Quinn v Bryant

[2012] NSWCA 377

Court of Appeal

New South Wales

Case Title:

Quinn v Bryant

Medium Neutral Citation:

[2012] NSWCA 377

Hearing Date(s):

13 November 2012

Decision Date:

21 November 2012

Jurisdiction:

Before:

Allsop P at [1]
Barrett JA at [2]
Sackville AJA at [3]

Decision:

(1) Appeal dismissed.

(2) The appellant pay the respondent's costs of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

EQUITY - promissory estoppel - detrimental reliance by promisee (a granddaughter) on promise by the promisor (her grandmother) to provide accommodation and leave half of her estate to the promisee - no dispute that compensation to the promisee should be assessed on an expectations basis - whether primary Judge failed to take into account that the compensation would be payable before the promisor's death and thus would be "accelerated" - no error demonstrated.

Legislation Cited:

Supreme Court Act 1970

Cases Cited:

Giumelli v Giumelli [1999] HCA 10; (1996) 196 CLR 101
Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483

Texts Cited:

Category:

Principal judgment

Parties:

Joan Phyllis Quinn (Appellant)
Susan Bryant (Respondent)

Representation

- Counsel:

Counsel:
J A D Needham SC and F F F Salama (Appellant)
R D Wilson and D Steirn (Respondent)

- Solicitors:

Solicitors:
Vizzone Ruggero & Associates (Appellant)
Tsolakis Solicitors (Respondent)

File number(s):

2012/52197

Decision Under Appeal

- Court / Tribunal:

- Before:

Sackar J

- Date of Decision:

14 October 2011

- Citation:

Joan Phyllis Quinn v Susan Bryant [2011] NSWSC 1153

- Court File Number(s)

2011/45569

Publication Restriction:

JUDGMENT

1. ALLSOP P: I have read the reasons in draft of Sackville AJA to be published. I agree with them and with the orders proposed by his Honour.

2. BARRETT JA: I agree with Sackville AJA.

3. SACKVILLE AJA: This appeal concerns an unfortunate dispute between a grandmother ("the appellant") and a granddaughter ("the respondent"). The issue on the appeal is a very narrow one relating to the assessment of compensation payable by the appellant to the respondent and raises no question of principle.

4. The appellant commenced proceedings against the respondent in the Equity Division of the Supreme Court. She sought various declarations and orders, including a declaration that the respondent had no interest in a property at Blakehurst of which the appellant was the registered proprietor. The primary Judge dismissed the appellant's claim and she does not appeal from that order.

5. The respondent cross-claimed against the appellant seeking an order that the appellant hold the Blakehurst property upon constructive trust for the respondent for the term of the appellant's life or, alternatively an order that the respondent is entitled to a licence to occupy the Blakehurst property for her life in payment of an occupation fee of $200 per week. In the further alternative, the respondent sought compensation in the nature of equitable damages for the detriment she had sustained in relying on the appellant's promises or damages for breach of contract.

6. The primary Judge found in the respondent's favour on the cross-claim, although the orders made differed from those she sought. His Honour made declarations to the following effect:

   (1)The respondent is entitled to damages equivalent to a half-share interest in the Blakehurst property plus the sum of $82,800 (subject to a reduction of the total by 10 per cent for "vicissitudes"). (The declaration refers to the sum of $82,500 but this is apparently in error and the correct figure is that referred to in the substantive orders.)

   (2)The respondent is entitled to occupy the Blakehurst property until it is sold, on condition that she pays a licence fee of $200 per week to the appellant.

   (3)The "value of the [respondent's] damages" is secured by an equitable charge in favour of the respondent over the Blakehurst property and upon the net proceeds of sale thereof.

7. In addition, his Honour made orders that:

   (4)The Blakehurst property be sold.

   (5)Upon settlement of the sale, the appellant pay to the respondent "damages" comprising:

   ·one half of the net proceeds; and

   ·the sum of $82,800,

   the total to be discounted by 10 per cent.

