McDonald v Dunscombe

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2015 03955

MARGARET MCDONALD	Plaintiff
v
JOHN FRANCIS DUNSCOMBE	Defendant

---

JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	14–17, 21–23 November, 7 December 2016
DATE OF JUDGMENT:	31 May 2018
CASE MAY BE CITED AS:	McDonald v Dunscombe
MEDIUM NEUTRAL CITATION:	[2018] VSC 283

---

EQUITY — Promissory estoppel — Proprietary estoppel — Whether parents promised or represented certain assets to pass to plaintiff and her sister upon the death of both parents — Whether defendant’s response constitutes representations — Whether promises or representations sufficiently certain — Whether plaintiff reasonably relied on the promise or representations — Whether plaintiff acted to her detriment on the promise or representations — Giumelli v Giumelli (1999) 196 CLR 101 — Harrison v Harrison [2011] VSC 459 —Sidhu v Van Dyke (2014) 251 CLR 505.

EQUITY — Common intention constructive trust — Muschinski v Dodds (1985) 160 CLR 583 — Baumgartner v Baumgartner (1987) 164 CLR 137.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Anderson QC with Mr R Craig	Holding Redlich
For the Defendant	Mr P H Solomon QC with Ms M O’Sullivan	Russell Kennedy

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

The plaintiff’s claims......................................................................................................................... 1

Defendant’s defence...................................................................................................................... 2
Plaintiff’s responses to the defences.......................................................................................... 2
Defendant’s response to s 53(1)(c) of the Property Law Act 1958............................................ 3

Mrs Crouch’s proceeding.................................................................................................................. 3

Applicable principles – promissory or proprietary estoppel..................................................... 3

Factual background...................................................................................................................... 6
Family history...................................................................................................................... 6
The farming partnership and purchase of Faceys.......................................................... 7
Purchase of Hayes............................................................................................................... 8
The farming partnership..................................................................................................... 8
Financial contributions for the purchase of Faceys and Hayes.................................... 9
Consolidation of titles of Faceys and Hayes and thereafter known as Spring Lodge 10
Compulsory acquisitions of easements over Spring Lodge....................................... 10
Purchase of a family home by the defendant and Kathy............................................ 10
Kathy becomes a partner in the business...................................................................... 11
Purchase of McLellans...................................................................................................... 11
Plaintiff’s reaction to the purchase of McLellans.......................................................... 12
Mrs Crouch’s reaction to the purchase of McLellans................................................... 14

The plaintiff’s pleaded representations................................................................................... 14
Plaintiff’s evidence of the kitchen table discussion..................................................... 15
Mrs Crouch’s evidence of the kitchen table discussion............................................... 16
Defendant’s evidence of the kitchen table discussion................................................. 17

Did Mr Dunscombe represent to the plaintiff that she would receive one half of Spring Lodge on the death of both himself and Mrs Dunscombe and did the defendant also make that representation?.............................................................................................................................................. 19
Plaintiff’s pleaded further representations.................................................................... 23
Plaintiff’s evidence at trial of statements made by Mrs Dunscombe to the plaintiff 24
Plaintiff’s alternative claim of encouragement............................................................. 25
Plaintiff’s further alternative claim of mutual assumption......................................... 25
Conclusions........................................................................................................................ 25

Did the plaintiff act in reliance on the representations, the further representations or the encouragement or mutual assumption to her detriment?.......................................... 26
Working for uncommercial terms substantially below accepted industry wages.. 28
Not pursuing alternative activity.................................................................................... 29
Not demanding to be registered as proprietor............................................................. 30
Conclusions........................................................................................................................ 30

Was the plaintiff’s expectation of an interest in Spring Lodge upon the death of Mr and Mrs Dunscombe extinguished by the payment to her of $1 million........................................ 31

Factual background.................................................................................................................... 32
Discussions to buy out the interests of the plaintiff and Mrs Crouch in Spring Lodge... 33
The deeds of gift.......................................................................................................................... 35
The Barbara Dunscombe Family Trust.................................................................................... 37
Consideration.............................................................................................................................. 39
Section 53(1)(c) of the Property Law Act 1958........................................................................... 41

Common intention constructive trust........................................................................................... 42

Was a common intention as to the beneficial ownership of Spring Lodge established?. 43
Was a common intention established through the conduct of the parties?....................... 45
Conclusions.................................................................................................................................. 46

Orders................................................................................................................................................. 46

HER HONOUR:

Introduction

John William Dunscombe and Barbara Annie Dunscombe are the parents of the plaintiff, the defendant and Mrs Joan Crouch. Mr Dunscombe died on 30 July 1989, aged 76 years. Mrs Dunscombe died on 20 November 2013, aged 98 years.

The plaintiff’s claims

The plaintiff’s proceeding claims promissory or proprietary estoppel, alternatively, a common intention constructive trust, in respect of a property known as ‘Spring Lodge’ in Narre Warren Road, Cranbourne on the basis of certain representations made by the defendant and Mr and Mrs Dunscombe at a kitchen table discussion held at Spring Lodge in early 1984 (‘the kitchen table discussion’). At the time of the kitchen table discussion, Spring Lodge was jointly owned by Mr and Mrs Dunscombe and the defendant.

The plaintiff alleges that the defendant and Mr and Mrs Dunscombe represented to the plaintiff and Mrs Crouch, that upon the death of Mr and Mrs Dunscombe, the plaintiff and Mrs Crouch would be the joint owners of Spring Lodge and the defendant would be the sole owner of a nearby property known as ‘McLellans’.

Subsequent to the kitchen table discussion, the plaintiff alleges further representations were made by the defendant and Mr and Mrs Dunscombe that upon the death of Mr and Mrs Dunscombe, the plaintiff and Mrs Crouch would be the joint owners of Spring Lodge and the defendant would be the sole owner of McLellans.

In the alternative, the plaintiff pleads that at all material times the defendant and Mr and Mrs Dunscombe encouraged the plaintiff to work in the market garden business conducted at Spring Lodge and not to demand to be a registered proprietor of Spring Lodge. In the further alternative, the plaintiff, the defendant and Mr and Mrs Dunscombe mutually assumed that as and from early 1984, the plaintiff and Mrs Crouch would be the joint owners of Spring Lodge and the defendant would be the sole owner of McLellans.

In reliance on the representations, the further representations, or the encouragement or the mutual assumption, and the common intention, the plaintiff continued to work at the market garden business at rates that were substantially below accepted industry wages, did not pursue alternative activity and did not demand to be a registered proprietor of Spring Lodge.

The plaintiff claims a proprietary interest in Spring Lodge to the extent of a one half share, alternatively, to equitable compensation to the value of a fifty per cent interest in Spring Lodge. Alternatively, the plaintiff claims the defendant holds the plaintiff’s interest in Spring Lodge as constructive trustee.

Defendant’s defence

The defendant denies the plaintiff’s claims. He accepts that some kind of family agreement was reached at the kitchen table discussion as to the amount of inheritance that the plaintiff and Mrs Crouch would receive on the deaths of Mr and Mrs Dunscombe. He says the agreement was that the plaintiff and Mrs Crouch would each receive one sixth of the value of Spring Lodge.

The defendant alleges that in 2002 and 2003, the plaintiff’s expectation of an interest in Spring Lodge was satisfied by payment to the plaintiff by way of deed of gift between the plaintiff and Mrs Dunscombe. Pursuant to the deed of gift, an amount of $500,000 was paid to the plaintiff and the balance of $500,000 was invested during Mrs Dunscombe’s lifetime, with interest on the capital paid annually to the plaintiff. On Mrs Dunscombe’s death, the capital amount of approximately $500,000 was paid to the plaintiff. The defendant contends that the plaintiff agreed to this arrangement and the plaintiff has no remaining entitlement to an interest in Spring Lodge.

Plaintiff’s responses to the defences

The plaintiff admits receiving the first payment of $500,000 by way of gift, the interest from the remaining $500,000 each year until the death of Mrs Dunscombe and thereafter the amount of $494,958 on her death. The plaintiff claims that the payments were a gift to her from Mrs Dunscombe and denies the payments extinguished her entitlement to an interest in Spring Lodge.

The plaintiff also contends that a disposition in land subject to an equitable interest must be in writing, pursuant to s 53(1)(c) of the Property Law Act 1958, and the arrangement and payments to her were ineffective to dispose of her equitable interest in Spring Lodge.

Defendant’s response to s 53(1)(c) of the Property Law Act 1958

The defendant contends that the plaintiff had no equitable interest subsisting at the time of the disposition in 2003 and s 53(1)(c) is not applicable in the circumstances.

Mrs Crouch’s proceeding

In August 2015, Mrs Crouch issued a proceeding against the defendant alleging proprietary estoppel on the basis of representations made to her at the kitchen table discussion in the presence of Mr and Mrs Dunscombe and the defendant, alternatively, a common intention constructive trust. At the date of the plaintiff’s trial, Mrs Crouch’s proceeding had been dismissed.

Applicable principles – promissory or proprietary estoppel

In Australia, the principle of equitable estoppel is set out in Waltons Stores (Interstate) Ltd v Maher (‘Waltons Stores), where Brennan J said:

A non-contractual promise can give rise to an equitable estoppel only when the promisor induces the promisee to assume or expect that the promise is intended to affect their legal relations and he knows or intends that the promisee will act or abstain from acting in reliance on the promise, and when the promisee does so act or abstain from acting and the promisee would suffer detriment by his action or inaction of the promisor were not to fulfil the promise.[1]

[1](1988) 164 CLR 387, 424.

Proprietary estoppel is the doctrine by which a court of equity intervenes to redress the unconscionable conduct of a promisor departing from a promise, which promise has induced another to change his or her position to their detriment.[2]
[2]Harrison v Harrison [2011] VSC 459 (19 September 2011) [369] (Kaye J).

In Donis v Donis,[3] Nettle JA (as his Honour then was) considered these principles where the expectation that was encouraged was the acquisition of an interest in real property, with the defendants making statements to their daughter in law (‘the plaintiff’) before and after her marriage to their son, that she and their son would be registered as proprietors of certain property. The Court of Appeal upheld the decision of the trial judge who found in favour of the plaintiff as she had relied on those statements, to her detriment, by agreeing to marry the son, by allowing herself to become pregnant sooner than would otherwise be the case, by moving into the property and by spending money and effort improving it (‘the relevant circumstances’).[4] From the lead judgment of Nettle JA, it is clear that the Court considered that the relevant circumstances each qualified as acts of detriment that were material to establishing her claim in proprietary estoppel.[5] In Sidhu v Van Dyke,[6] the High Court of Australia granted relief under the doctrine of proprietary estoppel and approved the statements of Nettle JA in Donis v Donis.[7]
[3]Donis v Donis (2007) 19 VR 577 (Maxwell ACJ, Nettle and Ashley JJA).
[4]Donis v Donis [2005] VSC 263 (16 September 2005) (Hansen J).
[5]Donis v Donis (2007) 19 VR 577.
[6](2014) 251 CLR 505. See also, Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, 16 [36] (French CJ, Kiefel and Bell JJ).
[7] Sidhu v Van Dyke (2014) 251 CLR 505, 528 (French CJ, Kiefel, Bell and Keane JJ).

