Salehi v Salehi

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S ECI 2021 01635

BETWEEN:

MARYM SALEHI	Plaintiff
- and -
NOURIA SALEHI	Defendant

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATES OF HEARING:	24, 25, 28, 29 and 30 November, 1, 2, 7, 12 and 20 December 2022
DATE OF JUDGMENT:	7 September 2023
CASE MAY BE CITED AS:	Salehi v Salehi
MEDIUM NEUTRAL CITATION:	[2023] VSC 535

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ESTOPPEL – Proprietary estoppel – Alleged oral representations made by defendant to plaintiff that she and her late husband would receive transfer of a property – Plaintiff and her late husband lived at the property and spent funds saved for a deposit on renovations to the property – Whether representations made – Standing of plaintiff to bring a claim when husband died intestate and no letters of administration obtained – Held, no representation made, but if made, standing issue would limit the remedy available to the plaintiff.

EQUITY – Proprietary estoppel – Estoppel by encouragement or acquiescence – Extensive renovations carried out to the property by the plaintiff and her late husband in reliance on the alleged oral representations or conduct which induced an expectation that the property would be transferred to them – Held that plaintiff and her late husband funded two-thirds of the costs of the renovations – Held that defendant did not encourage the plaintiff to renovate the property – Held that the defendant stood by and allowed the plaintiff and her late husband to proceed with renovations to the property under a mistaken assumption to the future ownership of the property.

EQUITY – Remedies – Prima facie entitlement to a transfer of the property affected by the presumption in equity that co-owners of property hold their interests as tenants in common – Delehunt v Carmody (1986) 161 CLR 464 referred to – Entitlement to equitable compensation – Proper measure of equitable compensation – Insufficient evidence of counterfactual to base compensation upon loss of opportunity to purchase own home – Equitable compensation should be referable to payments made for renovations – Whether equitable compensation should be reduced or extinguished by the value of benefits received by the plaintiff during the course of her occupation of the property – Whether proper measure of damage the sums expended on renovations plus interest or the contribution made by the plaintiff to improving the value of the property.

RESTITUTION – Counterclaim by defendant for restitutionary damages – Whether express or implied agreement for possession of the property for the payment of rent – Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 referred to – Mesne profits – Mere occupation of property does not establish an agreement – Australian Provincial Assurance Association Ltd v Rogers (1943) 43 SR (NSW) 202 referred to and applied – Held no such express or implied agreement – No entitlement to restitutionary damages – Counterclaim dismissed.

EVIDENCE – Onus and standard of proof – Court is not bound to make findings of fact on the basis of one party’s version of events – Roberts-Smith v Fairfax Media Publications Pty Limited (No 41) [2023] FCA 555 referred to – Consideration of the effect of the passage of time on the reliability of evidence – Use of contemporaneous documents in evaluating plausibility of events – Kalam v Kalam [2015] VSC 72 referred to – Reasonable, common sense approach to competing facts – Assessment of credibility of witnesses – Duic v Duic [2012] NSWSC 76 referred to and approach adopted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr L Magowan	BSP Lawyers
For the Defendant	Mr M Albert	Mills Oakley

TABLE OF CONTENTS

Introduction................................................................................................................................... 1
Chronology of relevant events.................................................................................................... 2
The pleadings............................................................................................................................... 26
The issues in dispute.................................................................................................................. 32
Comments upon the witnesses and other evidentiary issues.............................................. 41
Relevant legal principles............................................................................................................ 74
The standing issue....................................................................................................................... 91
Was the representation made?.................................................................................................. 96
The renovations......................................................................................................................... 119
The tax return issue................................................................................................................... 138
Estoppel by encouragement/acquiescence........................................................................... 154
Common intention constructive trust.................................................................................... 161
Conclusions and remedies....................................................................................................... 163
The counterclaim....................................................................................................................... 174
Orders and next steps............................................................................................................... 179

HER HONOUR:

Introduction

These reasons concern a dispute within the Salehi family over the ownership of a two storey, five bedroom home in Ashburton (‘property’). The plaintiff, Ms Marym Salehi, has lived at the property with her family since late 2001. The registered proprietor of the property is the defendant, Dr Nouria Salehi, Marym’s sister-in-law. However, Marym[1] says that she is the rightful owner of the property, by reason of, among other things, representations said to have been made by Nouria to her and her late husband in 2001. The property is valued at approximately $2 million.
[1]Given that the parties and many of the witnesses share a common surname, first names are used for family members throughout these reasons. No disrespect is intended. I have described witnesses who do not bear the surname ‘Salehi’ more formally, as is conventional.

Both Marym and Nouria were born and raised in Afghanistan, and were part of the ‘first wave’ of Afghan migrants to Australia after what was then the USSR invaded Afghanistan in late 1979. Nouria was studying biophysics and nuclear physics in France when the invasion occurred, and after she completed her studies in 1981, she migrated to Melbourne, where two of her brothers already lived. Apparently there were only five families of Afghan origin living in Australia at that time.

After arriving in Melbourne in April 1981 Nouria obtained employment with the Royal Melbourne Hospital (‘RMH’) as a biophysicist and nuclear physicist, and worked there, largely in a research capacity, until her retirement in or around 2017. She is also a part owner of a business owned by some members of the Salehi family, the Afghan Gallery restaurant in Fitzroy, and has been involved in numerous philanthropic ventures and activities, many of which have been directed at helping with the resettlement of refugees from Afghanistan in Australia, and promoting economic development and gender equity in Afghanistan. She is now 80 years of age, but remains active in community affairs. She is very prominent and well regarded in the Afghan diaspora community and the community at large.[2] Nouria was preceded by or followed to Australia by seven of her nine siblings and her parents during the course of the 1980s. Two siblings remained in Europe.
[2]Organisations Nouria has been involved with include Médecins Sans Frontières, the Refugee Council of Australia, Austcare, and the Brotherhood of St Laurence. In 2002, she founded the Afghan Australian Development Organisation, a non-profit organisation which has as its primary purpose the initiation and implementation of projects to assist the reconstruction and development of communities in Afghanistan. She received the Order of Australia medal in 1997, and was appointed as a Member of the General Division (AM) in 2019. She also received a Centenary medal in 2003, and was named Victorian Senior Citizen of the Year in 2012. Her niece Zahra gave evidence about attending an Australia Day function at Government House with her aunt and being very impressed with how many prominent people Nouria knew and conversed with at the function.

By reason of her academic qualifications and professional achievements, and no doubt her personality and her status within the community, Nouria holds considerable sway within the extended Salehi family, both among her siblings and her nieces and nephews, many of whom are now adults. She describes herself as a family elder. She has never married, and has been actively involved in the lives of many family members. Marym says that family members looked to her for guidance and solutions, as Nouria was familiar with the Australian ‘system’. Nouria has also been very generous to many family members over the years, including to Marym and her immediate family. The question in this proceeding is whether that generosity extended to giving Marym and her late husband a valuable property.

Chronology of relevant events

In 1985, Nouria purchased the property for approximately $120,000. The house on the property was built in the 1950s, and is reasonably large, with five bedrooms. Along with Nouria, Nouria’s sister Golalai and her brother Timur were the registered proprietors of the property, despite her siblings not having made any financial contribution to the purchase of the property. Nouria explained that she wanted her siblings to have a stake in the property to encourage them to remain in Australia rather than return to Europe, as she feared they might do.

Nouria’s parents arrived in Australia in or about 1985, and commenced living at the property along with Golalai, Timur, and Nouria’s niece and nephew, Homaira and Karim. Nouria also allowed the property to be used for short stay accommodation for newly arrived Afghan refugees, some of whom were sponsored by Nouria and employed by the Afghan Gallery restaurant to assist with their applications to live permanently in Australia. It seems that no family member or other guest paid Nouria any rent for living at the property at any time prior to 1992.

Golalai and Timur left the property during the course of 1987, when they each married. Nouria paid them a total of $77,500 for their interests in the property, and since 1989, Nouria has been the sole registered proprietor of the property. After Nouria purchased the property, it was encumbered by a mortgage. Nouria paid all of the mortgage repayments. By the mid-2000s, the loan secured by the mortgage was almost fully paid off. In 2006, Nouria borrowed further funds (approximately $400,000), which she said were used to fund renovations to a property she owned in France, an apartment in Lyon (‘Lyon apartment’), and to assist with the purchase of another property.[3]
[3]However, the land tax assessment notices prepared by the State Revenue Office (‘SRO’) do not disclose any purchases of property by Nouria in 2006 or 2007.

In 1987, Sultan, Nouria’s younger brother, arrived in Melbourne from Europe, and commenced living at the property with his parents, niece and nephew, and for a time his brother Aref. Sultan was Marym’s late husband. He had been studying and working in Belgium, where he had qualified as an architect. However, his qualifications were not recognised in Australia, and while he was fluent in French and German, he never really learned to speak or write English.

Nouria and Sultan had a special relationship. At the age of 10, Sultan was diagnosed with a serious heart condition. Nouria, who was nine years his senior, took responsibility for his care, both in Afghanistan, and later in France, where he travelled for surgery when she was pursuing her studies in Lyon. The surgery was at least partially successful, but Sultan’s health was always quite delicate.

In 1989, Sultan left Australia and travelled to India. In New Delhi, he met Marym, a woman then in her late twenties some 13 years his junior, who was visiting there with her family. They became engaged, and married in New Delhi soon afterwards. Some of Sultan’s sisters attended the wedding.

In 1990, Sultan and Marym moved to Melbourne, and went to live at the property with Sultan’s parents and niece and nephew, where they stayed for about a year. Marym, who had qualified in Afghanistan as a pharmacy technician, devoted herself to learning English and pursuing further studies in applied science with the aim of qualifying as a pharmacist in Australia.

It seems that the relationship between Marym and at least some members of the extended Salehi family was somewhat rocky. Marym said that Sultan’s siblings were loud and opinionated, and were often verbally abusive to her. However, given that the children of Sultan’s siblings and her children were of a similar age, and all grew up together, she did not protest her treatment or seek to distance herself from the extended family. By all accounts she and Nouria enjoyed a warm relationship until they fell out in 2017 in circumstances which will be discussed later in these reasons. Marym and Sultan lived with Nouria at her apartment in East St Kilda for about a year after leaving the property.

In 1993, Wais, the couple’s first son was born. At around this time the family moved to a two bedroom apartment in Armadale, not far from the family fish and chip shop in Windsor, which Timur had purchased some time after his arrival in Australia. Sultan regularly worked at the fish and chip shop, and had done so since around 1991. According to Marym, he took over the running of the business in about 1994, working long and unsociable hours.

The fish and chip shop address was given as Sultan’s business address when Marym and Sultan applied to establish an account with what Marym described as the Islamic bank in 1996.[4] The application form also (somewhat misleadingly) described Sultan’s occupation as being an architect. Marym said that they established this account to save for a house deposit, and they hoped to eventually qualify to take a home loan from the MCCA. Apart from the application form itself, no records of this account have survived. Mr Musleh, a close friend of Sultan, was subpoenaed by Marym to give evidence, and confirmed that Sultan asked him about the MCCA in about 1995, and told him that he and Marym wanted to buy a house. Mr Musleh said he went with Sultan to the premises of the MCCA some time in 1997.
[4]I believe that Marym is referring to the Muslim Community Co-operative (Australia) Limited (‘MCCA’).

Zahra, the couple’s daughter, was born in 1995. Their second son, Hassib, was born in 2000. Wais is now 29, and works as a bricklayer. Zahra, 27, has a bachelor’s degree from RMIT, and works as an account manager for a fundraising organisation. Hassib, now 22, is completing his post-secondary studies. Wais and Hassib live with their mother at the property. Zahra lived there until early 2022, leaving home when she got married.

