McRae v Surtees
[1991] TASSC 186
•5 December 1991
Serial No B72/1991
List “B”
COURT: SUPREME COURT OF TASMANIA
CITATION: McRae v Surtees [1991] TASSC 186; B72/1991
PARTIES: McRAE, Kenneth Baldwin
v
SURTEES, Margaret
SURTEES, Robert
FILE NO: 444/1989
DELIVERED ON: 5 December 1991
JUDGMENT OF: Underwood J
CATCHWORDS:
Estoppel—Equity—Conduct and words relied on as creating an assumption that a gift of real estate had been given—No writing—Equity claimed to arise from unconscionable conduct—Relied upon to defeat claim for possession on termination of licence to occupy—Discussion of principles—Estopped not established.
Judgment Number: B72/1991
Number of paragraphs: 63
Serial No B72/1991
File No 444/1989
KENNETH BALDWIN McRAE v MARGARET SURTEES and ROBERT SURTEES
REASONS FOR JUDGMENT UNDERWOOD J
5 December 1991
This case is about a house at No 2 Bangalee Street, Lauderdale. The plaintiff bought the vacant land in about April 1985 and immediately built a small house on it. As soon as it was finished the first defendant, his then unmarried daughter, lived in it. She stayed there for just over a year and then moved out to live elsewhere with the second defendant whom she subsequently married. In February 1987, when the defendants were expecting the birth of their first child, they went to live at No 2 Bangalee Street. It has been their home ever since, but the plaintiff now wants possession of it.
By the writ and statement of claim, the plaintiff alleges that the defendants' occupation of the property was as mere licensees, that the licence has been terminated and consequently, he is entitled to an order for possession. The defendants join issue with these allegations and plead an estoppel. The same estoppel is pleaded as a counter–claim against the plaintiff and herein lies the real issue in this litigation.
The defendants concede that the plaintiff is the registered proprietor of the house and hence the legal owner, but claim that shortly before they went to live there in February 1987, the plaintiff told them the house was theirs as a gift and they consequently assumed that they were the owners of No 2 Bangalee Street. The defendants also claim that, over the ensuing twenty months or so, the plaintiff, by words and conduct, encouraged the defendants in this assumption and that to the plaintiff's knowledge, the defendants acted on it to their detriment. It is claimed that in the circumstances, the plaintiff's conduct has been unconscionable and to satisfy the equity which the defendants say this unconscionable conduct created, they are entitled to an order that the plaintiff transfer the title to them. The plaintiff joins issue with the claim of estoppel. The plaintiff's case is that the defendants made no such assumption or, if they did, he was unaware that they had done so for he said nothing and did nothing to create the assumption claimed by the defendants.
The litigation arises out of differences in the McRae family, principally between the mother and her daughter. It is regrettable that the parties have been unable to resolve these differences without resort to the court. The plaintiff, Kenneth McRae, now 85 years old, is the father of the first defendant, Margaret Surtees. She has just turned 31. She is married to the second defendant, Robert Surtees. For ease of reference, I shall sometimes refer to the parties in this judgment as the father, the daughter and the son–in–law respectively.
According to the father, his forebears were original settlers in the Bothwell area; "there's been McRae's at Bothwell for about 140 years". Continuation of the McRae lineage through a male heir is a very important matter to the plaintiff and his wife. The latter described her daughter as someone very special and explained that originally she and the plaintiff had two children, a girl called Roseanne and a boy. The boy died of cancer at the age of 19. This caused both parents, particularly the father, great distress and anguish. Although the mother was then 42 years old, she and the plaintiff decided that they would have another child and the daughter was born on what would have been the deceased son's twentieth birthday. The mother agreed that they saw the daughter as a continuation of the life of their son. She looks like he did, "exactly a replica" but, according to the mother, her nature is quite different.
Roseanne is married. Her only child is an adopted son. Although the mother and father love this boy, he is not regarded by them as a descendant in the McRae lineage.
The mother and the father both said, and the evidence bears out, that the daughter wanted for nothing during her childhood and early years as an adult. Both admitted they had spoiled her with material possessions. The claim and counter–claim arise out of this background. The daughter and son–in–law assert that, overjoyed at the prospect of the birth of what the plaintiff and his wife regarded as the first of the new generation of McRae's, the plaintiff gave them the house at Bangalee Street, Lauderdale. The plaintiff denies that he ever gave the house to them or either of them and asserts that he merely gave permission for his daughter and son–in–law to live in it until the child was born or they found some alternative accommodation. This case arises out of domestic disputations and misunderstandings. In result, the family has become divided and the plaintiff denied contact with the defendants' recently born second child, a son; no doubt regarded by the plaintiff as the McRae heir.
The findings of fact largely depend upon an assessment of the credit of the principal witnesses. In common with most accounts of domestic disputation, perceptions of grievance and improbity by others tarnished the objectivity of the evidence given by those who were and are emotionally involved. The evidence occupied almost eight days. The plaintiff, his wife and the defendants were in the witness box for the majority of that time. Over this period, from the words spoken and the demeanour of those witnesses, a picture of the relevant events emerged. The findings of fact which follow do not owe their origin solely to the acceptance of the account given by any one witness. They arise from an acceptance of parts of each account and inferences that can properly be drawn from facts which are found or not in dispute. As is the case in most disputes of this kind, the truth, insofar as it can be ascertained, lies somewhere between all the different accounts. However it is appropriate to make some general comments with respect to the credit of each of the principal witnesses to help understand the basis for the findings of fact which follow.
