Melville v Robin Bruce Gibbs as Executor of the will of Pauline Delys Melville
[2011] WASC 357
•22 DECEMBER 2011
MELVILLE -v- ROBIN BRUCE GIBBS as Executor of the will of PAULINE DELYS MELVILLE [2011] WASC 357
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASC 357 | |
| Case No: | CIV:3122/2009 | 9 NOVEMBER 2011 | |
| Coram: | KENNETH MARTIN J | 22/12/11 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application refused | ||
| B | |||
| PDF Version |
| Parties: | CLIVE STEWART MELVILLE ROBIN BRUCE GIBBS as Executor of the will of PAULINE DELYS MELVILLE ENA MELVILLE RONALD GARY MELVILLE BRENDON ROY MELVILLE ROGER STEVEN MELVILLE NEIL ANTHONY MELVILLE FAYE BLANCHARD MELVILLE |
Catchwords: | Strike out Pleading Proprietary estoppel Plea of unclean hands conduct by plaintiff Need for causal connection to equitable interest claimed Turns on own facts |
Legislation: | Nil |
Case References: | Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 Carantinos v Magafas [2008] NSWCA 304 Dewhirst v Edwards [1983] 1 NSWLR 34 Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501 H Stanke & Sons Pty Ltd v O'Meara [2007] SASC 246; (2007) 98 SASR 450 Industrial Acceptance Corporation Ltd v Tarulli [1974] WAR 125 Meyers v Casey (1913) 17 CLR 90 Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ROBIN BRUCE GIBBS as Executor of the will of PAULINE DELYS MELVILLE
First Defendant
ENA MELVILLE
Second Defendant
RONALD GARY MELVILLE
Third Defendant
BRENDON ROY MELVILLE
Fourth Defendant
ROGER STEVEN MELVILLE
Fifth Defendant
NEIL ANTHONY MELVILLE
Sixth Defendant
FAYE BLANCHARD MELVILLE
Seventh Defendant
Catchwords:
Strike out - Pleading - Proprietary estoppel - Plea of unclean hands conduct by plaintiff - Need for causal connection to equitable interest claimed - Turns on own facts
Legislation:
Nil
Result:
Application refused
Category: B
Representation:
Counsel:
Plaintiff : Dr P MacMillan
First Defendant : Ms W F Gillan
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Solicitors:
Plaintiff : David Rawlinson
First Defendant : Steven Andrew Forward
Second Defendant : Mossensons
Third Defendant : Mossensons
Fourth Defendant : Mossensons
Fifth Defendant : Mossensons
Sixth Defendant : Lightwater Legal
Seventh Defendant : Lightwater Legal
Case(s) referred to in judgment(s):
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060
Carantinos v Magafas [2008] NSWCA 304
Dewhirst v Edwards [1983] 1 NSWLR 34
Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501
H Stanke & Sons Pty Ltd v O'Meara [2007] SASC 246; (2007) 98 SASR 450
Industrial Acceptance Corporation Ltd v Tarulli [1974] WAR 125
Meyers v Casey (1913) 17 CLR 90
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1
(Page 4)
1 KENNETH MARTIN J: This action concerns a family dispute between members of the Melville family over land held by their deceased parents at Cowaramup, in the south west of Western Australia. Proceedings were commenced by the plaintiff (Clive) in this court on 17 December 2009. The action was admitted to my CMC List on 7 April 2010, in circumstances where Clive had sought an interlocutory injunction against the first defendant, the executor of his late mother's will.
2 The interlocutory application I am presently concerned with is a strike out application brought by Clive against the very recently filed minute of substituted defence and counterclaim of the executor. Only Clive and the executor have participated in this application. The application was argued on the basis that the minute be regarded as the first defendant's substantive pleading - bearing in mind that leave to amend at this time is not required.
3 Principles applicable to interlocutory strike out applications brought against pleadings in the CMC List have been explained by Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 and Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1, both being decisions of the Chief Justice. The threshold to be surmounted by a party seeking to advance such an application is of considerable moment.