Marym was not employed during the 1990s, and, while Sultan presumably derived some income from the fish and chip shop, it seems that the family were largely dependent upon social security benefits from Centrelink to support themselves. Despite this, Marym says that by early 2001, she and Sultan had saved approximately $40,000, which they planned to use as a deposit for a home, preferably in the Armadale/Ashburton/Glen Iris area. They hoped to purchase an older home requiring renovation for about $120,000 to $150,000,[5] with the plan being that Sultan would undertake any necessary renovations. As well as being a qualified architect, Sultan was also quite ‘handy’, having worked various construction jobs in Europe.
[5]How realistic these plans were was not fully explored in the evidence. While there was no direct evidence apart from Marym’s own evidence about property values in their preferred suburbs at that time, the house prices identified seem a little optimistic on Marym’s part, certainly with respect to property prices in Armadale. I note that the SRO had determined the unimproved value of the property to be $275,000 as at 31 December 2001 for land tax purposes, that is, approximately double the price at which Marym and Sultan were hoping to purchase a property in the area. It was also unclear whether the couple would have been able to borrow funds to purchase a home from the MCCA or a mainstream financial institution, given their dependence upon Centrelink for income, at least until Marym started work as a pharmacy technician in about 2004. Even after that time, Marym gave evidence that she could not afford repayments of $270 per month to repay a personal loan in 2005.

While she doesn’t specifically recall telling Nouria that she and Sultan had saved $40,000, Marym says that details of their financial circumstances and their plans were well known to other family members, including Nouria. The members of the extended Salehi family (with Nouria’s parents and eight of her nine siblings by then living in Melbourne with their spouses and children) met regularly, generally every weekend, and property was a frequent topic of discussion. As newly arrived migrants, they were keen to settle and establish themselves, and the family was described as ‘business minded’. Nouria herself has purchased and sold a number of homes and investment properties in the Ashburton/Ashwood/Chadstone area since the 1980s, and a number of her siblings had also purchased homes and were raising their children in the area.

In 1992, Nouria purchased another property in Ashwood for her parents to live in (‘Ashwood property’), following which she leased the property to an unrelated family. By 2001, she also owned investment properties in Chadstone and Phillip Island, and was living at the Ashwood property.

While Nouria and other family members who gave evidence on her behalf agreed that property matters were a frequent subject of discussion within the Salehi family, and that family members were generally aware of each other’s business, they gave evidence that they were not aware that Marym and Sultan had saved $40,000 for a house deposit. Nouria said that she was aware that Sultan and Marym wanted to buy a home, and as such, they would need to accumulate funds for a deposit, but she was not aware that they had saved $40,000 to put towards a deposit. However, all agreed that by 2001, it was undesirable for Marym and Sultan to continue living in a small two bedroom apartment with three growing children.

Nouria gave evidence that some time in 2001, she received some disturbing news about Sultan’s health. Sultan, who would have been in his early fifties at the time, told her that his heart was only functioning at the ’20 percent level’. She discussed what she had learnt with one of her colleagues at RMH, Dr Willy Chan (who I understand to be a highly regarded cardiologist), who told her that a person with Sultan’s condition would have a life expectancy of about eight or nine years. As it turned out, Sultan died seven years later.

In July and August 2001, Marym travelled to Europe with the children to visit members of her family. Sultan stayed in Melbourne, and it was during this period he had a discussion or series of discussions with Nouria. Nouria gave evidence that she had been informed by the tenant at the property that he and his family would soon be vacating the property (which they did in around August 2001). She decided to offer (or, in her words, ‘give’ or ‘leave’) the property to Sultan for him and his family to live in. She said she did so because she wanted to make life easier for Sultan, by enabling him to live in a house with space for the children and a garden, where he could entertain friends and family, in a neighbourhood close to his siblings and their families.

Nouria said that when she discussed her proposal with Sultan at the Ashwood property,[6] he was resistant at first, but agreed to the proposal provided that he pay her rent for the property. He suggested that he pay $1,200 per month in rent, which was what he was expecting to have to pay for a larger property should they leave the Armadale apartment, and she agreed.
[6]Which would have been prior to her departure from Australia on 7 August 2001.

Wais gave evidence that one day he answered the phone when his father called his mother while they were visiting family in Europe. Sultan told Wais that when they returned, they would be moving to a new home, being the property. He was very excited, and passed the phone to his mother.

Marym gave evidence that when she spoke to Sultan, he too was very excited. He told her that the property had become vacant, that Nouria had given the property to them, and that they could renovate the house using their own savings, which would be easier than borrowing money from the bank to buy a house. Sultan said that the house on the property needed an update, but they were able to renovate, and they could discuss where to start when she returned from Europe.[7]
[7]Of course, this evidence is only admissible for the purpose of establishing what Sultan told Marym, not for the purpose of establishing what Nouria told Sultan. The exceptions to the hearsay rule in the Evidence Act 2008 (Vic) (‘Evidence Act’) did not apply to this evidence.

By the time the family returned to Australia at the end of August 2001, Sultan had already started some renovation works at the property. He had removed all of the carpets in the house on the property, had purchased some hardwood flooring, and had started demolishing an external laundry at the rear of the house.

According to Marym, the original plan was for Marym and the children to stay in the Armadale apartment for a few months until the renovations were complete. It was not clear from the evidence the exact renovations she and Sultan had planned for the property at that time, given that the plans for the renovation were not drawn up until January 2002. However, she said that one day in October 2001, Nouria telephoned her and suggested she move to the property as soon as possible.

Marym gave evidence that during this phone call (‘October 2001 conversation’), Nouria said that she should move to the property, as it was a bigger house, with a bigger backyard and more room for the children, she would be closer to Sultan, it might be difficult, but she would stop wasting money on rent. Marym agreed to do so because she thought it was a reasonable thing to do.

Nouria did not dispute Marym’s evidence about the contents of the October 2001 conversation. Rather, her position is that nothing she said in the October 2001 conversation could amount to a representation that she would transfer the ownership of the property to Sultan and Marym.

There is a dispute about whether Marym and the children moved to the property some time in October 2001 (as Marym says) or at the end of November 2001 (as Nouria says). Arguably not much turns on this dispute, given that Nouria does not dispute what was said during the October 2001 conversation, and the very nature of the October 2001 conversation indicates that it must have taken place prior to Marym and the children moving into the property.[8]
[8]Nouria relies upon her contention that Marym moved into the property on or about 29 November 2001 as support for the proposition that no detriment has been suffered by Marym as a consequence of any representation by Nouria, as Sultan had already commenced carrying out the renovations. However, it is apparent from the evidence that the substantive renovation works were commenced in 2002, probably in mid 2002 after the building permit was obtained, such that not much turns on this issue in the end.

Marym and the children did move to the property, probably in late November 2001, with the assistance of family members. Marym says that during the course of moving house, and at family gatherings at around this time, Nouria told family members in her presence that she had given Sultan and Marym the property, and that they were free to renovate it as they wished, because it was their home. Marym says that ‘people’ (more specifically, family members) were congratulating her and Sultan on their new home, and knew they were renovating the property.

Two family members called as witnesses by Marym gave (qualified) support for Marym’s evidence. Ms Marizah Samad, a distant relative of both Marym and Nouria, and a long time friend of Marym, said that she attended a family gathering at Nouria’s home at around the time Marym and Sultan moved to the property, where Nouria said words to the effect that the property would be Sultan and Marym’s for the rest of their lives, or as long as they wanted to live there, and when the children grew up, it would be in their name, that is, in the children’s names. Ms Forozan Shapoor, Marym’s friend and ex-sister-in-law (she married Timur in 1987 and was divorced from him from 2006) said that she was present when Sultan and Marym moved into the property, and Nouria said that the property was their home, and they could do whatever they wanted with the property. Later, at a family gathering at the Ashwood property, Nouria said, in respect of the property, words to the effect that it is theirs now, and if they wanted to renovate or change it, that was up to them, because it was their house.[9]
[9]It is not clear from the evidence whether Marym and/or Sultan were present at these gatherings.

Marym said that she wasn’t surprised that Nouria had given them the property: she helped everyone in the family with their property purchases and their education. Also, Nouria and Sultan had a very good relationship, and Nouria knew that Sultan was unwell.

A few weeks after Marym moved into the property, there was a further conversation between Marym and Nouria (‘$600 conversation’). Both women agreed that the $600 conversation took place, that it took place some time in late 2001, and that Marym attempted to give Nouria an envelope containing $600 in cash. However, their versions of the $600 conversation otherwise diverge. Marym says that the $600 conversation took place during a visit by Nouria to the property, and that Sultan and the children were present. Marym said that she commenced by saying that she would like to have a chat about the title of the property, because if Nouria was to change her mind about giving them the property, or there was any other issue, she would stop the renovations right now. She said that she told Nouria that they still had half of the money they had saved for a house deposit, and, they could go and look for a house and buy their own home.[10] She said she told Nouria that the $600 was for rent, which was the same rent that she was paying for the Armadale apartment.
[10]This evidence does not enhance Marym’s credibility on this issue and on other issues in the proceeding. Both Marym and Nouria agreed that the $600 conversation took place shortly after Marym moved into the property, probably in November or December 2001. By that time, the only work that had been done was to remove the carpets and to demolish the laundry. While there was evidence that Sultan had purchased some hardwood flooring by that time, it is difficult to believe that he would have spent half of their savings (said to be $40,000) on floorboards.

Marym said that Nouria told her ‘don’t be silly, this is your house, I don’t need your money, put your money away’. Nouria said that Marym and Sultan should not stress, and they should concentrate on finishing this mess (that is, finishing the renovations) and enjoying the property, which would be beautiful after the renovations were completed, because Sultan was so skilled. Marym gave evidence that after the $600 conversation, Marym and Sultan agreed between themselves to finish the renovations.

Nouria said that about a week after Marym moved to the property, Marym came to her sister’s home with an envelope containing $600 for rent, telling her that it was difficult for them to pay more than that. Nouria told Marym to keep the money, and no rent was ever paid by Sultan or Marym for the property. She denied that anything was said about the title to the property in the $600 conversation.

Both women also agree that sometime between October and December 2001, Nouria signed a certificate verifying that Marym and Sultan were paying her $1,100 per month in rent for the property for the purpose of Marym claiming rent assistance from Centrelink. Marym had been receiving rent assistance for the period in which the family lived at the Armadale apartment. Nouria says she only signed one such certificate, and she did so at Marym’s request, because Marym and Sultan were both unemployed, and because it would help them to get a ‘few extra dollars’.

Nouria said that at the time she signed the rent certificate, she believed that Sultan and Marym would be paying rent, which she, unilaterally, had decided would be $1,100 per month, not $1,200 per month. In contrast, Marym says that it was Nouria’s idea to claim rent assistance, and that she initially refused to do so, but Nouria was insistent, and after her demands became more frequent and strident, Marym gave in. She said that Nouria signed rent certificates for submission to Centrelink every six months until about 2010 or 2011, when Centrelink apparently ceased requiring Marym to provide regular certificates.[11]
[11]The documents produced by Centrelink in response to a Freedom of Information request made by Marym in the lead up to the trial of the proceeding (‘Centrelink documents’) do not include any such certificates, such that there is no means of independently testing this evidence.