I am unable to place much reliance upon large parts of the plaintiff's evidence. It was clear from his evidence–in–chief that his memory was poor and confused. With respect to some events, the occurrence of which were not in dispute, he was either totally unable to recall them or erred by a matter of years when asked to say when they occurred. On many occasions when unable or unwilling to respond to a question, the plaintiff gave evasive answers and resorted to general statements which he believed would be favourable to his case. When the cross–examination concerned the plaintiff's financial affairs he frequently avoided directly answering questions which he believed might reveal the extent of his wealth. Some of his answers bore the stamp of guile and some were just wrong. For example, he did not offer as claimed, to pay his daughter for "any little jobs" she did around No 2 Bangalee Street nor did he believe that the builder employed to build some extensions to the house was paying his son–in–law an hourly rate to work as a labourer. However, it was clear that the plaintiff has always loved his daughter and I am in no doubt that, generally speaking, over the years covered by the evidence, he was often torn between this love and loyalty to his wife who, together with the daughter, comprise the principal protagonists in this family dispute.
I place even less reliance on the evidence given by the plaintiff's wife. Carefully putting to one side theatrical effects from the witness box which included leaping to her feet at one stage and making the sign of the cross to lend force to her claim to be telling the truth, most of her account was highly improbable and on occasions, at odds with matters not disputed by any other evidence. All of Mrs McRae's evidence was overlaid with an unshakeable belief in her righteousness and an apparent but, to me, inexplicable dislike of her daughter and son–in–law. She gave me the clear impression that she was prepared to say whatever she perceived on the spur of the moment as appropriate to ensure that her husband regained possession of what used to be called "Margaret's place"; No 2 Bangalee Street, Lauderdale.
The daughter's recollection of relevant events was far superior to that of her parents but the weight of her evidence was made difficult to assess because of her apparent inability to give direct answers to questions put to her. This inability, I might observe, was not assisted by the often convoluted and obtuse form of the questions she was asked by her counsel. There is no doubt that her recall of the relevant words and conduct was tainted by emotional upset and her belief that she had been badly treated by her parents, principally her mother. The daughter's perceptions of her entitlements from her parents has undoubtedly been influenced by her father's indulgence over the years.
I found the evidence given by the son–in–law to be the most reliable. It appeared to be less clouded by emotion and substantially in accordance with the probabilities. His answers were thoughtfully and concisely given, often after several moment's reflection. His recollection for events was good and appeared to be largely untainted by his perception of the rights and wrongs of the domestic dispute in which he had become involved.
The foregoing is expressed as part of judicial reasoning in the fact finding process. Expression of views concerning the parties is made for the purpose of indicating the impact the evidence of each had in the process of finding the facts. It should be made clear that the judicial function is not censorial; it is only to determine the issues pleaded in the proceedings at hand.
The plaintiff is a retired grazier. In 1972 he sold up his property, stock and implements and retired to live at Acton. Since then his income has been derived from investments made with the capital raised. After leaving school, the daughter went to Europe. In June 1979, whilst in Denmark, she married a Danish seaman. She was then 18. The marriage, which was childless, failed and, at the end of 1982, she returned to Tasmania and resumed living with her parents. While she was overseas the plaintiff contributed several thousand dollars to the purchase of a house in Denmark and paid for his daughter to make visits home on several occasions.
In February 1983, a few months after her return home, the plaintiff bought No 22 Bangalee Street and his daughter moved in and lived there free of rent and all other outgoings. At this time, the daughter was the owner of a horse. It, like others in the past, had been bought for her by her father. The daughter enjoyed horseriding and equestrian competition. The plaintiff was proud of his daughter's skills and ability at this sport. In early 1983, a five acre allotment, No 2 Bangalee Street, came onto the market and the plaintiff bought it so that his daughter would have somewhere to keep her horse. He sold No 22 Bangalee Street and applied the proceeds towards the purchase of No 2 and the building thereon of a small house. When it was finished, the daughter moved in on the same rent free basis as she had been living at No 22.
The daughter said in evidence–in–chief that No 22 Bangalee Street was her home. In cross–examination she said that when the opportunity came to buy five acres down the road on which the horse could be kept, her father said, "we'll sell No 22 and I'll build you a new home". She said No 22 was her home because her father has said it was her home. She also said that she considered No 2 was her home because it was a substitution for No 22. In further cross–examination however the daughter said it had been willed to her: "Well, when the house was first built back in 1985: the house was mine you know, it had been willed to me. That's what dad said. That's why I took it as my house".
This evidence and later evidence concerning the parties' understanding of rights of ownership and occupation of "family property" has to be seen in the light of a tradition common to many long established farming families for the male heir, at an appropriate age, to move out of the "big house" to live in a cottage on the property. The evidence of the plaintiff and his wife showed that this tradition was part of their way of life. In the absence of serious disagreement, tradition decreed that the heir would remain in the cottage, not the legal owner, but working on the family property and using the family assets in common with other members of the family. On his father's death the heir would inherit the whole of the property including the cottage into which his heir would move when the time came. Like entry into marriage, at which time the possibility of divorce is seldom contemplated, provision is not made for the contingency that serious disputes might arise between the generations making continued residence in the cottage impracticable.
