Lorna June Smith v Ian Ross Smith

[2004] NSWSC 641

CITATION:	Lorna June Smith v Ian Ross Smith [2004] NSWSC 641
HEARING DATE(S):	15.06.04; 16.06.04; 17.06.04
JUDGMENT DATE:	23 July 2004
JUDGMENT OF:	Nicholas J
DECISION:	Para 40
CATCHWORDS:	EQUITY - licences - equitable nature of irrevocable licence - whether principle that licensor should be estopped from asserting licence in fact revocable satisfied on facts - Plaintiff mother of Defendant - Plaintiff contributes substantial sum to construction of units - whether sum contributed by Plainitff to Defendant for building purposes on vacant land of nature of gift, loan or given on assumption of an expectation of conditional right of occupancy - whether financial contribution establishes Plaintiff's equity in the form of an irrevocable licence - whether Court should satisfy Plaintiff's equity and estop Defendant from denying Plaintiff's right to occupancy REAL PROPERTY - caveats - whether equitable interest in form of irrevocable licence entitled to equitable estoppel enough to found proprietary right capable of supporting continued registration of caveat
LEGISLATION CITED:	Real Property Act 1900 (NSW) ss74MA, 74F
CASES CITED:	Inwards v Baker [1965] 2 QB 29 Vinden v Vinden [1982] 1 NSWLR 618
PARTIES :	Lorna June Smith - Plaintiff Ian Ross Smith - Defendant
FILE NUMBER(S):	SC 3606/03
COUNSEL:	R Scruby - Plaintiff I R Smith - In person
SOLICITORS:	John A Glynn & Associates - Plaintiff I R Smith - In person

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Nicholas J

23 July 2004

3606/03 Lorna June Smith v Ian Ross Smith

JUDGMENT

Introduction

1 His Honour: These proceedings arise out of a dispute as to the entitlement of Lorna June Smith (the Plaintiff) to continue to live in unit 1, No. 13 Karissa Drive, Goonellabah (the unit) which is owned by Ian Ross Smith (the Defendant). Mr Scruby appeared as counsel for the Plaintiff and the Defendant represented himself. The following matters of background are common ground and, in any event, are established on the evidence.

2 The Plaintiff was born in 1925 and is now 79 years old and is the mother of the Defendant who was born in 1952 and is now 52 years old. He is the registered proprietor of the whole of the land in folio identifier 1/SP65653 on which the unit stands and over which the Plaintiff has lodged caveat no. 7189461.

3 In about April 1988 the Defendant and his then wife, Alison Maree Smith (Alison Smith) purchased the property at No. 13 Karissa Drive and there completed the construction of two units in about May 1989. The Plaintiff moved into the unit upon its completion and has lived in it as her home continuously since then. She has always paid her son a sum by way of rent or occupation fee for the unit which presently is at the rate of $100.00 per week.

4 In about 1997 or 1998 the Defendant decided to sell his various parcels of real estate including No. 13 Karissa Drive. In 2000 he came to the view that a better place for his mother to live was at the Caroona Retirement Village, Goonellabah (Caroona). On 8 June 2000 he and the Plaintiff visited that establishment and enquiries were made about accommodation for her. It was requested that her name be placed on a waiting list for accommodation. However it seems that nothing further has been done about such accommodation, and the Plaintiff has no wish to go there.

5 Because she feared that the Defendant was proceeding to sell No. 13 Karissa Drive, the Plaintiff on 17 July 2000 lodged caveat 7189461 over the whole of the land. On 26 June 2001 she withdrew the caveat insofar as it affected unit 2 to enable the Defendant to proceed with its sale. The sale of unit 2 was completed on 2 August 2001.

6 These events caused the Plaintiff to move by way of Summons for a declaration that she has the right to continue to reside in the unit for as long as she wishes to do so, and for as long as she pays the Defendant $100.00 per week, and for an order that the Defendant be restrained from interfering with her right to continue to reside in the unit. Alternative forms of relief were sought the details of which need not be recited.

7 The Defendant in his Notice of Motion sought an order that the caveat be removed, and other relief the effect of which was to deny the Plaintiff’s claim.

The evidence

8 I now turn to the evidence relevant to the Plaintiff’s claim.

9 The Plaintiff said that in about 1986 she retired from her employment as an office cleaner with the Department of Agriculture Lismore. She received a superannuation payment of $24,000.00. She was then living in rented accommodation at No. 13 Daryl Avenue, Goonellabah.