Marym received rent assistance from Centrelink with respect to her occupation of the property between late 2001 and 2018, when Hassib turned 18.[12] She may also have received additional family tax benefit payments as a consequence of her eligibility for rent assistance, but whether this was in fact the case, and if so, the amount of any additional benefits received cannot be determined upon the available evidence.
[12]Counsel for Marym contended that Marym ceased receiving rent assistance in around 2010 or 2011, when Nouria stopped reporting receiving rental income for the property in her tax returns. However, this contention is inconsistent with the Centrelink documents and Marym’s own evidence.

Marym’s receipt of rent assistance for many years while she was not paying any rent is of significance to the issues in this proceeding in a number of respects. First, depending upon which version of events is accepted, the issue has the capacity to affect the credibility of one or the other of Marym and Nouria, or both of them. Secondly, it is relevant to the question of whether Marym, in seeking equitable relief in this proceeding, has come to Court with clean hands. Thirdly, this issue is also relevant to Marym’s case theory: her explanation of why Nouria promised to give the property to Sultan and Marym but did not want to pass the title to them immediately was because it was in Nouria’s personal financial interests to retain the title to the property. Finally, Nouria points to Marym’s receipt of nearly $60,000 in rent assistance as being one of the many benefits Marym has derived from her rent-free occupation of the property, which is said by Nouria to vastly outweigh any detriment incurred by Marym in reliance upon any representations made by or conduct of Nouria, if Marym’s claim that she was induced by Nouria’s representations or conduct to live at the property and to use their funds to renovate the property is accepted.

Returning now to the chronology of events, over the following years, from around mid 2002 up until 2007, the year that Sultan became seriously ill, extensive renovations were carried out at the property, although it seems that most of the works were complete by the end of 2005. The state of the property prior to the renovations, what work was done at the property, whether that work was necessary, who did the work, who paid for the work, and Nouria’s knowledge of and views about the work are matters in dispute, of varying degrees of intensity and relevance to the primary issues in the proceeding.

The disputes about these issues and the evidence about the renovations will be discussed in more detail later in these reasons. However, in summary, between 2002 and 2007 the house on the property was indeed transformed from a structurally sound, but somewhat tired and dated house to a more modern, spacious, and comfortable residence, with plenty of space for a family of five. All agreed that Sultan was the project manager of the renovation, and did a lot of the physical labour himself, with the help of others, both paid and unpaid, and that his poor health was an impediment to the speedy completion of the work. Indeed, some family members (and his close friend, Mr Musleh) would say that his work on the renovations hastened his death.

Marym said she and Sultan paid for the renovations, including purchasing materials and fittings and hiring professionals for plumbing and electrical works. She said that Nouria encouraged them to complete the renovations, and that they did so, in reliance upon their assumption that the property was theirs.

Nouria said that she paid for the renovations, or at least all of the expenses associated with the renovations that she knew about, despite her opposition to the renovations. She said that she was opposed to the renovations being carried out, largely because of her concerns about Sultan’s health and the disruption they caused to the family, but also because she considered that the house on the property was perfectly habitable as it was.

Marym commenced working in March 2004 as a pharmacy technician at a pharmacy in Toorak, where she still works today. In around 2004 or 2005, the fish and chip shop business was sold. It is not entirely clear from the evidence what share of the business Sultan actually owned, but Marym says that he received approximately $40,000 from the proceeds of sale, all of which was applied to the costs of the renovations. Sultan’s niece Homaira Mershedi, who was called to give evidence by Nouria, said that she believes that the fish and chip shop business was sold for approximately $70,000, but that she did not know how much of that sum Sultan received.

The renovations were largely complete by the end of 2005, although some of the invoices and receipts in evidence (‘renovation receipts’) suggest that some largely cosmetic work was still being carried out in 2006 and early 2007. The renovation receipts, which, for reasons explained later in these reasons, are not a complete record of the costs involved in carrying out the renovations, show that $39,630.45 was spent on trades, materials, and fixtures and fittings during the course of the renovations.[13] However, the renovation receipts do not include money paid to at least two labourers hired by Sultan, ‘Abdullah’ and Mr Rahim (‘workers’). Neither of the workers gave evidence.[14]
[13]In the course of their preparation for trial, Nouria’s solicitors made this calculation after removing all unpaid invoices, duplicates, and non-renovation related receipts from the renovation receipts. However, it is clear from the entirety of the evidence that the renovation receipts are not a complete record of the renovation works actually carried out.
[14]Counsel for Nouria submitted that I should draw an adverse inference from Marym’s failure to call the workers to give evidence. Marym gave evidence that she did not know how to contact them. However, Zahra gave evidence that she contacted Mr Rahim’s daughter to ask for his telephone number, but his daughter told her that her father was sick. When asked about Abdullah, Zahra said that she did not know his last name, saying ‘there’s a million Abdullahs in Dandenong’. However, I cannot see how the workers’ evidence would have been particularly useful: the evidence indicates that they were paid in cash, but it is unlikely that they would have known whether or not the ultimate source of the cash was Sultan and Marym (who would have handed the cash to the workers) or Nouria.

Marym says that the renovations cost $156,510, based upon a record in a notebook she was using at the time, and were paid for by her and Sultan from their savings of $40,000, a further $40,000 from the proceeds of sale of the fish and chip shop, the funds raised by a personal loan taken from the ANZ Bank (‘ANZ Loan’) and from Marym’s income from the pharmacy and Centrelink benefits. Marym said she gave Sultan cash to pay for materials and to pay the wages of Mr Rahim after she started work in March 2004. Zahra confirmed that she saw her mother preparing envelopes of cash for the workers.

Marym took out the ANZ loan in January 2005. She said she took out the ANZ loan to finish the renovations. By then, the structural work was largely complete, but there was still plastering and tiling left to be done. The drawdown of the ANZ loan occurred at around the time Marym and Sultan received a quotation for plumbing works at the property for $11,440, as shown by the renovation receipts. The ANZ loan was repaid in full in June 2005. Marym said that she does not recall Nouria repaying the ANZ loan, saying that she used her emergency savings to pay off the ANZ loan, as she could not afford to pay the regular instalments of $270 per month, and that Nouria told her to repay the ANZ loan. However, Nouria says that she paid off the ANZ loan at Sultan’s request, by depositing a cheque at the ANZ branch at Melbourne University, but she has no record of that payment.

Nouria says that she reimbursed Sultan for all of the money he spent on the renovations that she knew about, largely in cash. She does not say how much she actually paid for the renovations over and above the $40,000 for trades and materials evidenced by the renovation receipts and her repayment of the ANZ loan, but she believes that some of the cash she gave to Sultan was used to pay Abdullah. She did not say when (that is, during which months or years) she made the payments. When asked about the system she had for making the payments, she said that Sultan would come to her home at 11pm at night and tell her that he needed $8,000 or $9,000 tomorrow. Sometimes her sister[15] would give money to him if Nouria was not there.
[15]It is not clear from the evidence who Nouria was referring to, but it was probably Ms Komak.

Sultan had little time to enjoy the fruits of his labours. In late 2007, he became seriously ill, and spent four months in hospital after surgery, much of it in the intensive care unit at the Monash Medical Centre with a post-operative infection. Some family members who gave evidence were critical of Marym for not taking the children to see Sultan often (or, according to Ms Mershedi, at all). He died in hospital on 1 April 2008. By this time, Wais was nearly 15, Zahra was 12, and Hassib was seven years old.

Marym gave evidence that in March 2008, while Sultan was in hospital (in a general ward rather than in the intensive care unit), she visited him, along with Nouria and Mr Musleh. She said that Nouria told Sultan that he shouldn’t worry about anything, saying ‘I’m here to knock off that debt’. She said words to the effect that Sultan shouldn’t worry, she was there to look after them, and the family will be at the property forever, because that is their house. Mr Musleh did not give any evidence about this conversation.

Nouria denied telling Sultan when he was in hospital that the property was their house. Rather, she gave evidence that when she visited him in hospital on the night before his second operation in November 2007, Sultan asked her if she could look after the children’s education. He also asked her what she would do if he died the following day. He said words to the effect ‘what will you do with the house, will you leave my wife and children to live there or not?’ In response, she assured him that Marym and the children could stay at the property until Hassib turned 18 and finished secondary school.[16]
[16]When asked when she had told Marym that she would have to move out of the property at the end of 2018, Nouria said that Sultan told Marym when he went to hospital on 9 November 2007. She did not say whether or not she was present during this discussion.

On the day after Sultan died, the extended Salehi family gathered at the property to mourn his loss. There is a dispute as to what was said by Nouria at this gathering about the family’s ongoing occupation of the property. There is no dispute that Mr Hassib Musleh, an old friend and former co-worker of Sultan’s, conveyed to a number of family members, including Marym and Nouria,[17] what he said were Sultan’s final requests, or arguably, demands. These requests included a request that Nouria and her sister Golalai be responsible for ensuring Sultan’s family received everything that they were entitled to, that Marym not remarry, a request that his brother, Aref, look after the children and take Hassib to and from school because Marym was working, and a request that Nouria transfer the title of the property to Marym and the children. Marym said that, in response, Nouria said that she would transfer the title of the property to them (that is, Marym and the children) when Hassib turned 23.
[17]The witnesses all gave slightly different evidence as to who was present when Mr Musleh addressed the gathering. Marym says that she and Nouria were present, along with Nouria’s sisters Golalai and Kaoki and their husbands, Hamid Najeem and Springhar Komak.

Ms Samad gave evidence that she witnessed Nouria telling ‘everybody’ at the gathering that she was giving the property to Marym, that Marym could stay in the property, and when the children were grown up, the property would be in their names.

Mr Musleh gave evidence that Nouria, Marym and four other people, including Sultan’s brother Aziz and his wife, were present when he conveyed Sultan’s requests. He said that Nouria should pass the title of the property to the children. Nouria was very upset, and said, when Wais is 18,[18] when he finishes university, and Marym shouted ‘Don’t talk about these things’.[19] He recalled thinking that this was a strange response on Nouria’s part, as an 18 year old could not have finished university.
[18]I believe this must be a reference to Hassib, Marym’s younger son, but little turns on this error for present purposes.
[19]Aref Salehi and Kaoki Komak also gave evidence that Mr Musleh said that Nouria should give the property to Marym.

Nouria and the witnesses called on her behalf who recalled the incident said that Mr Musleh’s statements were met with the response from Springhar Komak, who was the husband of Nouria’s sister Kaoki, that these were family matters of no concern to him, and that the family would look after Sultan’s widow and children. Mr Komak is now deceased.

Nouria says that her position regarding the family’s ongoing occupation of the property was consistent with the promise she made to Sultan in November 2007 while he was ill in hospital, and that is what she told those assembled at the gathering, and what she separately told other family members. Nouria’s brother Aref and Ms Komak supported Nouria’s version of what was said during the gathering. Nouria’s brother- in-law, Mr Najeem, said he did not recall hearing any discussion about the property at the gathering, although he heard Nouria say in his presence on two or three occasions within a month or so of Sultan’s death that Marym and the children could stay at the property until Hassib turned 18 and finished school.

Accordingly, nothing changed in the immediate aftermath of Sultan’s death, although Marym says that Nouria started paying the rates for the property from then on. Prior to Sultan’s death, either she or Sultan paid the rates, in cash, either at the offices of the City of Boroondara (‘Council’), or at the Windsor or Ashburton post offices.[20] Nouria said that she always paid the rates, but prior to Sultan’s death, she reimbursed him in cash for the payments that he made, because her internet banking wasn’t functioning during that period.
[20]This evidence is consistent with the records produced by the Council pursuant to a subpoena.