I find that when the daughter moved into both No 22 and later No 2 Bangalee Street, she was told by her father that upon his death, the property would become hers and, as no one contemplated anything would occur to affect what was regarded as the ordinary course of events, it was assumed that the plaintiff would live at No 22 and later, by way of substitution, No 2 Bangalee Street until the father's death and thereupon the daughter would become the legal owner.
At the end of 1985, the daughter met the second defendant. He is a fitter and turner by trade and, until retrenched just prior to trial, had been employed at the Electrolytic Zinc Company, Risdon for twelve years. In June 1986 the daughter left No 2 Bangalee Street and went to live with the son–in–law on a small property at Dynnynre called "Willow Bank". Also living there with them was the son–in–law's brother. The rent was shared between the three of them. Why the daughter left her house to cohabit with the man she later married was not explained by the evidence. What was made clear was that Mrs McRae did not hold the son–in–law in high esteem. His perception was that the plaintiff and, more particularly, his wife considered him lower class and not good enough for their daughter.
After the daughter left No 2 Bangalee Street, the plaintiff let it to tenants. I infer that he did not seek his daughter's permission to do this. His daughter did not claim to have any rights of either ownership or occupancy of No 2 Bangalee Street after she left it to go to "Willow Bank". The plaintiff kept the rents he received and, despite her evidence that she then considered that No 2 Bangalee Street was her house, the daughter neither said nor did anything to suggest that he was not entitled to do so.
The plaintiff and his wife were frequent visitors to "Willow Bank". At one stage the daughter suggested to her father that he might like to buy it. He considered the proposal but after enquiry, rejected it as an unsound investment. I infer that the proposal the plaintiff and his daughter considered was the purchase by the plaintiff of a house in which he would permit his daughter and presumably, her then de facto husband, to live; the same proposal which earlier had led to the daughter occupying firstly No 22 and secondly, No 2 Bangalee Street.
According to the evidence, disputes arose, principally between the daughter and her mother, while the defendants were living at "Willow Bank". Although a considerable amount of trial time was devoted to exploring the nature of these disputes, it is unnecessary to make any finding other than that they arose out of what was perceived by the defendants to be too many visits and too much interference in their lives by the plaintiff's wife. At the end of August 1986 the disharmony reached the point where the daughter called the police to remove her parents from the "Willow Bank" property. Communication broke down completely. Shortly after this incident, the defendants moved out of "Willow Bank" to rented property at Pawleena Road, Sorell. The house had some land attached to it and initially, the defendants went there in the hope that they would be able to save enough money to buy the property for themselves. They did not tell the plaintiff or his wife where they had gone, but after a while they found out. On one occasion the plaintiff's wife visited the house at Sorell but did not gain access.
Apparently without the knowledge of his wife, the plaintiff started visiting his daughter at Sorell. Communication was partially restored but strained. By this time, the defendants were expecting the birth of their first child in May 1987. The defendants realised that the house they were renting would be an unsuitable purchase. There was trouble with the septic tank and the amount of land attached to the house was not as much as the defendants had first thought. The plaintiff considered it to be sub–standard accommodation and no place in which to bring up what he considered would be his first grandchild. The defendants looked at some property at Orielton but were unable to raise the finance to buy it. It did not occur to anyone that the daughter was free to sell No 2 Bangalee Street if she wished to do so and apply the proceeds towards the purchase of a new home. Towards the end of 1987 the defendants decided to get married. They told the plaintiff of their decision and their plans to be married in the Botanical Gardens by a relation of the son–in–law who was a marriage celebrant. The father strongly disapproved of these ideas and said that they should be married in a church by a Catholic priest. There was an argument about this and in result relations between the defendants and the plaintiff broke off again. The defendants were married on 1 January 1987 in the Botanical Gardens as they had planned. They did not tell the plaintiff or his wife about the marriage. Neither attended and only learnt about it from others after the event.
A few weeks after their marriage, the defendants looked at some land at Broadmarsh. By this time, communication between the defendants and the plaintiff had resumed but I infer, relations were again, somewhat strained. Ever since the defendants had lived together the underlying theme of all the difficulties between the generations was the defendants' belief that the plaintiff and his wife were continually interfering with their freedom to live their lives as they chose and the plaintiff's belief and more particularly his wife's, that parental intervention was no more than appropriate in the circumstances and that the defendants were ungrateful for the advice and material goods they were given. At all events, by January 1987 the relationship had improved to the stage where all four went to look at a property at Broadmarsh. As had been the case with "Willow Bank" the idea was that the plaintiff might buy it and if he did, the defendants would live in a house to be built on it. However, the proposal did not come to fruition and the defendants continued to reside in the unsatisfactory rented accommodation at Pawleena Road, Sorell. At this time, No 2 Bangalee Street was vacant and the plaintiff was trying to sell it.
In February 1987, when the daughter was six months' pregnant, the plaintiff visited his son–in–law's parents. He took with him some gifts his wife had bought for the baby.
