Manno v Manno

[2016] NSWSC 493

Supreme Court

New South Wales

Medium Neutral Citation:	Manno v Manno [2016] NSWSC 493
Hearing dates:	12-14 April 2016
Decision date:	22 April 2016
Jurisdiction:	Equity - Expedition List
Before:	Stevenson J
Decision:	Further amended statement of claim dismissed
Catchwords:	EQUITY - equitable estoppel – proprietary estoppel - family relationship - whether parents represented to adult son that they would subdivide land they owned and give him and his siblings a lot from the subdivision - whether any such representation relied on - subdivision did not proceed - whether unconscionable for parents not to honour any representation
Legislation Cited:	Family Law Act 1975 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Ashton v Pratt [2015] NSWCA 12 Commonwealth v Verwayen (1990) 170 CLR 394 Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unrep) Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Category:	Principal judgment
Parties:	Joseph Manno (Plaintiff) Estate of the late Salvatore Manno (also known as Sam Manno) (First Defendant) Gaetana Manno (Second Defendant)
Representation:	Counsel: F F F Salama (Plaintiff) D M Flaherty with L Do (Defendants)   Solicitors: ClarkeKann (Plaintiff) Albert A Macri & Co (Defendants)
File Number(s):	SC 2014/373004

Judgment

1. The plaintiff, Mr Joseph Manno, claims that his father and mother, the defendants, represented to him that they would subdivide land they owned at Edmondson Park and give him (and each of his two siblings) a lot from the subdivision. Many years later, the parents sold the land without subdividing it. Mr Manno claims that, in the events that have happened, his parents are estopped from denying that he is entitled to, or should be compensated for the value of “a subdivided lot”.

2. In my opinion, Mr Manno’s claim should be dismissed.

Background

3. The first defendant, the late Mr Salvatore (known as “Sam”) Manno and the second defendant, Mrs Gaetana Manno, were born and married in Italy.

4. Mr Manno migrated to Australia in 1966. Mrs Manno followed upon their marriage in 1969.

5. There were three children of the marriage, all born in Australia; Rosaria (known as “Sara”) born in 1970, Vito born in 1971 and the plaintiff, Joseph (known as “Joe”) born in 1978.

6. In 2001, Joe married Giuseppina (known as “Josie”).

7. Because each of these individuals has the same surname, for convenience, with their consent, and without intending any disrespect, I will refer to them by their given names.

8. Sam died in February this year. On 26 February 2016, pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 7.10(2) I appointed Sara to represent his estate for the purpose of these proceedings. Sara otherwise played no role in the proceedings.

9. Sam was 73 when he died. Gaetana is now 68.

10. In 1987, Sam established a business known as “Sam Manno Bobcat & Tipper Hire”. I will refer to it as the “Business”.

11. Sam and Gaetana purchased the Edmondson Park property in about 1990. The property then comprised some two hectares, much of it bushland. The family moved into a timber dwelling near the front of that property.

12. Between 1995 and 1996 Sam (with some assistance from Vito and Joe) built a large family home on the property.

13. In March 2002 Sam and Gaetana sold the property to a developer, Landco Developments Pty Limited, and simultaneously re-purchased a 3,300m² block on which the two houses were located. According to a valuer called by Joe, Mr Frank Carrapetta, this was achieved by a “boundary adjustment” rather than a formal subdivision. The parties referred to the block that Sam and Gaetana retained as “Lot 1”, and the lot sold to Landco as “Lot 2”. I will do the same.

14. Sometime in mid 2002, Joe commenced work in the Business. At that time, Vito was working in the Business. Joe was then 23. Previously, after leaving school in 1995, at the end of year 10, Joe had commenced (but did not complete) an apprenticeship as a motor mechanic. Thereafter, he worked as a handyman for a real estate agent.

15. Joe claims that he was induced to commence working in the Business by a representation made to him by Sam and Gaetana that if he joined the Business and agreed to receive only “a nominal draw” they would:

1. transfer the Business to Joe and Vito “upon retirement”;

2. subdivide Lot 1; and

3. upon the subdivision of Lot 1 transfer “the Subdivided Lot” to Joe.

16. Joe claims that, in reliance on the “assumption and/or expectation” arising from that representation between 2002 and December 2010 he:

1. “operated one unit of machinery and accounted to the Business for all income earned”;

2. received a “nominal draw” from the Business which represented “well below”:

1. the “industry standard for the type of work” he was performing; and

2. an amount that he could have earned had he undertaken the same type of work for a third party or his own account; and

3. did not conduct or was not employed in any other business in competition with the Business.