Any alleged promise or representation must be in clear terms before it can found an estoppel.[8] However, in cases of proprietary estoppel, the test is less stringent and the precision of the promise relied on does not need to be proved to the same standard as that required to establish promissory estoppel.[9]
[8]Legione v Hateley (1983) 152 CLR 406, 435–7 (Mason and Deane JJ).
[9]Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, 16 [36] (French CJ, Kiefel and Bell JJ).

Critical to a finding that the promisee acted to his or her detriment is proving that he or she relied on the promise, causing him or her a detriment. Such reliance must be proved and cannot be inferred; a causal connection between the promise and the detrimental reliance must be established on the facts of the case. In Sidhu v Van Dyke, French CJ, Kiefel, Bell and Keane JJ held:[10]

Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact. It is actual reliance by the promisee, and the state of affairs so created, which answers the concern that equitable estoppel not be allowed to outflank Jordan v Money by dispensing with the need for consideration if a promise is to be enforceable as a contract. It is not the breach of promise, but the promisor’s responsibility for the detrimental reliance by the promisee, which makes it unconscionable for the promisor to resile from his or her promise. In Giumelli v Giumelli, Gleeson CJ, McHugh, Gummow and Callinan JJ approved the statement of McPherson J in Riches v Hogben that:
“It is not the existence of an underperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise.”

[10](2014) 251 CLR 505, 522–3 [58] (citations removed).

Proprietary estoppel acts to protect a promisee from any detriment that they will suffer as a result of the promisor changing his or her position and resiling from the promise made. Where established, the estoppel acts to take necessary steps to prevent any detriment to the promisee by requiring, for example, specific performance of the promise or of the expectation generated by the promise.[11] That is, in circumstances where a promise as to an interest in property is so categorically expressed and, as a result, a promisee relies on that promise to his or her detriment, ‘justice between the parties will not be done by a remedy the value of which falls short of holding the [promisor] to [his or her] promises’.[12] While specific performance is often the relief granted, the ‘requirements of good conscience may mean that in some cases the value of the promise may not be the just measure of the relief’;[13] that is, equitable compensation may suffice in lieu of specific performance where it would be inequitable or unjust to uphold the promise.[14]
[11]Giumelli v Giumelli (1999) 196 CLR 101, 112 [6], 123–5 [40]–[48] (Gleeson CJ, McHugh, Gummow and Callinan JJ).
[12]Sidhu v Van Dyke (2014) 251 CLR 505, 530 [85] citing Giumelli v Giumelli (1999) 196 CLR 101.
[13]Ibid 529 [83].
[14]Ibid citing The Commonwealth v Verwayen (1990) 170 CLR 394, 441 (Deane J).

In substance, in claiming proprietary estoppel, the plaintiff must establish:[15]
[15]See, eg, Harrison v Harrison [2011] VSC 459 (19 September 2011) (Kaye J).

(a) that a representation was made by the defendant to her that she would receive one half of Spring Lodge on the deaths of both Mr and Mrs Dunscombe;

(b) that she acted in reliance on that representation by working at the market garden business at below industry rates, did not pursue alternative work activity and did not demand to be a registered proprietor of Spring Lodge ; and

(c) that she acted reasonably in so relying on the promise made to her by the defendant;

(d) that the defendant knew or intended that the plaintiff would rely on his representation and would thereby act in the manner referred to above;

(e) That she has suffered detriment as a consequence of the failure of the defendant to adhere to his representation.

Factual background
Family history

The plaintiff was born in 1940, Mrs Crouch in 1941 and the defendant in 1945.

During their childhood, Mr and Mrs Dunscombe owned and operated a market garden in Springvale Road, Glen Waverley.

In 1956, aged 16 years, the plaintiff left school and worked at the Glen Waverley Post Office, carrying out tasks such as sales, creating postal notes, money orders and banking. In 1964, aged 24 years, she married Robert McDonald, a civil engineer working at the Cranbourne Shire Office. Before the birth of their first child in December 1965, the plaintiff worked on the checkout counter at Woolworths for a number of months. She did not work outside the home until about a year after the birth of her second child in 1967 when she worked in the market garden business then operated at Spring Lodge.

In 1963, aged 22 years, Mrs Crouch married and moved to the country and only occasionally visited her parents.

In 1961, aged 16 years, the defendant left school. He lived with his parents and worked full time in the market garden business. He also reared poddy calves, having done so while still at school. By the time he turned 21, he had saved around $38,000 from the sale of the calves. In 1973, aged 28 years, the defendant married Kathy and from 1974 onwards they lived close by to Mr and Mrs Dunscombe in a rented house on McLellans.

The farming partnership and purchase of Faceys

On 4 October 1965, Mr and Mrs Dunscombe and the defendant entered into an oral partnership agreement for the purpose of conducting a farming and market garden business.

In 1966, Mr and Mrs Dunscombe sold their Glen Waverley property and purchased a property known as Faceys in Narre Warren Road, Cranbourne, for $45,000. Mr and Mrs Dunscombe provided the funds for the purchase and the property was registered in the joint names of Mr and Mrs Dunscombe and the defendant.

On 7 November 1966, Mr and Mrs Dunscombe and the defendant entered into a written deed of partnership (‘the partnership’). The partnership deed noted the oral partnership agreement between the parties in place since 4 October 1965. The business of the partnership was described as ‘that of graziers, farmers and market gardeners and such other business as the partners shall agree and shall be carried on from the property in Narre Warren Road, Cranbourne or from such other place as the parties shall from time to time decide’.

The capital of the partnership consisted of land, property, stock and equipment used in the partnership business and was deemed to have been contributed by the three partners in equal shares. The deed noted that Mrs Dunscombe and the defendant owed Mr Dunscombe an amount of $15,333 for their share in the partnership, and this amount could be called upon at any time to be paid. Mr Dunscombe did not ever demand this money from Mrs Dunscombe or the defendant.

The partnership deed provided for the partners to draw down a salary in an amount as agreed by the partners from time to time and that this would constitute a business outgoing for the purposes of accounting. It appears that none of the partners drew a wage, with this confirmed by the few partnership returns in evidence. The deed provided that any partner could draw down an amount insofar as the sum total drawn down did not exceed the annual profit made for that partner.

The partnership traded under the registered business name of ‘J. Dunscombe’ with Mr Dunscombe registered as the individual owner, and Mrs Dunscombe and the defendant listed as representatives.

Faceys was not set up as a market garden as it did not have a water source or irrigation system and the paddocks needed to be ripped, ploughed and rotary hoed. Mr and Mrs Dunscombe, the defendant and other family members did this work. Until the market garden was in place, the partnership ran cattle on the property. In around 1967 or 1968, the partnership commenced the operation of a market garden business on Faceys.

Purchase of Hayes

In 1971, the partnership purchased a property known as Hayes for $30,468.75. Hayes was next to Faceys but it did not have road frontage. The defendant paid for Hayes, using his savings from the sale of his calves and his partnership profits. The partnership paid the additional costs, such as stamp duty and other fees, such as fencing and land surveys. In April 1971, Hayes was registered in the joint names of the partners.

The farming partnership

The combined size of Faceys and Hayes was 165 acres. The partnership operated the market garden business and farmed the cattle. The three partners were involved in the market garden business, with the defendant doing such activities as ploughing, rotary hoeing, planting seeds and plants, weeding and general maintenance. The majority of the produce harvested at the farm was sold at the Footscray wholesale market. The defendant drove to market twice a week, arriving between 3 and 4 o’clock in the morning. He was paid in cash or by cheque, the latter payment from repeat customers with larger orders. On his return from the market, he gave the cash and cheques to Mr and Mrs Dunscombe. The defendant sometimes assisted them by counting the amounts and paying the funds into the partnership bank account. Mrs Dunscombe usually kept some of the cash for farm expenses. The defendant emphatically denied that he was paid for his work on the farm, apart from when his mother occasionally gave him amounts for small expenses, such as a haircut, from time to time.

The partnership employed family members as casual workers on the farm. Mrs Dunscombe determined the rate of pay for the casual workers on the farm, including the plaintiff and Mrs Dunscombe’s sister, Rita, and paid them cash in hand. From time to time, Mrs Dunscombe asked the defendant to find out from the neighbours, who also operated a market garden business, what rates they paid their casuals. On some occasions, Mrs Dunscombe also paid cash to contractors for other farm work, such as fencing, cutting and baling hay and aerial spraying of the crops.

Financial contributions for the purchase of Faceys and Hayes

The plaintiff asserted that the defendant did not contribute to the purchase of Faceys and that it belonged to Mr and Mrs Dunscombe, with the defendant’s name only registered on the title.

The evidence did not support this assertion. As stated, the partnership deed recorded that Mrs Dunscombe and the defendant owed Mr Dunscombe an amount of $15,333 for their share of the partnership, reflecting their third share of the purchase price of $45,000 for Faceys. Mr Dunscombe did not call in the loans. Subsequently, the defendant paid the whole of the purchase price of $30,500 for Hayes. The combined payments for the two properties were $75,500, excluding additional costs and fees such as stamp duty, making the defendant’s financial contribution, as an equal partner in the case of Faceys and as the primary financer in the case of Hayes, to the two properties at more than half.

The plaintiff also asserted that Mr Dunscombe provided the funds for the purchase of Hayes from the sale of a property in Brazilia Drive. This assertion was first made at trial. The assertion was incorrect as it was not until 1973 that Mr Dunscombe received the sale proceeds from the Brazilia Drive property whereas Hayes was purchased in 1971.

Consolidation of titles of Faceys and Hayes and thereafter known as Spring Lodge

Around 1978, the partnership sought to consolidate the titles for Faceys and Hayes for the purpose of removing the problem of Hayes not having any road frontage. The consolidation of the titles to Faceys and Hayes occurred on 30 May 1978. In the Dunscombe family, the consolidated land was known as Spring Lodge and it was acknowledged and understood by the family that Spring Lodge was partnership property.

Compulsory acquisitions of easements over Spring Lodge

On 8 October 1979, the State Electricity Commission of Victoria gave notice to the partnership that it would compulsorily acquire an easement over a significant portion of Spring Lodge for the purpose of electricity transmission, with the relevant easement registered on the title to the property on 29 July 1982.

On 1 September 1981, the State Rivers and Water Supply Commission gave notice to the partnership that it would compulsorily acquire an easement over Spring Lodge, with the transfer registered on 16 June 1982 but subsequently cancelled as to part.