10 She told of a conversation with the Defendant in mid-1988 during which he asked her for $20,000.00 for the purchase of the land at No. 13 Karissa Drive, with the intention of building two units one of which would be for her for as long as she wanted it. She said that shortly afterwards she paid him the sum of $20,000.00 by cheque. She moved into the unit upon its completion and commenced paying rent to the Defendant. Since then she has maintained the gardens whilst the Defendant has paid all outgoings including council and water rates, and expenses for repairs and maintenance. In mid-2000 the Defendant informed her that he had placed No. 13 Karissa Drive on the market for sale. When she questioned him about the unit he replied that he had booked her into Caroona. Her response was that she did not want to go to Caroona and wanted to stay in the unit.

11 Kathleen Marie Jux gave evidence that she had a personal relationship with the Defendant between March 1995 and April 1996. She said that in about May 1995 the Defendant told her that the Plaintiff had lent him “ … $20,000.00 from her redundancy”. She gave evidence of other occasions during their relationship when the Defendant referred to the sum of $20,000.00 provided to him by the Plaintiff in the context of the purchase of No. 13 Karissa Drive and the construction of the units. On these occasions he also made statements to her the effect of which was to acknowledge his mother’s entitlement to an interest in, and to live in, the unit. She adhered to the substance of her evidence under cross-examination by the Defendant. I accept her evidence.

12 Alison Smith gave evidence that she and the Defendant purchased No. 13 Karissa Drive in about April 1988 with funds from their joint savings and the sale of a home unit. She said that on occasions after the purchase the Plaintiff suggested that if she gave them some money she might be able to move into and rent one of the units when built. In particular, she said that on an occasion after the purchase and whilst the units were under construction the Plaintiff told her that she would like to give the Defendant money to put towards the building of the unit, and mentioned the sum of $20,000.00. On other occasions the Plaintiff spoke to her in similar terms and referred to giving a sum from her superannuation entitlement as a gift towards the units. She said that the money given by the Plaintiff was in fact spent on fittings and fixtures in the unit, including a stove, lighting and carpet, of better quality than those in the other unit. She impressed me as a truthful witness disinterested in the outcome of the proceedings whose evidence I accept.

13 So far as is relevant, the evidence of the Defendant was that after the purchase of the land, but prior to commencement of the building of the units, he had a conversation with the Plaintiff in which the question of the renting by her of one of the units was discussed and it was agreed that she should do so. He said that on a later occasion between the commencement and completion of the units the Plaintiff handed him a cheque for $10,000.00 saying that she just wanted him and Alison to have it as a present.

14 He also said (and it was common ground) that soon after she moved into the unit he asked the Plaintiff to sign a lease but she declined saying: “Oh pot. I’m your mother, I don’t have to sign anything”. Nothing further was done to obtain an agreement for a lease. He denied that he ever said to the Plaintiff that she could rent the property for as long as she liked.

15 The Defendant also said that there was no discussion with the Plaintiff on the question of the duration of her occupancy. He said that a few years ago he came to the view that accommodation at Caroona was more suitable for her than the unit, and that had he not come to that view he would have been content for her to continue residing in the unit and that he could have sold the other unit and just let her stay there (T p 128).

16 The following evidence is also relevant (T p 131):

“His Honour: So the situation was left that duration was not determined, correct?
A. That’s correct.

Q. And was it your understanding that she believed she could stay in the unit for as long as she wished?
A. No, because she never said that and I never said that to her, your Honour.

Q. So both parties were silent on that?
A. There was just an assumption she could stay there, no set time, you know, really.

Q. Can I conclude from that, if there was no set time, that she could stay there as long as she wished?
A. Well I probably took it for granted, which may be perhaps wrong of me, that eventually when people do get older, if they are not capable of looking after themselves, which I put forth as true in my mother’s case, then yes, they go into more suitable retirement. And June, for years she talked about going into Caroona.

Q. I just want to do it in steps, to understand the position. May I take it then that as far as you were concerned, she could live in the place as long as she wished, meaning until such time as she indicated that she no longer wished to stay there; am I correct in that?
A. I think that is a fair assumption, yes your Honour”.

17 Also in evidence was a handwritten note of an officer of Caroona dated 8 June 2000 which recorded details of the visit by the Plaintiff and the Defendant on that date, and of the request that the Plaintiff’s name be placed on the waiting list for a self care unit. However there was no documentary evidence as to the date and amount of the payment by the Plaintiff to the Defendant, and none relevant to her occupancy of the unit.

Findings

18 Having regard to the concessions made by the Defendant during final submissions referred to later in these reasons, findings as to the actual amount paid and as to the timing of it are not critical to the result in this case. Nevertheless I should state what my findings are.

