Sandri v O'Driscoll
[2013] VCC 139
•1 March 2013
`
| IN THE COUNTY COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-04630
| STEPHEN SANDRI | Plaintiff |
| v | |
| PAUL ROBERT O’DRISCOLL (as personal representative of the estate of Francis Dean Humphries deceased) | First Defendant |
| and | |
| ELIZABETH ELLEN O’DRISCOLL | Second Defendant |
---
JUDGE: | HIS HONOUR JUDGE GINNANE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16-18, 21-22,24-25,28-30 May 2012 | |
DATE OF JUDGMENT: | 1 March 2013 | |
CASE MAY BE CITED AS: | Sandri v O’Driscoll & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 139 | |
REASONS FOR JUDGMENT
Catchwords – EQUITY – agreement concerning family home – effect of contract – whether proprietary estoppel – counterclaim for deposit and balance of purchase price – whether joint venture
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Cameron | Le Brun Glezakos Lawyers |
| For the Defendants | Mr B Reilly | Parke Lawyers |
HIS HONOUR:
1 This lengthy litigation culminating in a 10 day trial arises from an unfortunate dispute concerning the ownership of a family home situated in Williamstown. It has arisen in the circumstances of the untimely deaths of a mother and her daughter, who were involved in the planning of how the home was to be used.
2 The plaintiff, Stephen Sandri was married to Aileen Mary Sandri (Humphries) before her death in 2003. Mrs Sandri was the third child of Mr Francis (Frank) Dean Humphries and Mrs Aileen Elizabeth Humphries (Mrs Beth Humphries). Mrs Humphries died in 2003 and Mr Humphries in 2010. They lived at 30 Bayview Street Williamstown, which in this judgment is variously referred to as the property, the Bayview Street property, 30 Bayview Street or the Williamstown property. Their fourth child Elizabeth Ellen O’Driscoll, the second defendant, is married to Paul Robert O’Driscoll, the first defendant. He is the personal representative of the estate of Mr Frank Humphries.
3 Elizabeth Ellen O’Driscoll in the counterclaim sues under a deed of assignment as the assignee of Mr Frank Humphries’ rights to a debt said to be due under a contract dated 28 March 2002 (the contract) under which the Humphries sold half their interest in the Bayview Street property to the Sandris. The terms of, and effect of, that contract are discussed later in this judgment.
4 Mr Sandri seeks a declaration that the first defendant holds his interest in the land at 30 Bayview Street as constructive trustee for him and seeks an order that he execute a transfer of his interest in the land to him.
5 Mr Sandri also seeks a declaration that Mrs O’Driscoll is estopped from enforcing any terms of the contract by which Mr Frank Humphries assigned his interest in the land to her.
6 The second defendant counterclaims for money she says is owing under the contract.
7 In the alternative, the first defendant alleges that the arrangement reached between the Sandris and the Humphries was a joint venture or endeavour, a sub-stratum of which was that Mr and Mr Humphries would be content to reside, for so long as they lived or were able to do so, in close proximity to the Sandris. They argue that the sub-stratum of that joint venture or endeavour has been removed without attributable blame in that Mr Humphries, during his life, was no longer content to reside in close proximity to the plaintiff. They argue that as a result Mr Sandri holds his half share of the property on constructive trust for Mr O’Driscoll subject to an equitable charge or lien in his favour in such amount as may be agreed or determined by the Court.
8 Mr Sandri argues that the defendants are estopped from making the allegations contained in the counterclaim.
The issues
9 The issues raised by the parties in essence are:
(a) did the Sandris and the Humphries enter into an agreement or reach an understanding in the terms pleaded in paragraph 2 of the statement of claim?
(b) if yes to (a), has Mr Sandri established a proprietary estoppel entitling him to the whole of the property?
(c) does the contract of sale of 28 March 2002 made between the Humphries and the Sandris bind them? If so, what effect does it have?
(d) on the counterclaim, have the defendants established an entitlement to payment under the contract of 28 March 2002:
(i) of the deposit of $70,000?
(ii) of the balance of the purchase price of $170,000?
(e) on the counterclaim, is the relationship between the parties one of a failed joint venture and if so what are their entitlements?
10 Mr and Mrs Humphries purchased the property at 30 Bayview Street, Williamstown as their family home in 1959.
11 In 1956, their first daughter Aileen Mary Humphries was born. Elizabeth Ellen Humphries, now O’Driscoll, is their younger daughter. There are two sons Dean and Peter, who were the first and second children born.
12 In 1980, Stephen Sandri, the plaintiff, and Aileen Mary Humphries married. They have three children.
13 In 1995, Elizabeth Ellen Humphries, the second defendant, married Paul O’Driscoll, the first defendant.
14 Stephen and Aileen Sandri settled in the Altona Bay development, which is part of Altona Meadows and is situated about ten kilometres from the Williamstown property.
15 Mrs Sandri worked as a school teacher. Mr Sandri was employed in the State Bank for 18 years and later at Centrelink. He also worked as cricket coach and is now a self-employed contractor.
The Sandris wish to move to Williamstown
16 Near the end of the 1990s, the Sandris considered moving to Williamstown. In 1997, they placed their Altona house on the market, but it did not sell. They could have attempted to purchase a property in Williamstown, however, following discussions in 1999 between the Sandris and Mrs Humphries, which particularly occurred during a holiday in the United States of America, another proposal was discussed.
17 The Humphries, who were then in their late 70s wanted to maintain their lifestyle as long as possible. They did not want to enter a nursing home. Mrs Sandri was very close to her parents, especially her mother.
18 Mr Sandri gave evidence that he and Mrs Sandri agreed with, or reached an understanding with, the Humphries that they would sell their family home at Altona and would move to the Bayview Street property.[1] They would build a “granny flat” in the backyard for the Humphries to use until their death and they would renovate and then live in the front of the house. They would fund the extension and renovation of the house, obtain council permits and arrange for builders. They would pay all the utility bills, but not the Humphries’ medical, telephone or car expenses. [2]
[1]Transcript (“T”) 57-63
[2]T 64-65, 397-398
19 The Sandris and the Humphries would be registered on the title of the Bayview Street property as joint owners.[3] Upon the death of both Mr and Mrs Humphries, the Sandris would become surviving proprietors of the property.[4]
[3]T63-64
[4]T 93-94
20 While building works were being carried out, the Sandris would provide temporary accommodation for the Humphries, in the Newport home of Mr Sandri’s father.[5]
[5]T111
21 Mr Sandri gave evidence that initially under the arrangement made in about 1999, he and his wife were to fund the extension and renovation of the existing house and the construction of a granny flat.[6] Later, for reasons set out below, a new house was built, with a unit for the Humphries.
[6]T63,61
Mr Sandris’ case as pleaded
22 The agreement or understanding that Mr Sandri pleaded that he and his wife had entered into or reached with the Humphries in 1999 had the following features:
a. the Sandris would sell their Altona property;
b. the Sandris, at their own expense, would design and construct a new home on the Bayview Street land in which they could live;
c. the home would include a self contained unit, which would form part of the principal residence and in which the Humphries would reside until their deaths;
d. the Sandris would arrange and provide living accommodation for the Humphries from the time they vacated the original home on the Bayview Street land until the new house and unit were built;
e. the Sandris would contribute to the Humphries’ household and living expenses, including all utility bills, but not the telephone bills;
f. the Sandris would pay all rates and other expenses arising in relation to the land as and from the completion of the construction of the home, including insurance, landscaping works and repairs and maintenance.
g. the Sandris would assist and, when necessary, care for the Humphries in their later years;
h. the Sandris would become joint proprietors of the Bayview Street land with the Humphries;
i. the Sandris, upon the death of the Humphries, would become surviving proprietors of the whole of the land;
j. the Sandris together with the Humphries would retain Peter Boyle and Associates, solicitors, to record the terms of the agreement or understanding and effect a transfer of the land so that the Sandris would become joint proprietors of the land with the Humphries.
23 Paragraph 3 of Mr Sandri’s statement of claim listed 15 acts of reliance on the agreement or understanding
24 The plaintiff delivered lengthy particulars of his statement of claim, including of the actions that he and his wife took in furtherance of the agreement or understanding. Those actions, however, are linked back to an agreement or understanding reached in 1999: see for example page 3, line 19 of the particulars.
25 Mr Sandri gave evidence that the agreement or understanding reached with the Humphries resulted from a gradual build up of conversations.[7] Mr Sandri said that he and his wife were often at the Humphries home and many times discussed the concept and how it might be achieved. In cross-examination he said that:
“there were various items discussed all the way through until the finalisation of the – put in place in the contract.”[8]
[7]T67
[8]T424-425
26 In cross-examination, Mr Sandri gave evidence of a supplementary arrangement being reached with the Humphries in 2002 at Mr Boyle’s office around the time of the contract [9] that they would pay all the utility bills for Bayview Street after they moved into it.[10] These payments were intended to go towards the payment of the deposit.[11] They were also a way of showing that the balance of the purchase price of $170,000 due under the contract was paid.[12] The supplementary agreement or arrangement was not pleaded as a separate agreement that was made in 2002.
[9]T381
[10]T397, 401
[11]T374
[12]T 380-382
27 Mr Sandri also gave evidence that the payments they made, particularly to obtain planning permits, would be like a prepayment before they moved into Bayview Street.[13]
[13]T 65
28 There was limited evidence of the attitude of the Humphries’ other children to the proposal. Mrs O’Driscoll said that she had been supportive of the arrangement. She first heard of a proposal in 2000. Mrs Sandri told her that she and her husband were thinking of moving to Bayview Street so that she could be near their parents and use the existing house and build accommodation for their parents in the backyard.[14]
[14]T861
29 Mr O’Driscoll gave evidence of attending a family twenty-first birthday in late 2000 where animated discussions occurred between Mrs Sandri and her brother Dean, apparently about the proposal. On the trip back home, Mr Humphries said: “If that’s the way they feel, it’s off.” [15] Mr O’Driscoll had not been aware, prior to that point, of any proposal to sell 30 Bayview Street.
[15]T886
Valuations of the property
30 On 29 January 2002, Mr M Hinds of Farnbach Burnham (Altona) Pty Ltd provided a market valuation of the property stating:
“Based on recent sales in close proximity to the property, the appraised value of 30 Bayview Street, Williamstown is $350,000 as of 1st of June 1999.”[16]
[16]Plaintiff’s Court Book (“ PCB”) 157
31 On 4 March 2002, Mr W Brown of Compton & Green Real Estate Pty Ltd provided a valuation of the property stating:
“Following inspection of the subject property which following removal of the improvements is now a vacant residential allotment of 620 square metres approximately. It is my opinion that the present worth is in the close region of $480,000 (four hundred and eighty thousand dollars).”[17]
[17]PCB 161
32 In June 2002, Mr D Biggs, certified valuer, valued the property for the ING Bank, while the new house was being built, as having a current fair market value for Trustee first mortgage security purposes of $670,000 and it would, upon satisfactory completion of the new house, have a value of $840,000.[18]
[18]PCB 1851
33 In August 2011, Mr David Matler, a registered valuer, of BMT Commercial Pty Ltd provided a number of joint valuations to the parties. He valued the property at 1 June 1999 at $550,000 and at 28 March 2002 at $900,000.[19]
[19]PCB 105-107
34 Mr Matler valued the property at 29 September 2009 at $1,650,000, including a value of the residence of $313,000.
35 Mr Matler valued the property at 23 September 2011 at $1,550,000, including a value of the residence of $306,000.[20]
[20]PCB 105, 119 -120
36 I consider that I should act on the basis that Mr Matler’s valuations are accurate. I did not understand the parties to suggest the contrary.
The 2 June 2000 document
37 The Sandris, but not the Humphries, signed a one page document dated 2 June 2000, which bore the title “Agreement between Mr Francis D Humphries & Mrs Aileen E. Humphries and Mr Stephen Sandri & Mrs Aileen M Sandri” and which stated:
“Preliminary discussions between the above parties commenced early 2000 when they entered into an ‘in principle’ agreement on June 2nd 2000 for Aileen and Stephen Sandri to purchase the property at 30 Bayview St Williamstown. Real estate valuations were provided by Burnham Real Estate and an agreed price decided upon and a deposit paid. This agreement includes a commitment to build an extension to house Aileen and Francis Humphries for life tenancy.”[21]
Mr Sandri said that this document contained details of discussions that he and his wife had with the Humphries.[22]
[21]PCB 156
[22]T116
38 Next, there were a series of draft contracts ending in the contract of 28 March 2002. The terms of these draft contracts, and the discussions that the parties had with their solicitors that led to the drafts being prepared, give some light to their intentions and requires some description.