In 2010, Marym bought an investment property in Hallam, which she later sold to buy another investment property in Hampton Park in 2012. At the time she commenced this proceeding in 2021, she owned another investment property in Doveton, which she purchased in 2016. She has now sold the property in Hampton Park, making a healthy capital gain, apparently in order to fund this litigation. Her only remaining asset (apart from her claim in this proceeding) is the Doveton property, which is encumbered by a mortgage.[21]
[21]Counsel for Marym said that the value of Marym’s equity in this property is approximately $200,000.

Marym gave evidence that she purchased the Hallam investment property after a discussion with Nouria at Nouria’s home in 2010. She said that Nouria had told her in the beginning (that is, in 2001) that it was a very expensive and a lengthy process to transfer the title of a property to someone else. So she saved $20,000 and visited Nouria, telling her that she had a serious matter to discuss. She told Nouria that she had $20,000 in her bank account, and, if Nouria was happy to do so, then they should go ahead and change the title. But, once again, Nouria assured her, and said that there was no need for that, when she could do it, she would do it. Instead, Nouria suggested that $20,000 was enough for a deposit on a house in a cheaper suburb, which Marym could purchase as an investment property. Marym then proceeded to make a successful application for a loan, and purchased a property in Hallam for $320,000.[22] Nouria was not questioned by either counsel about this conversation, and therefore did not have an opportunity to either confirm or dispute this evidence.
[22]The Hallam property was sold in July 2012 for $337,000. In June 2012, Marym purchased a property in Hampton Park for $335,772, which she sold in November 2021 for $688,494. In December 2016, Marym purchased a property in Doveton for $462,000, which she still owns. None of these properties have been declared to Centrelink, although the income and expenses associated with them have been reported to the ATO in the tax returns prepared by Marym’s accountant.

Marym’s older children, Wais and Zahra, gave evidence about a number of conversations that they had with Nouria between Sultan’s death in 2008 and the falling out between Nouria and Marym and her children in 2017.

Wais gave evidence that over the course of his teenage years, he would occasionally run into Nouria at the Ashburton Recreation Centre (‘leisure centre’). He regularly played indoor soccer at the leisure centre between the ages of 15 and 17 (that is, between 2008 and 2010), and Nouria regularly used the swimming pool at the leisure centre. However, the first conversation between him and Nouria about the property took place at Nouria’s home in Chadstone, shortly after Sultan died. Wais said that Nouria took him into another room away from where he was sitting with his cousins and said words to the effect that ‘Wais, don’t tell anyone, but I have put the house in your name’. He would have been about 15 at the time of the conversation. He did not tell his mother about this conversation.

The next conversation took place at the leisure centre when he was about 15 or 16. Wais asked Nouria why she had not put the property in his mother’s name. Her response was that ‘your mum will just sell the house and move to Europe to be with her family’.

The next conversation also took place at the leisure centre when he was about 15 or 16. Wais said that Nouria told him that she would put the house in his little brother’s name. Wais queried ‘why not his sister?’ In response, Nouria said that one day Zahra would get married and her surname would change (that is, she would no longer be a Salehi).[23]
[23]As it turns out, Zahra still uses the surname Salehi, at least during the trial of this proceeding.

A further conversation took place at the leisure centre when Wais was about 17. Nouria showed him a sheet of paper with an unruled table listing five or six properties, with the property being the first in the list. Nouria said ‘this is how much land tax I have to pay, and I need you and your sister to start paying this now’.[24]
[24]The description Wais provided of the document Nouria showed him did not conform with any of the land tax assessment notices issued by the SRO in the court book.

A further conversation took place at the leisure centre when he was about 17. Wais asked Nouria why she had not put the property into his mum’s name, and she responded by saying that doing so would ruin Marym’s Centrelink payments.

The last conversation Wais gave evidence about took place when he was between 18 and 20 years of age, when Nouria raised the issue of land tax again. Wais said words to the effect that ‘if you had put the house in my name like you said you did all of those years ago, you wouldn’t have to pay land tax’. Wais said that Nouria appeared to be quite shocked at this response, and she did not bring up the subject ever again.

Nouria denied that she ever had any conversations with Wais about the ownership of the property, or her concerns about how much land tax she had to pay with respect to the property. She said that she would never discuss such matters with children.

Zahra gave evidence about a number of conversations she had with Nouria:

(a) when Nouria visited the property in 2011 or 2012;

(b) when Nouria took her out to dinner in around 2011;

(c) during a visit by Nouria to the property in 2017 where Nouria made some angry remarks to her and her brothers about their treatment of their late father; and

(d) during two visits by Nouria to the property in 2017 where the development proposal was discussed by Nouria and Marym.

Nouria did not dispute the evidence given by Zahra in relation to (c) and (d) above, save that she denied that she called the children liars. In relation to (a) above, Zahra gave evidence that when she was in year 11 or year 12 (that is, in the early 2010s), Nouria came to the property with some groceries, and said words to the effect that ‘the property is getting too expensive for me to maintain, with insurance, council rates and land tax, and now you guys are working, I need help to make the payments’. Zahra gave evidence that she responded with words to the effect that ‘why don’t you just transfer the title to our name and we’ll be happy to pay and even back pay you for anything’.[25] Zahra said that Nouria responded with words to the effect that ‘I’d love to put it under your name, but if I was to do that it would cut off your mum’s social security benefits, so now is not the time to do that.’
[25]Zahra clarified that “our” means Marym and all three children.

In relation to (b) above, Zahra gave evidence that in 2011, when she was in Year 11, Nouria called her and asked her out to dinner. It was the first time that they had been out to dinner alone. Nouria started telling her about her superannuation fund, telling her that she had appointed Zahra and two of her cousins as directors of her superannuation fund (presumably, as directors of the trustee of a self-managed superannuation fund). Zahra said that during the course of this dinner, she asked Nouria why she had not put the property in her mother’s name. Nouria responded by saying that if she did, Marym would sell the property and move to Europe to be with her family. Zahra says she accepted this response, as she was just being inquisitive, not trying to ‘settle a matter’, and she took the matter no further.

Nouria denied speaking to Zahra about the property or land tax in 2011 or at any other time, but agreed that she took Zahra out to dinner alone and told her that she would like to appoint Zahra (and one of Zahra’s cousins) as trustees of her self-managed superannuation fund. However, she says that this dinner was in 2017 (when Zahra would have been 22 years of age), not 2011 (when Zahra would have been 16 years old). She denied that Zahra had asked her why she had not put the property in Marym’s name.

As previously noted, it appears that until 2017 the relationship between Nouria and Marym was positive and warm. Marym had a great deal of respect for Nouria’s capabilities and accomplishments. They occasionally went out for lunch or coffee together. Nouria was very generous to the family. She passed on her car to Marym when she bought a new car on at least three occasions, the last occasion being in 2017, and bought an almost new car for Zahra (who she clearly adored) when she got her driver’s license. She paid for Wais and Zahra to join a family holiday in Thailand in 2010, and gave Wais some cash for a car and a holiday after he finished school, despite being disappointed that he did not go on to university. She gave Zahra $5,000 when she started university. She says she lent Marym some money to help her purchase her first investment property.

In about 2016, Nouria told Marym that she wanted to come and live at the property, as the house had plenty of bedrooms, and she wanted to get to know her nephews better. She also said that she ‘wanted to show Marym that she was the owner of the house’, and, by implication, that she could determine who could occupy the property. This was the context in which Nouria said she told the State Revenue Office (‘SRO’) that the property was her principal place of residence for land tax purposes.[26] However, Nouria said that while Marym verbally agreed to her proposal, Nouria believed that her expression said otherwise, and she took the matter no further. However, this incident did not lead to any serious falling out, as Nouria accepted that they had different personalities, with Nouria being more extroverted and sociable, while Marym was more introverted, and preferred to keep to herself and her immediate family.[27]
[26]The property was nominated as her principal place of residence between 2017 and 2020. However, Nouria denied that she told the SRO this to avoid land tax, and says that in fact she paid more land tax as a consequence of this declaration, as her actual residence was more valuable than the property.
[27]This is consistent with my observations of the two women during the course of the trial. However, under cross examination, Nouria attributed her decision not to move to live at the property to the “problem of the cemetery”, presumably the incident which is described in the following paragraph, which confuses the chronology somewhat.

Zahra gave evidence that sometime in 2017, Nouria arrived at their home while just the children were there (noting that by this time, Wais and Zahra were young adults), demanding to know where Marym was, and making some angry and hurtful accusations about the children’s alleged lack of care and respect for their late father. Zahra said that Nouria said, among other things, words to the effect that ‘your dad died building this house for you guys and you never appreciated him’. Nouria does not deny that angry words were said by her, or that Wais asked her to leave, but said that the incident occurred after she had visited Sultan’s grave and found it unkempt and untidy, which caused her to be upset with Marym and the children, who she considered were primarily responsible for its upkeep.

Finally, and there is no real dispute about this matter either, in early 2017, Marym and Nouria ran into each other in the leisure centre car park. Nouria told Marym that she had a plan to demolish the house on the property, and construct two townhouses on the site, giving one to Marym and keeping another for herself or to give to another family member (‘development proposal’). The development proposal involved Marym selling one of her investment properties to fund the construction of the townhouses.[28] Marym gave evidence that she was shocked to hear this proposal, in particular, the prospect of telling the children that their aunt wanted to demolish the house that Sultan had built. She did not want to discuss such matters in the leisure centre car park, and asked Nouria to come to the property to discuss the development proposal there.
[28]In hindsight, this proposal, if it had been accepted by Marym, may well have resulted in a far more favourable outcome (financially and otherwise) than what has occurred and what may occur as a consequence of this proceeding.

Nouria visited the property a few days later. Marym and Zahra were both present.[29] Nouria showed them some drawings prepared by her brother-in-law, Mr Najeem (who had also prepared the drawings for the renovation of the property back in January 2002). Marym said that Nouria commenced by saying that it was very expensive for her to cover the rates and land tax for the property, which Marym said she was willing to discuss. Nouria then said that she wanted to build two townhouses, with underground car parking, and that Marym’s responsibility would be to sell her investment property to pay for the build. Marym gave evidence that she responded ‘Okay, but if we’re doing to do that, we’ll have to have something in writing this time’. Nouria then got angry and left, and the two women have not spoken since. Nouria does not really dispute Marym’s version of events, but said that she doesn’t recall Marym saying that she wanted everything in writing. She said that she ended the discussion about the development proposal and left the property after Marym asked that the title of the property be transferred to her.
[29]Zahra gave evidence that there were two meetings at the property about the development proposal, but it does not seem to me that much turns on the question of whether there was more than one meeting about the development proposal. Both Marym and Nouria refer to there being only one meeting.

Zahra’s evidence about what was said during this meeting largely aligned with her mother’s evidence. Zahra gave evidence that at the first meeting, which was in late 2017 or early 2018, Nouria said that she wanted to demolish the house and subdivide the property. She said she and her mother were shocked, as Sultan had put his heart and soul into the renovations, and the house was perfectly fine. Nouria wanted to build two townhouses, and give one to one of her uncles. This did not make sense to Zahra, as the uncle concerned already owned an unencumbered property in Ashburton. Zahra said that when Nouria next visited the property, she told her and Marym that Mr Najeem had already drawn up plans for two townhouses. She said Marym was shocked and said words to the effect that ‘No, I don’t like his designs, I don’t know why you’d think I’d agree to that’, and ‘if we are ever going to talk about this house or do anything about this house, it needs to be on paper this time’.