8. The appellant's position in oral argument on the appeal was not entirely consistent with her written submissions. Ultimately, however, she challenged the orders on the basis that the primary Judge paid insufficient attention to the nature of the representations on which, on his Honour's findings, the respondent had relied. The representations, as found, required the appellant to make testamentary provision for the respondent to receive half of the appellant's estate. The appellant argued that the primary Judge had erred in failing to take into account that the orders entitled the respondent to be paid compensation when the Blakehurst property was sold, rather than when the appellant died. Accordingly, his Honour should have made allowance for the "acceleration" of the respondent's entitlement, but had not done so.

9. Ms Needham SC, who appeared with Mr Salama for the appellant, did not nominate a specific amount by which the award of compensation should be reduced. However, she asserted that the reduction in the award was likely to exceed $100,000 and thus would obviate the need for the appellant to obtain leave to appeal: Supreme Court Act 1970, s 101(2)(r).

FACTS

Background

1. The appellant was aged 87 at the trial. She is the grandmother of the respondent who was aged 46 at the trial.

2. In June 2009, the appellant's daughter (the respondent's mother) died. She had until her death assisted the appellant in a variety of ways. On 17 September 2009, the appellant executed a power of attorney in favour of the respondent.

3. On 1 October 2009, the appellant made a will leaving her estate in equal shares to the respondent and the appellant's son, Terry. The will left the appellant's jewellery to the respondent. At that time the appellant was living in a house at Chifley.

4. In late November 2009, the appellant signed a contract to purchase the Blakehurst property for $745,000. On 12 December 2009, she sold the Chifley house for $920,000. The Blakehurst purchase settled in early February 2010 and shortly thereafter the sale of the Chifley house was settled.

5. In February 2010, the respondent and her two children, together with her then partner, moved into the Blakehurst property. A few weeks later the appellant and her companion also moved in.

6. On 12 March 2010, the appellant signed a contract for the construction of a flat on the Blakehurst property. The building work was completed in early July 2010.

7. For many years prior to these events, the respondent had lived in a subsidised flat in Allawah provided by the Department of Housing. In early 2010, she was paying rent of $200 per week. On 19 April 2010, the respondent terminated her tenancy of the flat. She claimed to have done so on the faith of representations made by the appellant.

8. Soon after the parties began to reside in the Blakehurst property serious conflicts emerged between them. In consequence, the appellant and her partner left the property on 14 October 2010. The appellant revoked the power of attorney executed in favour of the respondent a few weeks later.

9. From October 2010 until the trial, the respondent and her two children lived at the Blakehurst property, paying $200 per week rent.

10. From late February 2011, the appellant and her companion lived in a rented retirement villa.

11. Prior to the trial, the appellant revoked her 2009 will and made a new will. The respondent is not a beneficiary under the new will.

Findings

1. The following findings made by the primary Judge are not now in dispute.

2. In August or September 2009, the appellant expressed a desire to live with the respondent and move to the St George area. She had in mind that the respondent would take over the role previously performed by the respondent's mother, including caring for the appellant in various ways. At the time the appellant knew that the respondent was living in the subsidised accommodation provided by the Department of Housing.

3. In September 2009, the respondent raised with the appellant the question of what would happen if the arrangement did not work out. The appellant said in response that she would give money to the respondent so that the respondent could provide a place for herself and her children to live.

4. In or about October 2009, the appellant said to the respondent that she would make a will leaving the respondent one half of her estate. This representation was part of the arrangements being discussed between them at the time. The will made by the appellant on 1 October 2009 reflected this representation.

5. The respondent vacated the Allawah flat in direct reliance on the representations made by the appellant. The effect of vacating the flat and terminating her tenancy was that the respondent relinquished her subsidised accommodation. Had she remained in the flat, she would not have had her entitlement to a subsidy reassessed, even if her income increased in the meantime. She would have been entitled to reside in the flat indefinitely.

6. In July 2010, the respondent applied to the Department of Housing for reinstatement of her tenancy. Her application was refused on the ground that she no longer satisfied the income criteria.