Compensation of approximately $133,000 paid for the easements was treated as partnership money and invested in bank bills.

Purchase of a family home by the defendant and Kathy

In 1982, the defendant and Kathy purchased a family home for $69,000 in Devon Meadows. They had sufficient funds to pay for it without borrowing any funds. The Devon Meadows property was registered in their joint names on 8 February 1983. The home on the property was much more comfortable than their modest rented home at McLellans. While they were living at Devon Meadows, their second child, Jonelle, was born.

Kathy becomes a partner in the business

On 26 October 1982, Kathy was added as a representative of the farming partnership and became a member of the partnership.

Before her marriage to the defendant, Kathy worked as a flight attendant. After her marriage, she was a senior training flight attendant. She then worked at Myer in sales where she became a manager and buyer in the fashion department. She was well paid and contributed financially to the marriage. She also worked in the market garden at Spring Lodge and helped with other farm activities, without payment, before heading to work, on her days off and on the weekends. When she ceased her employment at Myer, she worked full time on the farm without payment.

Purchase of McLellans

Around late 1982, McLellans came on to the market. The property comprised 280 acres and was zoned industrial. The defendant and Kathy had always liked the property and they decided to sell their Devon Meadows property and purchase McLellans. The Devon Meadows property sold for $84,000 and settlement took place on 27 May 1983.

In early 1983, the partnership purchased McLellans under a terms contract for the sum of $480,000. After the sale of the Devon Meadows property, the defendant and his family moved back to the same modest house they had previously rented on McLellans.

The plaintiff pleads that McLellans was purchased in furtherance of the family business. In the pleadings, the ‘family business’ is defined as the ‘family market garden business’ on Spring Lodge. The evidence does not support this pleading. The market garden business only ever operated on Spring Lodge and the balance of Spring Lodge and all of McLellans were used to farm cattle.

The plaintiff also pleads that McLellans was acquired using the proceeds derived from the family business. During the trial, the plaintiff maintained that McLellans was ‘bought for’ the defendant and that he did not contribute to the purchase of McLellans. The plaintiff disputed the contributions for the purchase price of McLellans, stating that Mrs Dunscombe told her where the funds for the purchase came from and she did not refer to funds coming from the sale of the Devon Meadows property owned by the defendant and Kathy.

The evidence does not support these assertions. The evidence, including the supporting documentation, establishes that the purchase of McLellans was funded by the defendant and Kathy providing $84,000 from the sale of their Devon Meadows property and by the partnership providing an amount of $400,000. This amount was made up by the compensation of $133,000 from the SECV and State Rivers, an amount of $117,000 from the Spring Lodge partnership and a further amount of $150,000 from partnership funds derived from cattle sales and agistment fees. Of the contributions by the four partners to the purchase of McLellans, the defendant and Kathy provided a significantly higher proportion of the funds compared to Mr and Mrs Dunscombe as the defendant and Kathy contributed the sale proceeds of their Devon Meadows property as well as their share of partnership funds. If Kathy’s contribution as a partner was discounted or removed, one third of the partnership funds used to purchase McLellans would still be attributable to the defendant in any case.

Upon settlement of the terms contract on 23 May 1985, McLellans was registered in the joint names of Mr and Mrs Dunscombe and the defendant. McLellans was treated as partnership property and was farmed by the partnership.

Plaintiff’s reaction to the purchase of McLellans

The plaintiff disputed the defendant’s evidence that in 1983 he told the plaintiff that ‘Dad and Mum and I are considering buying McLellans’. The defendant gave evidence that he said this at least one week before McLellans was purchased when he visited the plaintiff at her house. He did not discuss it again with the plaintiff as she was ‘very offensive [sic], even that Mum and Dad and I were considering buying another farm’. He did not discuss the purchase with the plaintiff’s husband or with Mrs Crouch, who lived in Albury and visited the family only occasionally.

In contrast, the plaintiff said she learned of the purchase one day in August or September 1983, after her husband asked her if she knew if her parents and the defendant had purchased McLellans. He told her that a friend at work, Mr Jim Rogerson, had told him and then Mr Rogerson viewed the plan of McLellans in the planning office. He said the purchase price was $480,000 and the names of her parents and the defendant were registered on the title to the property. As Mr and Mrs Dunscombe and the defendant were not registered as the proprietors of McLellans until May 1985, this latter statement is incorrect.

The plaintiff was angry and ‘terribly upset’ about the purchase and she immediately drove to Spring Lodge and confronted her mother in the kitchen, who was making dinner, describing it as follows:

I said, ‘Gee Mum, you didn’t tell me that you bought Greg McLellans property.’ She said ‘We were going to but I hadn’t got around to it’ and I said ‘Gee, that’s not fair’… She said ‘We were going to tell you’ and I said ‘And you paid $480,000 for it.’ [She said] ‘That’s right.’ I said ‘Did you have the money Mum or did you have to borrow?’ ‘No, we had the money, we had the money from [her brother] Matt’s inheritance, the SEC wires and money that we have had here from the farm’. I said ‘Oh yes, okay’ and then I just went home and finished cooking dinner and things like that.

Later that night, the plaintiff called Mrs Crouch. Both the plaintiff and Mrs Crouch thought it was ‘unfair’ because they considered Faceys to be their parents’ property with the defendant only having his name on the title to Faceys. They also thought it unfair because the defendant had not contributed financially to the purchase price for McLellans with her evidence being, ‘Well, my mother did tell me that [the defendant] and Kathy hadn’t put any money into the farm, McLellans farm.’

The plaintiff said that Mrs Crouch was also ‘upset and annoyed’. Mrs Crouch told the plaintiff that ‘in the New Year, early ’84, I will come down and let’s come down and we will sort it out, let’s have a talk to Mum and Dad about it’. The plaintiff said Mrs Crouch could not come to Spring Lodge immediately as she was working but that she had an appointment to see an eye doctor in Melbourne in early 1984 and would visit Mr and Mrs Dunscombe on that trip.

Mrs Crouch’s reaction to the purchase of McLellans

Mrs Crouch heard about the purchase of McLellans from the plaintiff. She also said her cousin, Mr George Foot, worked at the Cranbourne Shire Office and he told the plaintiff’s husband about the purchase of McLellans. Mrs Crouch was surprised about the purchase as she knew her father never took out a mortgage. She was worried her parents were using all of their spare money for the purchase, that her father had been unwell, had stopped working and questioned the reasons for her parents purchasing more farming land. She said she did not come to Melbourne because she was in the middle of selling a property in Shepparton and purchasing another in Albury.

The plaintiff’s pleaded representations

The plaintiff pleads that at a meeting at Spring Lodge in early 1984, the defendant and Mr and Mrs Dunscombe represented to the plaintiff and Mrs Crouch that, upon the deaths of Mr and Mrs Dunscombe, the plaintiff and Mrs Crouch would be the joint owners of Spring Lodge and the defendant would be the sole owner of McLellans. The representations were oral and made by Mr Dunscombe at a discussion around the kitchen table. Mrs Dunscombe stated ‘yes’ in response to Mr Dunscombe’s statement and the defendant stated ‘yes’ and indicated by ‘nodding his head in agreement’.

It was common ground that neither the plaintiff nor Mrs Crouch contributed to the purchase of Spring Lodge or McLellans, that Mr and Mrs Dunscombe and the defendant jointly owned Spring Lodge, that the plaintiff and Mrs Crouch knew that Spring Lodge was jointly owned and that Spring Lodge was partnership property.

The plaintiff and the defendant accepted that the discussion was about inheritance, that it concerned Spring Lodge, that it was Mr Dunscombe who said that the plaintiff and Mrs Crouch were to have an interest in Spring Lodge and that some kind of family agreement was reached at the kitchen table discussion. It was agreed that Kathy was not present at the kitchen table discussion.

It was also accepted that Mr Dunscombe was quite unwell and that the division of Spring Lodge he spoke about would be after his death and Mrs Dunscombe’s death.

The witnesses did not agree as to the sequence of events that took place at the kitchen table discussion or as to the nature and size of the interest of the plaintiff and Mrs Crouch in Spring Lodge.

Plaintiff’s evidence of the kitchen table discussion

In early 1984, possibly Easter, Mrs Crouch came to Melbourne and stayed with the plaintiff on Friday and Saturday night. On Sunday morning, they visited their parents at Spring Lodge as it was a rest day for Mr and Mrs Dunscombe. They went with the intention of talking about the purchase of McLellans and to ‘bring things to a head’. When they arrived around 10.15 in the morning, Mr and Mrs Dunscombe and the defendant were sitting at the kitchen table having just finished their morning tea. Mr Dunscombe was in his usual position at the head of the table. Mrs Crouch walked around her father and sat on the side of the table with her back to the window, where the long driveway was down the side to the sheds. Mr Dunscombe was reading the newspaper. The plaintiff sat opposite Mrs Crouch. Mrs Dunscombe was sitting on a stool at the kitchen breakfast bar, where she always sat so that she could make tea and prepare meals, facing the table just behind where the plaintiff was sitting.

After all were seated, Mr and Mrs Dunscombe and Mrs Crouch spoke about the farm, the weather and ‘the children’ over a cup of tea and some scones and fruitcake.

Mrs Crouch spoke to her father and said, ‘Dad, I heard you’ve bought McLellans’ property across the other side of the road there.’ Mr Dunscombe responded, ‘Yes, we have.’ Mrs Crouch then said ‘You know, what’s going on, what’s happening in the future?’ Mr Dunscombe then stood up, softly banged the table and said, ‘Okay, I’ll tell you about it … This farm here is yours and Margaret’s. The farm across the road there is John’s … it’s more valuable, it’s got a three road frontage, it will be developed well and truly before this farm here.’ Mr Dunscombe then turned to Mrs Dunscombe and said, ‘Is that right, Barbara?’ and she replied, ‘Yes, Jack.’ Mr Dunscombe then turned to the defendant and asked, ‘Is that okay?’ and he replied, ‘Yeah.’ Mr Dunscombe then turned to Mrs Crouch and asked, ‘Joan, are you happy with that?’ and she replied, ‘Yes, I’m very happy with that.’ Finally, Mr Dunscombe turned to the plaintiff and asked, ‘Are you happy with that?’ and she replied, ‘Yes, I’m happy with that but there’s only one thing, Dad. John’s got his name on the title here.’ Mr Dunscombe responded, ‘I’ll fix that up, no worries, I’ll fix that up.’ Mr Dunscombe turned to Mrs Dunscombe and said, ‘Is that right, Barbara?’ and she replied, ‘Yes, Jack.’

The plaintiff said that apart from agreeing with Mr Dunscombe’s proposition as above, the defendant did not speak at the kitchen table.