The Mahonys’ Contract January 2001
39 On 5 January 2001, Mahonys solicitors, who had been engaged by the Sandris, sent them a draft agreement providing for the sale of the property by the Humphries to them. The sale price, “as instructed” was to be $400,000, including a deposit of $100,000, whereupon possession would be given. The balance was payable on the expiration of 5 years from the date of payment of the deposit or, within 6 months of the death of the last survivor of the vendors or, within 6 months of the service of a termination notice pursuant to the contract.[23] A building contract for the new house was to be attached to the contract. Mahonys’ letter stated:
“Once the agreement is finalised, details of the plans and specifications and building contract should be annexed to the agreement and I will need to prepare a Section 32 Statement to enable the contract to be enforceable. Your parents should be independently advised as to any risks involved in undertaking such an arrangement and also with respect to the price which I note is under the capital improved value of the property… The agreement does not specifically explain why the price is less than the market value and whilst this may be explained by the fact that you are accommodating your parents and organising the extension, nevertheless the extension is being paid for by them to a property which will become yours and the extension is an improvement which ultimately becomes yours.”[24]
[23]Defendants’ Court Book (“DCB”) 288, 309-314
[24]DCB 288-289
40 The fourth and fifth recitals of the draft contract stated:
“D. The parents have agreed to sell the property to the daughter and son-in-law upon favourable terms on the basis that they will co-ordinate and organise the extension and whilst doing so all parties will reside in the property and that upon [completion] of the extension the parents will enjoy a life tenancy of extension.
E. The cost of the extension is to be paid for by the parents out of the proceeds of sale.”[25]
[25]DCB 311
41 Clause 3 of the contract stated:
“The parents acknowledge that the capital improved value of the property as of the last municipal valuation conducted in June 1994 was $485,000 but have agreed to the price for the reasons set out herein.”[26]
[26]DCB 311
Mr Boyle acts for the parties
42 On 19 January 2001, soon after receiving the Mahonys’ draft contract, the Sandris and the Humphries retained Mr Peter Boyle solicitor to act for them. He practised in Williamstown and acted as their solicitor until about April 2002. He sold his practice in June 2008, but continued in the practice for 18 months working for the solicitor who purchased it. [27]
[27]T 581-584
43 Mr Boyle gave evidence mainly by referring to file notes. He did not have any detailed recollection of conversations or events associated with the events relevant to this litigation.[28]
[28]T610
44 Mr Boyle’s first file note of 18 January 2001 recorded a sale price of $400,000 and a deposit of $70,000 and the figure of $1000 underneath it, with the note:
“payable on sale of A & S house or 30 June 2001 whichever is the earlier”.[29]
[29]Mr Boyle’s file is Exhibit D
45 He understood his clients’ instructions were that the Humphries were to sell the property to the Sandris or transfer the property and demolish the existing home and have a new home built, with separate accommodation for the Humphries.[30]
[30]T584-585
46 Mr Boyle said that:
“Without being able to specifically remember, but I sort of have the feeling of what we discussed in terms of their mutual safeguarding in terms of the joint tenancy and survivorship, particularly and then the provision for wills.”[31]
[31]T724
47 Mr Boyle prepared a number of contracts concerning the Bayview Street property.
The draft contract of January 2001
48 Mr Boyle sent the first such contract to the Sandris and the Humphries on 31 January 2001.[32] It provided for the Sandris to purchase the property from the Humphries for $400,000 with a deposit of $70,000, of which $1,000 “is paid” on the signing of the contract with the balance to be paid on settlement of the sale of the Sandris’ Altona property or 30 June 2001, whichever was the earlier. The balance of the purchase price, namely $330,000 was to be paid not later than 12 months after the death of the last surviving vendor.
[32]Exhibit 5 see T597 and 682
49 Special Condition 4 provided that the Humphries were able following possession to at any time give 120 days notice to the Sandris, to require the balance of the purchase monies to be paid. The purchasers would be entitled to possession of the property upon payment in full of the deposit and upon satisfactory completion and issue of the Certificate of Occupancy:
“of the additional 2 bedroom self-contained unit of approximately 10 squares to be erected on the property in accordance with the plans of…dated…”
50 On 31 January 2001, Mr Boyle wrote to the Sandris and the Humphries enclosing the draft contract. He referred to recent discussions with Mrs Humphries and Mrs Sandri and stated:
“We have also inserted Special Condition 4 which we believe is a usual safeguard for Vendors in such agreements in the event that the arrangement did not work out and alternate accommodation is required within a shorter period than expected.”[33]
[33]PCB 155 and DCB 277
51 The Sandris sold their house in May 2001 with settlement in August 2001 for $237,500.[34]
[34]PCB 213
52 On 18 May 2001, Mrs Humphries made a will leaving the whole of her estate to her four children as tenants in common. Clause 5 stated:
“I MAKE this Will on the understanding that I jointly own my own home with my husband FRANCIS DEAN HUMPHRIES or in the event that such home is sold that the proceeds thereof will be held or invested in the joint names of myself and my said husband and that the same would automatically pass to him in the event that he should survive me.” [35]
[35]DCB 142
53 On 17 May 2001, Mr Boyle wrote to the Commissioner for State Revenue, on behalf of Mrs Sandri, concerning a State Land Tax assessment issued to her and stated that:
“ At this point, our client has no legal or beneficial interest in the property known as 30 Bayview Street, Williamstown and we would be pleased if you could delete this property from the records of our client and we would be interested to learn on behalf of our client how this property became included as land owned by our client.”[36]
[36]DCB 276
54 In a file note of 6 July 2001, Mr Boyle recorded that:
“April ’99 agreed to transfer Bayview St to Aileen, Stephen in consideration of being permitted to live there for life.
No mention of money in any agreement
Graham Heard Centrelink.
Mr. Mrs H spoke to GH about 18 months ago:
Agreement: attach plans.
2 B/Room living areas self
approx 10 squares.
A – S pay rates utilities
Water gas electricity
Maintaining”[37]
[37]DCB 275
55 The Humphries received aged pensions through Centrelink. In July 2001 Mr Boyle commenced to make enquiries about the effect that the sale of the property would have on the pensions.[38]
[38]T605
56 In a file note of 3 October 2001, Mr Boyle recorded a conversation with Mrs Sandri about the details of a proposed sale of the property to them. His note referred to a deposit of $70,000, to three bedrooms and a lounge and dining area. It referred to fair consideration, and then included the words “Agreement June 2000”. It also included the message that: “she will drop in rates valuation tomorrow”.[39] Mr Boyle gave evidence that the parties had an interest in keeping the value of the property down for stamp duty purposes. The earlier that they had reached an arrangement about the sale or transfer of the property, the lower the valuation that could be applied. A lower stamp duty could be paid as a result.[40]
[39]DCB 271
[40]T609
57 It appears that a further draft of the contract was sent to the parties in about October 2001.[41]
[41]See DCB 318 and plaintiff’s final written submissions paragraph 34.
58 On 10 January 2002, Mr Boyle wrote a file note which contained the date “10 Feb 2000” and then stated:
“June 2000 was the date of the agreement”.[42]
[42]DCB 268 and T612
59 In January 2002, the proposal was still to sell the entire property for $400,000. Mr Boyle’s file contained a transfer of the entire property from the Humphries to the Sandris with the handwritten note: “16/01/02 Transfer reprinted (no consideration) Stephen took home for signing”.[43]
[43]T693 and DCB 267
60 On 21 January 2002, Mr Boyle made a file note stating that he had received a query from the State Revenue Office as to whether an agreement had been made on 1 June 1999. He made a second file note that day recording his attendance with Beth Humphries and Aileen Sandri and:
“They agree that the contract was 1st June 1999.
We can do agreement as at that date – $300,000.”[44]
He said that the reference to the contract was to the oral agreement.[45] He said that he did not think that he was leading them into that date. He thought that it was a question of “when they could best recall the date had sort of commenced for consideration of agreement.”[46]
[44]DCB 265, T618
[45]T618
[46]T695
61 Mr Sandri gave evidence that it was Mr Boyle’s idea for the Humphries to prepare mutual wills. Mr Sandri stated that the wills provided a protection for them to ensure that the property, “the joint structure”, was to be passed on to the Sandri children because the Sandris had funded the new house.[47]
[47]T 424, 462
62 Mr Boyle said that both parties were keen to proceed and that “they seemed to be fairly – very much in accord I thought.” However, he was not certain whether that was the position in 1999 or at a later time. [48]
[48]T594
63 In late Jan 2002, Mr Boyle made a file note stating:
“Michael Hinds can do letter as 1 June 99 at 350,000. He will send to Mr and Mrs Humphries at 30 Bayview Street, Williamstown.” [49]
[49]T619
64 The Bayview Street property was located in a Heritage Overlay area under the Hobsons Bay Planning Scheme.
65 On 5 September 2000, the City of Hobsons Bay responded to preliminary assessment plans submitted by Mr J Bennett, who was a builder acting on behalf of the Sandris, to seek approval of a first floor extension of the existing dwelling. The City stated that it considered that the proposed extension was inappropriate.[50]
[50]PCB 183
66 On 6 May 2001, the City of Hobsons Bay refused an application which was for the construction of an additional dwelling on the land, presumably a granny flat.[51]
[51]PCB 193
67 In August 2001, Mr Sandri, presumably acting as agent for the Humphries, applied for a permit for the construction of a new dwelling on the property. [52] The Sandris had plans drawn for the new home and for planning and other permits. They included a workshop at the back of the property for Mr Humphries. Mr Sandri gave evidence that the Humphries were consulted about the plans.
[52]PCB 194
68 This application appears to be the first formal statement of an intention to build a new house.
69 On 14 December 2001, the City of Hobsons Bay issued a planning permit for a double storey dwelling and associated garage to be erected on the property.[53]
[53]PCB 204
70 The existing house on the Bayview Street property was sold and removed by late 2001. The purchaser paid Mr Sandri $12,000 for it. [54]
[54]PCB 236
The draft contract 26 February 2002
71 Mr Boyle prepared a further draft contract on about 26 February 2002. it provided for the sale of the whole of the property for a purchase price of $300,000 including a deposit of $70,000, which the contract stated “has been paid”.[55]
[55]Exhibit 6
72 The reduction in the purchase price from the figure of $400,000 contained in the January 2001 contract was due to the deeming provisions that might affected the Centrelink benefits that the Humphries received. Mr Boyle spoke to Centrelink’s officers discussing sale prices that might be included in the contract including prices of $300,000 and $400,000.
73 Mr Boyle’s file contained a note of a conversation with Mrs Sandri on 26 February 2002, which stated:
“$70,000 – paid & parents
($40,000 paid)
money every fortnight”[56]
[56]DCB 259
74 This file note proceeded on the basis of the agreed sale price of $300,000.[57]
[57]T697
75 Mr Boyle said that he was aware that there were going to be payments by the Sandris to the Humphries and that as to the reference to”money every fortnight”:
“…I was aware that there were going to be payments by Aileen and Stephen to the Humphries as I understood. I think that it was something that they just be paying money from whatever agreed purchase price along the way.”[58]
[58]T627
76 He said that it looked like the Sandris had paid at least the $40,000 and that previously they noted that the deposit was to be paid from the sale of the Sandri’s home.[59]
[59]T628
77 On 26 February 2002, Mr Boyle wrote to Mrs Sandri enclosing a copy of a letter from Centrelink setting out “the granny-flat interest rules”. He stated:
“We confirm your instructions that the agreed sale price for the property is $300,000 as contained in the recent Contract we prepared. We would be pleased if same could be signed by all parties at your early convenience.”[60]
[60]DCB 257,258
78 The “granny flat interest rules” reduce the effect of the deprivation, or gifting rules, when people in receipt of a benefit transfer property to family members in return for a life interest or a right to accommodation for life. They stated:
“A life interest or right to accommodation for life IS a granny flat interest IF: the customer ‘pays’ for a life interest or a right to accommodation for life AND the life interest or right to accommodation for life is in a private residence that is to be the customer’s principal home.”[61]
[61]DCB 258
79 Mr Boyle recorded in a file note of the same day, apparently after a telephone conversation with Ms Sandri stating:
“$70,000 – paid & parents $40,000 paid.
money every fortnight.