The evidence is silent as to what transpired in the months after this meeting. Mr Najeem was not questioned at any length about his role in assisting Nouria to formulate the development proposal, but during cross-examination he denied having any discussion with Marym about the development proposal.[30]
[30]Marym gave no evidence about this conversation, but my recollection is that at the time Marym gave her evidence in chief, Mr Najeem was not expected to be called as a witness, and was called by Nouria to give evidence after the (late) amendments to the statement of claim, so that nothing turns on Marym’s failure to give evidence about this alleged conversation.

The date that Nouria said that Marym’s occupation of the property was scheduled to end, being the end of 2018, came and went. However, nearly a year later, on 3 October 2019, Nouria’s former solicitors wrote to Marym, stating that they had been consulted by Nouria about selling the property, which she wished to do in early 2020, and requested that Marym and her family vacate the property by 15 February 2020.

It is not clear whether Marym, or anyone on Marym’s behalf, responded to this letter, as there is not a complete set of pre-proceeding correspondence in evidence. What appears from the correspondence in evidence is that the following took place over the course of 2019, 2020 and 2021:

(a) Marym lodged a caveat on the title to the property on 5 December 2019;

(b) on 6 December 2019, Marym’s lawyers stated that the property was held on constructive trust for her, and that she would not be vacating the property;

(c) correspondence between the solicitors in January 2020 failed to resolve the impasse;

(d) on 23 November 2020, Nouria’s solicitors wrote to Marym’s solicitors providing a detailed rebuttal of Marym’s claim to an equitable interest in the property, stated that Nouria wished to sell the property, demanded that Marym pay rent of $280 per week from the date that Hassib finished school in late 2018, demanded that Marym account to Nouria for the rent assistance payments she received from Centrelink, and served a notice to vacate in accordance with the Residential Tenancies Act 1997 (Vic);

(e) Marym issued this proceeding in the County Court on 4 December 2020;

(f) in 2021, Nouria unsuccessfully applied to the Victorian Civil and Administrative Tribunal (‘VCAT’) to force Marym to vacate the property. The VCAT proceeding has apparently now been discontinued; and

(g) the proceeding was transferred to this Court on 18 May 2021.

Since the proceeding was transferred to this Court, there have been some disputes between the parties concerning the discovery by Marym of the Centrelink documents, and the discovery by Nouria of her tax returns. There were also disputes about Marym’s pleadings at the commencement of and during the course of the trial, with applications made by Marym to amend her statement of claim and her reply being partially successful. However, her attempts to amend her statement of claim to make a claim for a constructive trust over the property based upon the principles in Muschinski v Dodds,[31] and to amend her defence to counterclaim to assert an entitlement to adverse possession of the property were unsuccessful, largely on the basis that these claims were brought far too late, and were likely to derail the trial of the proceeding.
[31](1985) 160 CLR 583.

The pleadings

The second further amended statement of claim dated 29 November 2022 (‘statement of claim’) is a concise and simple document. In the statement of claim, Marym pleads, relevantly, as follows:

(a) she is the sole beneficiary of Sultan’s estate, and as such the beneficial owner of Sultan’s assets;

(b) in or about October 2001, Nouria repeatedly represented to Marym that the property was beneficially owned by Marym and Sultan (‘representation’), relying upon the October 2001 conversation and the $600 conversation;

(c) the following particulars were provided of the alleged representation:

(i)In or about October 2001, Marym and Nouria had a conversation to the following effect:
(A)Nouria said to Marym, ‘Move into this house, this property is permanently yours.’
(B)Marym said, ‘What about the title?’ Nouria said, ‘Don’t worry about the title right now. This is your house. Do not stress about the title. You are spending your own money that you could have used to buy your own house with but why should you when this house is available, and I am here. Changing the title will be expensive. When the time comes, I will do it.’

(ii)In or about November 2001, Marym and Nouria had a conversation to the following effect:
(A)Marym handed Nouria $600 in an envelope and said ‘if the property is not going to be put in our names then we [Marym and Sultan] will buy your own property’. Nouria said ‘you don’t need to stress, this is your house, I don’t need the money. Don’t worry about these types of things, just concentrate on the renovation’.

(d) in reliance upon the representation, Marym and Sultan moved to the property, and did not purchase their own home as they had intended, and spent money, time and labour on the renovations;

(e) the funds spent on the renovations included their savings of $40,000, funds applied by Marym from her income from her wages and from Centrelink, $40,000 from the proceeds of sale of the fish and chip shop, the proceeds of sale of Marym’s jewellery (about $20,000), and the ANZ loan of $15,000;

(f) the renovations were conducted with Nouria’s knowledge, involvement and encouragement, referring to Nouria being identified on the building permit application as the owner-builder, and the fact that the renovation receipts were provided to Nouria at her request;

(g) Nouria knew or ought to have known that the money and labour spent by Marym and Sultan over a seven-year period would have otherwise been used to purchase a matrimonial home. Nouria’s knowledge is to be inferred from the nature of the representation, Nouria’s frequent visits to the property, the fact that the funds saved by Marym and Sultan for a house deposit was frequently a topic of discussion within the family, and what Marym says was said during the $600 conversation;

(h) alternatively, Nouria, by her conduct, including her acquiescence, encouraged Sultan and Marym to spend their money and labour on the property in return for them gaining absolute ownership of the property, and induced that expenditure by them in the expectation that an absolute ownership of the property would be conferred upon them, noting that Nouria frequently demanded that Sultan carry out the renovations more quickly;

(i) Marym and Sultan have not paid any money to Nouria for their occupation of the property;

(j) between 2001 and 2008, Marym and Sultan paid the rates for the property;

(k) Nouria has resiled from the representation, in circumstances where it was unconscionable for her to not make good the expectation that she had encouraged; and

(l) accordingly, Nouria is estopped from denying that Marym is the beneficial owner of the property and is entitled to become the registered proprietor of the property, and Marym seeks a declaration that Nouria holds her interest in the property on trust for Marym.

Further, Marym claimed, in the alternative, as follows:

Further or in the alternative, Sultan, Marym and Nouria formed a common intention that Nouria would hold her interest in the Property on trust for the benefit of Sultan and Marym (“the common intention”).
PARTICULARS
The common intention was partly oral and partly to be inferred from the conduct of the parties.
In so far as it was oral, it was comprised by the Representation.
In so far as it was implied, it was to be implied from the following facts and circumstances.
(i) from Nouria’s making of the Representation;
(ii)Marym has lived in the Property without the payment of any rent or occupation fee since 2001;
(iii)Marym and Sultan conducted extensive renovations to the Property with the express consent of Nouria;
(iv)in around early March 2008 in the cardiac ward at Monash Hospital Nouria said to Sultan, in the presence of Marym and Hassib, words to the effect that ‘Never worry, the house belongs to your family’.
(v)on 2 April 2008, on the night of Sultan’s burial, Nouria said words to the effect that ‘the house is Marym’s and the title will be put in Hassib’s name when he turns 23’;
(vi)in about June 2010, Marym said to Nouria, ‘I have saved $20,000 that we can put towards the legal costs to change the title of the property’. Nouria said, ‘you own this house, there is no point of wasting money on a title change. You are better off buying an investment property with the money’;
(vii)Nouria had informed members of the Salehi family, including but not limited to Marym’s children, that the Property was Marym’s (and before his death Marym and Sultan’s); and
(viii)Nouria had informed Marym’s children that title would be transferred to Wais Salehi (see Outlines of Wais Salehi and Zahra Salehi).

Finally, in her prayer for relief, Marym claimed the following relief:

A.A declaration that the Defendant holds her interest in the Property on trust for the Plaintiff.
B.Alternatively, to paragraph B, a declaration that the Plaintiff is entitled to an equitable charge over the Property in respect of the contributions made to the Property.
C.Alternatively to paragraph B, equitable compensation.
…

In her further amended defence dated 2 December 2022 (‘defence’), Nouria denied that Marym was beneficially entitled to the assets of Sultan’s estate, given that:

(a) Sultan’s estate is not a party to this proceeding;

(b) Marym would not be the sole beneficiary of Sultan’s estate if the assets of Sultan’s estate exceeded $100,000;[32] and

(c) Marym lacks standing to bring this claim on behalf of Sultan’s estate or any other person or entity.

[32]Any claim by Sultan to an equitable interest in the property being an asset of the estate.

Nouria denied making the representation, and said that during August 2001, discussions were held between her and Sultan at the Ashwood property, in her mother’s presence (and in Marym’s absence), where Nouria offered Sultan the opportunity to move into the property, and they agreed a rental of $1,200 per month.

Nouria admitted that Sultan expended time and labour in carrying out works at the property. She said that Sultan asked her to pay for all of the expenses associated with the renovations, and she gave him the money required to meet these expenses, to the extent she was aware of them, usually when he visited the Ashwood property, but occasionally at the property or via Timur or Golalai.

Nouria denied that the renovations were funded by Marym’s income, and said further that Marym was not entitled to substantial parts of each Centrelink payment she received between 2001 and 2018.

Nouria denied the allegation that the renovations were conducted with her knowledge, involvement and encouragement, save that she said that she knew of significant changes to the property carried out or organised by Sultan, and that she paid or repaid all of the expenses associated with the renovations of which she was aware. She said further that she repeatedly and expressly discouraged Sultan from carrying out the renovations, because she was deeply concerned about Sultan’s poor health, and the property was habitable and in a fit and proper state prior to the commencement of the renovations.

Nouria denied that she knew or ought to have known that the funds expended by Marym and Sultan on the renovations would have otherwise been used by them to purchase a home, or that this expenditure was made in reliance upon any promise made by her regarding the ownership of the property.

Nouria denied that Marym was entitled to the relief she claimed, and said further that there are no allegations in the statement of claim to support a claim to an equitable lien over the property. She says that Marym has come to Court with unclean hands by reasons of her seeking, accepting and retaining over $60,000 in rent assistance from Centrelink when she was paying no rent for the property, and when she has not paid any of the expenses associated with the ownership of the property.

In the amended reply dated 2 December 2022, Marym said, in summary, as follows:

(a) Marym does not bring the proceeding in her capacity as trustee of Sultan’s estate;

(b) as a matter of fact, all or substantially all of Sultan’s assets are or should be vested in Marym, such that the relief sought by her should be granted;

(c) Marym’s rights alone are sufficient for the Court to grant the relief sought; and

(d) she denied that there was any agreement between Nouria and Sultan that he pay rent of $1,200 per month for the property, and at best, Sultan ‘suggested’ that he pay rent of $1,200 per month.

Nouria also brought a counterclaim with respect to Marym’s ongoing occupation of the property. In her amended counterclaim dated 16 November 2021, Nouria stated, in summary, as follows:

(a) Nouria granted exclusive possession of the property to Sultan and his family in 2001 pursuant to an oral agreement;

(b) the agreement ‘was agreed to terminate’ when Hassib finished school at the end of 2018;

(c) since December 2018, Marym failed to vacate the property;

(d) Nouria has suffered loss and damage by reason of Marym’s failure to vacate the property;

(e) alternatively, Marym has accepted the benefit of having exclusive possession of the property without Nouria’s agreement, and without paying rent since December 2018; and

(f) accordingly, it would be unjust for Marym not to pay a fair and reasonable sum to Nouria for exclusive possession of the property since December 2018.

In her amended defence to counterclaim filed on 16 December 2021, Marym said, in summary, as follows:

(a) she was not privy to any rental agreement between Sultan and Nouria, the existence of which was denied;

(b) any such agreement was required to be in writing, and as such, was unenforceable by reason of ss 52 and 53 of the Property Law Act 1958 (Vic);

(c) she and her family have occupied the property;

(d) given that her three adult children have also occupied the property, the property would therefore not have been able to have been used for any other purpose, Nouria has suffered no loss and damage by reason of Marym’s occupation of the property; and

(e) the mere fact of Marym’s ongoing occupation of the property does not create a cause of action known to the law entitling Nouria to payment for Marym’s occupation of the property.