He left with them a suggestion that the defendants might like to move into No 2 Bangalee Street. There was no reliable evidence upon which findings can be made as to the terms on which the plaintiff made this suggestion to his son–in–law's parents. Perceiving the gifts and the reference to No 2 Bangalee Street as a reconciliatory gesture, the defendants visited the plaintiff and his wife at their home which was then only a few hundred metres away from No 2 Bangalee Street. The defendants rely heavily on what they say took place at this visit. There were marked differences between the accounts given in evidence of what was said at this time. In substance, the daughter claimed that the plaintiff said that No 2 was "theirs", ie, the defendants, that it was a gift and that, if they did not like living there they could sell it and buy another house somewhere else. The daughter said that her mother said in her husband's presence, that it was a wedding present and he made no demur to this. The daughter described it as a happy occasion on which the family became reunited.
The father denied that he told the defendants that the house was theirs or that he had said anything which might reasonably be construed as him making a gift of the house. Both he and his wife denied that anything was said about it being a wedding present. The plaintiff said that, in the context of common ground that the house at Pawleena Road was an unsuitable place in which to bring up a baby, he said to the defendants that they could live in No 2 until the baby was born or the son–in–law found suitable alternative accommodation.
I find, in substance, the account of this conversation given by the son–in–law to be the most likely account. It is consistent with the then probabilities, the events which subsequently occurred and, importantly, the plaintiff's concession that had disharmony not subsequently arisen, he would have been content for the defendants to remain in No 2 Bangalee Street until his death.
The son–in–law said that the plaintiff "gave" them the house during this conversation in February 1987. "They said it was ours to have as our home, to do with as we pleased. If we wished to sell it, we could live there for a while and if we didn't like it we could sell it and buy something else." With respect to the plaintiff's wife the son–in–law said that she backed her husband up saying, "You can have it, it's your home. If you want it you can have it. You can live in it. If you don't like it there you can move and sell it and buy something else."
A little later on he said that it was clearly offered on the basis that the defendants would live in it for a trial term and, if "things didn't work out" they could sell it. "The fact, the way it was offered was we live there as our home and if we didn't like it we could sell it and buy something else. That was what we thought. We believed that it was a genuine gift and that if we didn't like it and it wasn't going to work out we could sell it and move somewhere else." The son–in–law denied that the plaintiff's words carried any implication that the defendants could only sell No 2 Bangalee Street with the plaintiff's permission.
I am unable to find precisely what was said by each of the parties to this conversation. However, I am satisfied that the plaintiff did not give, nor did he say words to the effect that he was giving the defendants or either of them the fee simple to No 2 Bangalee Street. Statements such as "it's yours", "you can have it" and "you can live in it" were said to convey the concept that the defendants were free to live in the house as if it were their own. A gift of the fee simple would have then been worth in the order of $78,000.00. Making an absolute gift of the freehold would have been inconsistent with the history of property dealings and discussions between the plaintiff and his daughter during the preceding four years and inconsistent with the tradition to which I have referred. The proposal that the defendants live in it for a period on a trial basis implies only a grant of licence to occupy. The suggestion that if "things didn't work out" the house could be sold and replaced by another is clearly a reference to the risk that the previous disharmony might re–surface with the parties living so close to one another. I am satisfied that this suggested possible course of action was the same as the course that was adopted when No 22 Bangalee Street was sold and replaced by No 2 Bangalee Street and the same as the course that was discussed with respect to "Willow Bank" and the land at Broadmarsh.
The probabilities are that the plaintiff and his wife wanted to restore the status quo that had existed when the daughter was living at No 22 and subsequently at No 2 Bangalee Street. Restoration of the status quo would have given the plaintiff and his wife ready access to their daughter and, as they saw it, their first grandchild.
That the plaintiff made a gift of occupancy only, is consistent with the steps the defendants took after they had moved in to assume the obligations to pay the outgoings on the property and the step they did not take of asking the plaintiff for a transfer of title until after they had been, or they believed they had been, asked by him to vacate the property. The following is taken from the cross–examination from the son–in–law:
"QSo you went through everything you could think of to ensure that as far as possible what you say was the terms of this gift would be given effect to that everyone who ought to be notified was notified that the house was now yours, is that the effect of it.?
AYes.
QBut you never, did you, took any steps, either you or your wife to get your father [sic] to execute the one document that was necessary to make you the legal owners of this house, to change the ownership of the title of the house into your name. You never once asked your father–in–law to do that did you?
ANo."
I find that the defendants made no assumption that the plaintiff had given or promised to give them ownership of the house. In November the following year, after the defendants had been living there for nearly two years, there was a serious dispute, to which I shall refer later, principally between the daughter and her mother. In an attempt to reconcile the differences that had arisen as a result of this dispute, the son–in–law visited the plaintiff and his wife. He was unsuccessful and told "to get out" a reference he understood to be to No 2 Bangalee Street although it might have only been meant as a reference to the plaintiff's house which he was then visiting. His response was not to claim that it was his house or his and his wife's house, nor to assert that the plaintiff had no right to tell him to get out; it was to assert that the direction to get out was "a bit unnecessary". He told his wife that the plaintiff required them to get out of No 2 Bangalee Street. She said that a few days later she saw the plaintiff and asked, "Do we have to get out?" and when told yes, she asked why and only then protested, "But you gave us this house, Dad" to which the plaintiff said, "I was going to. I was going to leave you everything in my will too and I'm cutting you out completely".