$300,000
$350,000
$280,000
[fax number given for Aileen Mary Sandri]
$350,000
$70,000
$300,000
224 Mason”[62]
[62]DCB 259
80 Mr Boyle said that these figures represented the Sandris and Humphries deliberations on the figure that would go into the agreement for stamp duty purposes and for “balancing Centrelink consideration(s)”.[63]
[63]T630
81 Mr Boyles’ file note of 27 February 2002, headed “Peter Centrelink” stated:
“Believe the $230,000 unpaid. Regarded as an asset which shouldn’t affect pension.”…[64]
Further discussions occurred with Centrelink the next day on the basis of a price of $300,000.[65]
[64]DCB 256
[65]T630-631
82 Mr Boyle met with Mrs Humphries and Mrs Sandri on 28 February 2002 and suggested a joint tenancy with will provisions.[66]
[66]DCB 255; T 632 and T697
83 Mr Sandri said that Mr Boyle advised them to have a joint proprietorship to protect their children if they predeceased the Humphries. Mr Boyle confirmed that he had given that advice. [67]
[67]T 633
84 Mr Boyle spoke with Mrs Sandri by telephone on 1 March 2002 and suggested the following:
“joint ownership. Suggested 300 (half interest transfer save stamp duty). Mortgage – 300.
House. Would take chance that if Aileen and Steve go before Frank and Beth that necessary for Beth and Frank to provide for their children and E Powers of Attorney to say Aileen and Liz.”[68]
[68]DCB 254
85 On 2 March 2002, Mr Boyle recorded a note of a conversation with Mr W Brown, the real estate agent, which suggested a valuation of the vacant property of $480,000.[69] It was needed for stamp duty purposes.
[69]DCB 253
86 On 5 March 2002, Mr Boyle spoke with Mr Sandri and discussed a joint tenancy.[70]
[70]DCB 254 T 700
87 On 6 March 2002, Mr Boyle met with the Humphries and discussed a proposal for a joint tenancy of the property and enduring powers of attorney and wills to protect the Sandri children.[71]
[71]DCB 249; T653-656
88 Mr Boyle was aware that a joint tenancy could be severed and was not immutable.[72]
[72]T703-705
89 Mr Boyle drafted the particulars of sale for the final contract with a price of $240,000, which was half of Mr Brown’s valuation of $480,000. He could not specifically recall who instructed him to insert “one half interest” and the consideration price, but said that it must have been the client.[73]
[73]T649
The building contract
90 On 4 March 2002, the Sandris entered into a building contract with Clifford Construction Pty Ltd to build a new house on the Bayview Street property for the price of $339,380.[74] The Humphries were not a party to the contract.
[74]PCB 247
91 On 18 March 2002, Mr Boyle wrote to the Humphries and Sandris stating:
“We refer to our recent discussions in this matter and confirm that we have now had the transfer to your four joint names assessed for duty on the basis of ½ Valuation of the property being $240,000 and we would be pleased if you could forward the following amounts to our office.”[75]
[75]DCB 247
92 The letter then set out the amounts required to complete the transaction, enclosed Mr Brown’s valuation and confirmed that Enduring Powers of Attorney had been executed by the Humphries appointing their daughters Aileen Sandri and Elizabeth O’Driscoll as their joint and several Attorneys.
The contract of 28 March 2002
93 Mr Boyle then prepared the final version of the contract of sale. It provided for the sale by the Humphries of a half interest in the Williamstown property to the Sandris for a price of $240,000.[76]
[76]DCB 969
94 The Humphries and Sandris signed the contract in Mr Boyles’ office, but the transfer, which is referred to below, appears to have been signed at a later point, away from the office.[77]
[77]T669
95 The deposit was $70,000, to which was added the words “which has been paid”. Mr Boyle did not know if the deposit had been paid. [78]
[78]T712 -713
96 The payment of the balance of the purchase price was dealt with in Special Condition 2, which stated:
“The balance of purchase moneys, namely $170,000.00, may be paid at any time following possession of the property provided that it shall not be later than the date being twelve (12) months after the death of the last surviving Vendor.”
97 The settlement date was dealt with in Special Condition 1, which stated:
“The purchasers shall be entitled to possession of the property upon payment of the full deposit and upon satisfactory completion and issue of the Certificate of Occupancy of the additional 2 bedroom self-contained unit of approximately 10 squares to be erected on the property in accordance with the agreed plans and specifications, a copy of which is annexed. Possession of the property for the purposes of the Purchasers does not include the possession of the abovementioned unit which shall be the exclusive right of the Vendors during their joint lives or so long as either of them or both are able and wish to reside therein. In the event that the said unit is not completed within twelve (12) months from the date hereof then at the Vendors’ option they may rescind this contract and refund any deposit moneys to the Purchaser less any cost they have incurred as a result of entering into this agreement and the arrangement between the parties.”
98 No plans and specifications were attached to the contract.
99 Special Condition 3 provided:
“The Vendors and Purchasers agree for themselves, their heirs, executors and assigns that the Vendors shall be entitled to reside rent free and have exclusive possession of the self-contained unit as referred to in Special Condition 1 hereof for so long as either of them shall live or be able and inclined to reside at the said unit without being liable for any rates or insurance in respect of the property. They shall also be entitled to use in common other areas of the property (excluding the interior of the main dwelling).”
100 Special Condition 4 provided:
“The Vendors shall have the right following possession at any time by giving one hundred and twenty (120) days’ notice to the Purchasers to require the balance of purchase moneys to be paid.”
The Transfer
101 The transfer was also dated 28 March 2002, and provided for the transfer by Mr and Mrs Humphries of all their estate and interest in fee simple in the land to themselves and Aileen Mary Sandri and Stephen Sandri as joint proprietors.[79]
[79]DCB 243
102 There was no explanation as to why the contract and the transfer differed in their description of the capacity in which the parties were registered.
103 On 5 April 2002, the Humphries and the Sandris became registered as joint proprietors of the property.
104 Mr Sandri said that if he had known that the title could revert to the Humphries he would not have entered into the arrangement.[80]
[80]T402
105 In April 2002, Mrs Sandri was diagnosed as suffering from cancer.
THE ING MORTGAGE
106 On 16 May 2002, the Sandris applied for a $150,000 loan from ING Bank (Australia) Pty Ltd (ING) to construct the house. The Humphries agreed to the property being used as security for the loan.[81] The Sandris made the loan repayments. The proceeds of the sale of the Sandri’s Altona home were also used to pay for the new house.
[81]T192
107 The Sandris paid approximately $342,000 for the construction of the house, but as stated, received $12,000 for the sale of the old building, which was removed by a purchaser.
108 On 24 July 2002, Mr Sandri, with authority from his wife and the Humphries, collected the original title to the property from Mr Boyle.[82]
[82]T665
109 On 19 August 2002, the Williamstown property was mortgaged to ING, which provided “a smart home loan offer” with a credit facility of $145,500 and a Visa credit card with a credit facility of $4500.[83]
[83]PCB 1066
110 On 24 March 2006 Mr Sandri varied the loan by splitting it into two loans of $72,500 each. [84]
[84]PCB 1925, T 269
The completion of the new home
111 While the new house was being built, the Sandris and two of their children and Mrs Humphries lived at the home of Mr Sandri’s father in Newport, except for occasional visits that Mrs Humphries made to relatives. Their son stayed with the O’Driscolls. Mr Frank Humphries stayed with friends and relations for most of that period, as there was limited room at the Newport home. There is evidence that he painted the interior of that home. Mrs Humphries helped with the running of the Newport home.[85]
[85]T770-771
112 On 1 October 2002, an occupancy permit was issued for the new house. The Sandris and the Humphries soon moved into it. The house was a two storey red brick veneer. The Humphries had a self-contained area at the rear of the property consisting of two bedrooms, a bathroom and a kitchen. Mr Humphries also had the use of a garage/ workshop.
113 On Sunday evening, 13 October 2002, a drunken driver drove into the front of the new house causing substantial damage. Mrs Sandri, who was being treated for cancer, ran out to the front of the house to see what happened and slipped and fractured her pelvis, thereby limiting her mobility.
114 Mrs Humphries was badly shaken by this incident and two days later was admitted to hospital. She died the following month on 6 November 2002.
115 Mrs Sandri and Mrs O’Driscoll were executors of their mother’s estate.
116 On 16 January 2003, Frank Humphries made a will which appointed Stephen Sandri and Paul O’Driscoll as his Executors.[86] It provided:
“I DIRECT my Trustees to forgive on behalf of myself and my Estate any liability due to me pursuant to a Contract of sale dated the 28th March 2002 made between myself, my late wife BETH AILEEN MARY SANDRI and STEPHEN SANDRI absolutely and DIRECT that should both AILEEN MARY SANDRI and STEPHEN SANDRI predecease me that this debt shall also be forgiven to their Estates or children.”
[86]PCB 181
117 The will also provided that, if the Sandris predeceased Mr Humphries, then he left the whole of his interest in the property to their three children.
118 On 4 September 2003, Aileen Sandri made a will leaving her estate to her husband. On the same day, Mr Sandri made a will leaving his estate to his wife.
119 On 18 September 2003, Aileen Sandri died as a result of cancer. She was 47 years old.
Events after Mrs Sandris’ Death
120 Mr Sandri and his three children and Mr Humphries continued to live in the new house. There was a common laundry for which Mr Humphries designed shelves.
121 The Humphries had received some home help and it continued after Mrs Humphries’ death.[87]
[87]T 803
122 Mr Sandri reduced his work hours to 3 days a week, with Thursday and Friday free to help with domestic duties. Sometimes, he and Mr Humphries would go out together for lunch.
123 In February 2004, the O’Driscolls moved into a house in Bayview Street. They built a new house on the land and moved into it in September 2007.[88]
[88]T767
124 Mr Humphries would often visit the O’Driscolls and have his meals with them. Other times he would cook for himself. He would often take their children to and from school.
125 There was some evidence from the O’Driscolls of a cooling of relationships between Mr Sandri on the one hand and Mr Humphries and the O’Driscolls on the other after Mrs Sandri’s death. There was evidence of a weekend in early 2004 when they attended the Barooga Races, during which there was little communication between Mr Sandri and the O’Driscolls.[89]
[89]T781
126 Mr O’Driscoll gave evidence of an animated discussion in about February 2004 between Mr Sandri and Mr Humphries that he overheard. Mr O’Driscoll was at the property helping Mr Humphries fix his car radiator. He was lying under the car when the conversation occurred. Mr Humphries said to Mr Sandri: “I need my money Stephen,” and Mr Sandri replied “my wife has just died, I’m not giving you any money, and you can do what you like with the house.” [90] Mr Sandri said that he did not recall that conversation and that he had never argued with Mr Humphries.[91]
[90]T888, 899,901-2
[91]T550
127 Mrs O’Driscoll gave evidence that her father no longer thought that the house was his home.[92]
[92]T788
128 Mrs O’Driscoll said that, after they moved back into Bayview Street, they had daily contact with Mr Humphries. She said that he had less and less contact with the Sandris.[93] Until late 2007, Mr Humphries went to medical appointments by himself. Mrs O’Driscoll then began to take him to appointments.[94] She also helped with his washing.[95]
[93]T783
[94]T787
[95]T801
129 Both of Mr Sandri’s daughters, Jayne and Sarah, who for most of the time continued to live at 30 Bayview Street, gave evidence of having a good relationship with their grandfather. There was some evidence of a sharp remark that one of them was said to have made to him and which they denied, but I generally accept their evidence on the issue of their relationship with their grandfather. There was some evidence that their relationship with their aunt, Mrs O’Driscoll, became less close from about 2007, particularly after the stop was placed on the ING account. It is unnecessary to go into the details of those matters, because they involve the subjective interpretation of parts of conversations and events and add nothing to the case.
130 On 20 September 2004, Mr O’Driscoll, with Mr Humphries’ authority, went to Mr Boyle’s office to collect the Humphries’ papers.