In response to a question as to whether she thought the kitchen table discussion was, in essence, an inheritance question, the plaintiff responded, ‘Yes, we were going to inherit the farm, half each, my sister and I.’ She affirmed that the purpose of the discussion was to confirm her position in respect of the inheritance she was to receive because she thought it was unfair that the defendant was on the title to all the properties and would receive the bulk of their parents’ estate by way of survivorship. She also confirmed that she did not ask to be put on the title of Spring Lodge.

Following this conversation, Mr Dunscombe then went across to the wall unit with drawers in it, took out his tobacco tin, went outside to the long veranda, sat down with his dog and rolled some cigarettes. Mrs Crouch and the plaintiff took a walk around the garden with Mrs Dunscombe for approximately half an hour and talked about the plants.

After that, the plaintiff and Mrs Crouch drove back to the plaintiff’s home. During the drive home, Mrs Crouch asked the plaintiff how she felt and the plaintiff responded, ‘That’s great, Joan’ and Mrs Crouch said, ‘Fantastic, we now know where we stand.’

Mrs Crouch’s evidence of the kitchen table discussion

Mrs Crouch came to Melbourne between Christmas and Easter in early 1984. She did not give any notice to her parents or the defendant of her visit so ‘[the defendant] wouldn’t run away.’ She also said she had ‘originally intended that [the defendant] would not be there’. She went with the plaintiff to Spring Lodge sometime between morning tea and lunch. Her parents were surprised she was there.

In giving her evidence, Mrs Crouch often spoke of what would have occurred, rather than what she remembered, such as when asked where people were sitting, she responded, ‘Dad wasn’t well. He would have been sitting there.’

Mrs Crouch said she initiated the conversation with her father by telling her father she was concerned they were using all of the inheritance for their children to purchase McLellans. She also said she initiated the conversation with her father telling him she was concerned that her parents were investing all of their cash reserves in the purchase of McLellans and the purchase would leave them with little to fall back on if her father became ill and money was needed to look after him. She said, ‘it wasn’t my hope that I could stop [the purchase] but I just wanted them to think about it’.

Her father said to her, ‘We’re buying this property for John. Spring Lodge will be for you and Margaret.’ He then turned to each of Mrs Dunscombe, the defendant, the plaintiff and Mrs Crouch and said, ‘Hear that?’ and each of them responded in the affirmative. Mrs Crouch then asked, ‘What about the title?’ Her father responded saying, ‘we will have that attended to’. Mrs Dunscombe said that they did not have the money at the time to transfer the title. Mrs Crouch said that she and the plaintiff discussed the titles with Mrs Dunscombe ‘at some stage’. After the discussion, Mrs Crouch said her father remained in his seat because he was not well.

Defendant’s evidence of the kitchen table discussion

The defendant said the kitchen table discussion occurred in 1984 but he could not recall the time of year that it took place. He recalled that they were in possession of McLellans when the conversation took place, making it any time after late 1983. The defendant did not dispute that it occurred in early 1984.

In contrast to the evidence of the plaintiff and Mrs Crouch, the defendant could not recall Mrs Crouch being present at the discussion. He said he would have remembered if Mrs Crouch was there, as it would have been the first time all members of the family had been together for a long while. If Mrs Crouch had been present, he did not recall her saying anything, but he accepted that his memory could be mistaken given the length of time since the kitchen table discussion took place.

The defendant surmised the kitchen table discussion occurred on Friday because it was usual that Kathy and the children were at the farm on Saturdays and Sundays. Mrs Dunscombe usually made scones for Sunday morning tea and a roast for lunch and in the afternoons, Kathy and the defendant sometimes took cattle to the Dandenong-Pakenham market.

On the defendant’s account of the kitchen table discussion, he came into the kitchen for his morning tea around 9.30 and the plaintiff was already speaking with Mr and Mrs Dunscombe at the kitchen table. There were four seats around the kitchen table. The plaintiff was sitting in the place where the defendant usually sat, opposite Mr Dunscombe. He said the plaintiff initiated the kitchen table discussion.

The defendant’s evidence was, in substance, that the plaintiff wanted to know what her inheritance would be, describing the conversation as follows:

The discussion was about [the plaintiff] wanting to know what her inheritance would be and Dad indicated that it would be ¾ Spring Lodge would be divided into four, one part for him, one part for Mum, one part for myself and one part to be divided between [the plaintiff] and Mrs Crouch and then … [the plaintiff] said to the effect that ¾ no, I said first ‘do they get a share of the profits from the farms’ and Dad said ‘no, they don't get any profits but they don't have to pay rates either’. Then [the plaintiff] said ‘well, when is it going to be sold?’ Dad said ‘when I'm finished with it’ and that's the words he used, ‘when I'm finished with it, it will be ¾ it will come down to one-third [the defendant’s], one-third your mother's and one-third for you and Mrs Crouch’ and [the plaintiff] said ‘what happens at the end when it's just [the defendant] and us, how's it going to be divided?’ Dad said ‘when [the defendant's] finished farming with it, he will know when to sell it’. It was virtually that quick, 15 or so minutes. I was outside and came in and I didn't know [the plaintiff] was going to be there. It was something that wasn't planned, to my knowledge anyway.

The defendant disputes the plaintiff’s evidence that Mr Dunscombe softly banged the table for a number of reasons: first, that his father was not aggressive and, secondly, as his father had suffered a stroke in 1981 and suffered from hemiparesis on one side of his body, he would not have been able to bang the table. The defendant also disputes the plaintiff’s evidence about the movement of people immediately after the kitchen table discussion, in particular, her evidence that Mr Dunscombe left the kitchen to roll some tobacco as his father had stopped smoking after his first stroke in 1981.

Did Mr Dunscombe represent to the plaintiff that she would receive one half of Spring Lodge on the death of both himself and Mrs Dunscombe and did the defendant also make that representation?

Of the five people present at the kitchen table discussion at Spring Lodge, only the plaintiff, Mrs Crouch and the defendant gave evidence, with Mr and Mrs Dunscombe having died in 1989 and 2013 respectively. Each witness gave a different account of the kitchen table discussion and their evidence conflicted on both critical and non-critical issues. There are obvious difficulties for a witness to remember an event that took place many years ago. Memories fade over time and a witness may unwittingly tailor the evidence to suit his or her case. In this case, little contemporaneous documentary records exist to assist in determining the disputed recollections of the witnesses.

Of the non-critical issues, the plaintiff and Mrs Crouch differed as to how the plaintiff became aware of the purchase of McLellans but both said the kitchen table discussion took place in 1984. The defendant queried the year that the kitchen table discussion took place by reference to a number of indicators, such as he and his parents being in possession of McLellans by the time of the kitchen table discussion, the date of the registration of ownership of McLellans and that he also told the plaintiff that he and Mr and Mrs Dunscombe were considering purchasing McLellans. Nothing turns on these queries as, ultimately, the defendant did not dispute that the kitchen table discussion took place in early 1984.

There were also different recollections about whether or not Mrs Crouch was present at the kitchen table discussion. The plaintiff and Mrs Crouch said they were present as they were both concerned about their inheritance. As with the queries about when the discussion took place, ultimately, the defendant did not dispute that Mrs Crouch may have been present and accepted that his memory could be mistaken given that the discussion was so long ago.

The person who started the kitchen table discussion was contentious. The defendant said the plaintiff initiated the conversation with Mr Dunscombe. The plaintiff said Mrs Crouch asked her father, ‘what was happening in the future’ and Mrs Crouch said she asked her father how could he purchase McLellans given he was unwell and short of money and was concerned her parents were using all their children’s inheritance to purchase McLellans.

Both Mrs Crouch and the plaintiff said each of them brought up the issue of the title of Spring Lodge with their parents, whereas the defendant corroborates the plaintiff’s evidence as he said the plaintiff raised it.

Of the critical issues and where the evidence differs is what Mr Dunscombe said at the kitchen table discussion. The plaintiff said that her father stood up after softly banging the table, said that Spring Lodge would be the plaintiff and Mrs Crouch’s, turned to Mrs Dunscombe and the defendant and asked them separately, ‘is that right’ or ‘is that ok?’ and each replied, ‘yes’ or ‘yeah’. The plaintiff said that her father asked her whether she was ‘happy with that’. Mrs Crouch said her father said, ‘Spring Lodge will be for you and Margaret’ and turned to each of them, including the defendant and Mrs Dunscombe and asked whether they had ‘heard’ him, with each responding in the affirmative. On Mrs Crouch’s version of the discussion, the defendant was doing no more than acknowledging he had heard the representation by Mr Dunscombe.

The defendant’s evidence of the kitchen table discussion on the issue of the representation is different from the evidence of both the plaintiff and Mrs Crouch. The defendant pleads the family agreement was that the plaintiff and Mrs Crouch were promised a one eighth interest in Spring Lodge while Mr Dunscombe was alive, with that interest to be increased to one sixth in the event of his death.

The plaintiff said her father referred to the different values of Spring Lodge and McLellans whereas Mrs Crouch said he did not. The plaintiff said her father asked Mrs Crouch and her whether they were ‘happy with that’ whereas Mrs Crouch said he did not. The plaintiff says she expected a one half share of Spring Lodge and Mrs Crouch would inherit the other half.

The plaintiff pleaded that her interest in Spring Lodge would arise upon the deaths of Mr and Mrs Dunscombe, at which time she and Mrs Crouch would be the joint owners of Spring Lodge. At trial, however, the plaintiff’s evidence was that her name would be on the title during the lifetime of Mr and Mrs Dunscombe. On the plaintiff’s case, the discussion at the kitchen table was about inheritance and it would be likely that she expected to inherit some portion of Spring Lodge and that this would occur upon the death of both of her parents, not earlier.

The different accounts as to what occurred at the kitchen table discussion so many years ago make it impossible to determine the content of the discussion with any certainty, whether the representations were made by Mr Dunscombe as pleaded by the plaintiff, whether the defendant confirmed what Mr Dunscombe said or whether he simply acknowledged that he had heard what was said by Mr Dunscombe, or whether Mr Dunscombe made representations as pleaded by the defendant.

The events and circumstances both before and after the kitchen table discussion assist in determining the issue. First, the plaintiff’s pleaded case and her evidence is that the defendant would not have any interest in Spring Lodge at all. This is inconsistent with the nature of joint ownership and the fact that the plaintiff knew and accepted that Spring Lodge was jointly owned. It is also unclear how one joint owner could make a representation as to the ownership of the whole. In contrast, the defendant’s version of the discussion, including that the extent of the plaintiff’s share was initially one eighth and would increase proportionally on the deaths of Mr and Mrs Dunscombe, accords more with the nature of the joint ownership of Spring Lodge.