The defendants moved into No 2 Bangalee Street within a few days of the plaintiff making the offer in February 1987. They cleaned up around the property, replaced some tiles in the kitchen, painted the windows and did other work which might generally be described as maintenance work.
On 6 May 1987 the defendants' first child was born. In November 1987 there was a christening at Bothwell. It was all arranged by the plaintiff and his wife. There was evidence from Mr and Mrs Surtees senior that they spoke to the plaintiff and his wife at this christening and said words to the effect, how generous the plaintiff and his wife had been to give the defendants the house and what a wonderful start it had made to their lives. Mr and Mrs Surtees senior also said there was a similar conversation later at the celebration of the plaintiff's golden wedding anniversary and that on both occasions, neither the plaintiff nor his wife demurred from the proposition that they had been generous to give the defendants the house. The plaintiff and his wife denied that there had been any such conversation but I generally accept the evidence of Mr and Mrs Surtees senior that there was a conversation to the effect they claimed. However, the plaintiff's response to such conversation is equivocal on the issues in this case. The licence to occupy that I have found the plaintiff did give the defendants was itself a generous gesture, was a wonderful start for the defendants and might easily be expressed as "giving them the home".
I find that after the defendants moved into No 2 Bangalee Street the plaintiff and his wife were virtually daily visitors but the evidence does not disclose this as being a source of friction in the early stages, or at least, not a source of serious friction. I infer that on many of these visits the plaintiff and/or his wife brought things for the defendants and their daughter and that both of them took great pleasure in looking after the baby from time to time.
The defendants decided that they wanted a family of four children and it was obvious that No 2 Bangalee Street was not big enough to accommodate their plans. In early 1988 there were discussions between the defendants and the plaintiff and his wife about the need for more accommodation. The defendants saw a house offered for sale at Millvale Road, Mangalore. They thought it would be suitable for their needs. There was discussion between the defendants and the plaintiff about the sale of Bangalee Street and the purchase of this house at Millvale Road. All four went to have a look at the house but, as the events turned out, the idea did not come to fruition. According to the defendants, at this time the plaintiff said that he had spoken to his solicitor, Mr Turner, about transferring No 2 Bangalee Street into the defendants' name so that it could be sold and so that the defendants could use the proceeds of sale to buy the property at Millvale Road. The plaintiff disputed that he had ever said this. Mr Turner did not corroborate the defendants' evidence other than to say that at some unspecified time after the plaintiff bought No 2 Bangalee Street, he recalled the plaintiff casually mentioning the possible transfer of the property to his daughter but no instructions to do so were given him.
I am satisfied that the plaintiff and the defendants considered the proposal to purchase Millvale Road on the basis that No 2 Bangalee Street would be sold and the proceeds applied towards the purchase of the new property. I do not accept that the plaintiff said that he would transfer No 2 Bangalee Street to the defendants' name to enable this to be done nor that he had spoken to his solicitor about doing it. There would be no point to this exercise. It would result in unnecessary expense being incurred. If No 2 Bangalee Street was to be sold, whoever arranged the sale, the proceeds would be used to buy another property so the most economic and sensible method would be for the plaintiff to execute the transfer to the purchaser. Accordingly, the circumstances surrounding the possible sale of No 2 Bangalee Street and the purchase of Millvale Road are not evidence tending to establish that the plaintiff "gave" the defendants No 2 Bangalee Street in February 1987. The contemplated sale of No 2 Bangalee Street and the purchase of Millvale Road was precisely the same kind of transaction as that completed by the plaintiff when he sold No 22 Bangalee Street and applied the proceeds towards the purchase of No 2 Bangalee Street. It was the same kind of transaction as that considered in relation to "Willow Bank" and Broadmarsh. Had it come to pass it would have fulfilled the promise made during the conversation in February 1987 that if the defendants did not like living at No 2 Bangalee Street they could sell it and buy something else. In no case was an inter vivos gift of real property by the plaintiff to his daughter involved or contemplated.
After the purchase of Millvale Road fell through, the parties discussed building extensions onto No 2 Bangalee Street. The circumstances surrounding this occupied much attention during the trial. The defendants decided that they wanted to extend the house by building on a large room, a study, a small dining room, a bedroom and a bathroom. The plaintiff agreed that their plans were a good idea. The defendants saw the extensions as making the house suitable for the children they expected to have. The plaintiff agreed with this but he also saw the extensions as suitable for him and his wife to possibly live in as a "granny flat". He said that when he and his wife were unable to live alone, it would be nice if they could live in a "granny flat" in the same house as their daughter and grandchildren. Significantly, the plaintiff did not mention this idea to the defendants for he knew that they would have objections to it.
Plans for the extensions were drawn by Mr Surtees senior who is a civil engineer. They were shown to a builder well known to the plaintiff. The idea was that the builder would supply his labour at an hourly rate and all materials would be provided for him. The builder looked at the plans and estimated that it would cost about $20,000 to build the extensions to lock–up stage. There was a sharp divergence between the evidence of the plaintiff and the defendants with respect to how the extensions were to be financed. The defendants said that they were planning to borrow $20,000 from a bank but the plaintiff said that he would lend them the money and after some discussion, it was agreed that this would be done and that the defendants would repay the loan, interest free, at the rate of $40 per week. The plaintiff said that he simply agreed to find the $20,000 required to build the extensions and applied the money, in effect, towards the improvement of his own property.