131 On 22 October 2004, Mr Humphries revoked his will of 16 January 2003 by making a new will. After making one bequest the will provided:
“I GIVE DEVISE AND BEQUEATH the remainder of my real and personal estate including in particular the contents of my garage and workshop and the debt due to me by my son-in-law STEPHEN SANDRI to my Trustee UPON TRUST
…
3. TO pay the residue to my daughter EILEEN ELLEN O’DRISCOLL…” [96]
[96]DCB 951
132 Mr Sandri, who as well as being a self-employed contractor worked as a professional cricket coach, was away overseas in Europe for four periods totalling about 18 months in 2005, 2006, 2007 and 2008. The periods were for 4-6 months each.[97] He worked as a cricket coach in Italy, where his father’s family lived and in Vienna. Sarah accompanied him on the first of the trips. While they were away, the older daughter Jayne Sandri lived in the house and provided some help in looking after Mr Humphries.
[97]T247-248 and Annexure B to Defendants’ submissions
Mr Blott
133 Mr Brendan Blott is a solicitor, who conducted a practice in Williamstown under the name Wilkens Roche. Mr O’Driscoll had known him for 25 years and he had long acted as his solicitor.
134 Mr Blott was not called to give evidence.
135 In September 2004, Mr Humphries told Mr O’Driscoll that he was having trouble obtaining documentation about the agreement concerning the house.[98] Mr O’Driscoll introduced him to Mr Blott, who commenced to act for him in early 2005.[99]
[98]T889,903
[99]T890
136 In early 2005, Mr O’Driscoll through Mr Blott arranged for Mr Humphries to meet Mr Boyle. Mr and Mrs O’Driscoll and their children also attended the meeting. [100]
[100]T817, 890-893, 907-909
137 According to Mr O’Driscoll’s evidence, Mr Humphries told Mr Boyle that he wanted more documents. Mr Boyle said “I’ve got some more documents for you, what’s next.” Mr Humphries told Mr Boyle that he was chasing $70,000, that was the deposit. Mr Boyle said that he could not help him with that and that he had never seen it.
138 Mr Boyle left the meeting and returned with a copy of Mrs Sandri’s will and of the contract of sale. Mr Boyle told Mr Humphries that because he was a creditor of the estate he was entitled to give him the documents. Mr Boyle said that under the contract $170,000 was due, to which Mr Humphries replied, “I know”. [101]
[101]T909-910
139 Mr Boyle could not recall this meeting.[102]
[102]T711
140 Mr Humphries requested Mr Boyle to tell the Sandris that he wanted his money and that “we’re going to follow up on the title”. Mr Boyle shrugged.[103]
[103]T912
141 Mrs O’Driscoll did not have much recall of the meeting. She said that her father did not understand what was going on with the contract and the agreement and he wanted to find out about them and about the money that was owing to him.[104]
[104]T823
142 Mr Humphries told Mr Boyle that the contract was correct, but the title had come out incorrect. Mr Boyle replied that correcting the title could be done in a number of ways and was easy. However, he could not do it because he was acting for the Sandris. Mr Humphries said: “Well, you tell the Sandris that I’m going to get it fixed.”[105]
[105]T892
143 Mrs O’Driscoll said that when her father found out about the joint tenancy, he could not understand how the whole thing had ended up in that manner and felt that he had no right to anything and had received nothing for the property. He said that he had received a couple of $1000 cheques and two other cheques for $1000 and $5000, which he had not banked.[106]
[106]T829-830
Mr Humphries meetings with Mr Blott
144 Mr Humphries attended a number of meetings with Mr Blott. Mr O’Driscoll, drove Mr Humphries to those meetings, but did not go into them. Afterwards, Mr Humphries told him what had happened.
145 At some point, Mr Humphries told Mr O’Driscoll that he was going to change the title. However the consent of ING, the mortgagee, was required.[107]
[107]T915-919
146 On 30 May 2005, Mr Blott wrote to Mr Boyle querying the basis of ownership of the property recorded on the title. He stated that he had sighted a copy of the contract of sale and that:
“A search of the title indicates, however:–
1. That the title vests in the 4 names on a joint tenancy basis which of course is contradictory to the Contract.
2. On what basis was the Transfer effected when there were no funds paid?
3. The Humphries are joint borrowers in regard to a Mortgage from ING Bank in respect of which they are both joint borrowers and joint debtors.
4. The sum only of $20,000.00 was paid under the terms of the Contract.
I should be pleased to receive your early comments herein and would note that Mr Humphries is somewhat concerned as to the outcomes, having regard to his understanding of the objectives of the original transaction.”[108]
[108]DCB 1496
147 On 25 July 2007, the ING Bank wrote to Mr Humphries under the heading, “We’d like to let you know about some changes” and stated in part:
“We’ve recently made some changes to the terms and conditions of your home loan and the loan offer. These will take place from 20th August 2007 and we’ve outlined all the changes in a table overleaf. To keep things simple, you’ll find a summary of some of the changes that may affect you below”[109]
[109]DCB 1499
148 Mr Humphries may have received another letter from ING about the accounts, of which he and Mr Sandri were named account holders.
149 Mrs O’Driscoll said that her father did not understand the content of the letters from ING and was unsure about the amount of money that it said owed. She made inquiries with ING and obtained records of all the accounts that were in her father’s name. She stated that she found out that ING loans were not a housing loan, but being used for ongoing living expenses.[110]
[110]T808, 854
150 On 10 October 2008, at her father’s request, Mrs O’Driscoll stopped the ING accounts using her Power of Attorney.
Mr Blott applies to the Titles Office
151 On 7 November 2007, Mr Blott made two applications to the Titles Office under the Transfer of Land Act 1958 in respect of the title for the Bayview Street property. The applicants were described as Mr Humphries and Mr Sandri. One application was made under s 50 by a surviving proprietor to be registered as the proprietor of the estate and interest in the land held jointly with the deceased Mrs Humphries and Mrs Sandri. The other application was made under s32 to change the interest of the registered proprietors to tenants-in-common in equal shares.[111]
[111]PCB 152-154
152 Mr Sandri had not authorised the application.
153 On 14 November 2007, Mr Blott wrote to the ING Bank seeking consent to the survivorship application and stating:
“I have been consulted herein and would advise the decease of the parties Aileen Elizabeth Humphries and Aileen Mary Sandri so that Francis Dean Humphries and Stephen Sandri are now the surviving proprietors of the land.
It is intended therefore, to register a Survivorship Application to reflect that change, It is also intended to rectify the title to record that the interests of the parties Humphries and Sandri should have been indicated as tenants in common in equal shares.
You will accordingly find enclosed, Section 50 and Section 32 Applications for endorsement of Orders to Register and due return.
Please telephone to advise your consent and production fee applicable herein.”[112]
[112]PCB1919
154 The Registrar of Titles granted the applications and a new title was issued on 29 February 2008 for the Bayview Street property describing Mr Humphries and Mr Sandri as registered proprietors as tenants in common each as to 1 of a total of 2 equal undivided shares.[113]
[113]PCB 159
Demands made on Mr Sandri
155 On 12 May 2008, Mr Peter Johnson, solicitor wrote to Mr Sandri on behalf of Mr Humphries demanding that the sum of $170,000, being the balance of the purchase moneys due under the contract, be paid within the next 120 days “to complete your obligations under the contract”. The letter did not demand the payment of the deposit of $70,000.[114]
[114]DCB 1604
156 Mr Sandri gave evidence that he did not receive that letter because he was overseas.[115]
[115]T227
157 Mr O’Driscoll gave evidence of speaking with Mr Sandri about the arrangements for the house on two occasions. The first occurred after the ING accounts were closed, when he went to have a beer with Mr Humphries as he sometimes did after work. As he walked past the front door, Mr Sandri came out and said “What are you doing to us?” Mr O’Driscoll replied “Well, do what you’ve got to do for Frank and I think everything will be all right.”[116]
[116]T892, 895
158 After Mr Humphries’ death, on the weekend that Ms Meg Jenkins was moving out of the house, Mr O’Driscoll spoke with Mr Sandri, who he said was “going on about his house”. Mr O’Driscoll reminded him that he was the executor of the estate and that his wife was “50 per cent on the title”.[117]
[117]T895
159 Mr Sandri gave a different version of his conversations with Mr O’Driscoll. He said that Mr O’Driscoll contacted him by phone shortly before the ING accounts were frozen[118] and said that that he owed $80,000 that had been paid by Mr Humphries for the construction of the house, that he (Mr O’Driscoll) already owned half the house because it was left to him via Mrs Humphries that he hadn’t paid $70,000 for the deposit and that he owed $170,000 for the purchase. He said that he would foreclose if he didn’t pay the money tomorrow.[119]
[118]T246
[119]T246
160 Mr O’Driscoll denied having such a conversation with Mr Sandri.[120]
[120]T896
161 On 17 October 2008, Mr Blott wrote to Mr Sandri enclosing a copy of Mr Johnson’s letter and stating:
“In the absence of that sum having been paid we advise that we have instructions to issue proceedings against you. In addition to the sum of $170,000.00 we will be claiming the amount of $70,000.00 being the deposit which was due and payable in respect of the Contract dated 28 March 2002 between the parties.” [121]
[121]DCB 1603
162 On the same day, Mr Blott wrote to Mr Boyle stating that Mr Humphries had no record of being paid the deposit of $70,000.[122]
[122]Part of Ex D
163 The ING accounts were Mr Sandri’s only access to obtain funds and he had deposited $4000 in them the day before they were frozen.[123]
[123]T51
164 When he received Mr Blott’s letter, Mr Sandri contacted Mr Boyle, who said that he would not be able to advise him further and that he should to go to the Titles Office.[124]
[124]T 53
165 On 21 October 2008, Mr Sandri went to the Land Titles office, obtained a copy of the title and learned of the alteration that had occurred in the description of the basis on which the registered proprietors held their interest in the land. He regarded the alteration as contravening his agreement or arrangement with the Humphries. He said that staff at the Titles Office advised him that, on face value, the application to amend the title appeared to be fraudulent and recommended that he report it to the police. [125]
[125]T 54-55
166 Mr Sandri said that he was in a state of shock and a short time later contacted the police.[126]
[126]T56
167 On 13 January 2009, Mr Sandri spoke to Mr Humphries about the alteration.[127]
[127]T241
168 On 25 January 2009, Mr Sandri made a statement to the police about the variation to the Title.[128] The statement referred to the “contractual agreement” of 2002 as in effect the basis of his right to be on the title. He stated that the property:
“ was registered under a joint proprietor structure so that upon the death of any listed person on title, the surviving parties would automatically acquire the estate, eliminating the risk of third party intervention.”[129]
[128]DCB 1011
[129]DCB 1012
169 He stated that he did not attribute responsibility for the alteration to the Title to Mr Humphries.[130]
[130]DCB 1011-1015
170 On 27 January 2009, Mr Sandri made a written complaint against Wilkens Roche Lawyers to the Legal Services Commission.[131]
[131]DCB 1002, 1577-1618
171 On 19 February 2009, when he was aged 85, Mr Humphries signed a handwritten statement prepared in an interview with a police officer who called at his home, presumably as part of investigating Mr Sandri’s complaint. Mr O’Driscoll sought to attend the interview, but he said that the police officer would not allow him to. In the statement, Mr Humphries said that he was not sure when he and his wife decided to sell the house to his daughter and her husband. He stated that Mr Sandri owed him money for the sale of the property. He had seen recently on a document that there was supposed to be a deposit of $170,000 and the remaining payment for the sale of the property to follow. He did not know anything about the change of the title for the house and was told by Mrs O’Driscoll that Mr Sandri’s ING account was stopped. He did not recall signing any legal documents to change the title.[132]
[132]PCB 1955, Ex 5
172 Mrs O’Driscoll said her father at that time was increasingly unwell.[133] Mr O’Driscoll said that parts of the statement were inaccurate.
[133]T847
173 Mr Blott was charged with offences arising from the applications to the Titles Office. He was convicted of the charges in the Magistrates Court, but on 16 August 2012, a Judge of this Court allowed the appeal and dismissed the charges.
174 On 15 April 2009, ING sent a letter to Mr Humphries stating that the account balance was over the approved limit by an amount of $783.35 and requesting payment to clear that amount. [134]
[134]Ex 4; T477
175 On 3 June 2009, Mr Humphries signed an assignment of his interest in the debt due under the contract of 28 March 2002 to his daughter, Elizabeth O’Driscoll under s 134 of the Property Law Act 1958.[135] The Recitals to the Assignment defined the debt as follows:
“ STEPHEN SANDRI of 30 Bayview Street, Williamstown, Victoria (called the ‘debtor’) is indebted to the donor for two hundred and forty thousand dollars ($240,000.00) under an agreement being a Contract of sale for the property at 30 Bayview Street, Williamstown dated 28 March 2002 (called the ‘debt’).