7. Prior to the respondent's relationship with the appellant breaking down, the respondent cared for the appellant at the Blakehurst property and assisted in supervising construction of the granny flat.

THE PRIMARY JUDGMENT

1. The primary Judge found (at [96]-[102]) the respondent had made out a claim on the basis of equitable estoppel:

   "96. I ... accept ... that the evidence supports representations emanating from the [appellant] which are in my view sufficiently clear to support an estoppel. These were not representations which were susceptible to ambiguity or uncertainty. The [respondent] expressly presented her concerns and uncertainty about leaving subsidised housing in the event that the arrangement with the [appellant] did not work out.

   97. I find that as a result of the representations identified the [respondent] was entitled and clearly did believe then, namely, that in return for giving up her subsidised accommodation and caring for the [appellant] the [respondent] either expected to receive accommodation for the remainder of the [appellant's] life and half of the [appellant's] estate on her death which given the [appellant's] age would reasonably be expected to amount to half of the Blakehurst property.

   98. I am of the view that the detriment suffered by the [respondent] in relinquishing her subsidised accommodation which she had for life is a relevant detriment and in accordance with [the] authorities ...

   100. I also find that the representations about the buying of the property in the St George area and the making of the will were operative at the time the [respondent] acted to her detriment.

   101. Having established however that she suffered detriment in reliance upon the [appellant's] conduct by having given up her subsidised accommodation means that she has in my mind established the necessary elements for her equitable estoppel claim."

2. The primary Judge noted (at [102]) that, in view of his findings on estoppel, he did not need to consider whether the parties had entered a contractual relationship. Nor did he need to consider whether a constructive trust should be found.

3. His Honour observed that the relief to which the respondent was entitled raised some difficult questions. He explained (at [145]-[154]) the declarations and orders he proposed to make as follows:

   "145. ... Counsel for the [respondent] submitted that either the court should, in making good the [respondent's] expectations, grant a right of residence in the Blakehurst home for the [appellant's] life subject to the payment of an appropriate rent together with damages for the loss of the chance to share in the [appellant's] estate or award the [respondent] an amount of money to buy another home or which is calculated by reference to the shortfall between her subsidised rent of $200 per week and the commercial rent payable in the subsidised housing accommodation.

   146. The grant however of a right of residence for the [appellant's] life in relation to the Blakehurst property as the [respondent] concedes would leave the [appellant] without any capital sum which she could access for her own purposes, whether it be for rent or otherwise. It would also involve potentially at least some sort of ongoing relationship between the two parties which I regard as undesirable. For both of these reasons I think such relief would be inappropriate in the present case.

   147. In my view in all the circumstances of this case I believe that an award of damages in favour of the [respondent] is the appropriate course.

   148. I should say that the parties made submissions as to the appropriate award of damages upon the basis of a number of assumptions. On the question of the market rent for the Allawah unit it was assumed to be in the order of $500 per week. I did not detect any opposition from counsel for the [appellant] as to that amount being used in calculations. Equally both counsel were content during submissions to work on the basis that the Blakehurst property is worth approximately $800,000.

   149. The amount I have calculated for her damages is based upon Blakehurst being valued at $800,000. Its fair market value however may well be less or it may be more.

   150. The [respondent] submitted for example that if the case were to be determined solely according to the [respondent's] detriment the measure would arguably be the loss of the Allawah unit for the rest of her life. It was submitted that the [respondent] being 46 years, of age would according to life tables have a future life expectancy of 37.28 years. This the [respondent] calculates at $300 per week for 37 years at the 3% tables totalling a figure of $352,200. The [respondent] accepts that there would need to be a discount of say 10% for the vicissitudes of life. This would amount to $317,000.

   151. It was further submitted that if the case were to be determined on a contractual basis, for the loss of chance for example, as is submitted it would lead to an amount equivalent of half of the value of the Blakehurst property being $400,000 less 10% for vicissitudes (ie $360,000). As I have already observed I do not consider a right of residence would provide a fair outcome because it denies the [respondent] access to her capital. The right of residence would be worth say $82,800 ($500 Allawah market rent less $200 paid at Blakehurst, ie $300 per week for 5.75 years being the life expectancy of the [appellant] from the 1997-1999 Australian life tables). $300 per week for 5.75 years at the 3% tables leads to a figure of $82,800.

