Lollis v Loulatzis

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 8583 of 2003

STELLA LOLLIS	Plaintiff
v
ANTHONY KASI LOULATZIS	First Defendant
and
IRENE PETRUCCELLI	Second Defendant

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JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	13–16, 19–23, 26–30 November 2007; 3–7 December 2007.
DATE OF JUDGMENT:	18 December 2007
CASE MAY BE CITED AS:	Lollis v Loulatzis & Anor
MEDIUM NEUTRAL CITATION:	[2007] VSC 547

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ESTOPPEL – Claim by plaintiff mother for possession of house occupied by son and family – Promissory estoppel – Estoppel by acquiescence and tacit encouragement – Trespass – Damages – Whether damages offset by improvements to premises by defendant.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms C.H. Sparke	Middletons
For the Defendants	Mr R. Kendall QC and Mr J.D. Mattin	N.A. Young & Co

TABLE OF CONTENTS

Background Facts............................................................................................................................... 2

Factual Issues...................................................................................................................................... 5

Evidence for Plaintiff......................................................................................................................... 6

(i) The plaintiff.............................................................................................................................. 6
(ii) Con Lollis.............................................................................................................................. 10
(iii) Tony Loulatzis.................................................................................................................... 12
(iv) Peter Takakis....................................................................................................................... 15
(v) Tracy Loulatzis..................................................................................................................... 18

Layout of Green Street premises................................................................................................... 20

Evidence for defendants................................................................................................................. 21

(i) The first defendant................................................................................................................ 21
(ii) The second defendant......................................................................................................... 30
(iii) John Browning..................................................................................................................... 33

Assessment of witnesses................................................................................................................. 34

The counterclaim.............................................................................................................................. 45

(i) First claim in counterclaim: promissory estoppel.......................................................... 46
(ii) Second claim in counterclaim: estoppel by encouragement or acquiescence........... 52

The plaintiff’s claim......................................................................................................................... 88

Summary of conclusions............................................................................................................... 101

HIS HONOUR:

The plaintiff is the registered proprietor of a residential property at 25 Green Street, Camberwell. The first defendant, her son, has lived in those premises for a number of years, together with the second defendant, who is his partner. The plaintiff claims an order against both defendants for possession of the property and damages. The first defendant asserts, by counterclaim, that he is entitled to a declaration that the plaintiff holds the property on trust for him, alternatively, a declaration that he is entitled to a charge over the property to secure the repayment of monies expended by him in respect of the property, and an order that the plaintiff transfer to him all her interest in the property.

The claim by the plaintiff is quite simple. The defendants admit that the plaintiff is the registered proprietor of the property, that they have been, and remain, in possession of the property, and that they have refused to deliver possession of the property to the plaintiff. However, by reason of the matters set out in the counterclaim, they claim that the first defendant is entitled to possession of the property to the exclusion of the plaintiff.

Thus, the issues which are in dispute in the case centre on the allegations made by the first defendant in the counterclaim. In particular, the first defendant alleges that, in about 1990, there was an oral agreement between himself and the plaintiff, whereby the plaintiff agreed to give the property to the first defendant, if the defendant settled down with the second defendant, got married to her and had children with her, and met all outgoings in connection with the property and carried out repairs and improvements to the property. Further, it is asserted that, in the ensuing years, the first defendant to the knowledge of the plaintiff occupied the property, and carried out substantial repairs, improvements and renovations to it, and met various expenses in respect of the property. The first defendant asserts that the plaintiff consented to, and acquiesced in, the first defendant occupying the property and carrying out the works to it, and thus encouraged and permitted in the first defendant an expectation that he would enjoy the sole beneficial ownership of the property. Accordingly, it is claimed that, by permitting and encouraging the first defendant to expend monies on the repairs, improvements and renovations to the property, the plaintiff is bound in equity to transfer all of her right, title and interest to the property. Alternatively, it is claimed that the first defendant, in the circumstances, is entitled to an equitable charge over the property to secure repayment to the first defendant of the amounts expended by him in connection with the property.

Background Facts

It is useful to commence by outlining the background facts which are not in dispute. The plaintiff married her first husband, Pantelis Loulatzis, in 1955. There were four children of that marriage, namely, Christina, born in 1959, the first defendant, Anthony Kasi Loulatzis (known as “Con Loulatzis”) born in 1960, a second son Anthony, born in 1962, and a third son, Nicholas, born in 1965. Pantelis Loulatzis became the registered proprietor of the property at 25 Green Street in 1963. It was then located in the suburb of Burwood, but subsequently when the boundaries of that suburb were altered, it became located in the suburb of Camberwell. Pantelis Loulatzis died on 14 December 1974. On 14 August 1975, by the terms of Pantelis’ will, the plaintiff became registered proprietor of the property.

Before his death, Pantelis Loulatzis had been carrying out some renovation works to the house. After he died the plaintiff installed three aluminium windows which had been purchased by her husband for the premises. She also had tiling carried out in the toilet and laundry. Between 1980 to 1982 she had the house, which was then timber framed, clad in bricks. She also installed new windows around the house, installed a new front door, re-carpeted the house, renovated the bathroom with tiles, and had tiles laid in the kitchen. In addition, she removed a glass partition between the kitchen and the sun room to form one room. At the same time she also extended the house to the rear to add a further room (then known as “Christina’s workroom”) and, above it, as a second storey, another bedroom (then used as Nicholas’ bedroom). Subsequently, in about 1987 or 1988, she engaged an electrician to re-wire the house. After those works were completed she had new plaster work undertaken, and the house was painted. She also installed ducted heating and a new hot water service.

The plaintiff married her second husband, Con Lollis, in June 1983. Mr Lollis then owned and conducted a nursing home in Ivanhoe, by his company La Trobe Private Nursing Home Pty Ltd. By that time Christina had left home, but the plaintiff’s three sons still lived there. Subsequently, the second son, Anthony, married his wife Tracey in 1986. At about the same time the youngest son Nicholas visited America. In the next few years he travelled to and from America, and ultimately settled there in about 1989, at the age of 22. By then, the first defendant was still living at home.

In the 1990s the plaintiff commenced to live with Mr Lollis in Mr Lollis’ house in Rosebud. After their marriage, the plaintiff was living off and on at Green Street and in Rosebud during the 1980s, but she lived full-time in Rosebud from 1990. In the following years, she visited Green Street regularly, where she carried out household tasks such as cleaning and cooking for her son. At some stage the second defendant, Irene Petruccelli, commenced a relationship with the first defendant. She commenced living full time at the Green Street premises in 1995. In 1998, the plaintiff and Mr Lollis moved into a new home which they had built in Mt Martha.

In December 1994, Mr Lollis was convicted of offences relating to the conduct of the nursing home, and was sentenced to a period of imprisonment. While he was in prison, the first defendant was appointed a director of La Trobe Private Nursing Home Pty Ltd. The plaintiff was also charged with offences under the Commonwealth Crimes Act in relation to deductions claimed by her in her income tax return. She was placed on a bond to be of good behaviour, and ordered to pay a sum of $880 approximately to the Commissioner for Taxation. In March 1995 Mr Lollis was released from prison. In June 1995 the plaintiff went overseas for a period of two months, and for some of that time Mr Lollis was with her. In late 1995, after her return from overseas, the plaintiff consulted a solicitor, Mr Tony Goldsmith. As a consequence of that consultation Mr Goldsmith prepared a document entitled “Notice to Determine Tenancy at Will” (to which I shall refer as “the notice to quit”). The plaintiff’s evidence is that three notices were prepared, one directed to the first defendant, one to the second defendant, and one to both of them. The first defendant’s evidence is that one such notice, addressed to him and undated and unsigned, was placed in the letterbox at Green Street. In her evidence the plaintiff stated that she spoke to the first defendant about the notice when she visited him at Green Street. He threw the notice at her and said “I’m leaving when I’m ready”. On the other hand, the first defendant denied that that conversation occurred. He said that, after he found the copy of the notice in the letterbox, he telephoned the plaintiff, who disclaimed any knowledge of it. He also said, in his evidence, that he reminded the plaintiff that he and she had “a deal”. The defendants continued to occupy the premises at Green Street after that notice was received by the first defendant. In April 1997 their son, Pantelis, was born. In 1998 Mr Lollis and the plaintiff moved their home from Rosebud to Mt Martha, where the plaintiff now resides. The defendants’ second child, Violetta, was born in November 2002.

In 2002, the plaintiff’s daughter Christina commenced proceedings against the plaintiff, challenging the grant of probate to the plaintiff of the will of her late husband. She also caused a caveat to be lodged over the title to the property at Green Street, by which she claimed an estate in fee simple. The grounds of claim were expressed as “interest as beneficiary under intestacy”. In the same year the plaintiff commenced divorce proceedings against Mr Lollis. On 8 August 2003, the solicitors acting for her in those proceedings sent a letter to the defendants requiring them to vacate the property at Green Street. In October 2003 these proceedings were commenced against the first defendant by writ. Irene Petruccelli was joined as a second defendant in March 2004. Subsequently, the proceedings between the plaintiff and Christina resolved. In 2005 the Family Court proceedings between the plaintiff and Mr Lollis were settled, and as a result the plaintiff is the sole proprietor of the former matrimonial home at Mt Martha. She is still living in those premises, and the defendants have continued to reside at the Green Street property with their two children.

Factual Issues

The principal factual issues arise from the claims by the first defendant in his counterclaim. They include the following:

(a)Whether there was a promise or representation by the plaintiff to the first defendant in 1990 that, if he settled down with the second defendant, had children with her, and, to his own expense, renovated and cared for the property, the plaintiff would give him the property;
(b)The extent of works carried out by the first defendant at the premises between 1990 and 2003;
(c)The extent to which the plaintiff knew that the first named defendant was carrying out such works;
(d)Whether the plaintiff encouraged and acquiesced in the carrying out of those works, and the incurring of expenses in relation to the property, by the first defendant.

The evidence, which was led in relation to those issues, raised a number of disputed questions of fact. In particular, there were disputes as to when the first defendant commenced his relationship with the second defendant, as to the nature and extent of that relationship in 1990, and as to the plaintiff’s attitude to the relationship between the first defendant and the second defendant. In addition, the evidence raised issues as to the plaintiff’s relationship with the first defendant during the relevant period, and in particular between 1995 and 2003. Importantly, there was disputed evidence as to whether the plaintiff made demands on the first defendant that he either leave the premises or pay rent from 1995 until the issue of the proceedings in 2003. There was a dispute as to whether the plaintiff knew, and expressly approved of, extensive renovations to the premises undertaken by the first defendant during that period, and whether she told him not to carry those works out. More broadly, the evidence necessarily ranged over a large raft of topics. In view of the relationship between the parties, the evidence inevitably included incidents which had occurred in the family setting over a period of some two decades. The evidence also touched on issues arising from the proceeding which the plaintiff’s daughter had brought against her in 2002, the divorce proceedings between the plaintiff and Mr Lollis, an application for an intervention order by the second defendant against the plaintiff in 2005, and a large number of other matters. In summarising the evidence, I shall focus on those aspects which bear more directly on the principal issues between the parties.