17. Joe makes no claim in respect of the alleged representation concerning the Business. As I discuss below, it no longer exists.

The representation concerning the land

18. Joe said that “during August and September 2002” and in November 2002, shortly after he and his wife, Josie, had purchased a home in Liverpool, Gaetana and Sam said:

“Gaetana:   We really like this house. You’ve done well.

Sam:   This is a great start for you guys and a good place for you to start your family until we are able to give you a block of land to build your own home.”

19. Joe said that, after he joined the Business and “towards the end of my training”, Gaetana said that she would open a bank account in his name because “I know you are getting low pay” and that “me and your dad will put extra money into this account to make up for it”. Joe said that Gaetana went on to say:

“Don’t worry, I will keep saving for you until this land gets subdivided and we can give you a block of land”.

20. Joe said that the following conversation then occurred:

“Joe:      Mum, what are you talking about – block of land?

Gaetana:   Listen, we have just taken a deposit for the back half of the property [that is, Lot 2], so just keep helping your father and we will help you later with a block of land.

Joe:   What do you mean, block of land?

Gaetana:   Keep helping your father with the business, and when the subdivision happens we will give you, Vito and Sarah a block each to build your own homes.”

21. Josie provided some corroboration for this evidence. She said that in or about 2002, she had this conversation with Joe:

“Joe:   Mum has sold the back part of the land [that is, Lot 2] to developers but they are keeping the remainder [that is, Lot 1]. Mum and dad propose to subdivide the remainder and give each of us a block so that we can build our own homes.

Josie:   Oh, okay, but do you really want to continue living right next to your parents and your brother and sister?

Joe:   At the end of the day, it’s a block for us and we can decide what we want to do.”

22. Vito denied that either Sam or Gaetana had said anything to him about being given a block from a subdivision of Lot 1.

23. As I have said, Sara was not called to give evidence.

24. Sam (in his affidavit) and Gaetana (vigorously, in cross-examination) denied making any representation to Joe concerning the subdivision of Lot 1.

25. Gaetana gave her evidence with the assistance of an interpreter. What emerged very clearly from her evidence, notwithstanding that it was for the most part given in Italian, is the deep rift that has developed between her and Joe and Josie. She has not spoken to Josie since 2008. In 2009 she told Joe that, so far as he was concerned “I don’t have a son”. In cross-examination, she called him a “one hundred per cent liar” and accused him of causing Sam’s premature death.

26. However, what also emerged from the cross-examination of Gaetana was that, at one stage, Sam and Gaetana did intend to subdivide Lot 1.

27. In March 2002, when Sam and Gaetana sold the property to Landco (and purchased back Lot 1), they entered into a Deed of Acknowledgment with Landco which contained the following recitals:

“D.   It is Manno’s intention that the proposed Lot 1 be subdivided at the same time as the Manno’s Subdivision in order that costs may be kept to a minimum. (‘Manno’s Subdivision’).

E.   Landco agrees that it will undertake its subdivision and the Manno’s subdivision simultaneously subject to Manno being responsible for the payment on a proportionate basis of all subdivision costs and expenses pertaining to the Manno’s Subdivision. Landco will as far as possible comply with directions from Manno as regards the layout of the Manno’s Subdivision. In the event that Lot 1 cannot be subdivided so as to comply with the LEP when issued, then Landco and Manno will agree to undertake any necessary boundary adjustments as may be required to give effect to the Manno Subdivision.”

28. Under the Deed, Landco agreed to effect a subdivision of Lot 1 at the same time that it undertook the subdivision of Lot 2.

29. Gaetana accepted that the contents of this document reflected her and Sam’s intention at the time.

30. Further, although Gaetana denied making any representation to Joe about getting a block from a subdivision of Lot 1, she agreed that she and Sam did intend to give each of the children, including Joe, a lot from any subdivision of Lot 1 “if we were okay”.

31. Thus she gave this evidence in cross-examination:

“Q:   If council allowed you to subdivide that block of land, were you going to give Joe and Vito a subdivided block from the larger block of land?

A.    It depended. If council approved the, the subdivision and I was still okay then I was happy to give one lot to Joe, one lot to Vito and one lot to my daughter.

Q.    So if I have this right, assuming that council would allow you to do it, that was your intention, that is to give a subdivided lot, one to Vito, one to your daughter and one to Joe?

A.    Once me and my husband were okay and we were, had nothing else to do and we were okay then we would have given it to our children. What else were we to do?