4 Lying at the heart of the strike out application are the executor's assertions as to Clive's 'unclean hands', particularly under pars 19A to 48 of the substituted defence and counterclaim.
5 The first defendant alleges that on two occasions in 2008, Clive forged his mother's signature to loan and mortgage documentation in relation to his mother's farming lands. The defence pleas say that in January and August 2008, Clive obtained loan funds of $750,000 and $778,000 from the lending institution 'Quantum', secured against his mother's rural properties. These serious allegations are pleaded and supported by reference to four reports of a forensic document examiner, John Horton & Associates (pars 29, 30 and 42 of the defence).
6 It is contended by the defence that Clive's conduct in 2008 led to two absolute caveats being lodged by Quantum, K490533 (lodged against his mother's land referred to as Lot 3) and K490532 (lodged against his mother's Location 4088). The loans said to have been obtained by Clive are designated by the pleading as 'the first Quantum loan' and 'the second Quantum loan' respectively. The loan and mortgage security
(Page 5)
- documentation to which it is contended Clive forged his mother's signature are referred to as 'the first Quantum loan documents' and 'the second Quantum loan documents' (pars 28, 29, 41 and 42 of the defence). Furthermore, it is pleaded that Clive's mother, the late Mrs Pauline Melville, had been wholly unaware of all this Quantum loan documentation until late 2008 (pars 31 and 43 of the defence).
7 It is contended by the first defendant that Mrs Melville was unaware her properties had been used as security by Clive for the first and second Quantum loans. There was neither her knowledge nor her consent (pars 32 and 44 of the defence).
8 The first defendant pleads [45]:
Caveat number K490533 and Caveat number K490532 were not withdrawn until after Mrs Melville's death, on about 31 August 2009.
9 It presents as uncontroversial that Mrs Pauline Melville made her last will and testament on 16 January 2009 and that she died a week later on 23 January 2009.
10 Mrs Melville had been married for many years to the late Stuart Frank Melville, Clive's father. He had died 17 years earlier on 30 June 1992, leaving all his farming properties at Cowaramup, including Lot 3 and Location 4088, to his widow. Another property left to her, namely 573 Cowaramup Bay Road, Cowaramup, is referred to by Clive as the 'Home Block'.
11 The unclean hands defence raised by the executor against Clive culminates:
46. Mrs Melville was thereby precluded from fulfilling the representations, assumption and expectations alleged by the plaintiff (which are denied by Gibbs).
47. Mortgage No 2 was not discharged before Mrs Melville's death, thereby precluding Mrs Melville from fulfilling the representations, assumption and expectations alleged by the plaintiff (and which are denied by Gibbs).
48. Gibbs does not know whether and, if so, to what extent, Quantum may still claim rights in respect of Lot 3 and Lot 4088 pursuant to Mortgage No 1 and Mortgage No 2.
12 Although not entirely clear, I infer from the defence plea that:
(a) The two caveats have now been withdrawn by Quantum.
(Page 6)
- (b) Neither Mortgage No 1 nor Mortgage No 2 (referred to in pars 28(d) and 41(b) of the defence) was a registered mortgage against Lot 3 and Location 4088.
(c) Mortgage No 1 was discharged at some point before Mrs Melville passed away, but Mortgage No 2 was not.
(d) The loans from Quantum were bridging loans made to Clive.
(e) The validity of the mortgage instrumentation and loan documents bearing the allegedly forged signature of Clive's mother has not been tested in any court to date.
(f) By reference to par 48 of the defence, the executor remains uncertain as to whether any liability against Mrs Melville's estate is asserted by Quantum. There is a concern that on the basis of a personal covenant (as opposed to an asserted interest in land) there may still be some claim from Quantum that is outstanding or unresolved against the estate. During the course of argument, counsel for the executor referred me to a local decision concerning the significance of that distinction (Industrial Acceptance Corporation Ltd v Tarulli [1974] WAR 125). She indicated that the enquiries of the executor were still unresolved on that issue.