   152. In all the circumstances I consider a fair outcome would be to award the [respondent] damages having found for her on estoppel which should reflect making good her expectations. She expected to be able to rent Blakehurst for the [respondent's] life and be a 50% beneficiary in the [respondent's]s estate. That would involve adding $82,800 to half of the value of the house ($400,000) but say minus 10% for vicissitudes, that is $360,000. The ultimate figure would also have deducted from it half of any expenses associated with its sale. The ultimate figure however will be contingent on the true market value of the Blakehurst property. As I say it may be more or less than $800,000.

   153. The property should be in the meantime the subject of a charge to secure that amount pending sale. This would otherwise leave the [appellant] immediately free to sell the property by whatever means she may be advised is best.

   154. I am also of the view that the [respondent] should be permitted to remain in the property pending sale provided she pays the agreed rent of $200. She should be the subject of orders requiring her to cooperate as and when necessary with the [appellant] in relation to the sale process and further be ordered to vacate the property on completion of the sale."

REASONING

1. In Giumelli v Giumelli [1999] HCA 10; 196 CLR 101, the High Court endorsed (at [10]) the proposition that a court must look at the circumstances of each case to determine in what way an equity, such as one created by detrimental reliance on representations, can be satisfied. The High Court also observed that before a constructive trust is imposed, the court should first decide whether there is an appropriate remedy which falls short of the imposition of a trust. In Giumelli itself, the Court held (at [51]) that it was appropriate to award a monetary sum as representing the value of the equitable claim to receive an interest in certain land and that the sum should be charged upon the land.

2. In Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483, Allsop P (with whom Giles JA agreed) said (at [3]) that the reasons in Giumelli:

   "appear to remove as a governing principle in the relief to be granted in equitable or proprietary estoppel cases the notion of enforcement or vindication only of the "minimum equity" ... That, of course, does not make irrelevant matters that can assuage the detriment brought about by the resiling from the representation or encouragement by the party concerned. It does mean, however, that relief in such cases is not to be measured by weighing detriment too minutely in order that it be converted into some equivalent of cash or kind, as if one were measuring the consideration for a commercial bargain. Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character. Equity has always had a place in keeping parties to representations or promises."

   See also at [56]-[59] per Handley AJA.

3. The primary Judge did not expressly cite these authorities, but his Honour seems to have had in mind the principles for which they stand. In any event, the appellant does not challenge the primary Judge's findings that:

   ·in the circumstances, the respondent should be awarded "damages" as the means of satisfying the equity created by her detrimental reliance on the representations made by the appellant;

   ·her "damages" should not be assessed by reference to the detriment she suffered (the loss of subsidised housing for life), but by making good, through a monetary award, the expectations generated by the appellant's representations; and

   ·any relief should avoid the need for the parties to have an ongoing relationship and should permit the appellant to have access to her capital to meet her own needs.

4. Ms Needham submitted that in assessing compensation to satisfy the respondent's equity, the primary Judge overlooked that the respondent's expectation was that she would receive half of the appellant's estate under the appellant's will. Since the appellant had a life expectancy at the date of the trial of 5.75 years, account had to be taken of the possibility that the value of the appellant's estate would diminish by the time of her death (whether as the result of a reduction in the value of her assets or the application of capital to meet her needs). Moreover, the award effectively brought forward the respondent's entitlement from the date of the appellant's death to the date of sale of the Blakehurst property pursuant to the orders of the Court.