It is common ground that the plaintiff did provide $20,000 and this money was put into the daughter's bank account and used by her to pay the builder and for the materials used in the construction of the extension. It is also common ground that at some unidentifiable time after the money was provided, the defendants paid the plaintiff $80 each fortnight in cash. These payments ceased in about November 1988 when the defendants were asked to vacate No 2 Bangalee Street or they believed that they had been so asked. The plaintiff says that these payments were rent, payable because he told the defendants that they ought to start paying some rent in view of the money he was putting in to improve the property.
The extensions were built to lock–up stage by August 1988. The son–in–law worked as a labourer for the builder during his annual holidays. The job cost more than $20,000. A horse float was sold for $3,600 and the proceeds of sale were applied to the building. In addition, the daughter and son–in–law sold some of their personal possessions and applied the proceeds of sale to the cost of the building work. The son–in–law estimated that the money raised from these sources and applied to the construction of the extensions was in the order of $5,000 and I accept his evidence about this.
There was a dispute about the ownership of the horse float. It was common ground that it was bought by the plaintiff and kept registered by him in his name. It was also common ground that it was used by the daughter. I infer that in recent times it was used almost exclusively by the daughter. She claimed that her father had given it to her as a birthday present some time after it was bought. The probabilities are that, as the daughter was the only one who had use for the horse float, she treated it as hers and the plaintiff permitted her to do so. Whether or not it was a birthday present, I find that by words and conduct the plaintiff made a gift of the horse float to his daughter.
I find that the plaintiff did not lend $20,000 to the defendants or either of them to build the extensions to No 2 Bangalee Street.
1The plaintiff always considered himself the owner of the property in which he permitted his daughter, his son–in–law and his grandchild to live. It would be unlikely that he would lend his daughter and son–in–law money to improve his property, especially as he saw the possibility of living in the extensions with his wife when they were unable to care for themselves. Expenditure by the plaintiff of money on property occupied by his daughter was not a novel concept to the plaintiff in 1988 when construction of the extension was being discussed. This was something the plaintiff had done and contemplated doing on several occasions during the preceding five years.
2There was no dispute that, shortly after work began, the parties understood that the plaintiff's legal adviser had advised that all receipts for labour and materials should be made out in the plaintiff's name for "taxation purposes". The son–in–law said, "Margaret's father had spoken to his lawyer and he said he will have to explain why or where the money has gone to, can't just have some $20,000 going from one account to another for any reason [sic], and these are all as they are, [referring to receipts tendered in evidence] the bricks, the tiles, the timber, all the major bills for the extension, so we put them in Margaret's father's name so he could prove where the money had gone." In fact, not all the receipts and accounts were put in the plaintiff's name but a considerable number of them were. The son–in–law could think of no reason why this course was necessary if the plaintiff had merely made him and his wife a loan. No explanation is apparent from the evidence, other than as No 2 Bangalee Street had been a source of income for the plaintiff, it was necessary for him to keep a record of his expenditure on the property for the purpose of depreciation schedules and possibly, capital gains tax.
3Prior to trial, the defendants were asked to give particulars of "all matters and things" they had done in reliance upon the assumption created by the defendant and acted on by them. The particulars set out in considerable detail work done and money spent by the defendants on the property. These particulars conclude with the following paragraph:
"The defendants acknowledge the gift to them of $20,000 by the plaintiff to pay for part of the rest of the extension. The balance of the work, labour and materials has been supplied in cash or kind by the defendants."
The daughter said this was an error. The son–in–law also said that it was an error and added that he became aware of the error and drew his solicitor's attention to it prior to trial. However, it was never altered and remains a particular. There was no evidence to confirm the son–in–law's account that the solicitor had been told there was an error, nor any evidence about how it occurred or why it remained uncorrected throughout the proceedings. The paragraph could not be the product of typographical or transcriptional error. It appears at the end of three pages of detailed description of work and money the defendant's claim they expended towards the improvement of the property. It is totally inconsistent with the daughter and son–in–law's evidence that the plaintiff made them a loan.
Some time after reaching lock–up stage, the defendants removed the wood heater from the house and put in a connecting door to the extension. The son–in–law's brother, a plasterer by trade, plastered the interior for a nominal sum and the defendants did some other minor works to the original house.
During the latter half of 1988 the daughter was expecting her second child. On the night of 16 November that year, she feared a miscarriage and was taken to the Royal Hobart Hospital where she was seen in casualty and later sent home. A miscarriage occurred after she returned home either that night or in the early hours of the following morning. The son–in–law arranged for her to be re–admitted to hospital in the afternoon for a dilation and curettage. After breakfast the plaintiff and his wife visited. As they were leaving the son–in–law told them what had happened. There was great consternation during which the son–in–law was accused of not looking after the daughter properly and told, in effect, that had he taken her to a private hospital and consulted a specialist the miscarriage (the loss of their second grandchild) would not have occurred. It was no doubt a tense and very emotional time for all those involved. The daughter went into hospital as arranged and returned home the following day. She felt unwell and went to bed. Three times that morning the daughter and son–in–law were visited by the plaintiff's wife. The plaintiff was with her on at least two of those occasions. The detail of what occurred is immaterial. It is only necessary to find that Mrs McRae considered that her daughter was not being looked after properly and the daughter and son–in–law thought that Mrs McRae was interfering and not giving them any peace. Tempers flared and in result Mrs McRae was told in no uncertain terms by the daughter that she wanted some privacy, she wanted to be on her own and Mrs McRae was to leave the house immediately. This was the serious dispute referred to earlier in these reasons and which ultimately led to this litigation.