13 Clive's strike out application is advanced on the premise that the unclean hands plea against him by the executor is wholly unsustainable and unarguable. To fully understand that submission it is necessary to have some deeper appreciation of Clive's causes of action in respect of his proprietary claims in equity which he makes to assert his interest in certain subdivision areas lying within both Location 4088 and Lot 3. I address that in due course.
14 At this point however, I must mention that the objection invoked by Clive against the maintenance of the assertion of unclean hands against him is based on legal principles which, as between the parties, appear for the most part to be uncontroversial. The parties accept that for a defence of unclean hands to be properly raised, the impropriety complained of must be shown to 'have an immediate and necessary relation to the equity sued for', see Meagher RP, Heydon JD and Leeming MJ, Meagher, Gummow & Lehane'sEquity: Doctrines & Remedies (4th ed, 2002) [3-130] referring to Dewhirst v Edwards [1983] 1 NSWLR 34, 51 and Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501, 507 - 509 (Wootten J). The proper application of that
(Page 7)
- principle in this case directs immediate attention to the nature of the equitable interests sought to be established by Clive in the litigation.
15 Before examining Clive's case under his statement of claim of 17 December 2009, I record that the impugned paragraphs within the current defence pleading, by a minute of proposed orders handed up by counsel for Clive on 9 November 2011, are:
(a) Paragraphs 19A - 48 and 58 - 62, 'on the ground that the alleged impropriety constituting unclean hands does not have an immediate and necessary relation to the equity sued for'.
(b) Paragraphs 64 - 74 and the particulars to par 80, 'on the ground that they are not relied on to establish a cause of action and go to matters of evidence only'.
(c) Paragraphs 81 - 91, 'on the ground that they do not disclose a cause of action'.
Clive's pleading
16 I turn to Clive's statement of claim. He seeks relief (as regards his asserted interest in Lot 4022, Lot 3 and the Home Block) against the executor of his mother's estate, his sister Ena, his three brothers (Ronald, Brendon and Roger), his uncle Neil and his aunt Faye, namely:
1. A declaration that the plaintiff is the beneficial owner of the Promised Lot, alternatively the 1984 fenced area.
2. An order that the first defendant do transfer to the plaintiff the Promised Lot, alternatively the 1984 fenced area free of all encumbrances upon the plaintiff obtaining approval for the subdivision of the Promised Lot, alternatively the 1984 fenced area.
…
4. Alternatively an order that the first defendant do transfer to the plaintiff a one-half share of Location 4088, alternatively a one-sixth share of the farming lands, as tenant in common with the second, third, fourth and fifth defendants, free of all encumbrances.
5. Alternatively, judgment against the first defendant in the sum equivalent to the value of the Promised Lot, alternatively the value of one-half of Location 4088, alternatively one-sixth of the farming lands, alternatively the 1984 fenced area.
(Page 8)
17 Clive's pleading advances a series of seven distinctly alleged oral representations, said to have been made either by his late father or by his late mother, commencing in 1984 with the first, second and third representations (as referred to in par 7 of the statement of claim). The representations span a period up to what is referred to in par 24 of the statement of claim as 'the seventh representation', when Mrs Melville allegedly told Clive the 'Promised Lot' was his.
18 The content of the seventh representation is said to have been repeated by Mrs Melville to Clive orally on numerous occasions, particularised as ranging between 1994 to 'about 2006' (see subpars 24(a) to (e)). Particulars to subpar 24(e) read:
In or about 2006, when the plaintiff again discussed with the Mother plans for the construction of chalets on the south western section of the Promised Lot, the Mother told the plaintiff that he should proceed and that it was his decision.
19 Alongside those seven representations Clive also asserts (directed towards establishing his equitable cause of action in proprietary estoppel) oral agreements between him and his late mother and father, or one or other of them (see pars 8, 18 and 25).