Evidence for Plaintiff
(i) The plaintiff

I turn then to the evidence of the plaintiff. The proceeding was instituted by her while she was known as Stella Lollis, but she has subsequently reverted to using the surname of her first husband, and thus is known as Stella Loulatzis. I shall refer to her as “Stella”. She commenced her evidence by describing the family background, and by outlining the renovations which she carried out to the house at Green Street during the 1980s. She described how, over the years, three of her four children moved out, so that only the first named defendant (to whom I shall refer as “Con”) remained living at the Green Street premises. Con attended university during the 1980s, where he met the second defendant (to whom I shall refer as “Irene”). During the 1980s Irene was a friend of Con, but there was no special relationship between them. In March 1991 Christina, who had been living overseas, came home. She lived at Green Street for a short time. While she was there, she had an argument with Irene, and Stella told Irene to leave and not to come back. Stella denied that the relationship between Con and Irene at that time was close. She denied that at that time, or indeed at any time, she had encouraged Con to marry Irene. She particularly denied that she stated to Con that if he married Irene, had children with her, bore the expenses of the property, and maintained and renovated the Green Street property, she would give the property to him.

Stella stated that at some stage there was a bad argument between Con and her second husband (to whom I shall refer as “Lollis”). This incident became referred to as the “coffee table” or “tea table” incident. During an argument, Con lifted a coffee table, and threatened Lollis with it. After that dispute, Lollis refused to stay at Green Street, and thereafter he permanently resided at his Rosebud property. Stella continued to stay off and on at the Green Street property, and she was living alternately at those premises and with her husband at Rosebud. Later she lived permanently at Rosebud, but visited the Green Street property each day, where she did the cleaning, and cooked for her son.

Stella went on an overseas trip to the United States of America between August and October 1991. At about that time, she had repairs carried out to the front fence of the property, for which she paid. Con, Tony and Lollis all assisted with those works. When Stella returned from America in October 1991, Con had, without her knowledge, rendered the front of the house with grey/green mortar. In addition, he had removed a bed of flowers and roses which had been close to the house. At that time Con was commencing his plastering business, and he had practised plastering on her house. When Stella rebuked him for doing it without her knowledge, he told her to shut up, and swore at her.

During the ensuing two years, as Con established his plastering business, he commenced to place his equipment and materials for that business in the yard of the house. Stella kept a number of her own personal items at the house, including furniture, cutlery and clothing. In 1993 her second son, Tony, and his wife Tracey moved into the house for a few months, while their own new house was being built. During that time Con had an argument with Tracey. Irene was not living there at that time. Stella stated that she continued to pay the bills, including the rates, in respect of the house until 1996. After approximately 1996, Con commenced to pay the rates and the accounts for gas and electricity. Stella stated that in the meantime, from about 1991, she had had discussions with Con about the fact that he was still living at the premises, and not meeting any of the outgoings in respect of it. She said to him on a number of occasions that he should either move out or pay rent. She told him she was sick and tired of his friends, who were also using the premises, and that he was to either leave or pay rent. He would reply “Leave me alone, I’m sick, I will go when I’m ready, let me get on my feet”. Over the years Con had a number of problems with his health. In the late 1980s, on a trip to Darwin, he contracted Ross River fever. Subsequently he suffered, and has continued to suffer, from very high blood pressure, diabetes and asthma.

In December 1994, when Lollis was sentenced to a term of imprisonment, Stella moved back into the Green Street house. She remained there until Lollis was released from prison in March 1995, when the couple then went back to Rosebud. On Christmas Day in 1994, she had a heated argument with Con in the Green Street property. Con was expecting Irene at the house, and he wanted Stella to stay with his brother Tony. Stella stated in her evidence that the argument which ensued was, for her, a watershed in her relationship with Con, and that thereafter their relationship was never the same.

A few months after Lollis was released from prison, the couple went to Greece for a holiday in August or September 1995. On her return Stella consulted a solicitor, Mr Tony Goldsmith. On her instruction Mr Goldsmith prepared the Notice to Determine Tenancy at Will. Stella was unable to recall whether she, or Mr Goldsmith, served that document on Con. However, shortly after she saw Mr Goldsmith, she spoke to Con and Irene on the verandah of the house at Green Street. Con had a copy of the notice with him. He threw it at her, swore at her, and said “I’m leaving when I’m ready”. Stella told Irene she should leave, to which Irene replied “You go first, old bitch”. In November 2005 Stella also made a will, prepared by Mr Goldsmith, by which she gave the property at Green Street to her son Tony, and her interest in the property at Rosebud to her son Nicholas.

Stella stated that, after the incident on the verandah, she did not speak to Con for some time. They resumed talking in 1996. At that time she ceased to pay the rates and the household bills. After 1996 she discussed with Con the fact that he was still at Green Street. He would respond by saying that he was leaving and that Stella should give him a couple of months to enable him to do so. In 1997, Irene was pregnant with her first child, and Stella deliberately refrained from raising the topic with Con at that stage. In the ensuing years, she continued to raise the subject with Con, and he continually stalled, saying that he would move out, but he needed time. In the late 1990s Con and Irene purchased two properties at Point Leo. Con told Stella that Irene had booked their son Pantelis into the kindergarten at Point Leo, and that they intended to live there. During that period Con removed some furniture at Green Street to the Point Leo house. He also removed some of the Stella’s furniture from Green Street and transported it to her home in Mt Martha.

In Christmas 2001 (or possibly Christmas 2002), Con visited Stella at Mt Martha and showed her a sketch. Stella thought that the sketch related to proposed extensions to Con’s Point Leo premises. Subsequently, she learned that Con had plans to build an extension to the property at Green Street. She told him that he was not allowed to do anything at Green Street. Con asked her for the title so that he could obtain a permit for the renovations, but Stella refused to give it to him. She told him he was not allowed to build or touch anything there.

In 2002, Stella’s daughter Christina commenced proceedings against the plaintiff seeking to set aside the grant of probate in respect of her late husband’s will. Both Con and Tony assisted the plaintiff to defend that proceeding. After a mediation meeting in relation to those proceedings in October 2002, Con said to her words to the effect “You wait and see, this is nothing compared to what I am going to do to you”.

Stella also gave evidence as to some works which Con carried out at the premises at Green Street of which she was aware. As I have already stated, when she learnt that he had rendered the brickwork of the house during her trip to the United States in 1991, she told Con of her disapproval. At one stage Con removed and replaced the windows in the front bedroom and the lounge room. He replaced the window in the lounge room with a bay window. She objected, and asked him why he had changed the windows. Con replied that he did not like the previous windows. On another occasion, Con demolished the fire place in the lounge room, and Stella was very angry. She said to him “How many times have I told you don’t touch anything”. On another occasion, Con laid new tiles in the laundry and in the toilet. Stella asked him why he did that and told him “How many times do I have to tell you not to replace my things?”

On one occasion, in about 2002, when Stella visited the house, she went outside and noticed that all the other aluminium framed windows in the house had been removed and were on the ground. Con had replaced those windows with timber windows. On another occasion, in 2003, Con telephoned Stella and told her that she should come to the house, as he wanted to speak to her about the bathroom. On the next day, by the time she arrived, the bathroom had been gutted. The door, the floor and the bath tub had been removed and only the frame of the room remained. She again told him that he should not have carried out those works.

On a previous occasion, Stella was aware that Con had removed some floor tiles in the kitchen and dining room. She was angry and disappointed and told him not to do it. She stated that her opposition to Con carrying out a number of the works, including removing the bath tub, removing the floor tiles, and removing the aluminium window frames, was based on sentimental reasons, because those items had been purchased or installed by her late husband. During her evidence, and in cross-examination, Stella was taken through a large list of items of works, which Con claims that he had carried out to the premises over the years. Apart from the works to which I have just referred, Stella stated that she was substantially unaware that the other works were carried out to the house at or about the time it is said that Con did them.

(ii) Con Lollis

The principal witnesses called by the plaintiff in support of her case were her former husband, Con Lollis, her son Tony Loulatzis, her daughter-in-law Tracy Loulatzis and her nephew Panagiotis (Peter) Takakis. Lollis stated that, after he married Stella, they lived, during the 1980s, both at the Green Street property and also at a house which he owned in Braidwood Avenue, Rosebud. Lollis himself spent more time at Rosebud than at the Camberwell premises. He stayed at Rosebud on a number of occasions when Stella stayed at Camberwell. From the late 1980s Lollis lived only at the Rosebud premises. From the early 1990s the plaintiff moved to Rosebud to live with him on a permanent basis. He would drop her each day at the Green Street property, and he would then drive on to the nursing home in Ivanhoe.

Initially Lollis had a very close relationship with Con. However, after the “coffee table incident”, their friendship cooled. Lollis stated that that incident occurred in 1989, but he also said, in his evidence, that the incident occurred after he was released from jail, which was in March 1995. I should remark that while, generally, Lollis had quite a good memory for connecting particular incidents, which he could recall, to other events which were occurring at the same time, he was not good at identifying the dates of those events.

Lollis was unable to say when Irene moved in permanently into Green Street. At one stage in his evidence he said that occurred in 1985 to 1986, while Con was still at university. However, later in his evidence, he stated that Irene seemed to be in and out of Green Street in 1995. In 1991, when Christina returned from America, Lollis was a witness to an argument which the defendants had with Christina. He said that, in the course of that argument, Con said to his sister “Get out from here, you bloody bitch”. Lollis stated that, from the early 1990s, Stella and Irene did not have a good relationship. Indeed it would appear, from his evidence, that the plaintiff had a fraught relationship with both defendants. When he picked Stella up from the Green Street property at the end of each day to drive her to Rosebud, she was often quite upset, as a result of disputes which she had had with Con and Irene. Lollis stated that that seemed to occur from the time Stella first visited America in late 1991. During that period the defendants would, from time to time, visit Lollis at his nursing home, and consult him about difficulties which they were having with Stella. Lollis attempted to play the role of a peace-maker in those disputes.

Lollis stated that, during that period of time, he was present when, on a number of occasions, the plaintiff told the defendants to get out of the house or to pay rent. The defendants would respond “No, we stay in the house”. During the same period, Lollis himself was encouraging the defendants to pay rent to the plaintiff. On some occasions Con said that he would move out, but “not yet”. On one occasion, Con told Lollis that he would go to live in the Point Leo house, and that the defendants wished to move to Point Leo before their son Pantelis commenced school. During that period Stella was often saying to Lollis that she wanted the defendants to vacate the premises at Green Street or pay rent to her for occupying it.