[135]DCB 992
Mr Humphries’ affidavit
176 On the same day, Mr Humphries, who was then aged 86, swore an affidavit on 3 June 2009 in connection with a proposed Supreme Court action. A notice under s67 of the Evidence Act 2008 was given in respect of that affidavit. It was admitted into evidence subject to deletion of various parts. The hearsay rule does not apply by reason of the operation of s 63(2)(b) of the Evidence Act, but the Court still has to determine the weight to be given to it. I consider that the appropriate course is to give it less weight on matters concerning the making of the agreement or understanding or the issue of payments made by Mr Sandri to Mr Humphries, because he could not be cross-examined.[136] The evidence establishes that he had little involvement in matters of family finances and had little understanding of the arrangement that had been reached with the Sandris. I will give the affidavit greater weight in respect of the demands for payments that Mr Humphries says were made of Mr Sandri, although they are also proved by other documents. I give little weight to any suggestion, that might be drawn from the affidavit, that Mr Sandri arranged for ING Bank statements to be sent to him, so that Mr Humphries would not learn details of the ING accounts. That suggestion was not part of the defendants’ case.
[136]Cf Lane v Jurd (No 2) [1996] NSWSC 5 at [15] and the other authorities referred to in Goddard Elliott v Fritsch [2012] VSC 87 at [50] – [69] and see Short v Crowley [2003] NSWSC 1158 at [8]
177 In his affidavit,[137] Mr Humphries stated that that some time in early 2000 his daughter and his wife raised with him in conversation that Aileen Sandri and her husband sell their property and buy half of the property at Bayview Street. He stated that he recalled in conversations with his wife that she was not keen to sell and felt pressured by Aileen and had to have the whole idea of the sale and moving into the flat persuaded to her. He said that his recollection was that his daughter “sold” the idea to his wife and him on the basis that by agreeing to sell half of their interest in the property at substantially below market price, so that the Sandris could afford to buy it, they would build a flat for him and his wife at the back of the property and pay all their bills and other expenses and look after their needs for as long as they lived.
[137]Ex 7, DCB 955
178 Mr Humphries stated that he recalled very clearly that one of the absolute conditions for his agreement to the sale was that he would retain the garage and the carport at the rear of the property for his wife and his own exclusive use. The garage was very important to him, as it was where he maintained a workshop and kept his tools. Many of his friends gathered there each afternoon. He also brewed his own beer and kept all implements and appliances in the garage.
179 The Humphries had looked at the possibility of moving into a retirement village in the Williamstown area, but he could not then have kept his workshop and tools.
180 Mr Humphries’ other clear condition of agreeing to sale was that their pensions not be affected by it. He and his wife in 2001 visited the Centrelink office in Werribee to find out the amount for which they could sell their property and not affect their pensions.
181 He did not recall actually signing the contract of 28 March 2002, but recalled attending the office of Mr Boyle for this purpose some time in early 2002. He stated that his wife handled all the financial affairs and he was not involved in the day to day management of the finances of the property. He could not recall receiving any money from the proceeds of the sale of the house or his wife mentioning having done so.
182 He stated that Aileen and Stephen Sandri had to obtain a loan, because they were not able to afford the purchase by their own means. He did not recall signing the mortgage documents, but recalled his wife telling him that they were going as guarantors for a loan, that Aileen and Stephen were obtaining it because they could not afford to buy without a loan. There was no need for him and his wife to borrow any money as they were receiving the flat at the back of the property in exchange for the cheap sale of half the property.
183 He stated that prior to his wife’s death he did not involve himself in their financial affairs, nor keep track of whether any payments were received. It was only after her death that he realised that there was no money at all coming into his account. His daughter, Mrs O’Driscoll informed him after his wife’s death that she could find no record in the bank statements of the deposit of $70,000 having ever been received by his wife and him. He did not believe that deposit was ever in fact paid. Because his daughter, Mrs Sandri was ill, he did not make an immediate demand for payment.
184 He stated that not long after his daughter, Aileen, died in September 2003, he asked Stephen Sandri to pay the deposit and balance of the purchase price. Mr Sandri did not dispute that no moneys had been paid. However, instead of agreeing to do so, he gave him a cheque for $1,000 which he banked. Mr Humphries asked for some more money in the same way a short time later and again received a further sum of $1,000 from Stephen, which he also banked.
185 In early 2007, he received a letter from the ING Bank advising of interest changes on his account. He was not aware that he had such an account or what the letter was about and gave it to Mrs O’Driscoll to attend to.
186 Mrs O’Driscoll informed him that she had made calls to ING on his behalf where she was advised that it had been discovered that variations had been made to the ING account, which was held in Stephen and his joint names. The letter had been sent to him by accident, as Mr Sandri had apparently arranged to remove his name and address from communications and arranged for all correspondence to go only to him.
187 In April 2007, he again asked Mr Sandri to pay all the moneys he owed as did his son-in-law, Mr O’Driscoll. By this time, Mr Sandri had stopped paying Mr Humphries’ bills and other expenses contrary to what had been agreed back in 2001.
188 At the beginning of May 2007, Mr Humphries received two cheques with a note stating that one was to use and one to rip up. He said he did not bank any of the cheques as he wished to be paid the whole amount which he was owed, rather than bits and pieces. Mr Sandri went to Italy at the beginning of May 2007. By late 2007, Mr Humphries still had not received payment of any money.
189 After that, Mr O’Driscoll, made demands of Mr Sandri and so did lawyers, who were engaged. He stated that he no longer talked with Mr Sandri other than to acknowledge him when they met, nor did he speak to any of his children.
190 Mr Sandri did not live at Bayview Street for all of 2009 because, a Ms Jenkins, who was a cousin of Mrs Sandri, lived there for a time and the house was a bit cramped.
Mr Humphries’ death
191 Mrs O’Driscoll gave evidence, which was supported by her diary entries, that she took her father to medical appointments between 2007 and 2009. He suffered from Bell’s Palsy. He had a fall in September 2007 and his health deteriorated, but he did not want to live in a nursing home.
192 Mr Humphries was admitted to hospital in October 2009 and when released stayed for a time at the O’Driscoll’s home.
193 On Christmas Eve 2009, an application was made to a Judge of the Court to have evidence taken from Mr Humphries as his death was imminent. The application was not granted and was adjourned.[138]
[138]T 43
194 Mr Humphries died on 3 January 2010.
195 Mr Sandri and his two daughters continue to live at the Bayview Street property.
Mr Sandri’s evidence of payments to the Humphries
196 Mr Sandri gave extensive evidence of payments that he claimed that he and his wife made to the Humphries under the agreement or understanding. This evidence was particularly relevant to the detriment that he claimed to have suffered by acting on the agreement or understanding. While the issue of the extent of payments made by the Sandris is not necessarily determinative of whether a proprietary estoppel has been established, it is important and in order to make findings on fact, it is necessary to refer to this evidence in detail.
The Red Book
197 Mr Sandri gave evidence about a notebook kept by Mrs Sandri and containing her handwriting, which was called the “red book” because that was one of the colour of its cover. He retrieved it from her belongings after her death.[139] He did not recall his wife mentioning the red book to him.[140] He said that she would not have deemed it necessary for him to know about the book because she maintained the family finances.[141] He wrote the words “Loan Payment Book” on the title page of the red book after his wife’s death.[142]
[139]T 372
[140]T 345
[141]T 346
[142]T 372
198 He said that the red book contained entries of payments that his wife had made to the Humphries from 1999. They had acknowledged some of the payments by signing two of its pages.[143]
[143]T 71
199 Mr and Mrs Humphries signed the third and fifth pages of the red book. Those pages list seventeen amounts of money, which are recorded against particular months in 1999, 2000 and 2001 and which total $32,150 The first entry is “July ’99 $500”. The fact that the Humphries signed these pages suggests that the they received the payments.
200 The three pages of the red book, immediately after the third and fifth pages, apparently followed on in date order from 28 March 2002 to August 2003. Those pages contained dates with payments recorded against them. Next to some, the word “(Mum)” was written and next to others, the word “(Dad). Other descriptions of payments included 4 Feb 2002 “½ architect’s fees $3000” and “20 March 2002 $285 rings”. Other amounts are recorded with the word “rates” and “bills”, “newspaper”, “gas”, “elect + connections”, “mum’s car rego”, “Tobin Brothers” and “ deposit headstone”.[144]
[144]The evidence suggested that Mrs Sandri received a refund from Mrs Humphries’ estate for the cost of the funeral see T496,671
201 Mr Sandri said that entries that did not have any notation beside them were cash payments that he knew were made.[145] He totalled these amounts at $73,344.[146]
[145]T 342
[146]T 351-352
202 Mr Sandri, in final submissions, relied on a number of tables listing payments that he said that he and his wife had made to the Humphries. One of the schedules concerned “deposits to the Humphries’ accounts”. The payments recorded totalled $7,365.00. He speculated that these were payments made to Mrs Humphries and deposited in her Bendigo Bank accounts e.g. the first entry in this schedule of $250 was said to be the entry of 16 August 2001 recorded in Mrs Humphries’ Bendigo Retirement Account.
203 These entries could not be precisely matched with the entries on the third and fifth to eighth pages of the red book. A number, but not all, of the cash payments identified on p 5 of this Schedule were amounts recorded as paid into Mrs Humphries’ Bendigo Bank account in months in respect of which a lump sum payment is recorded in the red book on the pages signed by the Humphries.
204 Mr Sandri said that his wife would have given her mother cash, which would have been recorded in her Bendigo Bank statements.[147] However, Mr Sandri never saw his wife make payments of cash to the Humphries. He said that from 1999 he and his wife reached an arrangement with the Humphries under which they would pay money to them.[148]
[147]T 77
[148]T 80
205 On the evidence presented, there is no real indication whether the payments recorded at p 5 of the Schedule were included in any of the monthly payments recorded on pages 1 and 3 of the red book.
206 The fourth page of the red book contains Mrs Sandris’ writing, including the words “Mobile phone – ongoing” and underneath that reference, the words “March: $12,000”. Mr Sandri did not know to what these amounts related. He did not recall them having mobile phones at that time.[149]
[149]T 294
207 On the last page of the red book are entries totalling $33,695. They include $20,000 for the car that Mr Sandri said that he purchased for Mr Humphries and others expenses that appear to relate to the construction of the new Williamstown house, including payments of $3,500 and $6,400 to “Joe” the architect. The last entry on that page appears to contain the words of Mrs Sandri: “gave up”.
208 Mr Sandri gave evidence that he purchased a Sonata motor car for Mr Humphries in 2001 for $19,750. He gave his wife a cheque drawn of the Commonwealth Bank and she and Mr Humphries attended at Max Kirwan Motorland and purchased the car.[150] I accept Mr Sandri’s evidence in that regard. Even though he had been unable to obtain his Commonwealth Bank statements, there were other documents, including the receipt for the purchase of the car[151] and the entry in the red book, that support his evidence on this issue.
[150]T 158,160, PCB 1132,1740
[151]T 158-159
Mr Sandri’s payments to Mr Humphries
209 Mr Sandri said that a few months after his wife’s death, he spoke to Mr Humphries and said that they would have to continue some sort of arrangement, meaning financial arrangement. He described things as fairly awkward at that time and it was some months later that they were able to come to an arrangement. Thereafter, at regular intervals that were satisfactory to them, he would pay money to Mr Humphries. The payments averaged $500 a month and were made about three times a year. Sometimes they were made just before Mr Sandri went overseas and also on his return.[152]
[152]T 152, 372
210 Mr Sandri gave evidence that under this arrangement, he gave Mr Humphries cheques and cash totalling $22,700 and made other payments on his behalf. He said that the first payments were cash. He identified various cash withdrawals in his ING account as cash paid to Mr Humphries.[153] He used the red book to record these cheque and cash payments. He recorded fourteen payments totalled $22,700. These entries appeared on page 9 of the red book under the heading “Frank”.