20 Distinct acts of personal reliance are pleaded by Clive as regards different assumptions or expectations he contends arose out of various of the seven particular representations.
21 The first, second and third representations Clive contends for relate to his asserted proprietary interest in the area of land defined in particulars to par 12 as the '1984 fenced area', seen marked 'A' on a plan attached to the statement of claim. These three representations relate to Location 4088. They are said to have resulted in Clive constructing a dwelling house-shed, a dam, water tanks, orchard and other improvements. Clive contends by subpars 12(b) - (c) that he outlaid $31,200 and then laboured in excess of 2,000 hours as builder and labourer in relation to the improvements, which he says were made by him in an area comprising approximately 12 acres within Location 4088. That area he asserts, was commonly referred to by Melville family members as 'Clive's place'. He says the 1984 fenced area was used and maintained for his own purposes (par 13 of the statement of claim).
22 Clive contends that other members of the Melville family, with the approval of his parents, 'built homes and other improvements on various
(Page 9)
- parts of the farming lands and fenced those parts' from about the mid-1970s (par 15 of Clive's statement of claim).
23 The money and labours Clive claims to have expended upon the 1984 fenced area appear to have been outlaid in a period between 1984 to 1986 (subpar 12(a) of the statement of claim).
24 Clive's pleading then asserts further oral representations made to him by his father and his mother (the fourth and fifth representations) in 1990 and then in early 1991. These representations were (par 16) that Clive would 'receive the 1984 fenced area plus a share of the remaining farming lands as his inheritance' and 'would receive the south western portion of Location 4088 excluding Neil's Lot as his minimum inheritance' (par 17). The area of land now the subject of the asserted representations by his parents in early 1991 carries a distinct definition, namely 'the Promised Lot'. Paragraph 17 refers to an attached plan or diagram marked 'B'. The Promised Lot is said to include the 1984 fenced area. Again it relates to a subset portion of Location 4088. Clive's attachment 'B' to his pleading shows a diagonally marked area abutting Caves Road and (to the south) Cowaramup Bay Road.
25 On this plan Location 4088 is said to comprise 52.569 hectares. The area marked within, said to be 'agreed minimum boundary area with Dad in 1990/1991', looks to be approximately just under one half of the area of Location 4088. Dimensions for Neil's Lot within this shaded area are not shown.
26 Clive's asserted fourth representation takes his case beyond simply a claim to a portion of Location 4088, by the plea 'plus a share of the remaining farming lands as his inheritance'. The 'Farming Lands' are defined to include not only Location 4088, but also Lot 3 and Lot 1 (referred to as the Home Block) inherited by Clive's mother upon his father's death.
27 By par 19 of the statement of claim, it appears to be a contention of Clive that the five representations raised so far aggregate, and that the influence of the earlier representations continue. Paragraph 19 asserts that on the basis of the effect of all these five pleaded representations, Clive assumed 'the Father and Mother accepted the plaintiff's beneficial entitlement to the 1984 fenced area and a share of the remaining farming lands alternatively to the Promised Lot'.
28 The fourth and fifth oral representations need to be assessed together with the assertion that the Promised Lot area was represented as Clive's
(Page 10)
- 'minimum inheritance'. The inference is that Clive's inheritance could be greater in extent than the Promised Lot and therefore potentially embrace as well, it seems, some part of Lot 3 and the Home Block. It is not clear whether the representation relates to an inheritance by Clive under his father's will, his mother's will, or perhaps the survivor's will.
29 Clive contends, in reliance upon all five oral representations, that he expended more monies and labours in 'constructing and establishing improvements to the Promised Lot' (subpar 21(a) of the statement of claim). It is said he constructed, then occupied, a new house by 'utilising parts of the said dwelling house-shed'. Clive refers to various other financial outlays he made in an asserted amount of $126,850 (particulars to par 21). He contends his labours exceeded 2,750 hours as builder and labourer towards these improvements.