19 In my opinion the preponderance of the evidence establishes that the amount paid by the Plaintiff to the Defendant was $20,000.00, and I so find. There was no reason to doubt the Plaintiff’s evidence as to the amount and it is consistent with that of Alison Smith and Ms Jux. In the circumstances, absent corroboration, I reject the Defendant’s evidence that the amount was $10,000.00. I also find that with regard to the evidence and to common sense the amount of the payment was, in the circumstances, a substantial sum for the Plaintiff to make having regard to her circumstances, and it was accepted as such by the Defendant.

20 I also find that it is probable that the amount was paid between the time the land was purchased and the completion of construction of the units. This finding is supported by the evidence of the Defendant and Alison Smith, and the inherent likelihood that the parties would have discussed the question of the prospects of the Plaintiff’s occupancy of one of the units whilst construction was underway.

21 Consistently, from my acceptance of the evidence of Alison Smith that the property was purchased from the joint savings of her and the Defendant and the proceeds of sale of a home unit it follows that I do not accept the Plaintiff’s assertion that the money was given to the Defendant as a contribution towards the purchase price. Furthermore, the evidence does not support a finding that the payment was by way of a loan, and I am satisfied that it was not.

22 Further, I find that at the time the payment was made it was the common intention of the parties that the money was to be spent on the unit designated for the Plaintiff’s occupancy. The evidence of the Defendant and of Alison Smith is clear that, in accordance with such intention, the money was in fact spent on fittings and fixtures for the unit.

23 I also find that the money was given on the assumption that the Plaintiff would reside in one of the units upon its completion for as long as she wishes, and the Defendant received and spent the money in the way described on that assumption. Inter alia, the passage quoted above supports that finding.

24 During the Defendant’s final submissions the following exchange took place (T p 173):

“His Honour: I think in your evidence, which I would be prepared to accept, is that you formed the belief Caroona would be a suitable place for her to go.

Defendant: Yes your Honour.

His Honour: But the question really is, Mr Smith, in this case not so much a question of whether or not there are better places for her to go but whether or not you were entitled to have her leave the place regardless of where she goes and this case has been brought by the plaintiff because she had, as I understand it, some concern and it's quite obvious that you were wanting her out of the place.

Putting it another way, I doubt this case would be brought if she didn't fear that you wanted her out.

Defendant: I agree with you there, your Honour.

His Honour: So one can take it, I suppose, and I think the evidence is clear that as things stand at the moment you want her out.

Defendant: No, no. No, I'm happy for her to stay there and I've actually mentioned it to Mr Scruby if we can just sort of set up a sort of arrangement where somebody visits her everyday. That might be some of source of annoyance to my mother. As long as we have somebody looking after her and I've told Mr Scruby and I don't necessarily want - I've managed to get out of debt and I've still got to have a house to live in myself but, I mean, I'm happy for her to stay there in the unit”.

25 There was then a short adjournment during which some discussion took place between the parties, but to no avail. The hearing resumed and the Defendant continued his submissions during which he stated (T p 177):

“… I am still prepared to give an undertaking to the Court that she does not have to move out. I am not going to sell the property but I need to borrow money against it. I am happy to give an undertaking.

The rent I would like to put up to $110; if your Honour deems $100 I am happy. I still pay all the outgoings. I have I have fallen on hard times and I have had to sell the unit next to it. The unit, it was built for my children”.

26 In conclusion the Defendant stated (T p 178):

“Your Honour, I can't say anything further so far as my submissions in summing up except that I am prepared to give the Court an undertaking that June Smith can stay there. I mean, I don't have a problem with that but I would require that I could borrow some money against it to build the house on the block of land so I have a residence. At the moment I am living out of a car and having cold showers, which is probably not, I don't enjoy it at my age”.

Conclusion

27 In my opinion, the findings I have made together with the concessions of the Defendant which I have quoted amply support the Plaintiff’s case that she paid to the Defendant the amount of $20,000.00 in the expectation that it would be spent on the unit in which, upon its completion, she would be entitled to reside for as long as she lived or as long as she wished, on the understanding that she would pay rent to the Defendant as agreed from time to time.

28 I accept the submissions for the Plaintiff that the principles discussed in Inwards v Baker [1965] 2 QB 29 at pp 36-38, and in Vinden v Vinden [1982] 1 NSWLR 618 at pp 624-625 apply to this case.