Q.    When you say ‘okay’, do you mean as in once you were retired and comfortable?

A.    Yes, yes.

Q.    So you always intended to give them the subdivided lots of land? When I say ‘them’ I mean your daughter, Vito and Joe, but only once you retired and council approved it?

A.    The intention was sort of there but it wasn’t a real intention until we got the approval, until the time came.”

32. A short time later, Gaetana gave this evidence in answer to questions from me:

“Q.    And what do you mean when you say ‘after I was okay’? What do you mean by that?

A.   Sorry?

Q.    What do you mean when you say ‘after I was okay’?

A.    So after my husband had retired I had to make sure that we - there were no - there was no money coming in, so I had to make sure that we were doing okay because I didn't want to go to my children and ask for money.”

33. And later:

“Q.    In response to a query from your Honour about what you meant when you said ‘when I am okay’ or ‘when we are okay’ you said that, effectively, and these aren't specific words but when you were comfortable and you had no more debts or things to pay. Is that what you meant, ma'am?

A.    When I had no debts, nothing to pay, then I could have also helped my children in which way I could.”

34. Thus, what Gaetana meant when she said “if we were okay” was something to the effect “if we were financially secure”.

35. Gaetana was adamant, however, that nothing was said about this to Joe (or the other children).

36. Thus, she gave this evidence:

“Q.    But you always intended to subdivide the lot 1 property.

A.    When the time came.

Q.    You did say to Joe that he would get a subdivided lot when the time came.

A.    No, I didn't say anything to Joe. Neither I nor my husband had this discussion with Joe.

Q.    Are you absolutely certain that your husband did not say that to Joe?

A.    100%.”

37. A short time later, in answer to questions from me:

“Q.    Mrs Manno, you've just said something like, ‘We had a conversation with my husband, it was an intention not a promise.’ Do you remember saying that to me just then?

A.    Yes.

Q.    When you say, ‘We had a conversation’, with whom did you have that conversation?

A.    Me and my husband.

Q.    Did you say anything to any of the children about that?

A.    No, no.”

38. Despite this evidence, I think it probable that Gaetana and Sam did say something to Joe (and perhaps also Vito and Sara) about subdividing Lot 1 and possibly giving the children a lot from the subdivision. That was, after all, their intention; provided they were financially secure.

39. As Mr Flaherty, who appeared for Sam and Gaetana, very fairly conceded in final submissions, “the parents may well have said something about the subdivision”.

40. But even on Joe’s account of it, all that his parents said to him was that he (and his siblings) would receive a block of land “when the subdivision happens”.

41. There could be no certainty that any subdivision would go ahead. In fact, as I describe below, it did not.

42. Joe must have understood that whatever his parents said to him about getting a “subdivided lot” depended on the subdivision proceeding and that that would depend on what the future held for his parents, including financially.

Detrimental reliance?

43. Gaetana gave this evidence about the circumstances in which Joe came to work at the Business:

“Q.    I want to suggest something to you, ma'am, and that is: Joe started in the Business about May/June 2002, and also around that time, you and your husband said to Joe to accept a lower wage and he would be given the Business, and be given a subdivided lot.

A.    No, it's happened like this: Joe came to work for the company because he had no work, and I had pressed my husband to take him to work, because he had a certain character that I'm sure my husband didn't want to take him, but I pushed him to take him. And then when Joe came to work, my husband said, ‘Slowly, I'll teach you how to work. I'll teach you how to do the Business, and then going on, you'll be able to get more and more money.’ But that's all that was promised to him, nothing else.”

44. It is true that Joe had “no work” at the time he was invited to join the Business. He had left his handyman job with the estate agent suddenly, and as a result of an altercation with his employer.

45. In his first affidavit, Joe claimed that he had been earning almost $800 per week in his handyman job and started at the Business on a wage of $400 per week: around half of his earnings as a handyman.

46. This was not true, as he accepted very early in his cross-examination when confronted with documentary records contradicting his claim.

47. He was not earning $800 per week at the real estate agent. He was earning $544 per week. And he was not earning $400 per week at the Business. He was being paid $550 per week: a slight increase on what he was being paid as a handyman.

48. Further, although he initially denied it, he was being paid some money in cash.

49. Each of Sam (in his affidavit) and Gaetana (in cross-examination) said that Joe stated he wanted to be paid in cash as he did not want Josie to know of such payment. Joe denied that was so but, as I have said, ultimately admitted to receiving payments in cash. Josie said that Joe had never told her of any cash payments.