Lollis stated that when Stella returned from her first trip to the United States of America in late 1991, she was very upset to find that in her absence Con had rendered the house. She told Con not to do it, as she liked the house as it was. In the early 1990s Con wanted a workshop under the house. Lollis helped him to put in a workshop, putting supporting beams under the floor, and inserting columns. Some bricklayers installed a floor, for which the plaintiff paid. At the same time Con and Lollis, together with a couple of Con’s friends, rebuilt the front fence.

Lollis stated that, in the early 1990s, the house was in good condition, it was nice inside and outside, and it presented as a new brick veneer. At that time Con removed the tiles from the floor of the kitchen and the dining room and polished the floorboards under it. Stella told him not to do it. She was angry and said that she was not happy with having the work done. Subsequently, Con removed the window and small balcony at the front of the house, and installed a bay window in their place. This was the cause of a substantial dispute between Stella and Con. She told him to get out of the house because it was her house. On another occasion, Stella told Lollis that Con had changed the bathroom. She was very upset, because that was where she had bathed her children, and her husband had installed the bath.

(iii) Tony Loulatzis

Anthony Loulatzis (“Tony”) was the third witness called on behalf of the plaintiff. He stated that after his marriage in 1986, he and Tracy lived in Chadstone. Their first child, James, was born in 1989. At that time he had no recollection of Irene being involved with Con. His mother did not speak of Irene at that time. During that period Stella was living at the Green Street property, but Con Lollis had already moved to Rosebud. In the following years Stella lived at Rosebud, but spent a lot of time at Green Street.

Tony stated that when his sister Christina returned to Australia from the United States of America in early 1991, she had an argument with Con at a family dinner. Christina accused Con of trying to take over the family home. By that time Con had already carried out some works to the house. On the following day, Con visited Tony and his wife Tracy (“Tracy”) at their home in Chadstone, and reassured them that he was not trying to take over the house at Green Street, but that he was carrying out the work there for his father’s memory.

Tony was able to recall some work which was carried out to the front fence. Con coordinated the construction of the fence. At the same time Con and Stella dug out an area under the house, and some concrete was poured there and RSJ beams were put in. The area was developed for storage under the house.

In early 1993, Tony and Tracy moved into the Green Street house with their young son, while they were building a new property at Warranwood. While they were living there, they had a number of arguments with Con. At that time Irene was not living at the house. In his evidence, Tony stated that at that time it was difficult to gauge the extent of the relationship between Con and Irene, because Con made a number of negative and disparaging remarks about Irene. At that time, Irene would quite often call in to the house. At that stage Con did not speak about having plans for the future with Irene. Stella would say that she could not see why Irene was staying at the house, as she had her own home.

Tony confirmed that at the end of 1994, while Lollis was in jail, Stella lived at Green Street, but returned to Rosebud when Lollis was released from prison in March 1995. Tony and his wife would often take Stella to the prison at Morwell to visit Lollis.

At that stage Stella was still paying the bills in respect of the house at Green Street. She complained to Tony that should she not be paying the bills for Con to be living at the Green Street property. She first made that complaint to Tony in about 1995. She said that, if Con was not paying rent, and was not prepared to move out of the house, she should not be paying the bills. At about the same time Stella told Tony that she had asked Con to either pay rent or move out of the property. She made that remark to Tony on a number of occasions. Stella was upset, because she had asked Con to leave the property or pay rent, and Con would not comply. At that time, Stella had a lot of Christina’s furniture, which she had purchased, at Green Street. Tony stated that he could not recall seeing Irene at the Green Street property at the time that Con Lollis was in jail.

Tony stated that, in the ensuing years, between 1995 and 2000, he did not have a great deal to do with his brother Con. However, from time to time, he spoke to Con on the telephone, and asked Con to leave the property or to pay rent. Tony raised the matter with Con because it was making his mother very angry at the time. Those discussions ended in an argument between the two brothers. Generally, Con stated that he needed time to move out, and in particular that he needed time to relocate his family and his business. In cross-examination, Tony acknowledged that he did not recall any occasion when Con, Stella and he were all present and at which Stella asked Con to either get out of the property or pay rent.

During that period Stella was becoming upset that a number of works were being carried out by Con to the property without her knowledge. Those works included the external rendering of the brickwork, and the removal and replacement of windows at the front of the house. Stella was very upset, because she did not consider that there was any reason for the windows to be replaced, and because Con had taken the windows out without her knowledge.

Tony attended the Australian Football League Grand Final in 2001 with Con, Con’s son Pantelis, and Tony’s son James. When they returned to the Green Street property after the game, Con showed Tony some plans of a proposed extension at the Green Street property. Tony did not say anything to Con at that stage, because he did not want to have an argument with Con in front of his own son. However, a few days later, he telephoned Con and asked him not to do any work as the house was not his. Con responded that everyone had left the house, and that he had been left to look after things. The conversation was unpleasant and degenerated into an argument.

Tony stated that when his sister Christina brought proceedings against Stella, both he and Con helped her to defend them. They each paid some of the legal costs to the solicitor who was engaged to act on behalf of the plaintiff, Mr Barry Kenna.

Tony further stated that in about 1995, Stella told him that Irene had moved into the Green Street property. At that time Stella used disparaging language when speaking about Irene. She was not happy that Con and Irene were both living in the house at Green Street, and were not prepared to pay rent. In cross-examination, Tony denied that the source of irritation to Stella was the fact that Irene and Con were not married. In re-examination, Tony pointed out that he had lived with his wife for a period of one year before they were married, and his mother was not unhappy about that. In cross-examination, he stated that the source of his mother’s anger at the time was the fact that Irene had moved into the house with Con, and that neither of them were paying rent, despite being asked to pay rent or move out.

Tony also stated that, over the years, Stella expressed reluctance to force Con out of the house, because she was concerned, from time to time, about his state of health, and she was also concerned that it might be detrimental to his business and that he might need to get back on his feet. In cross-examination, Tony recalled that, at some stage in the mid 1990s, Con had difficulties with a black ban which had been imposed on his business by the trade unions. Tony stated that at no time had Con mentioned to him that Stella had made a promise to him that if he was to settle down with Irene and have children with her, and renovate the house, she would give him the house at Green Street.

(iv) Peter Takakis

The next witness called on behalf of the plaintiff was her nephew, Panagiotis (Peter) Takakis. Mr Takakis is two years older than Con. His mother died when he was young, and, from an early age, he was close to the Loulatzis family. Con was his best man when he married in 2001. Between 1995 and 2005, Con and Peter Takakis went to the football together six or seven times per year. Mr Takakis stated that he has been estranged from Con over the last two years, and he has not spoken to Con during that period.

Mr Takakis stated, that from about 1990 onwards, Con and Irene went around together and visited people together as if they were a couple. Con did not tell Mr Takakis that he was thinking of getting married. Mr Takakis never heard Stella encourage Con to settle down and marry Irene. In about 1995, Irene began living with Con at the Camberwell property. Stella told Peter Takakis, on a number of occasions, that she was not happy that Irene was living there. The relationship between Stella and Irene was not good, and Stella did not feel comfortable in going to her own house while Irene was there. She told Mr Takakis that she had tried to talk to Con to persuade him to leave the house. That conversation went on over a number of years. During that period, Mr Takakis perceived that his aunt was becoming unhappy and anxious about the matter. Accordingly, on a number of occasions, he took it upon himself to raise the subject with Con. Those conversations occurred en route to the football, and on other occasions. He would say to Con words to the effect of “What’s happening, have you sorted the matter out?”, to which Con replied “No, Mum still wants to get me out”. Mr Takakis encouraged Con to resolve the matter with his mother.

During that period Stella mentioned to Mr Takakis, on a couple of occasions, that she thought she would take legal action about the matter. On one occasion, Mr Takakis stated that he was present when Con and Stella were also present. During that conversation Con said “I should not pay rent because I have done renovations here and that would cover it”, to which the plaintiff responded “Well that is not right”. In cross-examination Mr Takakis stated that that conversation occurred about 10 years ago. Mr Takakis could not recall who had brought up the topic of rent. However, that topic was discussed in the context of the renovations carried out by Con. Stella said that Con had not paid rent, and Con replied that he had renovated the property and should not have to pay rent. In cross-examination Mr Takakis stated that he was “pretty sure” that that conversation occurred, but he was not 100 percent sure, and he could be wrong. In re-examination he reconfirmed his version of the conversation, namely that during a discussion about rent, Con responded by saying that he had renovated the property at his own expense.

Mr Takakis also stated that on one occasion, after he had visited Con at his Point Leo house, and while they were driving “back” from Point Leo, the question of Con paying rent for his residence at the Green Street property arose. Mr Takakis asked Con what was the situation with the renovations, and whether he had talked to Stella about the rent. Con replied “Mum won’t listen to me about that”. Mr Takakis told Con that he should try to resolve the matter with his mother. In cross-examination, Mr Takakis was unsure whether the conversation occurred while he and Con were en route to shops from the Point Leo property, or whether they were travelling back to Melbourne. He stated that the conversation occurred in about 2002 or 2003. He stated that the last time he saw Con was when Con’s daughter Violetta was born. When Mr Kendall QC, who appeared with Mr Mattin for the defendants, pointed out that Violetta is now five years of age, and thus the conversation could have occurred no later than 2002, Mr Takakis stated that that did not make his evidence about the conversation in the car false, but that he might have been wrong about the date on which it occurred.

Mr Takakis stated that when he visited the Green Street property, he could see there had been some renovations carried out to the property. He thought that some renovations in the back room had been carried out at the back of the house during the last 15 years before 1997. In fact, it seems that those renovations were carried out much earlier, in the early 1980s, by Stella. During the 1990s, Stella told Mr Takakis that Con was renovating the Green Street property without her permission and knowledge, that she did not agree with what Con was doing, and that she was concerned about it. She made that remark to Mr Takakis on three or four occasions. She complained that some windows had been taken out of the Green Street property without her permission and that one of them had been taken to the Point Leo property. Stella was not happy about Con doing renovations at the house in her absence and without consulting her. Mr Takakis stated that he never heard Con or Stella mention to him any agreement, by which Stella would give Con the house, if Con was to settle down with Irene, have children and renovate the house.

(v) Tracy Loulatzis

The last witness called on behalf of the plaintiff was her daughter-in-law, Tracy Loulatzis (“Tracy”). Tracy stated that in April 1991, when their son was 18 months of age, she went back to work. Stella would come and look after their son, James. Tony would then drive her back to Green Street, where (Tracy understood) she was then living.