1. In oral submissions, Ms Needham accepted that the primary Judge was entitled to award the respondent $82,800 (less 10 per cent) as compensation for the loss of her subsidised accommodation for the expected life span of the appellant. However, Ms Needham contended that his Honour erred in awarding further monetary compensation. Instead, the primary Judge should have satisfied the respondent's expectation of a share in the appellant's testamentary estate by declaring that the appellant had made an enforceable testamentary promise. According to Ms Needham, such a declaration would reflect the fact that the respondent had borne the risk that the appellant's estate might be diminished by the time of her death, even if the diminution occurred deliberately.

2. As was pointed by Mr Wilson, who appeared with Mr Steirn for the respondent, the appellant's contention encountered the difficulty that it had not been put to the primary Judge at the trial. On the contrary, the appellant's then counsel approached the case on the basis that his instructions were that the appellant wished to sell the Blakehurst property. Counsel put to the primary Judge that if he found the equitable estoppel to be made out, he should order the appellant to pay the respondent an appropriate sum out of the proceeds of sale. The primary Judge acted on that basis.

3. Faced with this difficulty, Ms Needham accepted that she could not maintain the submission that the primary Judge had erred in awarding a monetary sum as compensation for the respondent's disappointed testamentary expectations. The appellant's argument thus comes down to the proposition that the primary Judge erred in not making allowance, or adequate allowance, for the acceleration of the respondent's entitlement to a half share of the appellant's testamentary estate.

4. As the observations in Delaforce v Simpson-Cook (at [32] above) demonstrate, the primary Judge's task, despite his use of the term "damages", was not to assess compensation by minutely examining the value of the respondent's expectations as is sometimes appropriate when calculating common law damages for breach of contract. Given that compensation was to be assessed primarily by reference to the respondent's disappointed expectations rather than by reference to the detriment she had sustained, his Honour had to determine an appropriate quantum of compensation that fairly satisfied the respondent's equity. In performing this task, his Honour had to have regard to the circumstances of the case and to ensure that the compensation was proportionate to the representations made by the appellant and the consequences of the respondent's reliance on them.

5. The relevant circumstances in the present case included the appellant's representations that the respondent and her family would live at the Blakehurst property and that the respondent would receive half the appellant's estate under the latter's will; the respondent's expectations, induced by the appellant, that the representations would be met and that, if the arrangements did not work out, the appellant would provide the respondent with money so that she and her family would have a place to live; the substantial detriment caused to the respondent when she gave up her subsidised accommodation in reliance on the appellant's representations; the undesirability of any orders forcing the parties to have a continuing relationship; the appellant's wish to sell the Blakehurst property and her recognition that any compensation to the respondent should be payable from the proceeds of sale; the fact that the Blakehurst property was the major asset held by the appellant (although the evidence showed that the appellant had other assets of significant value); and the appellant's need to have access to a capital sum for her own requirements. The primary Judge took all these matters into account in determining the quantum of compensation and the manner of its payment.

6. Contrary to the appellant's submissions, the primary Judge did not overlook that the effect of the orders was that the respondent would not have to await the appellant's death to receive benefits from her estate. His Honour recognised that the respondent's entitlement would be accelerated by deducting from the award 10 per cent of the value of the Blakehurst property at trial for "vicissitudes". Although his Honour did not explain his choice of this particular percentage, it had been suggested to him at the trial and its adoption was clearly intended to allow for the chance that, even if the arrangements had worked out as the parties contemplated, the value of the appellant's estate might have been less at her death than at the date of the trial. In selecting 10 per cent as the discount for "vicissitudes", it is also reasonable to infer that the primary Judge took into account the possibility that if the appellant had retained the Blakehurst property for some years, it might well have increased in value. The respondent's expectation was not that she would receive a fixed sum of money on the appellant's death, but that she would receive half of the appellant's estate.

7. In my view, the appellant has not established that the primary Judge, in assessing compensation for the respondent's disappointed expectations, failed to take into account that she would receive payments earlier than if her expectations had been met. The award his Honour made reflected application of the correct principles and the manner in which the case was conducted. No error has been demonstrated.

CONCLUSION

1. Although there may be a question as to whether the appellant required leave to appeal, it is sufficient simply to dismiss the appeal. The appellant must pay the respondent's costs of the appeal.

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