A few days later, the son–in–law went round to see the plaintiff and his wife to try and restore good relations. He was unsuccessful. He told the plaintiff and his wife in effect, that while he and his wife were fond of the McRaes, they visited too often and left them no privacy. Mrs McRae pointed out that the defendants were willing to accept the things that she and the plaintiff had given them but were not willing to give time in return. In the end, the plaintiff told the son–in–law to get out. The following is taken from the evidence–in–chief of the son–in–law.
"Her mother first of all said that you can't take the good with the bad, 'all you want is the good', and I said, 'that's not true', I said, 'most people don't get anywhere near to the amount of visits that we have and we've put up with it for a long period of time without complaining whatsoever', and I said that we'd just like a bit more privacy and a bit more time to ourselves and sort of shortly after that it was said that, 'well, you can get out then'.
QNow, who said those words to you? ... Margaret's mother first and then her father backed Margaret's mother up.
HIS HONOUR: What did he say?
A'Well, you can get out then'. That's basically what Margaret's mother had said. I said, 'Well, that doesn't seem very' – I said, 'That's a bit unnecessary isn't it?', I said, 'All I was trying to do was just have a bit more privacy. We don't get a lot of time to ourselves' and that was the end of it. I just – I left then and went back and told Margaret."
The plaintiff said that he did not tell the son–in–law to get out of No 2 Bangalee Street. He said he was referring to his own home where the conversation was taking place when he told the son–in–law to get out. There is no doubt that the son–in–law understood the plaintiff to mean that he was to leave No 2 Bangalee Street for he went home and told his wife that they had to leave. She did nothing about this hoping that time would heal the breach. Two days later the plaintiff went round to No 2 Bangalee Street to collect his lawn mower and some tools and other things of his that were there. Whilst loading the trailer the daughter went out to speak to him. The following is the daughter's account given in evidence–in–chief:
"Well, the next time I saw my father was the following weekend on the Saturday. He came around and he was in the garage getting nuts and bolts and a few things that were there and the lawn mower and I went out to my father and I said, 'What's this? do we have to go?', and he said, 'Yes. I want you out', and I said, 'but why? why?', and he said, 'I want you out', and I said, 'but you gave us this house dad', he said, 'I was going to. I was going to leave you everything in my will too and I'm cutting you out completely just like I did with his sister [sic] some years ago' and I said, 'well what about the money we've put into the house?' and dad said, 'what money? you didn't put anything in it was all my money', and I tried to reason with him and there was just no way I could reason with him and I said, 'well what is it, is it something mum said?' and he said – 'oh you know, he just didn't want to reason' and I said, 'look mum's been making a lot of trouble dad', and he didn't want to listen and I repeated different things I'd heard back from friends and different people in the area and my father just didn't want to listen at all."
Since that Saturday morning there has been virtually no contact between the parties. Shortly before Christmas 1988 Mrs McRae visited No 2 Bangalee Street but that visit ended in acrimony. It may well be that the plaintiff did not mean to terminate the licence in November 1988 when he told the son–in–law to get out for it is common ground that no direction or request to leave No 2 Bangalee Street was made by the plaintiff or his wife between the end of November 1988 and April 1989.
The defendants' consulted their solicitor just prior to Christmas 1988 and he wrote to the plaintiff's solicitor on 20 December that year (inter alia):
"I act for Mr and Mrs Surtees who were made a gift of No 2 Bangalee Street, Lauderdale before witnesses in February, 1987 by Mrs Suttees parents, your clients.
...
I am instructed to call upon your clients, through you, to make good their gift to my clients within sixty days of the date hereof failing which Supreme Court proceedings will be instituted to compel them to do so."
The plaintiff's solicitor replied on 11 January 1989 denying that the plaintiff had ever intended to make a gift of the property, asserting that the extensions were funded by the plaintiff and concluding with the enquiry about the defendant's intentions "as to the vacation of the property."
The next piece of correspondence in evidence is a letter from the plaintiff's solicitors to the defendants dated 17 April 1989, formally withdrawing the plaintiff's permission for the occupation of the premises and requiring them to deliver up possession on or before midday Monday 24 April 1989. As the defendants did not vacate the premises as requested the writ which commenced these proceedings was filed on 26 April 1989.
The defendants' case was pleaded in the following way. In February 1987, at the plaintiff's home, there was a conversation between the plaintiff and his wife and the defendants. The plaintiff said words, and the plaintiff's wife said words which were adopted by the plaintiff, to the net effect that the plaintiff was then giving No 2 Bangalee Street to the defendants or one of them. No instrument in writing was then or later executed by the plaintiff so that no gift of the land was effected, (Conveyancing and Law of Property Act 1884, s60) and equity will not assist a volunteer, Milroy v Lord (1862) 4 De GF & J 264.