In 1991 Tracy attended a dinner at Green Street, when Christina had returned from overseas. She said that Christina, Tony, Stella and Con were present. She was not sure if Lollis was there. Her memory was that Irene was present, but she could not be certain. An argument erupted during the meal between Christina and Con, in which Christina accused Con of taking over the house. Tony and Tracy left. On the next day Con visited them at their house and they spoke in the kitchen. Con said that Tony and Tracy should not believe what Christina was saying, that what he (Con) was doing at the house was for his father’s memory.

At that time Tracy considered that Con and Irene were friends. In early 1993, Tony and Tracy moved into the house at Green Street, while their own house was being built at Warranwood. They left in May or June, because their relations with Con had broken down. During that time Irene was not living there, but she visited the house, and sometimes she stayed overnight. Tracy’s perception was that Con and Irene were, by then, a couple. Stella would come to the house to visit it. Tracy does not recall any remark made by Stella about Irene at that time.

When Tony and Tracy left the property in 1993, they were not on good terms with Con. Tracy had very little contact with Con in the ensuing years. She could not recall visiting the house at Green Street after 1993.

Tracy stated that, in the early 1990s, she did not hear Stella express any desire that Con should settle down with Irene and have children. Subsequently Stella, on occasions, used derogatory words when talking about Irene.

Tracy stated that, from late 1995, Stella used to speak about Con, and say that it was time that Con moved out of Green Street, and that she wanted him to move out. From time to time Tracy would ask Stella what was happening in that respect, and at different times Stella would give her different answers. She would say that there were problems with Con’s business, that he was not well, or that Irene was pregnant, and that that was why they had not moved out. She did not tell Tracy why she wanted Con to move out of the house, just that it was time to move on. In one conversation Stella said to Tracy “Well, if he’s not going to move out, then he can pay me rent”. In cross-examination, Tracy agreed that she had never heard Stella, in her presence, say to Con that he should get out of the house at Green Street, or that he should pay rent.

During that period, Stella made mention of work being carried on by Con at the house at Green Street. Stella was unhappy about the windows having been taken out of the front of the house, because she had spent good money on them having put them in there, and she did not see why they should be changed. She told Tracy that she had had no knowledge that the work was going to be done, and that she was very upset. Stella said “It’s my house, why are they changing the windows?”

In Christmas 2001, Tony and Tracy attended a Christmas celebration at Stella’s house at Mt Martha. Con arrived on his motor bike. Tony went to another part of the house, because he did not want to speak to Con. Tracy spoke briefly to him, and apart from greeting him, avoided speaking to him. Tracy saw that Con had some papers at the back of his motor bike, but she did not see what they were. A short time later, either still at Christmas time or in early January 2002, Stella told Tracy that she was very upset, because Con had plans to have the builders come in the next day, and she did not want him to start work on the house. Stella said that Con had told her that the builders were coming, and she asked Tracy to telephone Con. She said “Con won’t listen to me, he might listen to you, will you please call him?” Tracy did not want to telephone Con, but she made the call at the insistence of the plaintiff. She rang Con and said “I believe you have got builders coming in tomorrow, your Mum does not want you to do any work on the house. You will be wasting your money if you spend any work on the house with the builders”. Con responded that it was none of Tracy’s business, and she should stay out of it. Tracy replied “Don’t tell me this has anything to do with your father’s memory, because we both know it hasn’t”. Con became abusive, and the telephone call ended. In cross-examination, Tracy denied the suggestion that, in their conversation, Con had said to Tracy, in relation to the plaintiff “She hasn’t told you, has she?”.

Layout of Green Street premises

The evidence of Con Loulatzis involved a detailed description of renovation work which he carried out to the premises at Green Street between 1990 and 2003. Before summarising his evidence, it is useful first to give a brief description of the layout of the house. During the trial there was disagreement as to the correct names which should be given to each of the rooms. The first defendant appended to his counterclaim a document headed “Annexure A: Particulars of Repairs and Improvements”. For the purposes of convenience, I shall adopt the nomenclature used in that document in referring to each of the rooms in the house.

The property runs in a northern direction from Green Street. There are five rooms on the eastern side of the house. Proceeding from south to north, those rooms are referred to as the loungeroom, the bathroom, the second bedroom, the utility room, (previously known as Christina’s bedroom), the shower in the utility room, and bedroom No. 1 (previously known as Christina’s workroom). Bedroom No. 1, and the room immediately above it, were added to the premises in the early 1980s. The upstairs room was used by the youngest son Nicholas as his bedroom until approximately 1989. It is now used by Con as his study, and will be referred to as “the study”.

On the western side of the property, proceeding from south to north, are the master bedroom, and the kitchen/dining room. To the west of the dining room are the laundry and a second toilet. The front rooms to the house are divided by the front entrance hallway, which runs alongside the master bedroom on its western side, and the loungeroom and bathroom on its eastern side. It leads to the kitchen.

Evidence for defendants
(i) The first defendant

Con stated that he has always lived at the premises at Green Street. After the plaintiff’s marriage to Con Lollis in 1983, she lived alternately at Rosebud and Green Street until 1989. By the end of 1989, Stella and Lollis had moved in together at Rosebud, and Con visited them there in 1990 on his motorbike. After 1989, Lollis would regularly drop his mother at Green Street, where she would spend the day. She would clean the house, wash and iron his clothes. She would cook the evening meal for herself and Lollis, and leave part of that food for Con. Lollis would pick her up in the afternoon from the driveway, and they would return to Rosebud. After Stella moved out, she removed most of her furniture in 1990, but she left a cupboard, a set of drawers and her bed in the master bedroom until 1997. She also left furniture belonging to Christine at the Green Street property, which she removed to the Mt Martha house in 1997. In the period up to October 1995, Stella used to visit the Green Street property two to three times per week. Between October 1995 and August 2003, her visits decreased. She only visited the premises on four or five occasions in 1996, and in 1997 on only ten to twelve occasions. Between 1998 and 2001, she visited the house once per month. In 2002, she visited the house on a few more occasions, because Con was assisting her with the case brought against her by Christina.

In 1990, Con commenced to carry out work to replace the front fence, which was also a retaining wall, and to dig out the cellar. The cellar, which is an area under the front verandah, had initially been dug out by Tony and Stella during the 1980s. Con decided to expand it. He stated that he did some of the work on the front fence, and bricklayers were engaged for it. Lollis put in an agricultural drain under the front fence, and also changed the sewer line. In the meantime, Con commenced to dig out the cellar area under the house. For that purpose the foundations needed to be underpinned, so that more concrete had to be poured under the existing foundations. Con carried out that work under the guidance of Lollis. When the area had been dug out, it was painted and shelving was installed. Con has used it as a storage and work area.

Con commenced an arts degree at Latrobe University in 1983. He completed his undergraduate degree in 1985, and completed his Honours year in 1986. While he was at university he met Irene. At that stage he and Irene were friends. They remained friends for a period of five years. In 1988 Con went overseas to India, and Irene went to Europe. They had arranged to meet together in Greece. When they were in Greece, they stayed together in Con Lollis’ brother’s place and also at Stella’s sister’s place. Con then returned to Australia in order to have his knee operation undertaken. When Irene returned to Australia, she visited Con at the Green Street property. They went on a trip together to Broken Hill in October 1989. Con and Irene decided to reacquaint themselves, and work out whether they would have a relationship.

Con stated that, while he was overseas in 1989, he spoke to his mother by telephone. Irene had visited Stella, in order to see if there was anything she wished Irene to take to Con when she met up with him. Stella was enthusiastic about Irene at that time and was always asking about her. She started to suggest that Con should settle down with Irene and get married to her.

After Con returned from Europe, Stella continued to encourage him in his relationship with Irene. One day in 1990, Con was working on some dwarf walls in the front garden. At that stage the front fence had nearly been completed. Stella came into the front garden and had a chat with him. She said, “Look, you know, Irene’s a very good girl, she’s pretty, she comes from a good family, and look, you know, if you get married and have children and you fix the house up you can have the house, the house is yours”. Con replied, “Great”. He said, “Thanks very much Mum”. In his evidence he said he felt as if his heart had been quickened. At that time, he stated, Irene and he were a couple, and had been a couple for some time. After the conversation, Lollis came and picked up the plaintiff and they went off to Rosebud. Con told Irene what his mother had said to him. He said, “Mum reckons if you and I get married and have a couple of kids and I fix up the house, I can have the house”. Irene responded by saying, “You have a lot of work to do” (referring to the work needed to fix up the house). At that time, Irene was staying off and on at the Green Street house on about two or three nights per week. She was then working shifts on the other side of town. Irene moved into the Green Street property to live permanently in 1995.

In his evidence Con stated that, at about the time of the conversation with his mother in 1990, and in the ensuing period, it was understood by Irene’s parents, and by Lollis and Stella, that Irene and he were going to get married. Irene’s parents discussed with Con about getting married to Irene. In addition, Irene’s parents, in the presence of Stella, discussed in which church the marriage would take place. Stella insisted that there should first be a ceremony of marriage in the Greek Orthodox Church, followed by a separate ceremony in the Catholic Church. At one stage Lollis did work for Irene’s parents at Rye during this period. Con said that Irene and he did not get married, because events overtook the importance of the need for a formal ceremony. He stated that those events were the arrest of, and criminal proceedings involving, Lollis and Stella.

Con stated that, after his discussion with Stella on the front lawn, he proceeded to completely renovate the house. Those works commenced in 1990. He continued working on the cellar, which involved a large amount of physical work digging out and extracting materials from underneath the house. He then commenced renovating some floors, skirting boards and architraves on the inside of the house. He also did some preliminary plaster work. The earlier work was done in the front part of the house, in the hallway and in the second bedroom. Stella, when visiting the premises, was regularly aware of the works which were being, and had been, undertaken by him to the house, and she did not express any disagreement with those works, or demur at the carrying out of those works.

In his evidence Con confirmed that he carried out the works, which are set out in substantial detail in Annexure A to the counterclaim. He described some of those works, room by room, in the order set out in Annexure A. In summarising the evidence by Con as to those works, it is more convenient if I endeavour to do so in the chronological order in which he carried them out.

