – actual knowledge of the promise that David would rely on to keep share farming.

MR HUTLEY:   Quite, but no thereafter knowledge that he did rely upon it.

BEECH-JONES J:   I saw you get very excited, Mr Hutley.  I was actually pointing out that if “knowledge” means knowledge of share farming, it is a very fine line between that finding and a lack of intent.  And you are saying ‑ ‑ ‑

MR HUTLEY:   But anyway, your Honour sees the finding ‑ ‑ ‑

BEECH-JONES J:   ‑ ‑ ‑ well, they did not make it, so it does not matter.

MR HUTLEY:   They simply have not made it.  That is why we say also they did not make the finding that they would have them make, because if they made that finding it would be very odd to say, I have not made any finding of actual reliance.

BEECH-JONES J:   Can I just get back to your answer to the Chief Justice’s question.  Are you saying you need encouragement plus more encouragement, or is it you need a promise plus encouragement, and the promise and the encouragement cannot be the same occasion?

MR HUTLEY:   Yes, it is in the same way as a gift; an actual purported gift cannot be encouragement.

BEECH-JONES J:   A gift cannot be encouragement, a promise cannot be encouragement, the promise and the encouragement cannot happen at the same time either.

MR HUTLEY:   All the cases say it all happened afterwards.

BEECH-JONES J:   So, it has to be promise plus later encouragement.

MR HUTLEY:   Quite.  And we say ‑ ‑ ‑

GORDON J:   How much later?

MR HUTLEY:   Well, your Honour, that will depend ‑ ‑ ‑

GORDON J:   No, seriously.

MR HUTLEY:   I understand exactly what your Honour says.  It has to be separate from the promise.  That is what it has to be.  And all the cases ‑ ‑ ‑

GORDON J:   And what is the rationale for that?

MR HUTLEY:   The rationale for it is, you can make promises and you do not have to keep them.  What is the equity is not the equity produced by the promise.  The equity is produced by the acts separate from the promise, whereby you encourage – that is, you bring about a person’s reasonable reliance to his or her detriment – by reason of the promise.  Otherwise, you get into the problem that really in effect all you are doing is enforcing the promise because of reasonable reliance.

BEECH-JONES J:   But why is not the answer to say, sure, a bare promise is not enough, but something that amounts to a promise and an encouragement at the same time is enough?

MR HUTLEY:   But an encouragement, with respect, your Honour, is what another person takes from your promise.

EDELMAN J:   It is never enforcing the promise though.  I mean, if the promise is to convey a million‑dollar property, and it is made in circumstances where there is encouragement subsequently for reliance upon it, the reliance is very brief, fleeting and to the tune of $50, then you might be entitled to a $50 detriment but you do not get the multimillion‑dollar property.

MR HUTLEY:   And we would say the same, if the gift was a gift of a house and you spent $200 on a gate at the front, equity may well not, as it were, perfect that gift even though somebody was aware that you were going to build the gate.  So, in other words, we would say the equitable principles are not limited, to take up your Honour’s observation to me, as limited to always perfecting the gift.

EDELMAN J:   Yes, but the point I am making to you is that your concern that we are undermining the law of contract by enforcing promises is not right, because you can see in these extreme examples that the concern is not to enforce the promise.  It may be coincidental that the promise gets enforced, but that is because that is the way of protecting the detriment. 

MR HUTLEY:   Can I say, if this Court comes to the view a promise plus reasonable reliance is sufficient, what the Court will do, we say there is no – have really overstepped all the statements of principle which have been made today.  No one said just an encouragement plus reasonable reliance was sufficient, even in Waltons v Maher.  They made it perfectly clear – Sir Anthony Mason from Justice Wilson – that that was not sufficient.  It is the “something more” and the “something more” they adverted to whilst discussing Olsson v Dyson.  That is because the equity lies not in the, what I would call, factual influence of the promise, or for that matter the factual influence of the purported gift which you might call encouragement.  Equity looks for an act which it considers encouragement in respect of those events which binds the conscience. 

That is, we say, the only way to understand the statement of principle, the “something more” is that which takes purely the promise or the gift beyond being something which equity will not assist with, irrespective of reliance.  That, we say, is consistently the principle.  It has been the principle, we say, consistently for some hundreds of years.  We accept there are statements in English cases that – the will cases and the death cases – are broader, but that really in effect resolves into, in our respectful submission, promise plus reliance.  We say then in effect you have really brought equity – brought estoppel together to mean nothing than encouragement plus reliance is sufficient. 

Therefore, in the same way as one can be estopped from a promise of a commercial contract, you can lose a property purely by giving an encouragement which is reasonably relied upon – totally unknown to anybody but reasonably relied upon, and you can be characterised and lose your property.  We say that is what the courts have for centuries stood against.  It is not the acquiescence cases, this case was not an acquiescence case, the President made perfectly clear there cannot be acquiescence, it would be a new case. 

Our learned friends’ concentration of knowledge in acquiescence cases and not in encouragement cases was, with respect, diverting attention from the main point.  The main point is, will this Court say that encouragement through a promise plus reasonable reliance is sufficient for an equitable estoppel?  If it is, then those findings have been made.  There is no other basis upon which, we say in principle, we can lose.  That would be a departure, we say, from all authorities in this case, and would be a profound change in the law.  That is really what comes down between us. 

The finding at 192 is really neither here nor there in that analysis.  Even if it is against me at that highest level – and we say it is not for the reasons I have advanced – it still does not mean that a person is not, in conscience, precluded from revoking the promise, because it amounts to this:  I want him to rely upon it by continuing on, I have no knowledge whether he did – I have absolutely no knowledge one way or the other whether he did, so far as I know he did not – I cannot revoke it – rely upon it by staying there.

GORDON J:   But we know he did stay there. 

MR HUTLEY:   Your Honour, there is no finding that Dame Leonie had any knowledge about that.  That is all I am saying.  The real question is, does that fix upon her conscience?  That is the point now, in our respectful submission, and one can put it any way.  Estoppel in pais and going through Palmer and Grundt really does not insist for the very reason that your Honour Justice Edelman observed upon.  They are dealing with a wholly different form of equity, a form of relief, a common law evidentiary consequence in a relationship created consensually between the parties in a contract or other relationship, governing the particular parameters of that relationship.  Same, we say, essentially, in traditional promissory estoppel, but not here where one is dealing with, in effect, determining who owns people’s property.

Unless I can be of further assistance, your Honour. 

GAGELER CJ:   Thank you, Mr Hutley.  The Court will reserve its decision in this matter and will adjourn until 10.00 am tomorrow. 

AT 3.45 PM THE MATTER WAS ADJOURNED