Secondly, the defendant’s financial and non-financial contributions to Spring Lodge are consistent with him having an interest in it and are inconsistent with him relinquishing that interest. The defendant accepted liability for a loan in the partnership deed for a third of the price of Faceys, paid the purchase price of Hayes in 1971, and through the partnership contributed to the additional fees and costs. He also contributed to the ongoing liabilities of Spring Lodge, such as the rates and other outgoings, before and after the kitchen table discussion. In contrast, the plaintiff made no financial contribution to the purchase prices of the properties that were consolidated into Spring Lodge, or towards the payment of any outgoings. Her only work was paid casual work when Spring Lodge operated as a market garden business.

Another event that occurred after the kitchen table discussion reinforces the inconsistency of the plaintiff’s pleaded case. Many years after the kitchen table discussion, an abattoir owned by Wagstaff Cranbourne Pty Ltd (‘Wagstaff’), located adjacent to Spring Lodge to the north east of the property, submitted a planning application to the Victorian Administrative and Civil Tribunal (‘the VCAT’) in June 1999 to expand the buffer zone around the abattoir. The issues associated with the application affected Spring Lodge, as it was within the proposed buffer zones, but not McLellans, as it was well outside the proposed buffer zones.

The application was commenced after a series of applications for works, the first of which was lodged with the Environmental Protection Agency (‘the EPA’) in February 1997. Prior to the proposed expansion, there had been complaints about the noise and smell from the abattoir and the run off into neighbouring properties and waterways with the increase in production at the abattoir in the 1990s. The defendant had contacted the EPA and the council after discovering discharge from the abattoir on Spring Lodge.

If the buffer zones were allowed, the land within the buffer zones, which included Spring Lodge, could not be developed and the value of Spring Lodge would have decreased considerably. If the buffer zones were not allowed, the land within the buffer zones would increase because of the potential for further development.

The defendant was one of the active objectors to Wagstaff’s application over many years and was a party in the VCAT proceeding. He contributed financially towards opposing the application, attended council and landowner meetings, initiated independent reviews of the proposed buffer zone, wrote letters to the local paper and to local council members from the late 1990s through to 2004, lobbied various bodies, including the council, and took water and other samples to back up the objectors’ claims. Ultimately, the defendant and the other objectors successfully opposed the expansion of the buffer zones.

The defendant’s actions in opposing the Wagstaff application are consistent with the defendant retaining his interest in Spring Lodge. The defendant displayed diligence in his stewardship of Spring Lodge in respect of the detrimental impact of the increased buffer zones on Spring Lodge and complained to the EPA and the local council about discharge found on Spring Lodge from the abattoir. From the late 1990s to 2004, the defendant also expended considerable time, money and effort in objecting to the proposed expansion applications. Conversely, the plaintiff and Mrs Crouch had no involvement in opposing the Wagstaff application and did not spend any time, money or effort in protecting the value of Spring Lodge as an asset. The plaintiff’s actions are inconsistent with the pleaded representations that she and Mrs Crouch would be the joint owners of Spring Lodge on the deaths of Mr and Mrs Dunscombe.

Plaintiff’s pleaded further representations

The plaintiff pleads that subsequent to the kitchen table discussion, Mr and Mrs Dunscombe repeated the representations to Mrs Crouch and her at family meetings from time to time, in the presence of the defendant and that the defendant acknowledged his agreement to the statements of Mr and Mrs Dunscombe by nodding his head and stating, ‘yes’.

The plaintiff did not give any evidence at trial of any subsequent family meetings with Mr and Mrs Dunscombe and the defendant. There was no evidence of any further representations being made by Mr and Mrs Dunscombe or the defendant. Neither Mrs Crouch nor the defendant gave evidence of any further representations being made by Mr and Mrs Dunscombe or the defendant, or that within this period the defendant nodded his head and stated ‘yes’ to any further representations by either Mr or Mrs Dunscombe.

Plaintiff’s evidence at trial of statements made by Mrs Dunscombe to the plaintiff

At trial, the plaintiff gave oral evidence of some statements made by Mrs Dunscombe in two or three conversations with the plaintiff in the early 1990s, the first around July 1990, the second around 1991 and the third on an unspecified date, to the effect that Mrs Dunscombe referred to Spring Lodge as the plaintiff and Mrs Crouch’s farm.

The first conversation was around July 1990 and Mrs Dunscombe said to her, ‘we have got the rate notice in for your farm and Mrs Crouch’s farm, the rate notice has come in.’ The plaintiff responded saying, ‘Mum, do you want [Mrs Crouch] and I to pay that?’ Mrs Dunscombe said, ‘Oh no, no, no, [the defendant] and Kathy will pay that, they are working, they will pay that.’

The second conversation was around 1991 when Mrs Dunscombe received correspondence from State Rivers and another bill. In telling the plaintiff about the correspondence, Mrs Dunscombe referred to Spring Lodge as ‘your farm and Mrs Crouch’s farm’. When the plaintiff asked again if she should pay the bill, her mother responded, ‘No, no, no, I’m just telling you. We have got the rate notice in and the value of the land has gone up a lot.’ The plaintiff said that she did not ask her mother about the increase in the value or anything else about Spring Lodge. She also did not discuss the rates with the defendant because he was not at the farm and did not live at Spring Lodge.

On an unspecified occasion, the plaintiff asked her mother if she had been to her solicitor, Mr Andrew Gray, to remove the defendant’s name from the title. Her mother told her ‘it will all be in the will … you will know about it all in the will.’ In cross examination, the plaintiff said the only discussion she had with her mother about asking to be the registered proprietor of Spring Lodge was when the rates notice came in. She also said that she believed, ‘our [Mrs Crouch and the plaintiff’s] names would be on the title’. Notwithstanding this, she was unable to specify exactly when she thought this was to occur and she did not consider that she would have the ability to deal with the property until ‘after my mother and father had passed away, half shares, half each.’

Plaintiff’s alternative claim of encouragement

The plaintiff’s pleaded case, in the alternative, is that the defendant and Mr and Mrs Dunscombe, as the joint proprietors of Spring Lodge and McLellans, encouraged the plaintiff to continue to work for the family business and not to demand to be a registered proprietor of Spring Lodge. The plaintiff relies upon the pleaded representations at the kitchen table discussion and the pleaded further representations.

Plaintiff’s further alternative claim of mutual assumption

In the further alternative, the plaintiff pleads that the plaintiff, the defendant and Mr and Mrs Dunscombe mutually assumed that, as and from early 1984, the plaintiff and Ms Crouch would be the joint owners of Spring Lodge and the defendant would be the sole owner of McLellans.

It is pleaded that the mutual assumption is to be inferred from the representations, the further representations and from the fact that plaintiff worked in the family business on uncommercial terms.

Conclusions

The plaintiff bears the burden of establishing that Mr and Mrs Dunscombe and the defendant made the pleaded representations. The oral evidence is such that it is not possible to determine with any certainty whether the representations were made at the kitchen table discussion. The events and circumstances before and after the kitchen table discussion assist in the determination and they do not support the plaintiff’s pleaded case. On balance, the Court is not satisfied that the pleaded representations were made by Mr and Mrs Dunscombe or the defendant at the kitchen table discussion.

There is no evidence to support the plaintiff’s pleaded case that further representations were made after the kitchen table discussion. The plaintiff’s evidence at trial of statements made by Mrs Dunscombe to her in conversations were not made in the presence of any other person and little weight can be attributed to them. In any event, they are not representations made by the defendant.

In view of the conclusions in respect of the plaintiff’s pleaded representations and the further representations, the evidence does not support the alternative claims of encouragement by the defendant and Mr and Mrs Dunscombe or mutual assumption of the defendant and Mr and Mrs Dunscombe. The plaintiff’s evidence set out at [117]–[122] of her work at Spring Lodge does not establish that she worked for below accepted industry wages.

The plaintiff has failed to satisfy the threshold element for her claims in promissory or proprietary estoppel, that is, she has failed to establish that it was promised or represented by the defendant and Mr and Mrs Dunscombe that upon the death of Mr and Mrs Dunscombe, she and Mrs Crouch would be the joint owners of Spring Lodge.

Did the plaintiff act in reliance on the representations, the further representations or the encouragement or mutual assumption to her detriment?

The plaintiff’s pleading combines the second to fifth elements of a claim of promissory or proprietary estoppel, that is, reliance, reasonableness and detriment, and by inference, that the defendant knew or intended the plaintiff would rely on the representation.

She pleads that in reliance on the representations, the further representations, alternatively, the encouragement, alternatively, the mutual assumption, she worked for the family business for 22 years until it ceased to operate in 1987 and that she acted to her detriment in the following ways:

(a) she continued to work in the market garden business for $5–$6 per hour which was an amount substantially below accepted industry wages;

(b) she did not pursue alternative activity; and

(c) she did not demand to be registered as a proprietor of Spring Lodge.

While there is no dispute that the plaintiff worked at Spring Lodge as a casual worker, there is no evidence that the plaintiff ordered her life around the pleaded representations. The plaintiff worked alongside Mr and Mrs Dunscombe, the defendant and other casual employees, most of whom were family members. The evidence differed concerning the plaintiff’s exact start date, which is not surprising given the passage of time. On the evidence, it is likely the plaintiff commenced working in the market garden business either in late 1968 or 1969, approximately 15 years before the pleaded representation.

The plaintiff’s work was part time, seasonal, dependent on the weather and convenient for her with her young family. Before her children commenced primary school, the plaintiff brought her two children to the farm with her and Mrs Dunscombe generally looked after them while she worked. When the plaintiff’s first child commenced primary school in 1971, she took him to school and arrived at Spring Lodge at around 9 in the morning. She worked until her lunch break of one hour, then worked until around 3 or 3.30 in the afternoon. She then collected her child from school in the afternoon or sometimes had a friend collect him. After she moved to Narre Warren, her husband took both children to school. When family commitments allowed, she occasionally increased her hours of work, if required.

The plaintiff generally worked three to four days a week, as required, and occasionally on the weekends. She worked four or five hours a day, depending on the season, and did whatever work was required, such as assisting with planting, thinning, spraying, picking and packing. In an annual cycle, there were approximately three months where there was little work to be done, usually in around October and November.

After the pleaded representation was made in 1984, the plaintiff continued to work at Spring Lodge, in the same position and doing the same work until the market garden business ceased to operate. The plaintiff evidence as to the end date varied in her pleadings, evidence and submissions, so that it was sometime between 1986 and 1988. At most, the plaintiff worked in the market garden business for two or three years until in or around 1986 or 1987 or 1988.

The defendant said that the market garden business at Spring Lodge substantially ceased in 1986 when the SECV completed the installation of the poles and electricity transmission lines on Spring Lodge. As a result of the installation of the power lines, there were restrictions on watering near the transmission lines and the use of Spring Lodge as a market garden became untenable. After the closure of the market garden business, the partnership continued farming cattle on Spring Lodge and McLellans and it was the mainstay of the partnership business. This continued until McLellans was rezoned in the 1990s and partly sold off by the partnership.