30 The first to fifth representations are contended to have been made in the period prior to the death of Clive's father on 30 June 1992. However, the sixth and seventh representations as pleaded in pars 23 and 24 of the statement of claim span 1994 to 'about' 2006.
31 The sixth and seventh oral representations asserted to have been made by Mrs Melville to Clive are:
23. In or about the period 12 months after the death of the Father, the Mother orally represented to the plaintiff on several occasions that the farming lands would be divided up equally between her children following her death ('the Sixth Representation').
24. Following the death of the Father, the Mother on numerous occasions orally represented that the Promised Lot was his ('the Seventh Representation').
32 By par 26, Clive now contends he relied upon all seven representations. As a result it is put that Clive 'assumed that [his] mother accepted [his] beneficial entitlement to the Promised Lot'.
33 By par 28, Clive contends that in reliance upon all seven representations 'or each of them', he spent further monies and labours on the Promised Lot. Clive estimates he spent $11,000 building a new workshop and in town planning fees incurred, together with about 40 hours as builder and labourer, in respect of these further improvements.
(Page 11)
34 As to Clive's realisation of a detriment, his statement of claim contends:
30. Contrary to the Representations and to the assumptions or expectations and each of them the Mother by the Will gave the farming lands including the Promised Lot to the second, third, fourth and fifth defendants as tenants in common in equal shares.
31. The mother failed to act to avoid the detriment by fulfilling the said assumptions or expectations.
35 Clive asserts in the alternative an implied, alternatively constructive, trust in his favour (par 35). He does so by reference to par 34, which contends in part '… it was the common intention of the Father and the Mother and the plaintiff that the plaintiff be the beneficial owner of the 1984 fenced area and a share of the remaining farm lands alternatively of the Promised Lot'. Clive argues unjust enrichment (par 36) as well.
36 Beyond a claim to be recognised as beneficial owner of the Promised Lot, free of all encumbrances, Clive claims an interest in the 1984 fenced area or 'alternatively a one-sixth share of the farming lands as tenants in common with his sister and three brothers free of all encumbrances'.
37 It is in the context of Clive's equitable claims to a beneficial interest in his parents' land on a basis of a proprietary estoppel in his favour, or by an implied or constructive trust in his favour, that Clive's application to strike out the first defendant's unclean hands defence is to be assessed.
Clive's arguments in relation to his unclean hands and other matters
38 In relation to the alleged forgery of the Quantum loan documents, Clive essentially raises what is a temporal objection against the arguable possibility of the first defendant showing a 'necessary and immediate connection' of such conduct to the equity sued for. Clive contends he will establish his claim to equitable relief without needing to 'rely on any disentitling conduct' of his such as that asserted concerning the Quantum loan documents.
39 The confined parameters of a clean hands defence and its narrow causal application, such as is explained in Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501, 508 - 509; Meyers v Casey (1913) 17 CLR 90, 124 (Isaacs J); Carantinos v Magafas [2008] NSWCA 304 [58] - [59]; and Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 [181] are invoked by Clive.
(Page 12)
40 In illustration, Clive refers to par 30 of his statement of claim. By reference to s 28 of the Wills Act 1970, he says that a beneficiary entitled to real estate will take the real estate 'together with any encumbrances'. He then contends (written submissions par 9(b)):
There was nothing, either in fact or in law, to prevent Mrs Melville from giving effect to the expectation or assumption in her will. The temporary security arrangements constituted no impediment to Mrs Melville's fulfilling the plaintiff's expectation.
41 Clive also says, 'The caveats have in any event been withdrawn and the mortgage discharged'. [I interpolate, as to the mortgage being discharged, that assertion presents as more in the nature of a plea of an antidote to a contention of unclean hands, rather than as a conceptual obstacle to invocation of the principle. In any event, this assertion raises a matter of factual dispute.]