50. Joe gave evidence that he repeatedly threatened to leave the Business but was encouraged by Sam to stay. He claimed that Sam made statements such as:

“[T]he business isn’t making much money so I can’t afford to pay you more”.

“[W]e haven’t got long now before we get the money for the land we have sold”.

“[D]on’t worry the business and a block of land will be yours soon. Do you really think I want to continue? I am old now and it’s time for your mother and I to relax and enjoy ourselves”.

“[J]ust be patient, the business and block are coming to you soon”.

51. He denied that Sam had said to him words to the effect “if you don’t like it here, leave”. However, Josie gave evidence that Joe had told her that Sam had said just that.

52. Notwithstanding Joe’s pleaded case, there is no evidence that the amount that Joe was being paid while working in the Business was a “nominal draw” or was an amount “well below” the “industry standard for the type of work” that Joe was performing. There was no evidence at all of “industry standard” remuneration for the work Joe was doing. Nor was there evidence that the amount that Joe was being paid was less than he could have earned working for a third party or working on his own account.

53. My conclusion is that Joe worked at the Business for so long as suited him. He did not stay in the Business because of anything said to him by either of his parents about the subdivision of Lot 1.

54. What is clear is that in July 2010, Joe started his own business under the name “Mr Earthworks”. He purchased a Volvo truck that formerly belonged to the Business and took with him at least one client that had formerly been a client of the Business. That event appears to be one of the reasons for the falling out between Joe and his parents.

55. At around that time, the Business collapsed. Gaetana gave this evidence:

• “Q.    Just a moment ago, Mrs Manno, you said that you thought it would be better to sell the Business. Did you ever sell the Business?

• A.    My husband had no choice, because when Joe took the clients and the Business went broke, and there was no extra clients, and my husband was diagnosed with prostate cancer, there was no choice. There was no business, there was no money coming in, so my husband decided he couldn't go to work, so he decided to sell all the assets for a plate of pasta, after 50 years of sacrifice. And to help pay the mortgage that was owing to the bank.”

The subdivision did not proceed

56. Mr Carrapetta gave evidence that it is now possible for Lot 1 to be subdivided.

57. However, this did not happen while Sam and Gaetana owned Lot 1.

58. In cross-examination Gaetana explained why.

59. She said that notwithstanding the agreement referred to in the recitals to the Deed of Acknowledgment, Landco did not proceed with the subdivision of Lot 2.

60. Gaetana said:

“No, we - there wasn't any money but when we sold the land the other part of the land [that is, Lot 2] a developer bought it and he wasn't doing anything with the land anyway because the government wasn't giving them any approvals. And he sold it to somebody else. To Santa Maria.”

61. Gaetana then gave this evidence:

“Q.    You and your husband didn't apply to get approval to subdivide Lot 1, did you?

A.    We went to council, my husband and I went to speak to council and they said that the land is still rural and that there's no - no - and there's no immediate change available. And he said that when the other people who bought the other part of the land gets approval then maybe there's a chance that we might be able to get approval for our lot. But, before they do the approval they have to make way for the road. And, in fact, the roads would end up in half our land.

Q.    Sorry, did you finish your response? I don't want to cut you off, ma'am.

A.     No, that's it.

Q.    That meeting with council that you and your husband attended to, what year was that in?

A.    I don't have these dates in my head all the time.

Q.    Is there perhaps an event that you may recall, I don't need a specific date but is there maybe an event that occurred around the time that you had this meeting that would prompt your memory?

A.    Two years ago. Two years ago, because when we saw them he said that there's no way that we're going to give you approval unless the people that purchased the other side get approval first, and since they're going to put the - the road in your side we thought there's no chance, it's still rural. So we thought to sell the land because there was no chance of it being subdivided.

Q.    Were you aware that your land was no longer zoned rural from at least 2008?

A.    Yes, we knew that, but still council wouldn't pass it.

Q.    But you and your husband didn't take the formal step of filling out an application, paying the fee and lodging it with council, did you?

A.    To do this formal application and to go to council and pay at least $30,000 for the application of each - of every block, we didn't have that money. So what was the point of going to - to council to ask for them to do the subdivision? Council wanted the money upfront before doing it.

Q.    But in the deed of acknowledge that you signed in March 2002 there was an agreement in relation to the subdivision that would be shared with you and the developer. Isn't that right? On a pro rata basis for the subdivision fees?

A.    But the other company didn't even try either, they haven't made any application to - to divide the land. So then I decided to sell the land. I sold it to pay for money that I owe to the bank and that's it.”