At the conclusion of the trial, Nouria did not press her claim for rent based upon the alleged agreement between her and Sultan in August 2001, conceding that the evidence did not support any contention that the discussions between her and Sultan gave rise to any liability on the part of Marym to pay rent for the property from 2001.

The issues in dispute

Prior to the commencement of the trial, the parties agreed that the following issues arose on the pleadings in this proceeding:

1.Was there a rental agreement as between Nouria and Sultan as alleged in paragraph 3 of the Amended Defence?[33]
2.Was the Representation alleged at paragraph 3 of the Amended Statement of Claim made? To the extent it was made, was reliance placed upon it in the manner alleged in paragraph 4 of the Amended Statement of Claim?
3.What was the extent and cost of the Renovation which was conducted on the Property as between 2001 and 2008?
4.Who paid the direct costs of the Renovation?
5.Did Nouria’s conduct as alleged in paragraph 7B of the Amended Statement of Claim give rise to actionable proprietary estoppel by reason of the established categories of estoppel by encouragement or estoppel by acquiescence?
6.Alternatively, did the parties form a common intention for joint relationship which has now failed such as to give rise to equitable rights by way of a constructive trust or otherwise within the meaning of Deane J’s judgment in Muschinski v Dodds (1985) 160 CLR 583, 620?[34]
7.Further or in the alternative, does Marym have rights under a common intention constructive trust?
8.What, if any, are the appropriate remedies (noting that if a conveyance or declaration of trust as to the whole of the interest is not ordered, then further evidence will be necessary)?[35]
9.Does Nouria have rights in equity as against Marym to claim equitable damages or compensation for the period after which she was asked to leave the Property? If so, what is the appropriate remedy?

[33]This claim was not pressed by Nouria following the conclusion of the evidence.

[34]An application by Marym at the commencement of the trial to amend her statement of claim to press this claim was refused.

[35]On 21 October 2022, Matthews AsJ made an order that ‘the question of the quantum of the plaintiff’s equitable compensation claim be tried after the trial of the balance of the proceeding’.

Further, another issue emerged from the way that Marym presented her case at trial, being the contents of Nouria’s tax returns (‘tax return issue’). Essentially, Marym contended that the reason why Nouria did not immediately transfer the title of the property to her and Sultan in 2001 was that, given that Nouria earned a high salary, it was to her financial benefit to represent to the Australian Taxation Office (‘ATO’) that the property was tenanted and generating rental income, so that she could negatively gear the property, and thus reduce her taxable income. She also had the benefit of being able to use her equity in the property to secure borrowings made by her, and deduct the interest payments on those borrowings to reduce her taxable income. Marym contended that Nouria’s demand that she claim rent assistance was part of this overall scheme, because then Centrelink’s records would align with what Nouria was telling the ATO about the purported tenancy of the property.

A significant part of the trial was taken up with evidence and disputation about the tax return issue. Nouria objected to the tax return issue even being canvassed, on the basis that it was irrelevant, and the allegation that Nouria had engaged in tax fraud was not pleaded. However, as observed earlier in these reasons, Marym’s allegations about the tax return issue were made in support of Marym’s explanation as to why Nouria did not transfer the legal ownership of the property at or around the time Marym and her family moved to the property, despite Nouria having promised to give the property to them.

Accordingly, the evidence about the tax return issue does not go to the essential elements of Marym’s claim for an equitable interest in the property: rather it was contended that this evidence made it more likely that Marym’s evidence regarding the essential elements of her cause of action should be accepted. Further, the evidence does go to Nouria’s credibility, which is important in a dispute of the current kind. Accordingly, strictly speaking, it was arguably not necessary for Marym to plead the allegations relevant to the tax return issue. However, I accept that the absence of any pleading about this issue did impede the smooth running of the trial, although it could be said that Nouria was on notice of this issue as a consequence of the correspondence between the parties in late 2022 regarding the discovery of Nouria’s tax returns.

Accordingly, the following issues require resolution in this proceeding:

(a) whether Marym has standing to bring her claims in this proceeding, given that the representation was said to have been made to both her and Sultan (‘standing issue’);

(b) whether the representation said to have been made in the October 2001 conversation and evidenced by, among other things, the $600 conversation was made;

(c) whether the main reason that Nouria failed to transfer the legal ownership of the property to Marym and Sultan at the time the representation was made was owing to Nouria’s desire to reduce her liability to pay tax;

(d) if the representation was made, whether Marym relied upon the representation to her detriment, by:

(i) refraining from purchasing another property with Sultan; and/or

(ii) carrying out the renovations at great cost and inconvenience (‘detrimental reliance issue’);

(e) whether Nouria’s encouragement of the renovations induced an expectation on the part of Marym that she and Sultan would obtain the beneficial ownership of the property;

(f) whether Nouria’s acquiescence in the carrying out of the renovations gave rise to equitable relief in favour of Marym on the basis that she knew that Marym and Sultan were undertaking the renovations in the (mistaken) belief that they held or would obtain an interest in the property;

(g) whether Marym is a beneficiary of a common intention constructive trust;

(h) how much the renovations cost, who paid for them, and the relevance of the findings regarding these matters to the issues enumerated in (b) to (g) above;

(i) if any of Marym’s claims are established, what is the appropriate remedy; and

I consider that my factual findings give rise to at least an argument that there was a common intention constructive trust, but not the common intention constructive trust pleaded by Marym. Contrary to my observations regarding the estoppel raised by Nouria’s acquiescence in the renovations, given that the existence of a common intention is the fundamental element of this cause of action, the failure of the evidence to establish the common intention pleaded by Marym is fatal to Marym’s claim that she is a beneficiary of a constructive trust of this kind.

In her statement of claim, Marym pleaded that Sultan, Marym and Nouria formed the common intention that Nouria held her interest on trust for the benefit of Marym and Sultan. However, in my view, to the extent that Nouria had any intentions with respect to the future ownership of the property, I believe that those intentions were to the effect that she would ultimately transfer the title of the property to the children. I also consider that this was probably also Sultan’s understanding of Nouria’s intentions, and, indeed, the matters relied upon by Marym and said by her to be matters from which the pleaded common intention could be inferred are matters which support a common intention (or at least an intention common to Sultan and Nouria) that the property would ultimately pass to the children.

However, I cannot be satisfied on the evidence that this intention was common to Nouria and Marym, given that I accept Marym’s evidence about what Sultan told her during the telephone conversation when she was in Europe in August 2001. The evidence about what was said by Nouria in her public pronouncements about her plans for the property does not allow me to safely conclude that Marym came to understand that it was her children, not her and Sultan, that would have an interest in the property, at least not before 2008, by which time the renovations were complete.

It is arguable that if the requisite common intention could have been established (and was pleaded), the other elements required to find the existence of a constructive trust of this nature as set out in paragraph 215 of these reasons may well have been able to have been established. However, Marym would face an additional hurdle, based upon the facts as found: the proper beneficiaries of the trust would be the children, not her and Sultan, which once again raises the question of her standing to bring the claims she makes in this proceeding.

Conclusions and remedies

In summary, I have made the following findings regarding Marym’s claims in this proceeding:

(a) Nouria did not make any representation to Marym to the effect that she would transfer the title to the property to Marym and Sultan;

(b) Nouria made a representation to Sultan that he and Marym could live at the property indefinitely, and said words which led him to believe (reasonably or otherwise) that Nouria would ultimately gift or bequeath the property to his children, consistent with the public pronouncements she made at that time;

(c) Nouria did not encourage Marym and Sultan to carry out the renovations, at their expense or otherwise;

(d) however, Nouria did acquiesce in the carrying out of the renovations knowing that Sultan and Marym were proceeding in accordance with certain assumptions with respect to the ultimate ownership of the property which ultimately proved to be mistaken; and

(e) Marym and Sultan paid for two-thirds of the costs of the renovations, being $156,510, and suffered the inconvenience associated with the renovations for approximately three years. It is not possible on the evidence to estimate the value of Sultan’s unpaid labour.

Marym relied upon the decision of the High Court in Sidhu[208] to support her contention that Nouria should be compelled to convey the property to her. I accept that where a person’s expectations concerning their interest in the property have been induced by the words and conduct of the legal owner of the property, and that person has relied upon that expectation to their detriment, the prima facie remedy available to that person is to give effect to that representation or expectation.
[208](2014) 251 CLR 505.

However, there are a number of reasons why ordering a conveyance of the property to Marym would be an inappropriate remedy in all of the circumstances. First, the standing issue means that in the absence of any claim by someone capable of bringing a claim on behalf of Sultan’s estate, and in the absence of any evidence or argument on the matter, I cannot be satisfied that I should depart from the presumption in equity that co-owners hold their interests in property as tenants in common in equal shares. Accordingly, the high point of Marym’s claim would be an entitlement to a declaration that Nouria holds a half share of the property on trust for Marym.

However, here Marym faces the hurdle that I have found that, to the extent that Nouria knew that Sultan and Marym held certain assumptions with respect to the ownership of the property, I consider that it is more likely than not that Nouria would only have expected them to assume that they had the benefit of long term occupancy of the property, and that the title to the property would ultimately pass to the children. Accordingly, while Nouria’s conduct in acquiescing to the renovations raised an equity in favour of Marym, it is not an equity of a kind which would justify the declaration of a constructive trust over part or all of the property in favour of Marym.[209]
[209]Ibid [84].

Rather, the appropriate remedy is a monetary award of equitable compensation. While orders have been made that the quantum of any equitable compensation be determined in a separate hearing, I will make some observations regarding the basis upon which equitable compensation should be awarded later in these reasons.

To pause here, during the course of the trial, counsel for Nouria made a submission to the effect that no order for equitable compensation could be made, because Marym had not pleaded the necessary elements of a claim for equitable compensation. Reference was made to submissions being made before Matthews AsJ during the course of a pre-trial hearing on 21 October 2022, and to Marym’s legal team having failed to take an opportunity to amend her statement of claim to plead matters in support of her claim for equitable compensation.

I do not, with respect, understand this submission. I do not have access to the transcript of any such hearing, and the submissions made in that regard have not been repeated before me. The only reference I can find in the evidence is a statement in some written submissions filed on behalf of Marym in an application she made to adjourn the trial to the effect that Marym intended to seek leave to make a minor amendment to her statement of claim to seek compensation for any increase in value that the renovations generated to the property. As far as I am concerned, a claim for equitable compensation, perhaps secured by a charge over the property, is a completely orthodox claim to make, and the facts relied upon to claim an equitable interest in the property can also be relied upon to support the lesser relief of equitable compensation. Indeed, that was the approach of the High Court in Giumelli v Giumelli[210] and the Court of Appeal in Mainieri v Cirillo,[211] where the interest of third parties or practical considerations made it inappropriate to order a conveyance of the relevant property to the successful claimant.
[210](1999) 196 CLR 10.
[211](2014) 47 VR 127.

Further, the order of Matthews AsJ made on 21 October 2022 that the question of the quantum of Marym’s equitable compensation claim be tried after the trial of the balance of the proceeding seems to presume the availability of that remedy. I do not consider that it was necessary for Marym to apply to amend her pleading in the manner foreshadowed by her counsel. Ultimately, the basis upon which any equitable compensation will be calculated will be shaped by the facts as found.