42 Clive contends that the unclean hands plea against him, as regards the 2008 forged Quantum loan and mortgage instrumentation, raises matters that are in truth wholly irrelevant. He says (written submissions par 10):
If it is said that Mrs Melville could not fulfil the assumption by transferring the real estate during her lifetime, the fact of the encumbrance of the real estate is the relevant material fact and not the events leading up to that encumbrance being put in place. Such background facts if admissible are matters of evidence and not material facts; they have no place in the pleading.
43 Clive also raises objections to the pleas under pars 64 to 74 of the counterclaim concerning St George Bank Guarantee Agreements, by contending 'any earlier agreements in this respect fall away; all material terms of the relevant agreement are pleaded in paragraph 75' (submissions par 16).
44 Paragraphs 81 to 91 of the substituted defence and counterclaim are also attacked by Clive. They advance a restitutionary claim for monies Clive is said to have received. It is said these funds rightly belonged to his mother. But Clive objects to the executor's plea on the basis it discloses no cause of action. It is said by Clive that 'the relevant limitation period is six years. The claims are statute barred' (submissions par 20). But a limitation of action defence bars the remedy, not the cause of action. It is for a party to plead and raise by defence a limitation of action plea against the executor's claim. Counsel for the executor
(Page 13)
- confirmed that this restitutionary claim is raised not only as a counterclaim, but also as a defence (see par 61 of the defence).
45 The executor claims the proceeds of the sale of 'the Restaurant Block' (sold pursuant to Clive's father's will on or about 12 June 1994, for $318,000) rightfully belonged to Mrs Melville, as sole beneficiary of Stewart Melville's will. However, it is said Clive received all the Restaurant Block monies in August 1994 and wrongfully retained them for his own benefit.
46 Apart from a need for Clive to explicitly plead and raise limitation as a defence, it seems to me that it is premature to prevent the first defendant from raising this Restaurant Block funds allegation at trial, bearing in mind one of Clive's claims is for an equal share under his late mother's will to an unencumbered one-sixth interest in the farming lands. Clive's complaint that an equal one-sixth share was not afforded him under his mother's will seems to me to raise an overall question about whether his retention of $318,000 of funds belonging to his mother should be weighed in assessing the fairness of a one-sixth equal share, if he does not bring those Restaurant Block funds to account.
47 Clive raises a distinct pleading attack upon pars 29, 30 and 42 of the defence by reference to the construction of those paragraphs upon the premise of the 'Horton forensic evidence'. In my view, the alleged essential material facts are properly raised and supported by the executor's plea and the objection by Clive is without merit.
The St George mortgage arrangements
48 Clive's objections to pars 64 to 74 are advanced on the basis they are mere pleas of evidence and unnecessary. That is put bearing in mind the historical evolution of a National Bank Guarantee Agreement of 2005 between Clive and Mrs Melville through asserted variations in 2006 (par 70 counterclaim), then in 2007 (par 74 counterclaim) prior to a further variation constituting the asserted St George Bank Guarantee Agreement under par 75.
49 I am of the view it would be premature to summarily remove this material from the first defendant's counterclaim. I note par 80, the culmination of this section, pleads the breach of a National Bank Guarantee Agreement and its variations, as well as the St George Bank Guarantee Agreement. Particulars contend for loss and damage to Mrs Melville, by reason of her not receiving the Promised Lot under the
(Page 14)
- National Bank Guarantee Agreement, the $500,000 under the St George Bank Guarantee Agreement and a new Toyota Prado motor vehicle.
50 However, subpar 80(d) foreshadows even further particulars of loss and damage by the executor. This subparagraph should be removed. Counsel for the executor did not seek to defend this plea during the course of argument. That was a wise course. The open-ended nature of that plea, bearing in mind what precedes it and the state of this action, is unacceptable.
51 Another 'Promised Lot' as referred to under par 80(a) and said to have been promised by Clive to Mrs Melville, must not be confused with the Promised Lot sought by Clive on the basis of part of his proprietary estoppel claims. The executor's plea appears to be in error here. There should presumably either be a reference to the Promised Block under subpar 66(b)(i) (as defined), the Promised Unit under subpar 70(c), or to something else. This needs clarification, but overall it is a small nomenclature fault.