[153]T167-171
211 Mr Sandris’ Schedule of payments, that formed part of his final submissions includes a page headed “ Other Records of Payments Made For Or To Frank Humphries”. That page records amounts of $49,700 made up of the $22,700 recorded in the red book and an additional $27,000 said to have been paid by 14 cheques. These cheques were counted more than once in the plaintiff’s schedule of payments – thus the schedule containing the summary of relevant cheques paid out by Sandri Family included the cheques that make up the $27,000 said to have been paid to Mr Humphries. Some of the cheques that make up the $22,700 referred to above, may also be included in the $27,000.
212 Mr Sandri stated that the entries recorded under the heading “Frank” were made after his wife’s death. The first item recorded, was a payment of $500 for November/December 2003. This represented two monthly payments of $250.
213 Mr Sandri gave evidence that many of the payments that he made to Mr Humphries were by cheque, which were drawn either on the ING accounts or on Commonwealth Bank accounts. The Commonwealth Bank had been unable to provide relevant statements.[154]
[154]T 412
214 Mr Sandri relied on the words that he had written on cheque butts to prove that he had made payments to Mr Humphries. Some of the cheque butts had the name “F Humphries” written on them. Mr Sandri was not sure when he wrote on the cheque butts, but said that he did not record the payments when they were made.[155]
[155]T 493
215 Mr Sandri was cross-examined about these cheques. He said of the entries in the red book under the name “Frank” :
“ The entries are there in different dates and different biros, different. I don’t recall when I wrote them exactly because these are on or about these times.”[156]
[156]T 371
216 He also said:
“ They’re in different biros, different inks, so, for example, the one we just spoke about, October, December and February was in blue biro, the one after that is in black, the one before that’s in black. I didn’t have a specific time that I wrote them down, knowing that it was consistently an average of 5000 per month in total with, as I said earlier on , provided before I went overseas, when I returned from overseas, and around the Christmas period, and that’s consistently in that area.” [157]
[157]T171-172
217 He said that he would have made the entries within a month of making the payments. He had little recollection of the circumstances in which he wrote some of the cheques.[158]
[158]T157
218 I will first consider the cheques listed in Mr Sandri’s Schedule Page entitled “other Records of Payments Made For Or To Frank Humphries”.
219 ING Cheque 68 , dated 1 January 2004 for $1000.[159] Mr Sandri said in chief that that was a payment made to Mr Humphries for ongoing additional funding for him. There was no record of this cheque being paid into Mr Humphries’ accounts.[160] In cross-examination, when asked whether he still said that Mr Humphries received the proceeds of that cheque, he replied: “I can’t say that exactly.” [161] He also said that he “couldn’t be certain until he actually saw the cheque itself.” [162] He could not recall when he wrote “ F Humphries” on the cheque butt.[163]
[159]PCB 341, 955
[160]T151
[161]T482
[162]T489
[163]T493
220 ING Cheque 93 dated 10 March 2004 for $1000 was presented. He said that he handed the cheque to Mr Humphries,[164] and it was presented.
[164]T153,492 and PCB 347
221 CBA Cheque 253 dated 1 October 2004 for $1000. Mr Sandri gave evidence that he would have given it to Mr Humphries, but he had no independent recollection of the matter. [165]
[165]T161,PCB 1157
222 ING Cheque 134 dated 15 November 2004 for $1000 was not paid into Mr Humphries’ accounts. Mr Sandri gave evidence that he did not recall giving that cheque to Mr Humphries.[166] The cheque butt was changed from $4000 to $1000. He did not recognize the writing deleting, or altering the amount.[167] He was asked in cross-examination if he still said that the debit of $1000 on his account by cheque 134 was a payment to Mr Humphries and he said: “I don’t know exactly” and “I don’t know in this case” and “Yes. I ‘d need to look at the cheque, yes.”[168]
[166]T153, PCB 351
[167]T502
[168]T480-481,505
223 ING Cheque 142 dated 15 March 2005 for $5000 was not paid into Mr Humphries’ accounts. Mr Sandri could not recall writing that cheque.[169] When asked in cross-examination whether he still said that he drew Mr Humphries a cheque for $5000, he answered: “I don’t recall that”.[170]
[169]T154, PCB353
[170]T483
224 ING Cheque 153 dated 2 June 2005 for $1000. That cheque was presented on 18 April 2006. He said that he wrote out many cheques for that sum, but he did not recollect exactly that particular cheque.[171]
[171]T155
225 ING Cheque 166 dated 18 April 2006 for $1000. That cheque was presented and paid into Mr Humphries’ accounts. He did not recall it specifically but said that it was in accordance with the arrangement that they had in place.[172]
[172]Ibid, PCB 359
226 CBA Cheque 260 18 April 2006 for $1000. Two cheques for $1000 were drawn, but only one for $1000 was deposited into the account of Mr Humphries.[173]
[173]T165
227 ING Cheque 170 dated 20 May 2006 was a cheque $1000. This cheque was presented on 14 June 2006, but not deposited into Mr Humphries’ accounts.[174] In cross-examination when asked whether he was able to say whether that cheque was drawn in favour of Mr Humphries, Mr Sandri answered “No”.[175]
[174]T156,512, PCB 360
[175]T483
228 CBA Cheque 265 of 14 September 2006 for $1000 was deposited into Mr Humphries’ account.[176]
[176]DCB364W,PCB1169
229 ING Cheque 176 dated 6 March 2007 for $1000. There was no record of that cheque being presented on Mr Sandri’s account or credited to Mr Humphries’ account.[177] When asked whether he was mistaken in asserting that he had drawn it payable to Mr Humphries, he said “I don’t know”.[178] There appears to have been another cheque for $1000 paid into Mr Humphries’ account on 15 September 2006, which may have been dated 6 March 2007. How this could have occurred was not explained.
[177]T484
[178]T484, 513, PCB 362
230 CBA Cheques 285 and 286[179] of May 2007 were for $5,000 and $1,000 respectively. Neither was deposited. Mr Sandri said that he gave them to Mr Humphries but they were never presented. He recorded those as paid in the red book. He left these cheques because he was going overseas and Mr Humphries was considering taking a trip with his brother on the Ghan train, which would have required the $5,000 cheque.[180] The original cheque for $5,000 was tendered in evidence by the defendants.[181]
[179]PCB1189,1190
[180]T163-164, 972,1019
[181]Exhibit 3
231 Mr Sandri put the two cheques in an envelope as he was leaving to go overseas and wrote on the front:
“FRANK
Sorry, I had to leave.
Use one of the cheques inside.
Look after yourself.”[182]
[182]Exhibit 3
He enclosed a note which stated:
“ Dear Frank,
Here are 2 cheques.
Choose one & rip up the other.
Spoke with P. Boyle, however, he has not got back to me as yet.
I will have to contact him from overseas.
Take care
Stephen”[183]
[183]DCB 953
232 The three $2,000 payments for October 2007, December 2007 and February 2008 that Mr Sandri recorded in the red book, were the first payments recorded after 1 May 2007. That was the date of the two cheques for $5,000 and $1,000 that Mr Sandri left for Mr Humphries when going overseas. Mr Sandri gave evidence that he did not intend that Mr Humphries would bank both the cheques.[184]
[184]T 171, 310
233 ING Cheque 189 of 5 May 2007 for $6000 was not presented or deposited into Mr Humphries’ accounts. Mr Sandri said that he did not recall writing a cheque for $6000 to Mr Humphries.[185] When asked in cross-examination whether that cheque recorded any such payment to Mr Humphries he said: “I don’t know, but I don’t recall a cheque for $6000 to Frank” and “I don’t recall giving a cheque for $6000 to Frank”.[186]
[185]T157-158, 485
[186]T 485-486
234 During the period during which the Sandris’ payments are said to have been made their combined taxable income, or Mr Sandri’s income varied between $124,153 in 2001 and $28,769 in 2009.[187] The defendants argued that the plaintiff did not have the funds to pay the amounts that he claimed that he had made.
[187]T 263, Ex 1
The cost of the new house
235 The Sandris paid for the construction of the new two storey home. The construction costs were about $342,000. As previously stated, Mr Sandri received $12,000 from the purchaser of the old house upon its removal.
236 The red book contained records of payments for the new house. There were recordings of architects’ fees, solicitor’s fees and stamp duty that the Sandris paid.
237 Much of the expenditure related to the new house was listed in the Schedule entitled “Summary of Relevant Cheques Paid Out by Sandri Family”, which was part of Mr Sandri’s final submissions. It included, insurance, payments for timber and carpet and to a business “M V Interiors”, payments to the draftsman, for fencing and payments to Citiwest Rentals.
The budget book
238 Mr Sandri also gave evidence about an exercise book that his wife kept as the family budget book to record expenditure.[188] He said that a number of the entries in that book were for expenditure for Bayview Street. The amounts in the book were paid to, or on behalf of, the Humphries.[189] The book appeared to contain few entries recording payments that the Sandris had made to the Humphries. A number of the payments related to expenses incurred for the Sandri’s Altona property.
[188]T 84
[189]T 384
Rates and Utility Payments
239 The red book has pages recording payments said to be for rates and utilities. The amount of utility and rates payments recorded in Mr Sandri’s schedule total approximately $38,000.
240 Mr Sandri recorded the details of utility bills paid for the Williamstown property on pages of the red book headed “Utilities” as part of preparation for trial. He did this after his wife died relying on information in the accounts in his possession.[190]
[190]T 332−333, 370
241 Mr Sandri did not know if they had paid rates or utilities for the Humphries prior to 2002.[191] He gave evidence that he paid the gas, electricity and water bills for the property after they moved in.[192]
[191]T 380
[192]PCB 1517-1675
242 I have previously referred to Mr Sandri’s evidence of a supplementary arrangement he said was made in about March 2002 with the Humphries under which the Sandris would pay all the utilities bills as part payment of the balance of the purchase price of $170,000 due under the contract.[193] The payments recorded in the back of the red book were the annual charges and not a list of the payments actually made on a quarterly basis. Mr Sandri said that he listed them to show that he and his wife had kept their arrangement to pay for the utilities [194]
[193]T 374, 380- 382, 397-398
[194]T 374
243 The payment of the utilities bills had not been discussed in 1999. There were no record of any rates for any time prior to 28 March 2002 in the red book.[195]
[195]T378
244 Mr Sandri could not have recorded some of the utility bills contained in the red book, at the time they were paid because he did not have the red book in his possession until after his wife’s death in September 2003.
245 The utility payments recorded in the red book were not reduced to acknowledge that the Sandris also lived at the property. The Humphries’ unit occupied a quarter of the floor area of the house. Nor was allowance made for the fact that Mr Humphries was entitled to pay his share of the utility charges at the pensioner concession rate.
246 Ms Margaret Jenkins, who was Mrs Sandri’s cousin and who stayed at Bayview Street on two occasions between June to September 2007 and February 2009 until early 2010, including while Mr Sandri was overseas. In those periods Ms Jenkins paid the gas, electricity and water rates in respect of the property.[196] Mr Sandri’s calculations made no allowance for that.
[196]T 746-747, T248
Submissions concerning Mr Sandri’s claim
247 Mr Sandri contends that Mr O’Driscoll as Mr Humphries’ personal representative is estopped from denying that he holds his interest in the property as constructive trustee for him, because of the 1999 agreement or understanding. He relies on what he describes as Mr Humphries’ unconscionable conduct in severing the joint tenancy. He relies on the discussion in the Court of Appeal decision in Donis v Donis[197]of the remedies that are available where a proprietary estoppel is established.
[197](2007) 19 VR 577
248 He submitted that the evidence established the reaching of an agreement or understanding between the Humphries and the Sandris or the giving of an assurance, that he and his wife acted in reliance on it and that he would suffer detriment if the first defendant could depart from it.
249 He submitted that once a party demonstrated that it had changed its position it does not have to prove affirmatively the causal link between its actions and its belief or expectation.
250 The Sandris had taken a number of steps in reliance on the agreement or understanding as reached.
251 The agreement or understanding in essence was reached in 1999 and the Sandris had done all that was required of them under it. Mr Boyle had given credible evidence that all the parties were willing participants in the arrangement.
252 Mr Sandri contended that that he and his wife had made substantial payments to the Humphries in accordance with the agreement or understanding. Mrs O’Driscoll conceded that she did not doubt the authenticity of the red book, where entries were signed or countersigned by her parents.