After ceasing to work at Spring Lodge, the plaintiff assisted Mrs Dunscombe from time to time with her shopping, mowing her lawn or opening and shutting gates when the stock was moved.

Working for uncommercial terms substantially below accepted industry wages

The plaintiff was remunerated for her work at Spring Lodge and was paid in cash each day by Mrs Dunscombe at a rate determined by her. Mrs Dunscombe checked the rate of pay with neighbours who also conducted a similar business by getting the defendant to ask them from time to time what they paid their casuals for the same type of work.

The plaintiff’s evidence concerning the rate she was paid for working at Spring Lodge varied and conflicted with her pleaded claim of being paid on uncommercial terms or substantially below accepted industry wages. The plaintiff said when she first started working at Spring Lodge, she was paid $15 for a 5 hour day. She also stated that she was paid at an hourly rate of approximately $3 per hour and, at some stage, the hourly rate increased to $4 per hour, them again increased to $5 per hour towards the end of her time working at Spring Lodge in 1987. She gave no evidence as to what were accepted commercial terms or accepted industry rates for the time that she worked at Spring Lodge. She said:

I didn’t make any complaints. It was my family and I enjoyed doing it; family was family … A little extra would have been nice but I didn’t complain.

In response to being asked whether she considered she was being underpaid, she said ‘no, not that I was aware of.’ The plaintiff later said, ‘that was the going rate, I thought it was the going rate’.

The plaintiff accepted that her mother was aware of her personal circumstances and paid her fairly for the work undertaken. However, the plaintiff also said that with hindsight she did believe she was paid on uncommercial terms but did not ask for a pay increase ‘because it was a family concern’ and stated:

I knew I was being underpaid but I didn’t discuss it with anyone else. I had no one else to discuss it with but I was happy at the time doing the work for my parents.

When she was not working at Spring Lodge, the plaintiff also worked for cash at a local flower shop during busy times for that shop. The plaintiff gave no evidence as to her rate of pay when she worked for cash at a local flower shop or how her rates of pay for that job compared to her pay at Spring Lodge.

There is no evidence that the plaintiff’s hourly rates over the time she worked at the market garden business were uncommercial terms or substantially below accepted industry wages. The relevant period of time for detrimental reliance is after the kitchen table discussion, a period of around two to three years at most. During that time she was paid the going rate of $5 per hour in cash by her mother. There was no evidence that this rate in that period was uncommercial or substantially below accepted industry wages.

Not pursuing alternative activity

The plaintiff pleaded that in reliance on the pleaded representations, she did not pursue alternative activity. The plaintiff believed her parents were ‘very honest people’ and she would not have continued to work on the farm after the kitchen table discussion because, ‘I think it was so unfair’, that both Spring Lodge and McLellans would pass to the defendant by way of survivorship.

The plaintiff’s range of time for not pursuing alternative activity was uncertain. In general terms, it was between 1984 to 1986 or 1987 and her evidence of alternative work activity was what she might have done. The plaintiff said she thought she could have looked around for another position, such as working in sales at Myer. She gave no evidence as to the rates of pay for sales employees at Myer or whether those rates were different from her pay at Spring Lodge.

After the market garden closed, the plaintiff worked part time at Metropolitan Golf Club for two to three years, where she was in charge of the dining room. She then worked elsewhere for approximately six months. The plaintiff gave no evidence about her rates of pay when she worked part time at Metropolitan Golf Club, or at her other job, or whether these rates were different from her pay at Spring Lodge.

Not demanding to be registered as proprietor

The plaintiff pleads that she acted to her detriment in not demanding to be registered as a proprietor of Spring Lodge. This pleading conflicts with her evidence that she did not expect to be registered on the title to Spring Lodge until after the death of Mr and Mrs Dunscombe, confirming that the kitchen table discussion was about inheritance.

Conclusions

After the kitchen table discussion, the plaintiff continued to work in the same position at Spring Lodge. Even if she acted in reliance on the pleaded representations, this period of reliance was short, being only two or three years in duration. She gave no evidence that she could have found employment at a better rate than her rates at Spring Lodge and there was no evidence that had she sought alternative employment, and if she did, whether she would have been successful in obtaining it. Her lack of qualifications and her education level meant that the opportunities available to her would have been limited.

After the market garden closed, the plaintiff did not continue work on Spring Lodge, with cattle farming being the main industry, nor did she contribute to the running of Spring Lodge in any way, or involve herself in the issues concerning Wagstaff’s attempts to increase the buffers zones or the subsequent VCAT proceeding. While she commenced other work in various part time roles, the plaintiff gave no evidence that she was paid more in these roles than at Spring Lodge between 1984 and 1987.

The plaintiff has failed to establish any reliance on the representations and any detriment. Accordingly, her pleaded claims for promissory or proprietary estoppel are dismissed.

Was the plaintiff’s expectation of an interest in Spring Lodge upon the death of Mr and Mrs Dunscombe extinguished by the payment to her of $1 million

The defendant pleads that in late 2002 or early 2003, the plaintiff asked Mrs Dunscombe and him to sell Spring Lodge in order to give her some money. The defendant and Mrs Dunscombe discussed this and decided to satisfy the interests of the plaintiff and Mrs Crouch in Spring Lodge by offering them $1 million each, with half paid immediately, and the second half to be invested, with the interest paid to them periodically and the capital paid on Mrs Dunscombe’s death.

The plaintiff accepts that payments totalling almost $1 million were paid to her over 10 years but rejects that the payments were intended or were capable of satisfying or disposing of her interest in Spring Lodge. She claims that the payments were a gift from Mrs Dunscombe and were unconnected with the acquisition of her interest in Spring Lodge.

The plaintiff also says that her interest in Spring Lodge was one half and as the agreed value of Spring Lodge in March 2003 was $4.43 million, the payment of $1 million was wholly inadequate to satisfy her equity in Spring Lodge.

She also pleads that even if the payments were intended to effect the disposal of her interest in Spring Lodge, the disposal did not occur in writing as required by s 53(1)(c) of the Property Law Act 1958.

Factual background

On 30 July 1989, Mr Dunscombe died. Probate of his will dated 12 April 1979 was granted to his three executors, Mrs Dunscombe, the plaintiff and the defendant on 16 November 1989. Mr Dunscombe’s estate was left to Mrs Dunscombe and, in the event that she predeceased him, to the defendant. On 6 December 1989, Mrs Dunscombe and the defendant were registered as the surviving joint proprietors of Spring Lodge.

In the late 1990s, McLellans was rezoned from industrial to residential. As a consequence of the rezoning, the defendant and Mrs Dunscombe decided to sub-divide McLellans.

On 13 December 1999, settlement was effected in respect of the sale of one of the sub-divided blocks at the corner of South Gippsland Highway and Thompsons Road, Cranbourne for $3,420,000. Part of the capital from the sale was invested by Mrs Dunscombe and the defendant into the partnership account and reinvested with accrued interest until at least 10 March 2004.

In January 2003, the partnership sold a further part of McLellans on terms for $15,014,640.41 to Australand Holdings. An initial deposit was payable on 15 January 2003, a further deposit on or before 31 October 2003 and three further payments on 31 October 2004, 2005 and 2006. As with the funds from the first sale of McLellans, the sale proceeds were paid into the partnership account.

The defendant’s daughter, Jonelle, was very close to Mrs Dunscombe. Jonelle said her grandmother did not generally show a lot of emotion but after the sale to Australand Holdings, her grandmother said to Jonelle that she was relieved as it was the first time the family had financial security.

In 2003, the plaintiff’s son, Craig, gave the plaintiff an article in the Financial Review dated 11 February 2003 about the sale to Australand Holdings, which stated:

The latest deal, valued at about $15 million, was negotiated with a local grazier and delivers Australand control of a major land parcel in the suburb of Cranbourne in outer Melbourne. The site, on the corner of Cranbourne and Thompsons roads, is earmarked for a mix of land and housing.

The plaintiff then told Mrs Crouch about the article and sent her a copy. Mrs Crouch did not corroborate the plaintiff’s evidence. She said her father’s sister, Mrs Dulcie Wilson, sent her the article as she ‘knew it was meant to be left to Mrs Crouch and Margaret’. Mrs Wilson’s alleged statement is inconsistent with the evidence of all witnesses at the kitchen table discussion that McLellans would pass to the defendant.

Discussions to buy out the interests of the plaintiff and Mrs Crouch in Spring Lodge

The defendant said that in 2002 and 2003 the plaintiff had been badgering Mrs Dunscombe for money. He could not understand why she wanted money as she appeared to have sufficient. He and his mother discussed the issue a number of times, including the possibility of selling Spring Lodge and buying another farm. Mrs Dunscombe did not want to sell Spring Lodge or move again. The defendant then discussed with Mrs Dunscombe the possibility of ‘buying out’ the shares of Mrs Crouch and the plaintiff in Spring Lodge. Mrs Dunscombe agreed and they determined that it should be done by way of deed of gift. This was because Mrs Dunscombe wanted a legal document to prove that each of the plaintiff and Mrs Crouch had been given their money.

The defendant then called the plaintiff and said that Mrs Dunscombe did not want to sell Spring Lodge, that the defendant and Mrs Dunscombe would buy out her interest in Spring Lodge and give her half now and half on the death of Mrs Dunscombe and that now that Mr Dunscombe had died, it was fair to split Spring Lodge one third to Mrs Dunscombe, one third to the defendant and one third between the plaintiff and Mrs Crouch. He told the plaintiff that Spring Lodge was valued at $5 million and that Mrs Dunscombe and he had rounded up the value to $6 million making the value easier to divide three ways. He asked the plaintiff whether she wanted the remaining half invested in shares or the money market. The plaintiff said, ‘yes’ and that she wanted the balance of the money invested in the money market.

The plaintiff said she had ‘never asked my mother for money in my life’, nor did she ask her to sell Spring Lodge. She was not in financial distress at that time as she and her husband had agreed on a property settlement. At that time, she had a share portfolio valued at approximately $500,000 and her own superannuation fund, a bank account and a half interest in the family home in Brighton. In 2001, the family home was sold for $1,060,000 and settlement took place on 29 January 2002. After allowing for a payment of $75,000 to her as part of the property settlement, the sale proceeds were divided equally between her husband and her. In June 2002, she purchased a property in Williamstown for $591,000 with settlement in August 2002 and she did not have a mortgage over the property.

After Mrs Crouch received the newspaper article from Mrs Wilson, Mrs Crouch telephoned Mrs Dunscombe who told Mrs Crouch that she was ‘overwhelmed at getting all of this money’ and ‘needed to get rid of some money’. Mrs Dunscombe said she would give $1 million each to Mrs Crouch and the plaintiff, on condition that they were divorced as she did not want either of their husbands to get any of the money. Mrs Crouch then called the plaintiff to ask whether she was divorced and also told her not to call Mrs Dunscombe as Mrs Crouch would handle it. Mrs Crouch did not discuss this with the defendant because the gift was from Mrs Dunscombe.