29 The situation in this case is that the Plaintiff paid to the Defendant a substantial sum on the common assumption that she would be allowed to reside in the unit conditional upon the payment of rent. The circumstances establish an equity in the Plaintiff which entitles her to stay in the unit for as long as she wishes pursuant to a licence from the Defendant which, in the circumstances, is irrevocable. It is an entitlement which the court will not allow to be defeated where it would be inequitable to do so (cf. Inwards v Baker pp 37, 38). With regard to principle, her case is similar to that considered in Vinden in which Needham, J (p 625) found an irrevocable licence “… or, to put it another way, an equity arose which could be satisfied only by holding the Plaintiff estopped from denying that the licence was irrevocable”.

30 As Lord Denning, MR pointed out in Inwards v Baker (p 37) it is for the court to say in what way the equity can be satisfied. Adopting his words I am quite clear in this case it can be satisfied by holding that the Plaintiff can remain in the unit as long as she desires as her home, and by ordering that the Defendant be restrained from interfering with her right to do so. His Lordship expressed the view that any purchaser who took with notice would be clearly bound by the equity.

31 On the Plaintiff’s Summons I propose to declare that the Plaintiff is entitled to continue to reside in the premises known as unit 1, No. 13 Karissa Drive, Goonellabah, being the whole of the land comprised in folio identifier 1/SP65653 for as long as she wishes conditional upon her continuing to pay to the Defendant the amount of $100.00 per week or such other amount as the parties agree. I propose to order that the Defendant be restrained from interfering with the Plaintiff’s right to continue to reside in the said premises.

32 In his Notice of Motion the Defendant sought a number of orders including an order for the withdrawal of the caveat lodged by the Plaintiff pursuant to s 74MA Real Property Act 1900 (NSW) (the Act).

33 In Schedule 1 of the caveat the estate or interest is described thus:

“The CAVEATOR has an equitable interest in the land by virtue of a personal loan of $23,000 advanced to the Registered Proprietor, Ian Smith to purchase land to build the existing 2 units on”.

The facts stated in support of the claim are:

“In 1989 I wrote a personal cheque for $23,000 payable to my son, the Registered Proprietor with my National Bank Account (Cheque) for him to purchase the land on which he built 2 units on (sic) at 13 Karyss (sic) Drive in Goonellabah. There was no written contract only a verbal agreement”.

34 As I have found that the payment was not a loan for the purchase of the land the basis for the interest claimed has not been established and, in the circumstances, the caveat should be withdrawn. However it is appropriate that I should deal briefly with Mr Scruby’s submissions that, nevertheless, the Plaintiff was entitled to maintain the caveat.

35 In effect it was put that once it was found that the Plaintiff was entitled by virtue of an equitable estoppel to reside in the property for life that right is capable of supporting a caveat. Also, as I understood it, it was put that once it was found that the arrangement was one which justified the declaration and order as proposed it followed that her right was one which established a proprietary interest sufficiently permanent as to amount to an equitable estate or interest in the land which entitled her to lodge a caveat under s 74F of the Act to protect it.

36 In my opinion in this case the Plaintiff has not established that she has a caveatable interest in the land on the grounds submitted. The Defendant has been held to be estopped from denying the Plaintiff’s entitlement to occupancy of the unit and the relief proposed is in accordance with the requirements of equity to give effect to that entitlement. In my view it is plain that the unwritten arrangement pursuant to which the equity arose does not create any equitable interest in the land of a proprietary nature.

37 Also it must be kept in mind that in cases such as Inwards v Baker, Vinden and this one, once the claimant has established the existence of an equity it is for the court to say in what way the equity can be satisfied. As is apparent from those cases the relief proposed was formulated to safeguard that equity with regard to the particular circumstances of the case. Obviously, the nature of the relief found to be appropriate in a particular case is of no assistance in proving the interest to which the relief is directed.

38 As I have indicated, the proposed declaration and order adequately safeguards the Plaintiff’s equity as I have found it to be. It is therefore unnecessary to decide whether she is entitled to the other relief claimed on her behalf.

39 Other than the order for the withdrawal of the caveat the claims for orders and other relief by the Defendant in his Notice of Motion are rejected.

Relief

40 I make declarations and orders as follows:

(1) On the Summons:

(i) I declare that the Plaintiff is entitled to continue to reside in the premises known as unit 1, No. 13 Karissa Drive, Goonellabah, being the whole of the land comprised in folio identifier 1/SP65653 for as long as she wishes conditional upon her continuing to pay to the Defendant the amount of $100.00 per week or such other amount as the parties agree;
(ii) I order that the Defendant be restrained from interfering with the Plaintiff’s right to continue to reside in the said premises.

(2) On the Defendant’s Notice of Motion, I order that caveat no. 7189461 be withdrawn by the Plaintiff.

(3) I order that the Defendant pay the Plaintiff’s costs of the proceedings.

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Last Modified: 07/26/2004