253 The terms of the contract were never the complete story of the legal relationship between the Sandris and the Humphries. For instance the contract and the drafts contemplated the construction of a granny flat as per “agreed plans and specifications, a copy of which is annexed”, but that proposal had been abandoned and a decision made to construct a new house. The contract did not address the position that the parties had reached at the time it was signed. Between 1999 and 2002, the parties acted in furtherance of the agreement or understanding. The contract must have been used as a matter of convenience for the purposes of affecting registration of the Sandris on the title.
254 If the parties wished to preserve the right to dispose of an interest in land for instance by a will, they would have been registered on title as tenants in common.
255 The defendants relied on their indefeasibility of title as sole proprietor of 1 of 2 equal undivided shares as tenants in common under s42 of the Transfer ofLand Act 1958.
256 They relied on the contract of 28 March 2002, which they said was plainly inconsistent with the terms of the constructive trust or assurance or agreement on which Mr Sandri relied. The contract was the best available evidence of the arrangement or understanding reached by the Sandris and the Humphries. Mr Sandri signed it voluntarily after having had the opportunity of obtaining legal advice.
257 No proprietary estoppel was established. There was no representation that the terms of the transfer were immutable or that the joint tenancy could not be severed.
258 The defendants referred to the presumption of tenancy in common, which is often applied see Stassinopoulos v Stassinopoulos[198] and s33(4) of the Transfer of Land Act 1958.
[198][2011] VSC 647 at [21] –[31]
259 The plaintiff’s evidence was vague and did not support the existence of an agreement or understanding. The parties had considered a range of proposals and the various forms of the draft contracts showed that there was never an arrangement set in stone, until the contract of 28 March 2002 signed. The plaintiff’s case, which was based on an agreement or understanding reached in 1999, was not established.
260 Until Mr Boyle raised the possibility of the sale by the Humphries to the Sandris of a half interest in the Bayview Street property for a reduced price, the Sandris apparently had expected to purchase the entire property for a higher price.
261 The Humphries did not encourage or induce the Sandris to enter into the contract. The Sandris did not rely to their detriment upon statements or assurances made to them by the Humphries.
262 Mr Sandri had not established that he had carried out his part of the bargain. Mrs Humphries performed household duties at Newport. Mr Sandri did not care for Mr Humphries and he was away much of the time overseas. Mr Humphries was independent until late in life.
263 Mr Sandri had not given reliable evidence as to the meaning of the entries recorded in the red book, but had speculated about their meaning. The red book did not accurately record the combination of cash and cheques that Mr Sandri asserted that he had made. It was just as likely that the red book contained Mrs Sandri household budget for her parents, in a similar manner to the budget that she kept for her own household
264 The evidence at best showed that Mr Sandri paid Mr Humphries four cheques of $1,000 each, which were presented and paid into his bank accounts. His assertions about the cheques affected his credibility as a witness. Much of the writing in the red book was inserted to prepare for the trial.
265 The only other specific payment that Mr Sandri could prove was the payment of about $20,000 to purchase a car for Mr Humphries.
266 A reasonable approach would have attributed a quarter of the utility bills to the Humphries’ use.
267 The Sandris were obliged to pay the Council rates and the insurance for the property because of the terms of Special Condition 3 of the contract.
Conclusions on the plaintiff’s claim
268 I am required to decide the rights of the parties by reference to the issues raised by the pleadings.
269 The plaintiff has not proved the agreement or understanding that is pleaded.
270 The evidence does not support the conclusion that in 1999 or at any later time, the parties reached an agreement or understanding in the terms pleaded.
271 The evidence does support the conclusion that the Sandris expected to move into the new home and expected to continue to live there after the Humphries died. That is why they sold their house and obtained finance for, and permission to build, the new house. That finance of course was obtained, at least in part, on the security of a mortgage over Bayview Street.
272 However, those actions have to be considered in the context of the contract of 28 March 2002, which represented the outcome of months of discussion between the parties, with the assistance of their solicitors. The contract does not cease to have effect because no building plans were attached to it. The parties’ building plans were contained in the building contract signed by the Sandris earlier in March 2002.
273 This case cannot be answered by simply stating that the fact that the parties signed the contract answers everything. The contract, also, has to be seen in the context of the discussions and consideration that preceded it. The reference in the contract to the deposit being paid, acknowledges the parties’ previous dealings, including the payments made by the Sandris to the Humphries. The contract also has to be read in conjunction with the building contract. The contract, itself, does not deal directly with the construction of the new house.
274 The joint tenancy, provided for in the transfer, provides some support to the plaintiff’s position, but its inconsistency with the contract makes its effect equivocal. Mr Sandri’s shock at finding out that the joint tenancy had been severed is evidence of his understanding of his position.
275 However, Mr Sandri’s expectations and understanding of his rights do not decide the matter. He did not argue that the contract of 28 March 2002 was a sham and the evidence would not support such an argument. Nor does the evidence support a conclusion that the contract was used as a matter of convenience for the purpose of obtaining registration of the Sandris on the title. Under the contract, the Sandris obtained a half interest in a property that was worth more than the value of their Altona property. On the other hand, they constructed the new house for an amount that was greater than half the value of the Bayview Street property. But they were able to live in the new home, which occupied considerably more of the property than the Humphries’ unit.
276 The actions of the parties, when considered objectively, in entering into the contract lead to the conclusion that the arrangement that was reached was not to be found in the many discussions that occurred between 1999 and 2002. Rather its essence was to be found in the contract. The parties, having considered the option of the sale of all the legal interest in the property, decided that only a half should be sold and purchased. That decision may well have been caused by the effect that the sale of the entire property could have had on the Humphries’ Centrelink payments, but, if that was the reason, it does not alter the legal effect of their action.
277 Although the Humphries were registered as joint tenants, they were able to apply to sever the joint tenancy: see Property Law Act 1958 s225. They could demand the balance of the purchase price. The Sandris were to pay the rates and insurance. They also paid the utility bills and made some payments to the Humphries and later Mr Humphries.
278 Although many family arrangements are not intended to be legally enforceable, the evidence, viewed objectively, supports the conclusion that the contract of 28 March 2002 was so intended.
279 The Humphries’ right to enforce the contractual obligations and sever the joint tenancy could, of course, be prevented if Mr Sandri could establish a proprietary estoppel.
280 But the agreement or understanding on which the proprietary estoppel which Mr Sandri relies is based, is not supported by the position that the parties appear to have reached when they signed the contract. I say “appear” in recognition of the fact that three of the four participants in the discussions are dead. The absence of their evidence, particularly of Mrs Humphries and Mrs Sandri, is significant when the Court is required to make findings about the evidence of the agreement or understanding that was reached.
281 The evidence supports the finding that no agreement or understanding was reached in 1999. At that time the no settled position had been reached. This is clear from the fact that up until 2002 the proposal under consideration was for the sale of all of the property. Mrs Humphries’ will of 18 May 2001 suggests that she did not consider that she had relinquished any of her rights in the property. Mr Sandri’s statement to police says that a contractual agreement was made in 2002.
282 Turning from these general findings and observations, it is necessary to make findings, on the evidence, about the matters that Mr Sandri has to prove to establish a proprietary estoppel. They are:
(a) he and his wife were induced by the Humphries’ conduct to assume, or have an expectation, that they would acquire an interest in their land, including by reaching an agreement or understanding to that effect;
(b) that they did rely, or act in reliance on that assumption or expectation;
(c) that he has suffered detriment as a result of that reliance.
283 In Walton Stores (Interstate) Ltd v Maher[199], Mason CJ and Wilson J stated:
“[A] person whose conduct creates or lends force to an assumption by another that he will obtain an interest in the first person’s land and on the basis of that expectation the other person alters his position or acts to his detriment, may bring into existence an equity in favour of that other person, the nature and extent of the equity depending on the circumstances.”
[199](1988) 164 CLR 387 at 404
284 Proprietary estoppel provides a remedy in order to prevent unconscionable conduct by a party who, having made a promise to another who acts upon it to his detriment, seeks to resile from the promise: see Giumelli v Giumelli.[200]
[200](1999) 196 CLR 101 at 112-113, quoting Brennan J in The Commonwealth v Verwayen (1990) 170 CLR 394 at 428-429
285 The Court of Appeal in Donis v Donis[201] decided that where the expectation encouraged by the defendant is the acquisition of an interest in property, the remedy available to the plaintiff relates to the understanding of the parties and the expectation that has been encouraged. Prima facie, the estopped party can only fulfil its equitable obligation by making good the expectation which it has encouraged. The estopped party, having promised to confer a proprietary interest on the other party and the latter having acted upon the promise to their detriment, is bound in conscience to make good the expectation.
[201](2007) 19 VR 577
286 I accept and find that Mr Sandri has proved many the factual matters pleaded as part of his case. These matters include those relating to the sale of the Altona property and the construction of the new home on the Bayview Street property. The matters that he has not proved are that the Sandris would become joint proprietors of the Bayview Street land with the Humphries and upon their death would become surviving proprietors of the whole land. I also do not consider that Mr Sandri has proved that he did assist or care for Mr Humphries to any significant extent in his later years, at least in part because he was overseas for significant periods.
287 The plaintiff has not established that the agreement or understanding as detailed in the statement of claim and which involved the 10 elements set out above was reached in 1999, or at a later time. Until the signing of the contract there were unfinalised discussions about selling all the house to the Sandris. In the nature of family relationships these discussions meandered and drifted for a time. The Sandris sought unsuccessfully to obtain permission to redevelop the existing house, sold their own home and the Humphries sought to ensure that any payment that they received under the contract would not affect their pension entitlements.
288 The contract, when viewed objectively, set out the arrangement for the transfer of an interest in the property to the Sandris. It was prepared against the background of the family discussions that occurred. The statement contained in it that the deposit was paid, when no payment had been made in the manner set out in the contract, suggests that the parties considered carefully the rights and obligations that existed between them.
289 The plaintiff has not established that the Humphries gave the assurance or created the expectation on which he relies. The evidence does not establish that the parties entered into an agreement or reached an understanding in 1999 as he alleges.
290 I take into account that four people were parties to the dealings about the property and only the oral evidence of one of them, Mr Sandri was before the Court. This requires that close consideration be given to the evidence that concerns their dealings.[202]
[202]Sacks v Klein [2011] VSC 451 [32] and Short v Crawley [2003] NSWSC 1158 [8]
291 The evidence does not establish that the Sandris acted on any agreement or understanding other than was contained in the contract. They were as much involved in the negotiation of the contract as were the Humphries. Perhaps, if Mrs Humphries or Mrs Sandri had lived, the terms of that contract providing for the payment of the balance of the purchase price, may not have been enforced, or the joint tenancy severed, but the contract did create legal rights.
292 In respect of the issue of reliance, Mr Sandri has not proved that he made the payments to Mr Humphries that he claims. His evidence on this issue is not entitled to much weight and involved at least some exaggeration and speculation. By way of example, he claimed that payments were made when Mr Humphries had not banked them e.g. his evidence concerning the two cheques totalling $6,000.
293 The Sandris were bound by the contract to pay rates and insurance in respect of the building.
294 On the evidence set out above, I find that the Sandris had made the following payments to the Humphries. There was the $32,000 set out in the red book and acknowledged by the Humphries’ signatures. There was the $19,785 paid for the car. Those payments may explain why the $70,000 deposit was described in the contract as having been paid.
295 After the signing of the contract, Mrs Sandri may have made some further payments to her mother, being some of the amounts recorded on pages 5 to 8 of the red book in 2002 and 2003. But save for a few payments which are noted as “Mum” or “Dad”, he has not proved the amount of such payments.
296 There is some evidence that the Sandris may have paid some cash payments to Mrs Humphries, which she deposited into her Bendigo Bank account, but the evidence does not support the conclusion that they were paid pursuant to the agreement or understanding relied on by the plaintiff.
297 I find that after the deaths of Mrs Humphries and Mrs Sandri, Mr Sandri paid the rates and utility bills totalling about $38,000 of which about a quarter could reasonably be attributed to the area of the property used by the Humphries. Mr Sandri has paid the insurance payments and CounciI rates, which were an obligation under the contract.