Accordingly, I shall proceed on the basis that it is open to me to make an order for equitable compensation in favour of Marym. The question remains whether I should make such an order, and if so, upon what basis, and upon what conditions.

These questions raise the following issues:

(a) whether any equitable compensation should be referable to the expenditure of the renovations alone, or whether I should also take into account Marym’s contention that by moving into the property and spending their savings on the renovations, Marym lost the opportunity to acquire a property of her own;

(b) whether, as contended for by Nouria, the benefits that Marym acquired from her occupation of the property, rent free, for over 20 years completely outweighed any detriment incurred by her, analogous to what was held in the decision in Sledmore v Dalby,[212] or, perhaps more accurately, those benefits extinguished any equity raised by Nouria’s conduct; and

(c) whether any condition should be imposed upon the grant of any relief to overcome the contention that Marym had failed to come to Court with clean hands, by reason of her receipt of rent assistance to which she was not entitled.

[212](1996) 72 P & CR 196 (CA).

Turning first to the question in (a) above, I accept that the authorities caution against awarding a remedy based upon reversing the detriment incurred by a party induced by an expectation as to an interest in land, on the basis that detriment is an element of a cause of action in proprietary estoppel, and is not to be equated with concepts such as consideration in contract. But, ultimately the appropriate remedy is what is necessary to address the unconscionable conduct of the estopped party in failing to give effect to the expectation. In some cases, reversing the detriment may well be an appropriate remedy.

In relation to the loss of opportunity issue, Marym gave evidence that if she had not moved into the property under the mistaken assumption that the property would be transferred to her and Sultan, she and Sultan would have used their savings to put towards a deposit for a property of their own, and that she would now own an unencumbered property valued at approximately $1.5 million.

That may well be the case. But I cannot be satisfied, on the evidence as it stands, that that is what would have occurred, such as to justify making an award of equitable compensation in a sum equivalent to the difference between the value of the hypothetical property and what Marym and Sultan would have paid for that property by way of a deposit, mortgage repayments, and rates and other costs associated with home ownership. The onus of proof with respect to a counter-factual of that kind rests with Marym, and she has not discharged that onus.

First, like Nouria, I have some scepticism as to whether Marym and Sultan would have been able to find a lender willing to lend to them to purchase a property, at least before 2010 when Marym started earning more income from her employment. Secondly, even if they could have borrowed money to purchase a property, I would need to have far more evidence about the availability of properties they could have purchased, the current value of any property they could have purchased, and the costs of acquisition of that property to even begin such a quantification exercise. And thirdly, that quantification exercise would have to take into account the fact that Marym has been able to buy and sell investment properties which she may not have been able to acquire had she been paying a mortgage on a home of her own, or paying rent for another property. Basing any equitable compensation upon Marym’s asserted lost opportunity would involve accepting a counterfactual which would be speculative in the extreme.

Accordingly, the soundest basis for making an award of equitable compensation is making an award based upon the costs of the renovations to Marym, and the benefits of the renovations to Nouria. However, the question remains as to whether any equity raised in Marym’s favour has been satisfied by her ongoing occupation of the property rent-free for nearly 22 years.

In my view, it has not. On Nouria’s own case, Nouria was quite content to have Marym and her family living at the property rent free until December 2018 at the earliest, although I accept that she was becoming increasingly disgruntled with bearing the costs associated with holding the property.

I agree with the submissions advanced on behalf of Nouria that in assessing the basis for and the value of any remedy available to Marym, it is necessary to compare the benefits to Marym and the costs to Nouria of Marym’s continued occupation of the property.

However, while I accept that Nouria incurred holding costs associated with Marym’s ongoing occupation of the property, she also enjoyed ongoing benefits from her retention of the property, being the capital gains associated with being a passive investor.

As discussed earlier in these reasons in the context of the tax return issue, during the first decade of Marym’s occupation of the property, Nouria’s continued retention of the property provided a benefit to her because the holding costs of the property and the additional rental income declared by Nouria in her tax returns were more than defrayed by the deductions claimed by her for the expenses associated with the Lyon apartment and the interest on the loan taken out by her in 2006 and secured by the property.

While there is no evidence regarding the market value or rateable value of the property over much of this period, the land tax assessment notices in evidence show that between December 2001 and December 2011, the unimproved value of the property increased by $495,000, that is, the value of the property increased, on average by approximately $50,000 per annum. Of course, the growth in the improved value of the property would have presumably been greater by reason of the increase in the value of the property as a result of the renovations.

After 2012, Nouria’s retention of the property no longer generated a financial benefit for her, because she was no longer claiming the deductions for her interest expenses and expenses associated with the property in her tax returns. However, as will be explained further, during this period up until the date she demanded that Marym vacate the property in late 2019, the capital gains associated with the property exceeded the costs to her of retaining the property.

The rate notices in evidence show that, as of June 2010,[213] the capital improved value of the property[214] was $865,000. In June 2019, the capital improved value of the property was assessed at $1,545,000, or an average increase of $75,555 per annum. Over the same period, Nouria paid rates and land taxes with respect to the property of $45,363.92, or approximately $5,000 per annum.
[213]The rates notice for 2011 is missing from the bundle of rate notices in evidence.
[214]Experience suggests that the sum recorded in the rate notices is likely to be less than the market value of the property, but this data is being used for illustrative purposes only.

Of course, I accept that during this period Nouria was deprived of the benefit of being able to generate income from the property. However, even on her own case, that was always going to be the case, by reason of the commitment she made to Sultan before he died. By sacrificing the rental income from the property, she derived the non-financial benefit of knowing that Sultan’s widow and children had secure accommodation during a vulnerable period. To some degree, pointing to the costs incurred by Nouria by reason of Marym’s ongoing occupation of the property is an arid exercise, because it presumes a counter-factual that, on Nouria’s own case, was never going to happen. And, in any event, Nouria has enjoyed the benefit of substantial capital gains over this period.

Those capital gains have been contributed to by the renovations to an as yet unquantified extent. Of course, ultimately Nouria will have to pay capital gains tax when she sells the property, but, as previously noted, the cost of the renovations will be able to be added to the cost base for the property when the property is ultimately sold.

As for the benefits accruing to Marym from her rent free occupation of the property, as discussed in more detail later in these reasons, these benefits are best measured by looking at her asset position as at the time Nouria demanded that she vacate the property, rather than ascribing a value based upon a notional rent for the property. By October 2019 Marym had acquired substantial equity in her two investment properties. However, this would have to be offset against the loss of opportunity for Marym to purchase her own home. Indeed, the value of her investment properties is probably the best proxy for the value of her lost opportunity, such that the two factors cancel each other out.

Accordingly, I consider that any award to Marym should be founded on the contributions made by her and Sultan to the costs of the renovations, namely two- thirds of $156,510, or $104,340. The question remains as to whether Nouria should be required to refund that payment (perhaps with interest, subject to submissions upon that point), or whether any award should reflect the contributions the renovations made to the value of the property, which would need to be the subject of expert evidence.

Conceptually, the latter measure seems more sound. The authorities following the decision in Ramsden v Dyson[215] refer to the relevant unconscionable conduct of the estopped party which equity seeks to ameliorate as being the conduct of the estopped party in standing by and profiting from the expenditure on improvements to the property by another party labouring under a mistaken belief as to the ownership of land. Further, that measure of damage may be fairer to Nouria, given the time which has elapsed since the renovations were completed, because as a matter of logic, the contribution of the improvements effected by the renovations to the value of the property will have diminished over time, as no doubt a substantial proportion of the increase in the value of the property will be attributable to increases in the value of the land component of the property.
[215](1866) LR 1 HL 129.

However, making an award of compensation to Marym on this basis does have case management implications which should be considered further. Making an award of $104,340 plus interest will require only a short hearing about the question of interest. Assessing the contribution of the improvements to the value of the property will require the determination of the appropriate time for assessment (for example, either as at October 2019 when Nouria asserted her rights as the owner of the property, or as at the time of trial), the parties will need to retain and brief experts, and there will need to be a further short trial, although the time and expense involved could be reduced by referring certain questions to a special referee. However, given the sums involved, I will give the parties the opportunity to reflect upon these observations and make submissions about the appropriate conduct of the assessment going forward.

The discussion above is predicated on my findings that no representation was made in the terms pleaded by Marym, that there was no common intention that the property would pass to Sultan and Marym, and that Nouria did not believe that Marym and Sultan held an expectation that the title to the property would pass to them, such that the appropriate remedy is a monetary award.

However, in the event that I am found to be wrong, and it was found that the representation was made, and was reasonably relied upon by Marym and Sultan in deciding not to purchase a home of their own and in carrying out the renovations, I shall discuss the appropriate remedy available had Nouria’s words or conduct given rise to an equitable interest in the property.

First, I note my earlier observations that the standing issue, in particular, regarding the equitable presumption that the co-owners of property hold their interests in property as tenants in common in equal shares, means that Marym may well be limited to claiming a half share of the property, although that issue was not the subject of full argument.

However, subject to any discussion about whether any equitable interest in the property she is entitled to has been extinguished or amortised by the benefits she has received by reason of her long term rent free occupation of the property, it seems to me that the nature and quantum of the detriment incurred by Marym would not justify a finding that she had made a ‘relatively small, readily quantifiable’[216] outlay on the property in reliance upon the representation. While her outlay on the renovations is quantifiable (and has been quantified in these reasons), it could hardly be said that the outlay was small, at least in the context of the value of the property at the time the renovations were carried out.
[216]Sidhu v Van Dyke (2014) 251 CLR 505 [84].

There was no evidence about the market value or the rateable value of the property during the early 2000s, but the land tax assessment notices in evidence show that as at 31 December 2001, the unimproved value of the property was $275,000. As at 31 December 2005 (after the renovations were largely complete), the unimproved value of the property was assessed at $490,000. In that context, a contribution of around $100,000 to improving the property could not be said to be a small contribution.

Further, while I have some reservations about whether the aspiration of Marym and Sultan to purchase a home of their own was achievable, at least as early as 2001, I accept that Marym has shown that she was eventually in a position to afford to acquire residential property (albeit, as submitted by Nouria, at least in part because of her rent free occupation of the property), and that the decision to move into the property and carry out the renovations was a decision of a life changing nature of the kind referred to by Nettle JA in Donis v Donis.[217]
[217](2007) 19 VR 577.

In the course of his final submissions, counsel for Nouria referred to a series of tables and calculations illustrating the various financial benefits which accrued to Marym by reason of her rent free occupation of the property, and the costs incurred by Nouria in conferring those benefits upon Marym. The benefits to Marym included the rent assistance and family tax benefits received by Marym from Centrelink, the value of her rent free occupation of the property and interest deductions claimed by Marym on her rental properties. The costs to Nouria included the land tax paid to the State Revenue Office, water connection charges, and rates, although these calculations failed to account for the benefits accruing to Nouria by reason of the tax return issue.

In some respects, these calculations somewhat overstate the benefits obtained by Marym, in that she would probably have been eligible for some Centrelink benefits between 2001 and 2010. However, it seems to me that the most straightforward means of evaluating whether awarding Marym an equitable interest in the property (whether a half share of the property, or in the property as a whole) would be a disproportionate remedy in all of the circumstances would be to compare the value of any equitable interest in the property she may have with her asset position at the time Nouria resiled from any representation she made with respect to the property, being October 2019.

I accept that Marym’s rent free occupation of the property enabled her to acquire investment properties in 2010, 2012 and 2016. Accordingly, for Marym to acquire an interest in the property without accounting for the assets she has been able to acquire by reason of her occupation of the property would overcompensate Marym for any disappointed expectation induced by Nouria.