62. Sam and Gaetana sold Lot 1 in September 2014 for $1.1 million.

63. Sam gave evidence in his affidavit that the proceeds of sale were used to discharge an amount owing to Citibank and that the balance of $280,00 was paid to him.

64. In the meantime, on 1 November 2012, Sam and Gaetana had entered into an agreement pursuant to s 90C of the Family Law Act 1975 (Cth).

65. That agreement recited that Sam and Gaetana had separated in 2003 and that:

“[T]he marriage had broken down irretrievably on that date. The parties have lived separately and apart since that date although the parties have not yet divorced. In their opinion there is no reasonable likelihood of cohabitation being resumed.”

66. In 2003, Sam and Gaetana purchased an apartment in Cronulla for $820,000, funded by borrowings from Suncorp-Metway in the sum of $800,000.

67. Although the evidence about this was not clear, it appears that, from the time of the purchase of that property, Gaetana lived there (for at least part of the time) rather than at Edmondson Park.

68. Sam and Gaetana sold that apartment in February 2011 for $1.02 million. Around the same time Gaetana purchased a smaller apartment in Cronulla for $545,000 which was principally funded from the proceeds of sale of the earlier apartment. It appears that the balance was used to retire debt.

69. Thus it appears that what has happened is that, although Sam and Gaetana did intend to subdivide Lot 1, and although they approached the relevant Council to seek permission to do so, they could not get permission on terms that were satisfactory to them.

70. That evidence emerged as a result of questions put to Gaentana by Mr Salama, who appeared for Joe. Mr Salama did not suggest the evidence was not true. Nor did he suggest that Sam’s and Gaetana’s motivation in selling Lot 1 was somehow to thwart any claim Joe might have to it.

71. There is no suggestion in the evidence that it was unreasonable of Sam and Gaetana not to persist in seeking to progress the subdivision, nor that it was unreasonable for them to decide, instead, to sell Lot 1 and use the proceeds as they chose (evidently, in large part, to retire debt and to secure Gaetana’s accommodation at Cronulla).

72. Sam has now died. There is no evidence as to what his estate comprises. Gaetana is now living at the second Cronulla apartment. There is no other evidence as to her financial position.

An estoppel?

73. The essential object of the law of estoppel is to avoid detriment that would be suffered by a party who has been induced to act, or to abstain from acting, in reliance on a non-contractual promise or representation, where it would be unconscionable for the party who made the representation or promise not to fulfil it (see Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 at 404 and 419).

74. Equitable estoppel:

“Looks backwards from the moment the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.”

Per Hoffman LJ in Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unrep) at [58]; cited with approval by Bathurst CJ (with whom McColl and Meagher JJA agreed) in Ashton v Pratt [2015] NSWCA 12 at [134].

75. I see no unconscionability on the part of Sam or Gaetana in this case.

76. Assuming that Sam and Gaetana said to Joe something to the effect that they intended to subdivide Lot 1 and to give him (and Vito and Sara) a lot from the subdivision, I do not accept that this statement induced Joe to join to the Business or to continue to work there until he set up his own business in 2010.

77. And even if that be wrong, and Joe was induced to join and remain in the Business because of such representation, there is no evidence that Joe suffered any detriment in doing so.

78. Further, the evidence fails to establish that any reliance by Joe on anything said to him by Sam or Gaetana was reasonable. He must have known that the transfer of a subdivided lot to him was conditional on council approval being given for the subdivision. That factor alone provides further support for the conclusion that there was no unconscionability on the part of Sam and Gaetana (eg Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 per Deane J at 445).

79. And perhaps most importantly of all, there was no subdivision. There is an explanation for why that is so. Sam and Gaetana were not able to negotiate terms with the relevant council on terms satisfactory to them. They chose to sell the property, rather than subdivide it, and used the proceeds as I have described.

80. Whatever was said to Joe back in 2002, the time to fulfil any promise made has not fallen due and will now never fall due.

81. I see nothing unconscionable about Sam and Gaetana’s decision not to proceed with the subdivision, to sell Lot 1 and to use the proceeds in their own interests in their declining years.

82. I should add that, in the further amended statement of claim filed on 16 February 2016, Joe also sought a declaration that Gaetana holds her Cronulla unit on trust for him and that she and Sam hold the proceeds of sale of Lot 1 on trust for him. However, the pleading seeking to justify those prayers for relief was, expressly, abandoned by the amendment made that day. In any event, I see no basis upon which to made any such declarations.

83. The proceedings should be dismissed.

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Decision last updated: 22 April 2016