Some of the earliest works seem to have been conducted to the hall entranceway, with the instalment of a skylight in 1991. Con carried out some renovation work to bedroom No. 2 in 1993 to 1994. Between 1994 and 1999, he renovated the loungeroom, and between 1992 and 1998 he renovated the master bedroom. In about 1994, he replaced the aluminium sliding door and balcony to the lounge room which had been previously installed by Stella, and replaced them with a bay window. At the same time he removed the aluminium framed window from the master bedroom, and replaced it with a new double-hung window. He explained that he considered the two aluminium framed windows to be ugly and impractical, and he considered that the windows which he installed were more in keeping with the period in which the house had originally been constructed. The work to the loungeroom included replacing the ceiling on a suspended metal grid and replacing the cornices. The plaster wall was replaced. An archway was installed to match the existing archway in the hallway. Window shutters were installed. The old Vulcan gas fireplace was removed, and replaced with a new firebox. In the master bedroom, a built-in robe was installed, cedar shutters were fitted to the window, the architraves and skirting boards were stripped, sanded and re‑varnished, and extensive plaster works were carried out. The carpet was removed and the floorboards were re‑sanded and polished. Insulation was installed in the ceiling of both the loungeroom and the master bedroom.

In 1994 to 1995, Con removed the tiles from the floor of the kitchen and dining room with the help of his mother. The tiles which had previously been used in those areas were in fact wall tiles, and they had delaminated. He carried out further works to the kitchen‑dining room area in 1997 to 1998. He replaced the archway between the kitchen and loungeroom because it was out of balance. He replaced the double sink in the 1990s, because the existing one leaked. In addition, in 1997 he renovated and redesigned the laundry and toilet. He removed the cupboard in the toilet area, and moved the wall between the toilet and laundry, so as to make the toilet smaller and the laundry house larger. He installed a new double trough to replace the single trough in the laundry. He fitted a new cedar window, replaced all plaster walls and ceilings, and installed new laundry cupboards, new tiles and architraves and skirting boards. In the toilet he installed a new toilet, hand basin, towel rail and exhaust fan.

In 2000, Con straightened and reinforced the original timber frame to bedroom No. 1 and to the room immediately above it (the study). The plaster had to be removed and the timber re‑blocked. Between 2000 and 2003 he substantially renovated both of those rooms. He replaced the flat roof above the study with a pitched roof in 2003. In the meantime, in 2000 he had renovated the utility room (previously Christina’s bedroom) and the shower which was next to the room.

In 2002 to 2003 Con extensively renovated the bathroom. That work included removing all existing plaster, re‑rendering the walls and installing new tiles, removing and replacing shower glass, installing a toilet, removing the sub‑floor and installing new flooring, installing a new skylight, installing an inbuilt cabinet with internal electrical fittings, and other works to the fittings. At about the same time, he removed all of the aluminium framed windows in the house and replaced them. In 2002 he carried out further renovations to bedroom No. 2, which then became the bedroom for his second child, Violetta, who was born in November of that year. In 2003, he extended the hall entranceway some 600mm or 900mm to the south with a consequent change of the position of the front door.

Con also described works which he carried out to the exterior of the premises. In 2003 he replaced the rear fence. At about the same time he had to have the large pine tree at the rear of the property removed, because its roots were growing under the slab of the study, and the house was beginning to move. He installed two water taps in the back yard. In 1995 he rendered the front of the house. He denied that he did so in 1991. He said that when the plaintiff returned from her overseas trip to the United States, she said, “Gee, it looks just like all the houses in America.” Subsequently, in 2002 to 2003, he put a new render over the initial coat. Con also described a number of works carried out to the outside front of the house. They were carried out over the entire period from 1991 to 2003. At the rear, the external staircase was removed because the stairs had become rotten. In 1996, the defendant replaced the staircase, placing it alongside the house, and constructed it of blue jarrah timber. The roof tiles were fixed, and roof tile ridges were re‑pointed, in 1998 to 1999. In 2002 to 2003, he replaced all the external aluminium frame windows except for the rear sliding door. As I stated, in 2003, the first defendant constructed a pitched roof over the study, in order to replace the flat roof.

Con stated that Stella visited the house throughout that period. She did not complain about the works. On occasions she complimented him in respect of them. He said that at no time before the issue of the writ in this case in October 2003 did Stella make any demand of him, or request of him, that he pay rent. He said that in October 1995 he received the Notice to Determine Tenancy in the letterbox. It was undated and unsigned. He repudiated Stella’s evidence that she visited him and spoke to him on the verandah of the house relating to that notice. He said that that did not occur, and described the plaintiff’s evidence as to that meeting as a “blatant lie”. Con said that, after he received the notice, he telephoned his mother in Rosebud. He said to her, “What is this all about?” to which she replied, “What’s what about?” Con said, “This letter that I’ve got in the letterbox” and described it to her. Stella stated that she did not know what Con was talking about, and she denied any knowledge of the letter or of its existence or its origin. Con said, “Well, as you know we had a deal, what does this mean?”, to which Stella responded, “Yes, I know, it’s okay, don’t worry about it.” Con stated that he suspected that the notice had come from one of his brothers or his sister. Almost immediately after his conversation with his mother he threw the notice in the rubbish tin.

Con denied that, at any time during the period, his brother Tony made any objection to him living in the house. He said that Tony never told him that he should pay rent. Similarly, he denied the evidence of Mr Takakis that he had raised the issue with him. He also denied the conversation which Mr Takakis stated occurred in the motor vehicle coming back from Point Leo.

Con stated that, in that period, his business, Icon Solid Plastering Services Pty Ltd (“Icon Plastering”), was faring well financially. By 1995 he was able to maintain a regular income. Since then, it has been a successful business and he has a number of employees. He denied that the financial state of the business, or his health, was such during the period from 1995 to 2003 that he could not have moved out of the Green Street property had he been required to do so. He denied that he ever used either the financial state of Icon Plastering, or his own health, as a pretext or reason for continuing to reside in the Green Street property.

In 2001, Con engaged an architect to prepare concept drawings for proposed extensions, which he wished to carry out to the rear half of the house. Those drawings are Exhibit 8. In about late February, or early March 2001, he visited Stella on his motorbike in Mt Martha. He took the plans with him and showed them to her. Stella’s only concern was that the planned extension would penetrate too far into the back yard. She did not tell Con that he should not, or may not, carry out the works.

Following that visit, Stella did not speak further to Con about the plans, which Con had shown her. On Grand Final day 2001, Con went to the football with his brother Tony, and their sons Pantelis and James. When Tony and James arrived at the Green Street house in the morning, before going to the football, Con showed Tony the work which he had carried out around the Green Street property. Tony did not raise any objection to that work. Con then showed Tony the plans while they were in the upstairs study. He described the work which was to be carried out. Tony did not make any objection to the plans.

Subsequently, between September 2001 and the end of 2001, Con had a discussion with Stella about the plans. On 24 October 2001, the architect had requested a copy of the certificate of title. Con telephoned Stella and asked her for a copy of the title, as he knew that she had the title. In response, Stella visited Con at Green Street and handed the title to him. He gave a detailed description of the document produced by his mother, in terms which would describe a duplicate certificate of title. He photocopied the title, and gave it to the architect. Subsequently the architect returned the title to Con and he then returned it to Stella, but retained the photocopy for himself. When Stella gave Con the title, he showed her the plans for the proposed extension. Stella did not tell Con he should not proceed with the plans. She asked Con about the cost of the proposed work, and she also expressed concern that the work might intrude too much into the garden. Some time after Grand Final day 2001, Tracy Loulatzis telephoned Con at Green Street. She said, “Your Mum says there’s builders starting at your place tomorrow and she does not want you to start any building work.” Con said, “She hasn’t told you, has she?” Tracy replied, “What are you talking about?” She added, “You are not doing this in your father’s memory, that’s a lot of rubbish.” Con denied that he was abusive to Tracy during that conversation.

Con stated that his mother had never told him that he had been cut out of her estate by a will that was made on 2 November 1995. She never discussed with him how she was intending to divide her estate after her death, or who would be her executor.

In late 2001 Stella was sued by her daughter Christina. Initially in his evidence Con did not recall seeing, at that time, or any time thereafter, the initial letter of demand made by Christina, dated 14 December 2001. Subsequently, in his evidence, he recalled seeing that letter at about the time. Con arranged for Stella to see his solicitor, Barry Kenna. During 2002 Con paid two bills of Mr Kenna, one for $5,000 plus GST, and the second for $1,500 plus GST. On 24 October 2002, Con and Stella attended a mediation of Christina’s claim. Before then he had read a copy of an affidavit sworn by the witness to his father’s will, Mrs Easton. Mrs Easton stated that she did not sign the will, as witness, in the presence of the testator. While Stella and Con were at the mediation, Con asked Stella what it was about. He expressed concerns as to the implications of the affidavit. Stella responded that a social worker had filled out the will in the hospital, had given it to her, and asked her to get someone else to sign it. Subsequent to the mediation, Mr Kenna, on behalf of Stella, received advice from a barrister. Mr Kenna told Con the substance of the advice, and he relayed it to Stella. Con was not happy with the fact that there was a reasonable possibility that his father’s will might be overturned. He was concerned with the possible consequences, should Christina win her challenge to the validity of the grant of probate in respect of the will. He warned Stella that, if he found out that there was merit in the affidavit sworn by Mrs Easton, there would be a lot of trouble.

Con also stated that, before the commencement of the divorce proceedings between Stella and Lollis, he had a conversation with her in the driveway of Green Street, Burwood. She said to him, “I’m going to fix that sister of yours first, I’m going to fix Con Lollis, and then I’m coming after you.” In saying that she pointed directly at Con.

Con stated that, from about 1991 onwards, he paid the majority of the gas, electricity and telephone bills, but his mother might have paid some of them. From 1995, he paid all of the rates in respect of the Green Street property.

Con stated that if his mother had not, in 1990, assured him that he would own the Green Street property, he would have purchased his own house in the same area. At that time similar houses in that area would have cost between $140,000 and $180,000. He would have been able to service a mortgage at that time, which he would have needed to purchase the property. He would then have proceeded to carry out renovations to the house. He further said that if he now has to vacate Green Street, he could not afford to purchase another house in the same area. He purchased the house at Point Leo for $150,000 in Irene’s name. He has only carried out minor renovation works to that property. He has never intended to live there (except after his retirement), or to move his business there. He denied telling Stella that he would be moving his home and business to Point Leo.

(ii) The second defendant

The second named defendant, Irene Petruccelli (“Irene”), also gave evidence. Irene said that she met Con at university in the 1980s. At that time they were friends. During that period she met the plaintiff. In the period 1984 to 1987, Irene did not have frequent contact with Con as she was in a relationship with someone else. They had telephone contact in 1988. In that year Con went to India, and Irene was shortly thereafter due to travel to Europe. They planned to meet together in Greece. Before Irene departed for Europe she visited Stella, to see if Stella wished her to take anything over to Con. They had a casual conversation.

As planned, Irene met Con in Greece. They travelled to Turkey, and it was there that their relationship became intimate. During that time Con was speaking on the telephone to Stella. Con and Irene then went to Athens to stay at Stella’s sister’s house. Irene remained in Europe while Con returned to Australia. When Irene returned, Con had had his knee operation. She visited him at home. Later in 1989 Irene and Con drove to Broken Hill. Irene said that the purpose of the trip was to reaffirm their commitment to each other.