There is limited evidence about the value of Marym’s investment properties in late 2010, and the extent to which those properties were encumbered. However, doing the best I can from what evidence is available to me (including by reverse engineering the interest payments shown in Marym’s tax returns), I estimate the value of Marym’s investment portfolio as at October 2019 to be as follows:[218]
[218]By necessity, these are very rough and ready estimates, but they are satisfactory for the illustrative purposes for which they are made. The market value of the Hampton Park property is based upon the sale price in 2021, discounted by the change in median house prices in Metropolitan Melbourne between the last quarter of 2019 and 2021 (Source: Real Estate Institute of Victoria). The market value of the Doveton property is based upon the purchase price in late 2016, increased by the change in median house prices in Metropolitan Melbourne between the last quarter of 2016 and the last quarter of 2019. The mortgage balances are reverse engineered based upon the interest shown in the rental schedules for the properties in Marym’s tax returns for the 2020 tax year, based upon an assumed interest rate of 5% per annum.

Market Value Mortgage Equity

Hampton Park $525,000 $127,000 $398,000

Doveton $523,000 $200,000 $323,000

Accordingly, based upon the above calculations, Marym utilised her rent free occupation of the property to build a property portfolio valued at over $720,000 as at October 2019. Adding in the rent assistance payments of about $60,000, and deducting the costs she and Sultan paid for the renovations of approximately $100,000,[219] then, if Marym’s prima facie entitlement was to a half-share of the property (based upon the standing issue), then the value of that entitlement would have been substantially eroded, although the position would have been different had she established a prima facie entitlement to the whole of the property. Further, I expect that if a constructive trust over the property or any share of the property was to be declared in favour of Marym, there would need to be an adjustment in favour of Nouria for the holding costs of the property paid by her since 2011 of approximately $45,000.
[219]That is, a net benefit of $680,000.

Finally, the question remains as to whether Marym should be deprived of any remedy by reason of her application for and receipt of rental assistance payments to which she was not entitled, I accept Marym’s submission to the effect that this is an appropriate occasion for the application of the conclusion of the High Court in Nelson v Nelson[220] to the effect that there is no general proposition that equity will let the loss lie where it falls in the case of illegal conduct on the part of a claimant.
[220](1995) 184 CLR 538.

Arguably, in the current case, the conduct of Marym in applying for rent assistance to which she was not entitled is not connected with Nouria’s conduct in acquiescing to the renovations. However, ultimately the question of the appropriate remedy has been determined, in broad terms, by balancing the costs and benefits to Marym of her ongoing occupation of the property. Accordingly, it would be contrary to equitable principles to make an award of compensation without imposing a condition that Marym account to Centrelink for benefits she has wrongfully obtained, albeit from the public purse rather than Nouria. Accordingly, any relief will be conditional upon Marym undertaking to inform Centrelink about to her receipt of rent assistance to which she was not entitled between December 2001 and December 2018.

The counterclaim

As noted earlier in these reasons, Nouria no longer presses her claim for unpaid rent based upon any agreement made between her and Sultan in 2001, as Marym was not a party to that agreement. However, she seeks damages in accordance with restitutionary principles for Marym’s ongoing occupation of the property after December 2018, on the basis that her permission for Marym’s ongoing occupation of the property terminated once Hassib had turned 18 and finished school, as she contends that she discussed with Sultan and announced in Marym’s presence at the family gathering after Sultan’s death. She submitted that the appropriate measure of damages is the rental income that would be able to be achieved for the property on the open market, being $900 per week, having obtained the benefit of a deemed admission from Marym to that effect by reason of her failure to file and serve a Notice of Dispute in response to a Notice to Admit served on Nouria’s behalf on 29 November 2022.

Marym submitted that the evidence does not establish that there was any agreement between Sultan and Nouria, let alone between Marym and Nouria that Marym would pay rent after 2018. Further, as Marym’s children have continued to occupy the property, and no demand has been made by Nouria that they vacate the property, then Nouria has suffered no loss.

Marym’s submission to the effect that Nouria has not suffered any loss and damage because Nouria has only demanded that Marym, not Marym and her adult children leave the property is unmeritorious. First, both Wais and Zahra gave evidence that they would follow their mother wherever she went, even if the context in which those questions were asked in cross-examination did not directly raise a scenario whereby Marym alone was being asked to vacate the property. However, it would have been open to counsel for Marym to elicit evidence from Wais and Zahra in re-examination and to call Hassib to give evidence as to whether the children would have remained at the property had Marym complied with Nouria’s demand and vacated the property.

Secondly, the letter sent by Nouria’s solicitors to Marym on 3 October 2019 (‘eviction letter’), which explained that Nouria proposed to sell the property, contained an implied requirement that Marym deliver up vacant possession of that property. Further, I can infer from the eviction letter, and from Nouria’s evidence that she intends to sell the property once this proceeding is finalised, that if the children remained at the property after Marym’s departure, then she would have taken steps to have them vacate the property. Given the time required to do that, that may have reduced any damages recoverable by Nouria, but is not a basis for finding that Nouria has suffered no loss and damage.

I have discussed the legal principles relevant to Nouria’s claim for restitutionary damages earlier in these reasons. As stated by Chernov JA in Ovidio,[221] a restitutionary claim may be made by a property owner based upon the use and occupation benefits accruing to an occupier of land where the occupier has been given permission to occupy the owner’s land without there being any binding term as to payment of rent. His Honour described the essential elements of this cause of action as being:

‘…the existence of an agreement between the parties – express or implied –to the effect that the occupant / respondent will be the tenant of the claimant and shall pay for the occupation.’[222]

[221][2006] VSCA 6.

[222]Ibid [21].

Accordingly, the authorities require that a landowner making a claim for restitutionary damages for the use and occupation of property must establish an express or implied agreement to the effect that the occupant will be the tenant of the landowner and will pay rent for the use and occupation of the property. While such an agreement may be implied from the act of entering into occupation, there may be circumstances where the mere fact of occupation is insufficient to establish an obligation to pay for that occupation.

Accordingly, the central issue in the counterclaim is whether there was any express or implied agreement between Nouria and Marym that she would pay rent (of any amount) for her use and occupation of the property from the end of 2018, or for that matter, from any time.

Nouria has conceded that the evidence does not establish that there was any express agreement reached between her and Marym in 2001 that she should pay rent of $1,100 or $1,200 per month. She relies upon the following matters to support her entitlement to claim rent of $900 per week from the end of 2018:

(a) Nouria granting exclusive possession of the property to Sultan and his family pursuant to the oral agreement between Nouria and Sultan in 2001;

(b) the discussion between her and Sultan at the hospital in November 2007 to the effect that Nouria would permit Marym and the children to stay at the property until Hassib turned 18 and finished school, which she said was communicated to Marym by Sultan;

(c) her statement to a similar effect at the family gathering following Sultan’s death, where Marym was present; and

(d) the deemed admission by Marym that the market rent for the property was $900 per week.

In my view, those matters do not support the existence of any express or implied agreement between Marym and Nouria for the payment of rent, let alone market rent for the property, for any period of occupation. First, if it is accepted that Nouria told Sultan in November 2007 that the family could stay in the property until the end of 2018, implicit in that statement is a representation that the family could live there rent free, as they had done for the past six years. There was no evidence from Nouria to the effect that she also said words to the effect that ‘and after that they can pay me rent’. In any event, while Nouria gave evidence that Sultan told Marym about what she told Sultan, she did not say that Sultan told Marym about this discussion in Nouria’s presence, such that I cannot conclude that he did so.

As for what occurred at the family gathering, I have stated earlier in these reasons that I largely accept the evidence that Nouria said that she would transfer the title of the property to the children when Hassib turned 18 (or 23). However, even if I am wrong about that, the statement by Nouria as to how long the family could stay in the property until the end of 2018 was a unilateral statement.[223] There was no evidence of any meeting of minds between Marym and Nouria, and thus I could not find that there was any express or implied agreement between Nouria and Marym to the effect that, after the end of 2018, Marym would pay Nouria rent for her continued occupation of the property. No such agreement is pleaded in the counterclaim, and there is no evidence that the question of rent was ever discussed between Marym and Nouria: indeed, the two women have been estranged since 2017.
[223]Indeed, Mr Musleh’s evidence is to the effect that Marym cried out that she did not want to discuss such matters.

The circumstances of the current case seem to me to fall within the exception identified by Jordan CJ in Australian Provincial Assurance Association Ltd v Rogers:[224] that is, they negative the implication of a contract between Nouria and Marym that Marym would pay for her occupation of the property. Nouria’s claim for restitutionary damages for Marym’s use and occupation of the property must fail, and the counterclaim will be dismissed.
[224](1943) 43 SR (NSW) 202.

However, if I am wrong about whether or not there was an express or implied agreement that Marym would pay Nouria rent for her occupation of the property and that Marym knew that she was only permitted to occupy the property until December 2018, I do not accept that even if there was any such agreement, that Marym would be required to pay rent from December 2018. Even if there was such an agreement, Marym’s understanding of what was to occur may well have been overtaken by events. In particular, the discussions about the development proposal in 2017 assumed Marym’s ongoing occupation of the property, or at least part of the property. Further, and importantly, no action was taken by Nouria to evict Marym prior to the end of 2019. One would have thought in circumstances where Nouria and Marym were no longer on speaking terms, Nouria would have acted promptly to enforce her rights if there had been an agreement that Marym vacate the property at the end of 2018, but nearly a full year passed beyond that before she took any action to have Marym vacate the property. Indeed, Nouria’s failure to take any action at the end of 2018 is more consistent with there being no such agreement, or any intention on Nouria’s part that the family would be required to vacate the property at the end of 2018.

In my view, Nouria’s permission for Marym and her children to occupy the property was revoked on 15 February 2020, being the date upon which Nouria required Marym to vacate the property, as stated in the eviction letter. Until that time, no demand had been made by Nouria that Marym leave the property. Arguably, Marym and her children are now trespassers, and as such, Nouria would have a claim for mesne profits. The market rent for the property would be an appropriate measure of damage for such a claim. But no such claim has been made.

Accordingly, the commencement date for the calculation of loss and damage would be 15 February 2020, with damages accumulating at $900 per week until the date the property is vacated.

However, for the reasons set out in the preceding paragraphs, the counterclaim will be dismissed.

Orders and next steps

Given my findings in these reasons, I propose to make the following orders:

(a) the claim by the plaintiff/defendant by counterclaim for a declaration that the defendant/plaintiff by counterclaim holds her interest in the property described in paragraph 1(b) of the second further amended statement of claim filed on 29 November 2022 be dismissed;

(b) the defendant/plaintiff by counterclaim pay the plaintiff/defendant by counterclaim equitable compensation in an amount to be fixed pursuant to paragraph 2 of the Order made by Matthews AsJ on 21 October 2022;

(c) the counterclaim be dismissed;

(d) the proceeding be listed for further directions on a date to be fixed for the purpose of making further directions with respect to paragraph 2 of this Order;

(e) the parties are directed to confer as to whether it is appropriate and/or practicable to refer the question of the quantification of the equitable compensation payable to the plaintiff/defendant by counterclaim to a special referee pursuant to Order 50 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic); and

(f) the parties’ costs of the proceeding, including the costs of the trial and the costs of the hearing today, be reserved for determination after the conclusion of the quantification exercise referred to in paragraph 2 of this Order.

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*Market Value*	*Mortgage*	*Equity*
Hampton Park	$525,000	$127,000	$398,000
Doveton	$523,000	$200,000	$323,000

[2023] VSC 535

7 September 2023