The plaintiff said that Mrs Crouch then telephoned Mrs Dunscombe who told her that she would give $500,000 each to the plaintiff and Mrs Crouch immediately and $500,000 would be placed in a term deposit to be given to them on her death. The plaintiff said that Mrs Dunscombe said to Mrs Crouch, ‘Yes, Joan, I intend to give you 500 now and [the plaintiff] 500 but you must make sure that [the plaintiff] is divorced and if she’s divorced I want you to get [the plaintiff’s] banking details and send them to [me].’ The defendant confirmed that Mrs Dunscombe was aware that Mrs Crouch was divorced but that she did not know if the plaintiff was divorced at that stage.

Mrs Crouch telephoned the plaintiff, confirmed her bank details, then sent a letter to Mrs Dunscombe dated 14 February 2003 informing her of the relevant bank details for the plaintiff and her, as well as their full names and dates of birth.

The deeds of gift

The defendant took Mrs Dunscombe to her solicitor, Mr Gray, of Andrew Gray & Associates. Mr Gray was the solicitor used by the Dunscombes for partnership matters. On 27 February 2003, Mr Gray forwarded a letter to the defendant enclosing three copies of the deeds of gift ‘in relation to the gifts proposed to be made by your mother to each of Margaret McDonald and Joan Crouch’. The defendant witnessed his mother’s signature on both deeds of gift. Mr Gray was unable to recall the instructions given to him, other than that the instructions were given to him by Mrs Dunscombe.

Mrs Crouch took the deed to a solicitor in Albury as she was unsure what was intended by the document. She also questioned why the defendant sent the document to her, and not her mother. Upon being satisfied by the solicitor in Albury that it was a gift, she signed the deed bearing the date 1 March 2003. Her evidence was that she did not think the deed was to extinguish her interest in Spring Lodge.

The plaintiff, together with her son, Craig, took her deed to a solicitor, Mr Gavan Black, in Williamstown. She said that the gift was ‘for when my mother passed away.’ She also signed the deed.

The deed of gift between the plaintiff and Mrs Dunscombe is dated 6 March 2003, and states as follows:

WHEREAS:
A. The Grantor [Mrs Dunscombe] intends to make a gift to the Donee [the plaintiff] of the sum of Five hundred thousand dollars ($500,000.00) in the currency of Australia (“Property”).
NOW THIS DEED WITNESSETH AND THE PARTIES COVENANT AND AGREE as follows:
1. The Grantor gives and conveys unto the Donee absolutely the Grantor’s title and interest in the Property to hold the same unto and to the use of the Donee free from any estate or interest of the Grantor.

On 18 March 2003, an amount of $1 million was withdrawn from the partnership bank account and $500,000 was deposited into the respective bank accounts of the plaintiff and Mrs Crouch.

On 21 March 2003, Mr Gray confirmed by letter to the defendant that the signed deeds of gift had been received and placed in his deeds system for safe keeping and enclosed a memorandum of his fees.

After the funds were deposited in their bank accounts, Mrs Crouch and the plaintiff visited their mother to thank her. By 2000, Mrs Dunscombe had moved from Spring Lodge to a granny flat next to the defendant’s home in Pound Road, Narre Warren. Mrs Dunscombe asked them what they had done with the money and they told her the money was in their bank accounts. The defendant was not present on this visit.

Mrs Crouch thought it was not good for her mother to be living so close to the defendant as she would lose her independence. At the time, Mrs Crouch was not aware that the defendant had bought the home in Pound Road. The plaintiff said her mother said, ‘I gave John and Kathy the same, I bought this property here [Pound Road, Narre Warren] for them, they didn’t even say thank you.’

The defendant’s evidence was that he purchased Pound Road using his share of the sale proceeds of McLellans. There was no evidence to the contrary on this point and the plaintiff did not dispute this. The plaintiff also suggested that Mrs Dunscombe gave the defendant the sum of $500,000 in 2003. The defendant denied this and there was no evidence of such a gift to the defendant. The suggestion is implausible in view of the sales of part of McLellans and that the plaintiff accepted that McLellans would pass to the defendant on the death of Mrs Dunscombe.

In 2003 when Jonelle was aged 21, Mrs Dunscombe spoke to her about the payment of money to the plaintiff and Mrs Crouch. She told Jonelle that, ‘[the defendant] has organised for an early inheritance [to Mrs Crouch and the plaintiff] so that there were no arguments when I’m gone. Everything’s sorted now, there won’t be any arguments once I’m gone. They have got their money, the rest will be your father’s once I'm gone.’ Jonelle was aware that both Mrs Crouch and the plaintiff had an interest in Spring Lodge but was not told the details of any amount or the value of their interest.

The Barbara Dunscombe Family Trust

On 16 February 2004, the Barbara Dunscombe Family Trust was established (‘the trust’). The settlor was Graham Seymour Facey. Mrs Dunscombe and the defendant were listed as the joint appointors and Marnabeck Pty Ltd (‘Marnabeck’) was the trustee. The directors of Marnabeck are the defendant and Kathy. The plaintiff and Mrs Crouch and their children and grandchildren were listed as the only full capital and income beneficiaries. The deed specified that the capital of the trust would be paid to the plaintiff and Mrs Crouch on the death of Mrs Dunscombe. The plaintiff was aware that the capital of the trust was held for her and Mrs Crouch until the death of Mrs Dunscombe.

On 12 March 2004, $1 million was transferred from the partnership account to Marnabeck, as trustee for the Barbara Dunscombe Family Trust. The bulk of the assets were held in term deposits with a minimal amount held in a JB Were cash trust. The interest was paid to the plaintiff and Mrs Crouch annually, pursuant to the terms of the trust. Interest was paid to the plaintiff and Mrs Crouch from the trust between 2005 and 2014. The plaintiff recalled receiving these payments each year. In 2010, Jonelle took over as operations manager for Marnabeck. In this capacity, she became aware of the deeds of gift as she was involved in distributing the interest pursuant to the terms of the trust at the end of each financial year. Mrs Crouch called her if there were any issues with the distributions.

On 20 November 2013, Mrs Dunscombe died aged 98 years. By her will dated 14 December 2005, she appointed the defendant as her executor and trustee of her estate.

On 10 December 2013, the estate’s solicitors lodged a survivorship application in respect of Spring Lodge and McLellans. At trial, it was suggested to the defendant that the survivorship application in respect of Spring Lodge was made hastily to ensure that Spring Lodge did not vest in the estate of Mrs Dunscombe.

This suggestion was surprising considering that it was always accepted by the plaintiff and her legal advisers that Spring Lodge and McLellans were jointly owned, with the consequence that the proprietorship of the properties passed to the surviving owner upon the death of the other joint owner and that jointly owned property does not form part of the estate of a deceased person.

On 10 April 2014, probate of Mrs Dunscombe’s will was granted to the defendant. Pursuant to Mrs Dunscombe’s will, her estate was to be distributed as follows:

(a) the corpus of the trust, being a loan from the testator after any liabilities such as investment expenses and professional fees as well as loans from other entities had been subtracted, to the plaintiff and Mrs Crouch as tenants in common in equal shares;

(b) her money in JB Were Securities Cash Management Trust to her seven grandchildren as tenants in common in equal shares;

(c) her partnership shares to the defendant and Kathy as joint tenants;

(d) one ring each to two of her granddaughters;

(e) the balance of her personal jewellery to her granddaughter, Jonelle;

(f) her personal effects to her executor on trust for her children and grandchildren; and

(g) her residuary estate to her executor.

On 28 April 2014, the estate’s solicitors forwarded a letter to the defendant in his capacity as executor of the estate of Mrs Dunscombe seeking instructions, inter alia, to release a copy of the will to the plaintiff’s son, Craig.

By letter dated 22 May 2014 to the plaintiff, Mrs Crouch and the defendant, the estate’s solicitors annexed the inventory of assets and liabilities of the estate, which comprised personal property valued at $2,326,585.61. The letter included a table setting out the distributions to be made pursuant to the will, which included a distribution of $494,958 each to the plaintiff and Mrs Crouch, being the amount loaned to the Barbara Dunscombe Family Trust. The letter noted that the estate would be held on trust in an interest bearing account pending the six month period within which a claim could be made pursuant to the family provision legislation and advised that an earlier distribution could be possible if the beneficiaries were willing to sign a release and indemnity.

Upon reading the letter, the plaintiff was ‘disappointed that my sister and I … did not receive Spring Lodge.’ She said that, ‘we were excluded out of the will with Spring Lodge and we were angry’. She sought legal advice from her solicitor, Mr Gavan Black, in relation to the correspondence as well as obtaining a copy of the will. The plaintiff told Mr Black that she was ‘promised Spring Lodge … and … this is all [Mrs Crouch and I] get out of the estate’. Mr Black advised that there was nothing she could do as there was ‘nothing’ in the estate. Her son, Craig, said to her, ‘you’ve got to do something about it’ and she then sought further advice.

On 5 September 2014, the plaintiff executed a release and indemnity that, inter alia, released and discharged the executor from any liability in connection with the early distribution and accepted the sum of $494,958 in full and final settlement of any claims relating to the estate. Mrs Crouch signed an identical document on 4 September 2014.

By letter dated 26 September 2014 to the plaintiff, the estate’s solicitors advised that the estate was distributed in accordance with the table that had been included in the letter dated 22 May 2014 and enclosed a cheque for $494,824.82, being the specific bequest plus interest.

Consideration

The plaintiff’s position that the payments were gifts from Mrs Dunscombe and unconnected with her interest in Spring Lodge is supported by the fact that the deeds of gift refer to the moneys paid as gifts and make no mention of the money being paid in exchange for the plaintiff’s expectation of an interest in Spring Lodge.

The defendant’s explanation for this was that the names of the plaintiff and Mrs Crouch were not on the title of Spring Lodge and reflects the understanding of Mrs Dunscombe and the defendant of the kitchen table discussion. The defendant acknowledged that he was unfamiliar with legal matters. Mr Gray’s evidence was that Mrs Dunscombe gave the instructions to him, not the defendant, and otherwise Mr Gray had no other recollection of the matter other than by reference to his file.

Jonelle’s evidence that Mrs Dunscombe considered that the deeds of gift finalised the inheritance arrangements in the family so as to avoid any arguments after her death supports the defendant’s evidence that he and Mrs Dunscombe were buying out the expectations of the plaintiff and Mrs Crouch of an interest in Spring Lodge.

The payments to the plaintiff and Mrs Crouch were from the sale proceeds of the partial sales of McLellans. All of the witnesses to the kitchen table discussion agreed that the defendant would receive McLellans on the death of Mr and Mrs Dunscombe. The fact that the amounts paid to the plaintiff and Mrs Crouch came from what was accepted as the defendant’s inheritance supports the defendant’s position that the payments were in exchange for the plaintiff’s expectation of an interest in Spring Lodge.