52 Substantively, and against Clive's contention that pars 64 to 74 be excised as mere evidence, I do not assess it as sufficiently obvious, from what has been raised at this part of the counterclaim, that the asserted 2007 St George Bank Guarantee Agreement, in the face of its asserted breach by Clive, must have operated on the basis that Clive's agreed payment of $500,000 wholly replaced his earlier promise to his mother of a Promised Unit (par 74(b)). That is especially so in circumstances where it is asserted that Clive failed to pay out the St George Bank loan as agreed and also failed to return the certificates of title for Lot 3 and Location 4088.
First defendant's position: Unclean hands
53 Returning to the central issue concerning the executor's plea of unclean hands in relation to asserted forgery by Clive in 2008, the position of the first defendant by his written submissions is that whilst accepting that unclean hands conduct sought to be raised against Clive must have a 'necessary and immediate connection' to the equity sued for, nevertheless:
(a) Equitable relief is discretionary and factors that might influence whether or not relief should be denied by reason of the plaintiff's own conduct are neither fixed nor closed, referring to the discussion in Black Uhlans, especially at [181]. In that context the first defendant pointed out that the observations by Campbell J
- (as he then was) in Black Uhlans were made in the context of a trial, not a summary determination.
- (b) Here, properly understood, the disentitling conduct had a necessary and immediate connection to the equity sued for. The first defendant pointed to observations of the New South Wales Court of Appeal in Carantinos v Magafas, especially at [58] and [59] by Hodgson JA, with whom on this point Campbell JA and Handley AJA agreed:
As to whether the disentitling conduct had a sufficiently close relationship to the equity sued for, in my opinion it did have a relationship sufficient to give rise to a discretion to refuse relief or to impose conditions on the grant of relief. … it was as a practical matter necessary for Mr Magafas to prove this illegal and fraudulent scheme in order to prove his case.
- It is apparent that these observations by the Court of Appeal were also made by reference to the trial judge's decision in the aftermath of a trial.
(c) By reference to pars 45 - 48 of the defence, that Mrs Melville was 'in any event precluded from transferring any interest in Lot 4088 and/or Lot 3 to Clive, by reason of Clive's own conduct in allegedly forging security documentation in her name, which also led to the lodgement of absolute caveats over those lots' (written submissions par 6).
54 By reference to Carantinos v Magafas at [58] (extracted above) the executor says it is necessary for Clive, a party moving for equitable relief, as a 'practical matter' to raise his illegal and fraudulent scheme in proving his case at trial. By reference to asserted considerations of pragmatism, the first defendant says at par 7 of his written submissions:
That position applies in the present case in the sense that the plaintiff, as a practical matter, will be called upon by the court at trial to produce evidence of the existence and status of potential third party interests in Lot 4088 and Lot 3.
55 By reference to par 48 of the defence the executor says it is unclear whether any third party does claim rights pursuant to the allegedly forged mortgage documents. That assertion is an unsatisfactory basis to defend at this time. It is for the first defendant to ascertain by now what the position is or is not, as regards a mortgagee and advance a case accordingly.
(Page 16)
56 However, I do accept the first defendant's basal contention that an existence of the caveats against Location 4088 and Lot 3, by reason of allegedly forged security documentation, may be a relevant matter at a trial. So much must be accepted, particularly in relation to Clive's asserted detriment concerning his late mother's failure to make the equal dispositions he says he had a right to expect under her will.
57 It will be remembered Clive's pleaded proprietary estoppel case claims, by various alternatives, more than just his entitlement to a portion of Location 4088 as his 'Promised Lot'. Clive also claims (in the alternative) a one-sixth equal interest in all the Cowaramup farming land (as defined) with his sister and four brothers. And as I read the pleading, Clive claims this interest on a wholly unencumbered basis. That claim is inconsistent with the submission made during the course of argument regarding s 28 of the Wills Act.