Notwithstanding that the gift was imperfect and cannot be perfected, the defendants claim that they have an equity which arose by way of estoppel and that this equity entitles them to an order that the plaintiff transfer to them or one of them, the fee simple title to No 2 Bangalee Street. In support of this claim the defendants rely on Waltons Stores (Interstate) Ltd v Maher & Anor (1988) 164 CLR 387.
Although the law of equitable estoppel and its relationship with common law estoppel has undergone substantial development in Australia over the last decade (Legonie & Anor v Hateley (1983) 152 CLR 406, Waltons Stores v Maher (supra) and Commonwealth of Australia v Verwayen (1990) 95 ALR 321), proprietary estoppel has long been recognised and enforced. See Dillwyn v Llewelyn (1862) 4 De GF & J 517; Ramsden v Dyson (1866) LR 1 HL 129; Inwards v Baker [1965] 2 QB 29; Taylor Fashions v Liverpool Victoria Trustees [1981] 1 All ER 897; Crabb v Arun District Council [1976] Ch 179; Pascoe v Turner [1979] 1 WLR 431.
In Verwayen Mason CJ at p330, referred to estoppel as "a label which covers a complex array of rules spanning various categories" and said that all the various categories (including proprietary estoppel) "are intended to serve the same fundamental purpose, namely 'protection against the detriment which would flow from a party's change of position if the assumption (or expectation) that led to it were deserted': Waltons Stores per Brennan J (supra) at p419. See also per Mason CJ and Wilson J (supra) at p404".
In Verwayen Mason CJ said at p333:
"The result is that it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to assist upon a disproportionate making good of the relevant assumption."
Relevant to the facts in this case and the plaintiff's right, as owner of the fee simple of No 2 Bangalee Street to obtain possession, is the following passage in the judgment of McHugh J in Verwayen at p397:
"The equitable doctrines result in new rights between the parties when it is unconscionable for a party to insist on his or her strict legal rights. It will unconscionable for a party to insist on his or her strict legal right if that party has induced the other party to assume that a different legal relationship exists or will exist between them, if he or she knew that the other party would act or refrain from acting on that assumption and if, as a result, the other party will suffer detriment unless the assumption is maintained. Hence, to avoid detriment to the party who has been induced to act or refrain from acting on that assumption, equity will require the parties to act on the basis of the relationship assumed by the innocent party until the detriment is removed or the innocent party otherwise compensated. The equitable right of the innocent party will take precedence over the strict legal rights of the party estopped. And because the doctrines of promissory and proprietary estoppel create equitable rights they operate differently from the common law doctrine of estoppel in pais. The purpose of both the common law and equitable doctrines is 'to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting': Grundt v Great Boulder Propriety Gold Mines Ltd (1937) 59 CLR 641. But because the common law doctrine of estoppel in pais is a rule of evidence, it operates to preclude the party estopped from denying the assumption of fact whenever it is necessary to do so for the purpose of determining the rights of the parties. On the other hand, because the equitable doctrines create rights, they preclude the party estopped from denying the assumption of fact (or law) only as long as the equitable rights exists. Once the detriment has ceased or been paid for, there is nothing unconscionable in a party insisting on reverting to his or her former relationship with the other party and enforcing his or her strict legal rights." [My emphasis].
Application of the principles enunciated by the High Court in the cases referred to will give rise to an estoppel and create an equity enforceable by the defendants if it is established that:
1The defendants made an assumption that the plaintiff gave them No 2 Bangalee Street at the meeting in February 1987.
2That the plaintiff induced them to make that assumption.
3They acted upon that assumption to their detriment.
4The plaintiff knew that he had induced that assumption and/or that the defendants were acting on it to their detriment and either encouraged them to do so or remained silent.
Steadfastly bearing in mind that, estoppel aside, equity will not assist a volunteer, the detriment referred to above is confined to the detriment occasioned by the defendants acting on the faith of the words of gift. It is to be sharply distinguished from the detriment suffered by the failure to perfect the gift. See Brennan J in Verwayen at p345. The critical element which shapes the equity and the remedy is the unconscionable conduct on the part of the person bound by the equity and the remedy to satisfy it will vary according to the circumstances of each case: per Brennan J Waltons Stores (supra) at p419, see also Amalgamated Investment and Property Co v Texas Commerce International Bank [1982] QB 84 at p103. Proportionality between the detriment occasioned and the remedy is required in satisfying the equity. This does not necessarily mean making good the assumption.
In this case the detriment claimed is the expenditure of money and labour on property which the defendants say they assumed had been given to them. Taking into account the period of time the defendants occupied the property free of rent, at best, the equity they claim would be well satisfied by an equitable charge to secure re–payment of the sums they expended. However, the defendants' defence and counter–claim of estoppel fails. For the reasons expressed I find that the plaintiff did not make or purport to make a gift of the fee simple of No 2 Bangalee Street to the defendants or either of them nor did he induce the defendants or either of them to assume that he had made or would make such a gift. I also find that the defendants did not assume that the plaintiff had made a gift to them of anything more than a licence to live in the premises.
Accordingly there will be judgment for the plaintiff against the defendants and an order that the defendants deliver up to the plaintiff possession of all that land known as No 2 Bangalee Street, Lauderdale.
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