In support of her argument that the money paid by Mrs Dunscombe was a gift, the plaintiff alleged that the defendant also received a gift of $500,000 in 2003 from Mrs Dunscombe. For the reasons given at [155], the allegation was implausible. In addition, the plaintiff alleged that Mrs Dunscombe paid for the home of the defendant and Kathy in Pound Road. The defendant’s evidence that Pound Road was paid for from his share of the sale proceeds from McLellans was not challenged. On balance, these conclusions support the contention that the money paid to the plaintiff was in exchange for the plaintiff’s expectation of an interest in Spring Lodge.

Further, the plaintiff referred to a conversation with Mrs Dunscombe about whether she had been to her solicitor to remove the defendant’s name from the title of Spring Lodge. Mrs Dunscombe told her, ‘it will all be in the will … you will know about it all in the will.’ Mrs Dunscombe refers to the trust in her will. This was unnecessary as the assets of the trust are not an asset in Mrs Dunscombe’s estate. The fact that Mrs Dunscombe’s will referred to the trust supports the position that the capital payments were to extinguish the plaintiff’s expectation of an interest in Spring Lodge on Mrs Dunscombe’s death.

The plaintiff’s position that the amount paid to her was wholly inadequate to satisfy her equity in Spring Lodge depends on her expectation of a one half interest in Spring Lodge being correct. As stated, the evidence does not support this to be the case. The defendant’s evidence was that Mrs Dunscombe and the defendant rounded up the value of Spring Lodge to $6 million, with the payment to the plaintiff and Mrs Crouch of $1 million each representing in total a one third share of Spring Lodge. On the basis of the agreed value of $4.43 million for Spring Lodge in 2003, the payment of $1 million to the plaintiff represents substantially more than the agreed value of one half of one third of Spring Lodge, being only $738,333.

Section 53(1)(c) of the Property Law Act 1958

The plaintiff pleads that if the payment to her was intended to buy out her interest in Spring Lodge, then the agreement and payment of the funds to her were ineffective to dispose of her equitable interest in Spring Lodge because it did not comply with s 53(1)(c) of the Property Law Act 1958.

That sub-section provides:

53 Instruments required to be in writing
Subject to the provisions hereinafter contained with respect to the creation of interests in land by parol –
(a) …
(b) …
(c)a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will.

The plaintiff contends that as a consequence, she remains vested of her interest in Spring Lodge as any disposition in land subject to an equitable interest must be made in writing.

The plaintiff’s contention assumes that she had an equitable interest in Spring Lodge at the time of the relevant disposition in 2003, that is, an expectation of a present interest in 2003. However, her claim is that she expected her interest to arise upon the deaths of Mr and Mrs Dunscombe and, as at 2003, she did not have an equitable interest in Spring Lodge.

Common intention constructive trust

Alternatively to her estoppel claims, the plaintiff relies on a common intention constructive trust. The pleading for the common intention constructive trust claim relies on substantially the same factual basis as the estoppel claims.

The plaintiff pleads that it was the common intention of ‘the parties’ from early 1984 that, upon the death of Mr and Mrs Dunscombe, the plaintiff and Mrs Crouch would be the joint owners of the beneficial interest in Spring Lodge. By the term ‘parties’, it is assumed the plaintiff means herself and the defendant.

The plaintiff pleads that in reliance on the common intention, she continued to work for the family business for $5–$6 per hour which was substantially below standard industry wages, did not pursue alternative activity, and did not demand to be a registered proprietor of Spring Lodge and it would be unconscionable, alternatively a fraud in equity, for the defendant to resile from the common intention. She claims that the defendant holds the plaintiff’s beneficial interest in Spring Lodge as constructive trustee and in breach of trust, the defendant has knowingly retained Spring Lodge for his own benefit and is liable for the proceeds derived therefrom.

The seminal statement of principle in relation to a common intention constructive trust was stated by Deane J in Muschinski v Dodds:

the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do.[16]

[16](1985) 160 CLR 583, 620 (Deane J) (citations omitted). See also Baumgartner v Baumgartner (1987) 164 CLR 137.

In Sobey v Sobey, Almond J summarised the principle as follows:

In essence, where there is a joint relationship or endeavour which fails, equity will impose a constructive trust by restoring contributions made in relation to property in circumstances where it was not intended that the other party enjoy them. In those situations, it would be unconscionable for the legal owner to retain or assert sole title to the relevant property.[17]

[17][2014] VSC 373 (14 August 2014) [47] (the principles applied were not disputed on appeal in Sobey v Sobey [2016] VSCA 36 (15 March 2016) [9] (Tate, Santamaria and Ferguson JJA (as her Honour then was)).

For the purposes of common intention constructive trust principles, the plaintiff must establish there was a joint relationship or endeavour in which expenditure was shared for a common benefit.[18] Whether there is a common intention that a party was to have a beneficial interest in a property is usually formed at the time of the transaction and may be derived from express agreement between the parties or from conduct of the parties that supports an inference of such a common intention. Evidence of any express statements or admissions creating that intention assist in establishing whether there was a joint relationship or endeavour, such that a beneficial interest in Spring Lodge was created in favour of the plaintiff. Examples of conduct that support an inferred intention include financial contributions to a property, meeting expenses for a property, or doing maintenance on a property where it would be unconscionable to disregard the contributions that the party has made.[19]
[18]West v Mead (2003) NSWSC 161 [58] (Campbell J) quoting Baumgartner v Baumgartner (1987) 164 CLR 137, 149.
[19]Rasmussen v Rasmussen (1995) 1 VR 613, 615 (Coldrey J); Allen v Snyder [1977] 2 NSWLR 685.

As the plaintiff is claiming a beneficial interest in Spring Lodge, she must also show that she has acted to her detriment. Disappointed expectation will not constitute detriment for this purpose. Detriment or material disadvantage is a necessary requirement for a common intention constructive trust.[20]
[20]Higgins v Wingfield [1987] VR 689.

Was a common intention as to the beneficial ownership of Spring Lodge established?

The kitchen table discussion took place in the context of the accepted circumstances of a longstanding partnership agreement between Mr and Mrs Dunscombe and the defendant, and of the joint ownership of Spring Lodge between them as an asset of the partnership agreement. On the death of one of the joint proprietors, the ownership of Spring Lodge would pass by survivorship to the surviving proprietors. The plaintiff does not assert a claim that included an interest in the partnership business.

At the time of the kitchen table discussion, Mr Dunscombe’s will provided for his estate to pass to Mrs Dunscombe and, in the event that she predeceased him, to the defendant. After the kitchen table discussion, Mr Dunscombe did not make any changes to his will or to the nature of the ownership of Spring Lodge.

The evidence of the express statements made by Mr Dunscombe and the responses by Mrs Dunscombe and the defendant do not establish a joint relationship or endeavour between them and the plaintiff for the purposes of the plaintiff’s claim of a common intention constructive trust in respect of an interest in Spring Lodge. At its highest, the plaintiff’s evidence may be characterised as a desire of Mr Dunscombe to benefit the plaintiff and Mrs Crouch at an unspecified time in the future and the statement was about Mr Dunscombe’s one third jointly held interest in Spring Lodge. Even if this statement is accepted, the statement is no more than an expression of what might happen in the future and does not lead to a conclusion that the imposition of a common intention trust was intended.

Further, the plaintiff’s claim that the ownership of Spring Lodge was premised on a common intention or joint venture relating to the family business is that both the plaintiff and Mrs Crouch would be the joint proprietors of Spring Lodge upon the death of Mr and Mrs Dunscombe. Mrs Crouch did not ever work in the market garden business at Spring Lodge. This fundamentally undermines the existence of a common intention constructive trust based on the market garden being a ‘family concern’. Mrs Crouch could not have a beneficial interest in Spring Lodge based on a common intention when she was never involved in the family business. Yet all agreed that Mrs Crouch and the plaintiff were to receive an equal interest in Spring Lodge, with the portion of that interest in dispute. This underlines the conclusion that the kitchen table discussion was no more than a discussion about inheritance upon the death of Mr and Mrs Dunscombe.

Mrs Dunscombe and the defendant implemented their understanding of the kitchen table discussion by making the payments to the plaintiff and Mrs Crouch in 2003 and thereafter pursuant to the trust. The capital amount was calculated on the basis that Mr Dunscombe’s interest in Spring Lodge had passed in equal shares to the three equal interests of Mrs Dunscombe, the defendant and, the plaintiff and Mrs Crouch jointly. The plaintiff knew Spring Lodge was partnership property and that the payments to Mrs Crouch and her, and the capital invested in the trust, were partnership funds sourced from the partial sales of McLellans.

Was a common intention established through the conduct of the parties?

As stated, the common intention of the parties may be inferred by conduct. The common intention must be concluded at the time the relevant property is purchased. Mr and Mrs Dunscombe and the defendant formalised their partnership for undertaking their business as a cattle farm and a market garden business at Spring Lodge by deed of partnership. The deed was entered into shortly after their purchase of Faceys in 1965. The recitals to the deed of partnership record that the partnership between them was entered into prior to the purchase of Faceys and the deed specified that the partnership may carry on the business at any other place as the parties shall from time to time decide.

The plaintiff’s contribution to the market garden business was as a part time casual employee. She was paid by Mrs Dunscombe in cash each day she worked. She did not complain to her mother or anyone else during the period she worked at the market garden that she was paid substantially below standard industry wages. The plaintiff did not adduce any evidence to support her claim that she was paid substantially below standard industry wages. As she was paid cash in hand, it would be surprising if there were a standard industry rate for cash payments. The defendant’s evidence about the rate of payment was that it was consistent with the going rate paid by the neighbours for that type of work and that Mrs Dunscombe was the person responsible for this aspect of the business.

The plaintiff acknowledged that the work she did fitted in with her lifestyle and family responsibilities. All of the casual workers for the partnership, including other family members, necessarily contributed to the success of the market garden business. Such a relationship as the plaintiff described is akin to a casual worker relationship and does not evince a joint endeavour between the parties.

The plaintiff’s conduct is not indicative of a joint endeavour that would support a common intention constructive trust. There is no evidence that the conduct of the plaintiff, Mr and Mrs Dunscombe or the defendant established a substratum of a joint endeavour capable of supporting the plaintiff’s claim of a common intention constructive trust in respect of Spring Lodge.

Conclusions

The plaintiff has not established that she was part of a joint endeavour in the market garden business such that a common intention constructive trust should arise and her claim is dismissed.

Orders

The plaintiff’s claims based on promissory or proprietary estoppel or a common intention constructive trust are dismissed.

---

[2018] VSC 283

31 May 2018