58 Clive's submission to me on this argument was to the effect that it would have been open to Mrs Melville to bequeath Cowaramup farming lands equally amongst her six children, on the basis of the subject land still remaining encumbered by whatever mortgages attached to the land at the time. However, that is not the way Clive's statement of claim is constructed. It claims unencumbered entitlements: see the phrase 'free of all encumbrances whatsoever', as used in subpars 38(a), 38(b) and 38(c). Clive's prayers for relief pars (2) and (4) are to the same effect.
59 Clive's pleading therefore pursues for himself an unencumbered outcome, beyond that deliverable under s 28 of the Wills Act. So, if Clive has engaged in conduct in 2008 which caused an encumbrance to attach over all or parts of the farming land, thereby rendering it impossible for his mother to confer an unencumbered interest by her will, an investigation of Clive's encumbrance-causing conduct at trial is, at least prima facie, relevant. Such conduct can, in my assessment, arguably meet the threshold of being conduct which has a necessary and immediate connection to the (unencumbered) equitable interest pursued by Clive, at least assessed at the level of potential arguability on an interlocutory strike out application.
60 The executor also raised alternative arguments. By reference to a South Australian Full Court decision of H Stanke & Sons Pty Ltd v O'Meara [2007] SASC 246; (2007) 98 SASR 450 [64], it was contended that at the interlocutory stage a court may permit allegations as to unclean hands conduct to remain, if they are 'relevant to the general question of
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- the equitable relief to be granted that should be left for the consideration and determination of the trial judge' (submissions par 9).
61 Each action obviously needs to be evaluated by reference to its own unique underlying facts. However, in my assessment the elemental wisdom demonstrable in the proposition that a court should be cautious about the proposed summary excisement of selected aspects of conduct, in a matter canvassing ongoing interactions between parties over a long period, is a prevailing consideration. In this particular case, Clive raises conduct of his parents spanning a relationship and dealings across a period of 22 years (early 1984 to in or about 2006), founding his claim for equitable relief. To summarily draw a line at 2006 presents to me as both arbitrary and artificial, particularly in circumstances where it is contended Clive and his mother had ongoing business dealings relating to the Cowaramup farming lands right up until just prior to her death in January 2009. Naturally, that leaves open a possibility that at the trial Clive can re-agitate all arguments against the invocation of the unclean hands principles against him. But that will be within a framework of the full facts, circumstances and evidence ventilated at the trial. That is the appropriate course.
62 At this point however, it seems to me a summary determination on these serious issues is unwise, particularly towards the presenting facts of this case.
63 It was also submitted on behalf of the executor (submissions par 10) that some matters contended for under pars 19A through 48 of the defence are likely to be raised in any event, because the alleged forgery in 2008 'arguably contradicts the plaintiff's case both as to representations allegedly made by Mrs Melville (and her late husband) and the plaintiff's alleged reliance on such representations'. It is said that 'although, for these purposes alone, it might not be necessary for the first defendant to actually plead by way of defence the relevant facts and circumstances, there is no relevant prejudice to the plaintiff for the pleading to remain'.
64 As this submission accepts, by itself this is not enough. Alone I am not moved by it. But bearing in mind the conclusions I have already reached upon other contentions, that is of no real moment.
Conclusion
65 In the end, I am of a view that it would be wrong and premature to summarily strike out pars 19A through 48 of the defence. Ultimately, the force, effect and implications of Clive's conduct asserted under those
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- paragraphs need to be evaluated in a global context and within the overall framework of evidence properly adduced and tested at a trial. Accordingly the plaintiff's strike out application must substantively fail.
66 The first defendant's minute of substituted defence and counterclaim stands as its defence, save only as to subpar 80(d) of the particulars to par 80 of the counterclaim, which will be excised, and with the required clarification I mentioned at [51] of these reasons.
67 Since the first defendant executor has been substantially successful, he should receive the taxed costs of this application. I will hear the parties as to the appropriate orders if they cannot be agreed upon.
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