In 1990, Stella was living in Rosebud with Con Lollis, but was visiting Green Street during the day. Irene stayed overnight at Green Street quite frequently. She was then working shift work. By 1990 Irene had met Tony Loulatzis, but not frequently. Around that time she attended functions of the Loulatzis family. Stella was cordial and pleasant to her at those functions.

During 1990, Con told Irene that his mother had told him that “if you settle down, get married have kids, and fix the house, the house is yours”. By that time, Irene and Con were definitely a committed couple to each other. Irene considered that the conversation which Con had with his mother was “very grounding”, amounting to an affirmation by the plaintiff that her son had reached a mature state, and that Irene and Con were serious about each other.

In 1991, Christina Loulatzis visited Melbourne. Irene did not attend the family dinner. However, within a week of that family gathering, Irene visited Green Street. She was present when Christina and Stella had a disagreement. When Irene attempted to pacify them, they turned on her, and yelled at her. Irene retreated to Con’s bedroom, to which Con had already withdrawn.

In 1993, when Tony and Tracy stayed at Green Street, Irene also stayed there between shifts. Irene stated she did not witness any disputes between the brothers. However, she considered that Tracy’s relationship with Con was not easy, as Tracy felt that her “space” was impinged on.

Irene further stated that, by the time Con Lollis had been sentenced to jail in late 1994, she had been staying at the Green Street property on two or three nights a week. She was not present when there was an incident between Con and Stella on Christmas night. After Lollis was released from jail, Stella and he went overseas. While they were overseas, Irene moved into Green Street. When Stella returned from Greece in September 1995, the relationship between her and Irene remained pleasant. However, on one occasion, when Stella visited Green Street, her mood to Irene changed while the pair were talking to each other. Stella raised her voice at Irene and swore at her. When Irene started to leave the premises, Stella pushed her physically against the front landing. Irene swore back at Stella, and then left the property. Irene telephoned Con Lollis to find out if there was something wrong. Lollis said he did not wish to be involved.

Irene stated that, notwithstanding that incident, Stella continued to visit the house between 1995 and 1997. She said that at no stage before Pantelis’s birth in 1997 did Stella ever say to her that she should either pay rent or leave the house. Irene said that if she had known that the house belonged to Stella, and not to Con, she would not have established her family there, and that she and Con would have purchased their own property elsewhere.

After the incident which I have just described, Con told Irene that he had received a notice in the letterbox. Irene did not see that notice, nor did she receive a notice addressed to herself. Irene denied the evidence given by Stella that she came and talked to Irene and Con on the verandah about the notice. Irene stated that she had no discussion with Stella about the notice. The only legal notice which she has received from Stella was when Con was served with the writ in October 2003. Further, Stella never told her that she had cut Con out of her will. Irene stated that, until she and Con received the letter of demand from CE Lawyers dated 8 August 2003, Stella had never asked her to pay rent or to get out of the house. She never heard Con say to Stella that he would leave the house.

After Pantelis was born in April 1997, Stella came to see him. She continued to visit her grandson, and bring him presents, on milestone occasions such as Easter, Christmas and birthdays. After Violetta was born, Stella visited Irene in hospital. In addition, Irene has taken the children to see Stella at her home in Mt Martha, both with and without Con.

In 1996 the Point Leo property was purchased in Irene’s name. Irene stated that she and Con have never had any intention of living permanently at Point Leo. She described the renovations and changes which she and Con had made to Point Leo, which were not particularly extensive. In 1998 the plaintiff’s furniture was taken from Green Street to Mt Martha. Con and Irene moved into the master bedroom in the same year.

Irene also described the renovation work which Con carried out to the Green Street property. She said that in 1990, the house looked as if some years had passed since any maintenance had been done on it. At that stage the front fence had been reconstructed, and the work on the cellar was under way. Between 1990 and 1995, Con continued to work on the cellar, and the driveway was widened. Inside the premises the carpet was removed from the hallway, the second bedroom and the master bedroom. The skirting boards and architraves to the hallway were removed and the paint stripped back, the hallway wallpaper was removed, and the old plaster was removed and replaced. In 1995 Con rendered the outside of the house. At that time Con Lollis was present.

Irene stated that, before Pantelis’ birth, Stella was present when the works were being performed. Stella did not complain to Con about the work being done, or ask why it was done. Between 1995 and 2001 the exterior of the house was done and the back rooms worked on. The laundry toilet area was gutted, restructured and renovated. Stella did not complain about any of those works. In 2001, Con had sketches and plans prepared for an extension to the house. Irene described how Stella visited them in late 2001 in relation to those works. Irene knew that Stella came to bring the certificate of title with her. Stella went upstairs with Con and spent some time with him.

In the next year, 2002, the bathroom, which required repair, was gutted and renovated. Stella did not make any complaint about that work. Irene said that before the issue of these proceedings, Stella never complained to her or, in her presence, to Con, about the work. During the period of renovations after 2001, Stella would visit the house about once every three weeks. In cross-examination, Irene stated that, when the tiles to the kitchen and dining room were removed, Stella helped, by removing the debris which was placed in the buckets. Stella did not say that that work should not be undertaken.

(iii) John Browning

The other substantial witness called on behalf of the defendants was Mr John Browning, a professional building consultant. Mr Browning gave evidence as to the value of the renovation works which the first defendant has claimed to have carried out at the premises at 25 Green Street. For that purpose, Mr Browning inspected the property on 2 March 2006. For the purposes of his inspection, and calculating a value to be attributed to the work carried out by Con, Mr Browning made reference to Annexure A to the counterclaim. He expressed the view, by way of general impression, that the works carried out by Con were of a very high standard, finish and workmanship. The materials, which had been used by the first defendant, were quality materials. For example, Con had used shielded wiring for the top end hi-fi system, he had installed extensive sound insulation to the office and bedroom beneath, and Mr Browning observed that there was meticulous detailing of the finishes in the renovation work. Mr Browning based the cost to be attributed to the work on rates applicable as at March 2006. Since the work had been carried out before that date, he applied the appropriate indices prescribed by Rawlinson’s Construction Guide. On that basis, Mr Browning estimated that the invoice cost of the works carried out by Con amounted to $555,248. The estimated tender price of the works, applying a 25 percent builder’s margin, was $694,059.99. Mr Browning stated that those costings were based on the work being carried out as part of the one project. He observed that, since the work had been carried out on a piecemeal basis over the years, it would have cost more, rather than less, since Mr Loulatzis would not have been able to utilise economies of scale and economies of operation. Mr Browning produced an extensive series of photographs taken by him to illustrate the work observed and costed by him.

Assessment of witnesses

The assessment of the evidence of the witnesses to whom I have just referred is not straightforward. The dispute in this case is the result of a very bitter, and so far irreparable, family dispute. A number of the principal witnesses, and in particular Stella, Con Lollis and Con, each manifested strong emotional responses to the dispute in the course of their evidence and in cross-examination. Understandably, each of the witnesses were, to some extent at least, affected by which “side” that witness had taken in the family dispute, and by that particular witness’s feelings toward the protagonist on the other side.

This phenomenon was particularly acute in the case of Stella and Con. Over the years they have had a complex and often tempestuous relationship. Their dealings for very many years were characterised by outbursts of bad temper and anger towards each other. On his own admission Con has a fiery temperament, and in the past he has often had difficulty controlling his temper when relating to his mother and siblings. It is also clear on the evidence that Stella is a strong woman of feisty disposition. In some respects, the temperament and character of the plaintiff and her eldest son are quite similar. Thus they often came into conflict in the past.

Yet, at the same time, the relationship between Stella and Con, at least until the final rift in 2002, was particularly close. Con was Stella’s eldest son, and she relied on him, from an early age, after her first husband’s premature death. That pattern of reliance continued long after Con had reached adulthood. At times of family crises, it was to Con that Stella first turned for support and help. In turn Con responded, on those occasions, as a loyal and supportive son. Thus, in late 1994, Stella only told Con, and none of her other children, that she and Con Lollis faced criminal charges. Only Con attended the Court hearing with his mother, at which Lollis was sentenced to imprisonment. Tony and Tracy learnt of that proceeding when they read the newspaper the next day. After Lollis’s imprisonment, it was Con who assisted his mother to run the nursing home. Again, in 2002, when Christina sued Stella, it was to Con that she primarily turned for help. Con arranged for Stella to see his own solicitor, Mr Kenna. Both Con and Tony assisted Stella in those proceedings, and each of them paid some of her bills. However, it was Con, not Tony, who took the lead role in assisting his mother in those proceedings. Thus it was Con who attended the mediation of those proceedings in October 2002.

That background to the relationship between Stella and Con is important to understanding, and making factual findings in respect of, the factual issues in the case. In 2002, shortly after the mediation of the proceedings brought by Christina, the relationship between Con and Stella suffered a rift, from which it has not, so far, recovered. They are clearly very bitter towards each other. The recollection, and evidence, of each of those principal witnesses, about the past events which are relevant to this case, has been coloured and affected by the tragic bitter dispute which lies between them. Each of them has viewed past events through a lens blurred by their emotional response to their falling out, and their natural desire to win this case. As I shall set out below, I formed the conclusion that Con Lollis and Irene were each particularly partisan in supporting, respectively, the case of the plaintiff and the first defendant. To some extent Mr Takakis was also quite partisan, out of a loyalty to his aunt. The other two major witnesses, Tony and Tracy Loulatzis were, in my view, significantly more objective. Nonetheless I did gain the impression that each, understandably, was affected, albeit to a limited extent, in their evidence by their feelings of affection and loyalty to Stella. In that context it has not been easy to make findings of fact. In order to do so, I have carefully read, and at the conclusion of the trial substantially re-read, the transcript, and subjected the evidence of each witness to careful scrutiny and assessment. Notwithstanding, and because of the absence of any truly independent witness in the case, I have had to take into account the fact that each of the witnesses, and in particular the plaintiff, Lollis and the two defendants, are substantially affected by their emotional responses to each other and to the case.

Subject to the two issues to which I have referred above, the law relating to the assessment of damages for trespass is well settled. Damages awarded for trespass to land are sometimes described as “mesne” profits[27]. The usual measure of such damages is constituted by the value of the market rent for the premises which the trespasser should have paid during the period of the trespasser’s occupation of the premises. In order to prove an entitlement to such damages, it is not necessary for the plaintiff to establish that the property has been damaged, or that the plaintiff would have been able, or indeed willing, to lease the premises during the period of the trespass.
[27]Wilson v Kelly [1957] VR 147, 152.