298 So far as the amounts Mr Sandri claims to have been paid to Mr Humphries are concerned, he was unable to prove that most of them were paid to Mr Humphries and deposited in his account. No original cheques were produced. The only cheques shown by the evidence to be deposited into Mr Humphries’ bank accounts were: two cheques for $1000 of 18 April 2006, a cheque for $1000 of 14 September 2006, and a cheque for $1000 of 15 September 2006. These total $4,000. There may have been another one or two cheques for $1,000 paid e.g. ING cheque 93, but the total of the cheques paid to Mr Humphries which he deposited have not been proved to exceed $6,000.
299 I find that the Sandris did pay for the construction of the house and made a number of payments in connection with the new house e.g. for garden supplies. But they obtained a half interest in the property which in 2011 was valued at $775,000.
300 The plaintiff has not acted to his detriment in a relevant sense. The payment of the construction costs and rates, insurance and utility bills has enabled him to live in the house for 10 years. He has sold his house, but now owns half a property of considerably greater value than his previous home. He is obliged, as I find below, to pay a further $170,000 in respect of his interest in the property.
Alteration of title
301 Mr Sandri argued that that conduct of severing the joint tenancy taken by Mr Blott on behalf of Mr Humphries was unconscionable and in breach of his expectations. Mr Sandri’s shock when he found out what had occurred demonstrates his expectations about the continuance of the joint tenancy. The shock may also have been caused by the manner in which the alteration of the title occurred and by the fact that he received no notice and was wrongly described as an applicant.
302 Accepting all of that, when all of the parties’ dealings are considered, Mr Sandri did not have an enforceable right to maintain his position as a joint proprietor and Mr Humphries had the right to sever the joint tenancy, at least under the provisions of the Property Law Act.
Conclusion on the plaintiff’s claims
303 The plaintiff’s claims have not been established.
COUNTERCLAIM
The deposit of $70,000
304 Mrs O’Driscoll, the second defendant’s case was that the Sandris had not paid the deposit of $70,000 required by the contract. She sued as assignee of the debt. She argued that Mr Sandri had not given evidence that he had paid the deposit. The contract was only prima facie evidence of payment and was rebuttable by proof of non-payment, or other evidence in contradiction: see Cousens v Grayridge Pty Ltd.[203]
[203][2000] VSCA 96 [ 58]
305 The second defendant pointed to the fact that on or about 26 February 2002, Mrs Sandri seemed to have instructed Mr Boyle that some $40,000 had been paid. In May 2005, Mr Humphries’ instructions to Mr Blott were that $20,000 had been paid.
306 The second defendant argued that the evidence did not support the conclusion that $70,000 deposit had been paid. The procedure for the payment of the deposit set out in cl 6.2 of the contract had not been followed. Clause 6.2 of the contract stated:
“ The Purchaser must pay the deposit:-
(a) to the Vendor’s Estate Agent or, if there is no Estate Agent to the Vendor’s Solicitor; or
(b) if the Vendor directs, into a special purpose banking account specified by the Vendor in the joint names of the Purchaser and Vendor.”
307 Mr Sandri stated in his complaint to the Legal Services Commissioner that he had paid the sum of $70,000 as listed in the contract. [204]
[204]DCB 1002
308 Mr Sandri pointed to the fact that in 2004 when the Humphries’ interests received a copy of the contract from Mr Boyle, they did not complain about the statement contained in it, that $70,000 had been paid. Mr Johnson’s letter of demand contained no suggestion that the $70,000 deposit was owing.
309 He agreed that he had received the $12,000 for the previous house that was removed from the property. That payment, strictly speaking, belonged to the Humphries.
Conclusions regarding the deposit
310 There was no argument put suggesting that Mrs O’Driscoll could not sue as assignee of Mr Humphries’ rights to the debts owing under the contract. The assignment appears to comply with the requirements of s 134 of the Property Law Act 1958[205] and I proceed on the basis that it does. In any event, even if the assignment was not enforceable, then Mr O’Driscoll, as personal representative, of Mr Humphries would have been able to sue for the debts owing under the contract.
[205]Young, Croft and Smith, On Equity, pps 693-699
311 The second defendant has not proved that the plaintiff owes her the sum of $70,000. The onus of proof lies on her. The contract says that the Sandris have paid it. I have found that the Sandris made payments for and on behalf of the Humphries before the contract was signed of alt least $50,000. Those payments provide a possible explanation for the statement contained in the contract about the deposit.
312 The defendants have not established that the deposit of $70,000 is due and owing. The contract says what is says and with three of the four parties dead it is difficult to go beyond the acknowledgement about the deposit contained in it.
313 The fact that Mr Humphries, as demonstrated by his affidavit, thought that the Sandris had not paid the deposit is not decisive. I have given reasons above as to why I do not consider it appropriate to give much weight to Mr Humphries affidavit or police statement concerning the terms of the arrangements that were made with the Sandris. Mrs Humphries handled the family finances and from Mr Boyle’s note of instructions, it is apparent that she thought some amount had been paid.
314 The second defendant’s claim for the payment of the deposit of $70,000 has not been established.
The balance of the purchase price
315 The payment of the balance of the purchase price was dealt with under Special Condition 4. The vendors had the right following possession, at any time, by giving 120 days notice to the purchasers to require the balance of the purchase monies to be paid. The contract also provided in Special Condition 2 that the balance of the purchase price may be paid at any time following possession of the property provided that it shall be not later than twelve months after the death of the last surviving vendor. That date would be 3 January 2011.
316 The evidence suggests that Mr Boyle advised the parties that Special Condition 4 represented a safeguard in case the Humphries did not wish to proceed with the arrangement.
317 The second defendant relies on the demands made to Mr Sandri in Mr Peter Johnson’s letter of 12 May 2008 and in Mr Blott’s letter of 17 October 2008. At least, Mr Johnson’s letter is a valid demand under Special Condition 4. Alternatively, under Special Condition 2, the balance of purchase price was due to be paid by 3 January 2011 i.e. a year after the death of Mr Humphries.
318 The defendants submitted that there was no evidence that the balance of the purchase price of $170,000 had been paid by the Sandris. Mr Humphries made demands for payment by about 1 March 2004. Mr O’Driscoll heard a conversation in which Mr Humphries demanded the payment of moneys owing under the contract. The plaintiff’s complaints to the Legal Services Commissioner and in his police statement admit that the $170,000 had not been paid.
319 Mr Sandri argued that under the supplementary arrangement, all the payments that he or his wife made for the benefit of the Humphries went towards the payment of the $170,000. He relied on the payments that he said had been made. He relied on the cost of building the new house and additional payments for floor coverings, blinds, curtains and landscaping. He submitted that it was never intended that the balance of the purchase price would be paid in cash, because such payments might have affected the Centrelink payments received by the Humphries.
320 Mr Sandri gave evidence that he and his wife could have been run over on “day two” and the Humphries could still be living there “for another 30 years”[206] He said:
“I’m just saying that there wasn’t a period of time – a determinal period of time that this was an item to be paid in a lump sum, it was a combination of these outgoings that were contributing to that figure in the contract. So how can you put it? The way the cards fell, so to speak, would determine exactly how much money would be paid at a given time. So if it was – you know, as it turns out now, the way the cards have fallen, is that you can sort of identify a timing to it. But once we walked out of that office – Mr Boyle’s office with that contract, there was no date or a lump sum to be paid, so as time went on, the payments, as it turns out when the accounts were frozen and this has commenced, it just happened to be around 170,000 was the amount paid in that context. But, as I said, the agreement was between four people, that it wasn’t a situation where – it wasn’t a business transaction or an investment transaction, it was incorporating living under one roof with a couple of particulars that were going to protect each side. It wasn’t a formal contract per se addressing everything, when people were going to pass away or die or how he cards fell, that was never to be known a the time, and of course I would never have entered into this agreement, as I’m sitting here now, knowing that some period afterwards that your family home is going to be in question, at risk, or whatever the description is.”[207]
[206]T 402
[207]T 402
321 He said that his statements in the Police statements and Legal Services Commission did not convey the actuality of how the payments were made.[208]
[208]T 375
Conclusion on the balance of the purchase price claim
322 The second defendant has proved her entitlement to a judgment against the plaintiff for the $170,000, being the balance of the purchase price.
323 I am satisfied that the rights given to the Humphries under Special Condition 4 were legally enforceable. It may be, that in the nature of contracts between family members, if Mrs Humphries and Mrs Sandri had lived longer, a demand for the balance of the purchase price may never have been made. Mr Humphries, in his will of 2003 forgave the debt, but then revoked that will. Special Condition 4 was in the nature of a safeguard condition that could be enforced. It is to be contrasted with the deposit which, although not paid by a payment under the contract, was taken to have been paid.
324 A demand for payment of the $170,000 was made in Mr Johnson’s letter. In any event the payment is owing under Special Condition 2.
325 The supplementary arrangement of March 2002 upon which Mr Sandri relies as providing a process whereby payments made for other purposes were to be attributed to the payment of balance of the purchase price has not been pleaded or proved. Mr Sandri has not established that he paid any significant sum to the Humphries after the contract was signed that could be regarded as part of the purchase price.
First Defendant’s alternative claim – the joint venture claim
326 The first defendant’s alternative claim under the counterclaim was that the parties were joint venturers in respect of the joint relationship or endeavour involving the entry into the half purchase share agreement. The substratum of the joint venture had collapsed and as a result the whole of the property was held on a constructive trust for him subject to a charge.
327 The first defendant contended that it was a substratum of the joint relationship that the Humphries would be content to reside, for as long as they lived or were able to do so, in close proximity to the Sandris. That substratum had been removed without attributable blame as Mr Humphries, or presumably his personal representative, no longer was content, or could be content to do so.
328 The defendants rely on the principle stated by Deane J in Muschinski v Dodds[209] that:
“Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purpose of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that that other party would so enjoy it. The content of the principle is that, in such a case, equity will not permit the other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so…”[210]
[209](1984) 160 CLR 583
[210](Supra) at 620 and see Austin v Hornby [2011] NSWSC 1059
329 The first defendant argues that Mr Sandri holds his half share in the property on constructive trust for him subject to the existence of an equitable charge or lien in favour of Mr Sandri in such amount as may be agreed or determined by the Court. The charge would be calculated by reference to the amount by which the property was more valuable than it would have been if plaintiff had not built the property.
330 The plaintiff submits there has been no failure of the joint venture, and relies on the proprietary estoppel.
Conclusion on joint venture argument
331 It is strictly unnecessary that I decide this issue in view of my other conclusions, but as the point was argued I will state my opinion briefly.
332 The first defendant’s joint venture claim has not been established. The dealings between the Sandris and Humphries were not a joint venture. The contract of 28 March 2002, when viewed in the context of the parties’ previous dealings, governed their legal rights. If they wished to bring the arrangement to an end they could sever the joint tenancy and in the case of the Humphries’ sue for the balance of the purchase price.
333 In any event, Mrs Humphries lived at the property for the rest of her life and Mr Humphries for most of the rest of his. The inevitable death of each of the parties in due course, was taken into account when they negotiated the contract and made their wills. If there was a joint venture relationship, its substratum did not collapse.
Summary
334 I answer the issues stated earlier in this judgment as follows:
(a) did the Sandris and the Humphries enter into an agreement or reach an understanding in the terms pleaded in paragraph 2 of the statement of claim? Answer: No.
(b) If yes to (a), has the plaintiff established a proprietary estoppel entitling him to the whole of the property? Answer: Not applicable.
(c) Does the contract of 28 March 2002 made between the Humphries and the Sandris bind them? If so what effect does it have? Answer: The contract binds the parties and, in the case of the Humphries, their personal representative. The contract sets out the parties’ rights and obligations in respect of a sale of a half interest in the property by the Humphries to the Sandris.
(d) On the counterclaim, have the defendants established an entitlement to payment under the contract of 28 March 2002 of:
(i) of the deposit of $70,000? Answer: No.
(ii) of the balance of the purchase price of $170,000? Answer: The second defendant has established that entitlement.
(e) On the counterclaim, is the relationship between the parties one of a failed joint venture and if so what are their entitlements.? Answer: The parties were not engaged in a joint venture or endeavour.
335 The plaintiff’s claim has not been established. The second defendant’s claim for the deposit has not been established. The second defendant has established her claim against the plaintiff for payment to her of the balance of the purchase price, being $170,000. The first defendant’s joint venture claim is not established.
Orders
336 I will relist this matter so the parties can make submissions about the appropriate form of orders and about costs.
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