Those principles were settled by the Court of Appeal in Whitwham v Westminster Brymbo Cole & Coke Company[28]. In that case, the defendants trespassed on the plaintiff’s land by tipping soil on to it from their colliery. It was submitted that, because the plaintiff had failed to prove any loss of user of the property during the trespass, damages should not be awarded on the basis of the rental value of the property. The Court of Appeal, upholding the decision of Chitty J at first instance[29], rejected that proposition. The Court applied the principles established by the “way-leave” cases, to the effect that, if one person without the leave of another uses the other’s land for his or her own purposes, then the trespasser ought to pay for that user. That principle has been adopted and applied for more than one century in a number of cases. In Swordheath Properties Limited v Tabet & Ors,[30] Megaw LJ held that, in order to be entitled to such damages, the plaintiff is not required to prove that he or she would have or could have leased the property to someone else during the period of the trespass. His Lordship stated:

“It appears to me to be clear, both as a matter of principle and of authority, that in a case of this sort the plaintiff, when he has established that the defendant has remained on as a trespasser in residential property, is entitled, without bringing evidence that he could or would have let the property to someone else in the absence of the trespassing defendant, to have as damages for the trespass the value of the property as it would fairly be calculated; and in the absence of anything special in the particular case it would be the ordinary letting value of the property that would determine the amount of damages.”[31]

[28][1896] 2 Ch 538.

[29][1896] 1 Ch 894.

[30][1979] 1 WLR 285, 288.

[31]See also Ministry of Defence v Ashman (1993) 66 P& CR 135; Inverugie Investments Ltd v Hackett [1995] 1 WLR 713, 717-8; Lamru Pty Ltd v Kation Pty Ltd & Ors (1998) 44 NSWLR 432, 439; Yakamia Dairy Pty Ltd v Wood [1976] WAR 57.

Thus, notwithstanding that the plaintiff did not adduce any evidence that she would, or could, have leased the premises at Green Street during the period of the trespass by the defendants, she is entitled, prima facie, to damages for the trespass calculated as the reasonable rental value of those premises during that period. The authorities, however, leave open the question whether, in calculating those damages, I should take into account, and offset, the value of the renovations undertaken by Con to the premises.

Apart from the two authorities to which I referred counsel, I have been unable to find any other authority directly in point on this question. The factual background to the decision of the Court of Exchequer in Lord Cawdor v Lewis is quite complex. In that case the plaintiff’s predecessor (the late Lord Cawdor) had, mistakenly, occupied, and erected a smelting house on, property owned by the defendant’s predecessor (Thomas Lewis). The defendant had successfully obtained judgment against the plaintiff, at common law, for possession of the property. The plaintiff sought an injunction in the Court of Exchequer to restrain the defendant from claiming mesne profits in that action. The plaintiff’s substantial claim in the Court of Exchequer was based in equity, on the basis that Lewis had stood by and allowed him to spend money on the lands without giving to Lord Cawdor the notice of his title.[32] The defendant admitted that the plaintiff had an equitable claim for compensation on that basis. The Lord Chief Baron held that “because in an action for mesne profits no setoff is allowed”, he should not allow the defendant to “go to law” and claim mesne profits, in light of the plaintiff’s undisputed claim in equity to compensation.[33] Thus, his Lordship extended an interlocutory injunction, against the defendant claiming mesne profits at common law, until the hearing of the suit in equity to determine the amount of compensation payable to the plaintiff.
[32](1835) 1 Y and C Ex 427, 430, 433.
[33]Ibid 433 - 434.

That decision was referred to, and applied, by Fell J of the Supreme Court of New Zealand in Tai Te Whetu v Scandlyn & Ors.[34] In that case, the defendant had occupied the land of the plaintiff under a lease, which was later found to be void. During the period of occupation the defendant had made improvements to the land. The defendant argued that he should be entitled to offset, against the plaintiff’s claim for mesne profits, the value of those improvements. That submission was rejected by Fell J. His Honour regarded the decision of the Court of Exchequer in Lord Cawdor v Lewis as authority against the defendant’s submission. His Honour held that the plaintiff should not be compelled to pay for, or offset, the value of improvements made without his consent. Accordingly, he awarded damages to the plaintiff for mesne profits without any deduction for the value of the improvements.
[34][1952] NZLR 30.

The authorities to which I have just referred do not, with respect, provide a strong basis for the proposition that, in each and every case, the value of improvements effected by a trespasser may not be taken into account in a claim for damages for trespass consisting of the rental value of the property during the period of trespass. The decision of Fell J in Tai Te Whetu is substantially, if not wholly, dependent on the decision of Abinger CB in Lord Cawdor v Lewis. As I shall later explain, I do not regard the decision, properly understood, as authority for that proposition, but, if it is, the Lord Chief Baron did not cite any authority for it. Further, the law relating to the assessment of damages for trespass has largely been developed and established during the last century, since the decision of the Court of Appeal in Whitwham. It is in the line of authority commencing with Whitwham that, in my view, the answer to the present question may be found.

As I have already mentioned, in Whitwham, Chitty J, at first instance, rejected the submission of the defendants that the measure of damages is the diminished value of the property, caused by the trespass, and not the value of the property to the trespasser during the period of the trespass. His Lordship stated:

“Now the question is whether the principle of the way-leave cases applies in a case of tipping. They are founded on the principle that a wrongdoer shall not make a profit out of his own wrong, and that the value of the land for the purposes for which it was actually used by the wrongdoer ought to be taken into consideration. … I think that the principle does apply (to this case), and that the plaintiffs are entitled to damages on the basis of what would be a reasonable sum to be paid for the use of their land by the defendants for tipping purposes.”[35]

[35][1896] 1 Ch 894, 899.

The decision of Chitty J was upheld by the Court of Appeal, on substantially the same grounds. Lindley LJ stated:[36]

“The plaintiffs have been injured in two respects. First, they have had the value of their land diminished; secondly, they have lost the use of their land, and the defendants have had it for their own benefit. It is unjust to leave out of sight the use which the defendants have made of this land for their own purposes, and that lies at the bottom of what are called the way-leave cases. Those cases are based upon the principle that, if one person has without leave of another been using that other’s land for his own purposes, he ought to pay for such user. … Applying that reasoning to this case, on what principle of justice can it be said that these defendants are to use the plaintiff’s land for years for their own purposes, and to pay nothing for it, in addition to the injury that they have done to the land? Chitty J has proceeded upon that principle, and, the principle being right, the figures are not disputed. The appeal must be dismissed with costs.”

[36][1896] 2 Ch 538, 541-2.

In Inverugie Investments Ltd v Hackett,[37] the Privy Council, having quoted the passage from the judgment of Megaw LJ in Swordheath Properties Limited, which I have cited earlier,[38] stated:

“It is sometimes said that these cases are an exception to the rule that damages in tort are compensatory. But this is not necessarily so. It depends on how widely one defines the ‘loss’ which the plaintiff has suffered. … In Stoke-On-Trent City Council v W & J Wass Limited [1988] 1 WLR 1406 Nicholls J called the underlying principle in these cases the ‘user principle’. The plaintiff may not have suffered any actual loss by being deprived of the use of his property. But under the user principle he is entitled to recover a reasonable rent for the wrongful use of his property by the trespasser. Similarly, the trespasser may not have derived any actual benefit from the use of the property. But under the user principle he is obliged to pay a reasonable rent for the use which he has enjoyed. The principle need not be characterised as exclusively compensatory, or exclusively restitutionary; it combines elements of both.”

[37][1995] 1 WLR 713, 717 - 718.

[38]Paragraph [220].

In Ministry of Defence v Ashman,[39] Kennedy LJ described the damages to be awarded in a case of trespass to be “somewhat analogous to quasi contractual restitution”.[40] Hoffman LJ was bolder, and regarded the nature of the damages to be entirely restitutionary. His Lordship stated:[41]

“A person entitled to possession of land can make a claim against a person who has been in occupation without his consent on two alternative bases. The first is for the loss which he has suffered in consequence of the defendant’s trespass. This is the normal measure of damages in the law of tort. The second is the value of the benefit which the occupier has received. This is a claim for restitution. The two bases of claim are mutually exclusive and the plaintiff must elect before judgment which of them he wishes to pursue. … It is true that in the earlier cases it has not been expressly stated that a claim for mesne profit for trespass can be a claim for restitution. Nowadays I do not see why we should not call a spade a spade. In this case the Ministry of Defence has elected for the restitutionary remedy. It adduced no evidence of what it would have done with the house if the Ashmans had vacated. In my judgment such matters are irrelevant to a restitution claim. All that matters is the value of the benefit which the defendant has received.” (Emphasis added)

[39](1993) 66 P & CR 195.

[40]Ibid, 199.

[41]Ibid, 200 - 201.

It is not necessary for me to enter into the debate as to whether the damages, which are awarded under the principles enunciated in Swordheath Properties, are restitutionary or compensatory, or both. To the extent to which the damages are restitutionary, they are founded on the notion that the trespasser must restore to the owner of the property the benefit derived by the trespasser from the occupation by him of the owner’s property. In the large majority of cases, it would be unjust and erroneous to take into account, in favour of the trespasser, expenses and costs incurred by the trespasser in effecting improvement to the property without the permission of the owner. In many, if not most of, such cases the improvements would have enured to the immediate benefit of the trespasser, during the period of the trespass complained of. However, in determining the appropriate amount to be repaid by way of “restitution”, that principle could not hold true in all cases. In the present case, Con has expended very significant sums of money, and has himself carried out what he describes as “thousands” of hours of work, restoring and renovating the house. It was not disputed in the trial that the renovations have significantly improved the value of the house. The improvements were carried out with a view to the future enjoyment of the premises. The evidence discloses that, in the short term, they detracted from, rather than enhanced, the user of the premises during the trespass. Most of the benefit of the improvements have not enured to the enjoyment of the premises by Con and Irene during the period of the trespass. If Con were now ordered to pay damages consisting of the market rental of the property, he would be required to do so in circumstances in which he has spent a large amount of money, and worked over a very long period of time, at his own inconvenience, in a manner which will be significantly to the financial advantage of his mother, the plaintiff. In the unusual circumstances of this case, a requirement that Con pay such damages to Stella, undiminished by a fair evaluation of the cost to him of the works undertaken by him in improving the house, could not be regarded as a remedy comprising just restitution by a wrongdoer of the benefits derived by that wrongdoer of his trespass.

Similarly, to the extent to which damages in a case such as this may be compensatory, it is basic that, in an action for tort, damages are awarded as compensation, in order to restore the plaintiff to the position in which the plaintiff would have been, had the tort not occurred. In this case, if the defendants had not trespassed on the plaintiff’s property, and if they had acceded to her demands that they leave the property, the house would not have been renovated to anything like the extent to which it has been. It is true that most of the renovations were carried out contrary to the wishes of the plaintiff. Nonetheless, as I have stated, they have substantially enhanced the value of the property. Ordinarily, it might be expected that renovations or improvements gratuitously undertaken by a trespasser should not, as a matter of fairness, be taken into account in determining damages to be awarded against a trespasser by way of compensation to the owner. However, this is a most unusual case. If I were to award to Stella damages comprising the whole of the market rental for the premises, undiminished by the value to her of the improvements effected by Con, such an award would go well beyond fairly compensating her for the loss which she sustained as a result of the trespass on her property by the defendants.

Thus, on either view of the juridical basis of an award of damages in a case such as this, as a matter of principle, it would seem to me that, in an appropriate case, the Court may and should take into account either the cost or value of improvements effected by the defendant trespasser. I emphasise that this is an unusual case. There is no evidence that the plaintiff has suffered any loss as a result of the trespass. As a result of her success in this action, she will regain possession of a house, the value of which has been significantly enhanced by the hard work, and at the expense, of the first defendant. The defendants have gained nothing as a result of their trespass. Their user of the property as trespassers was significantly diminished by the disruption and inconvenience occasioned by the renovation work. As a result of the order for possession, they will lose substantially, regardless of whether they are required to pay damages. The rental which they would have been required to pay on other premises (or to Stella) would be significantly reduced, if not entirely offset, by the cost and value of the work undertaken by Con, to the financial benefit of the plaintiff. There is no evidence that the plaintiff wished to live in the house in the meantime, to sell it, or to put it to any other use. Thus, in the unusual circumstances of this case, in my view it is appropriate, as a matter of principle, that either the cost or the value of the works undertaken by Con to the house be taken into account in determining the damages to be awarded for the plaintiff.

With those principles in mind, I return to the two authorities to which I have earlier referred. In my view, when properly analysed, I do not consider that the decision of Abinger CB in Lord Cawdor v Lewis stands in opposition to those principles.

The precise basis of the decision by the Lord Chief Baron is not entirely clear from the short report of the case. However, the following points may be made in relation to it. First, it seems that Abinger CB granted the injunction on the basis of the simple proposition that the claim of the plaintiff (Lord Cawdor) for relief in equity, in that case by way of compensation, could not be set off against the defendant’s claim for mesne profits, which was a claim at common law. Thus his Lordship was not directly addressing the question whether, at law, the amount of mesne damages might have been reduced by the improvements effected by Lord Cawdor. While that proposition may be implicit in the reason why the plaintiff, Lord Cawdor, had sought the intervention of equity, it is not part of the actual reasoning of the Lord Chief Baron. Secondly, if (contrary to what I have just said) that proposition was part of his Lordship’s reasoning, he cited no authority in support of it. His Lordship was hearing a case in equity, and, to the extent to which his statement reflected on the calculation of mesne profits of common law, it could only be obiter dictum. Thirdly, the decision in Lord Cawdor was well before the more modern line of authorities, commencing with the judgment of the Court of Appeal in the Whitwham case, which have identified and clarified the basis of the claim by the plaintiff in this case for the rental value of the premises during the period of occupation of them by the defendants.

Thus, I do not consider that the decision in Lord Cawdor would stand in the way of the conclusions which I have expressed above, and which, in my view, are based on an analysis of the fundamental principles underlying the type of damages which should be awarded to the plaintiff in this case. The decision of Fell J in Tai Te Whetu was substantially, if not wholly, based on the decision in Lord Cawdor, and on the explanation of that decision in the 11^th edition of Mayne on Damages, quoted by his Honour. The decision of Fell J is expressed in short compass, without reference to the considerations which I have analysed above. There is no subsequent authority, which I have been able to locate, which has followed or considered that decision. In those circumstances, while the decision is persuasive, I do not consider that it establishes, as a universal proposition, that in the circumstances of this case, the claim for damages by the plaintiff, based on the reasonable rental value of the property, should not take into account the cost or value of the improvements undertaken by Con to those premises during the relevant period of the trespass complained of.

Based on those principles, I therefore turn to the evidence in relation to the quantification of the damages claimed by the plaintiff. As I have stated, the plaintiff relies on the evidence of Mr Cundall. The defendants did not adduce evidence from any valuer to the contrary, in relation to the rental value of the property. I accept Mr Cundall’s evidence. If, as is my view, it is appropriate to offset, against the rental claimed by the plaintiff, the cost or value of the improvements effected by Con, then, equally, it is appropriate to quantify the rental value of the premises to him on the basis of the renovated state of the premises. On that basis, I calculate the fair rental value of the premises from 1997 to November 2007 at $208,630.

The evidence as to the cost and value of the work undertaken by Con in renovating the house was led in quite short compass. I have already referred to Mr Browning’s evidence, to the effect that the invoice value of that work was $555,248. Mr Browning himself concedes that that method of calculation is not entirely exact. Further, as pointed out by Ms Sparke, some of Mr Browning’s calculations may not be accurately based on the underlying material. For example, he used an hourly rate of $45 for carpentry works, when it would appear that an invoice, tendered in evidence, reflected an hourly rate of $25 per hour. Nevertheless, I regard Mr Browning’s evidence as a reliable guide as to the approximate quantum of the invoice cost to the works undertaken by Con.

A number of the works were undertaken by Con himself. Con did not perform any exact calculation of the cost to him of materials and contractors. However, he gave evidence that he estimated that cost to have been in the order of $250,000 to $300,000. That evidence was not the subject of any cross-examination. He also stated that he himself had spent “thousands” of hours in carrying out the works, and that evidence was not the subject of cross-examination either. Further, the plaintiff did not adduce any evidence to contradict the evidence of Mr Browning or Con in that respect.

Con did tender a bundle of invoices (Exhibit 35) for some of the expenses incurred by him in respect of the renovations. Those invoices are confined to the period after 2001, and they total approximately $75,000. They do not reflect at all the cost to Con of the works which he performed before 2001. Nor, it would seem, are the invoices an exhaustive record of the costs incurred in respect of the works after 2001. Accordingly, while Con’s evidence as to the cost to him of the work may be a little exaggerated, in light of Mr Browning’s evidence, I regard his evidence as to the costs actually incurred by him as being broadly accurate. In that case, even allowing a modest hourly rate for Con’s work over the years, it would seem that a fair estimate of the “cost” of that work to Con, in terms of expense incurred, and hours spent, would be at least $400,000.

Both sides led evidence as to the “value added” to the premises at Green Street as a consequence of the works undertaken by Con. Mr Cundall, who was called on behalf of the plaintiff, valued the premises, as at November 2007, in the sum of $1,000,000. Of that value, he attributed $845,000 to the land, and $155,000 to the improvements. If the property had not been improved, it would be worth $885,000. In that way, it is put on behalf of the plaintiff that the renovations undertaken by Con added approximately $115,000 to the value of the premises.

The figures produced by Mr Cundall are not particularly different to those arrived at by the defendants’ valuer, Mr Matler, whose reports were tendered in evidence. Mr Matler was not cross-examined in relation to those reports. Mr Matler valued the property as at 8 November 2007 in the sum of $995,000. Of that sum, the land value is $826,000. Mr Matler also expressed the view that, in an unrenovated state, the property would be worth $935,000, with the value of the residence in an unrenovated state being $109,000. Thus, on that analysis, the renovations carried out by Con “added value” to the premises in the sum of $60,000.

In my view, it would be unrealistic, and inappropriate, to use the method of valuation, undertaken by the two valuers, as the sole means of calculating the amount by which the plaintiff’s claim for damages should be reduced in this case. As Mr Kendall pointed out, there is a substantial artificiality in producing a valuation of a property as a whole, assessing the land value, and then treating the residue as the value of the improvements. Generally, the market value of a property comprises a synthesis of the land value and the value of the improvements. The market value may be less, or greater, than the value of those component parts. Further, and in any event, even if it is correct to rely on the evidence of the valuers to the effect that Con’s works have only added $60,000 to $100,00 to the value of the land, the fact remains that he has spent very significant amounts of money, and devoted very many hours of labour, to achieving that result. From a restitutionary point of view, during the period of his trespass, he has incurred those expenses to improve the property. From a compensatory point of view, the plaintiff has received an increase in the value of her premises, at considerable cost to the defendants. In those circumstances, I consider that the appropriate method of calculating the “offset” against the plaintiff’s damages is to take into account the cost to the defendant which, on any analysis, is well in excess of the rental value claimed by the plaintiff. Accordingly, it follows that the plaintiff’s damages are totally offset by the renovation works and the value of them carried out by Con. For those reasons I reject the plaintiff’s claim for damages.

Summary of conclusions

In summary, for the reasons which I have expressed at some length in this judgment, I have reached the following conclusions:

(1)The first defendant has not established either basis of estoppel asserted by him in his counterclaim. On the contrary, I am satisfied that there is no basis for the promissory estoppel, or for the estoppel by acquiescence or encouragement, pleaded in the counterclaim. Accordingly the counterclaim should be dismissed.
(2)The plaintiff is therefore entitled to possession of the premises. The defendants have failed to comply with the demands of the plaintiff that they vacate the premises. Accordingly the plaintiff is entitled to an order for possession of the property at 25 Green Street, Camberwell against both defendants.
(3)The plaintiff has not established her claim for damages against either defendant, and that claim will be dismissed.

Before departing from the case, it is appropriate for me to make the following concluding remarks. In analysing the evidence, and in applying the law, as I have done, I have been acutely conscious that the conclusions which I have reached will result in the plaintiff obtaining an order against her eldest son, his common law wife, and her two young grandchildren, requiring them to vacate the property which they have made their home for a substantial period of time. I am also acutely conscious that my conclusions mean that the first defendant will be excluded from the home to which he has devoted so much care, effort and expense. While that conclusion is necessitated by the findings of fact which I have reached, and the principles of law which are applicable to them, it occasions me no satisfaction that the outcome of this case will, no doubt, exacerbate the tragic differences which have divided the Loulatzis family. At an early stage in the trial I exhorted the parties to endeavour to compromise their differences, and to attempt to resolve them, rather than pursuing their respective legal rights. Accordingly, at the end of the plaintiff’s evidence, I directed that the matter proceed to mediation. Unfortunately the mediation did not succeed in achieving a settlement between the parties. At the conclusion of the final addresses I again encouraged the parties to make one last effort to reach a settlement between them. Notwithstanding that the case has now proceeded to judgment, I remain of the firm view that a much better result would be achieved for both sets of parties – the plaintiff, Stella Loulatzis, and the defendants, Con Loulatzis and Irene Petruccelli – and for their respective families, if the parties could still see their way to resolving their differences as to the premises at Green Street, rather than relying on the outcome of this case. I encourage them to do so.

[2007] VSC 547

18 December 2007