Sckaff v Sckaff

[2023] NSWSC 1582

Supreme Court

New South Wales

Medium Neutral Citation:

Sckaff v Sckaff [2023] NSWSC 1582

Hearing dates:

19 – 23 June 2023

Date of orders:

15 December 2023

Decision date:

15 December 2023

Jurisdiction:

Equity

Before:

Robb J

Decision:

See [277]

Catchwords:

ESTOPPEL – proprietary estoppel – standing by – where the defendants are the registered proprietors of a property – where the first defendant allowed the plaintiffs to occupy the property for around 25 years before taking any formal steps to challenge their right to possession – where the plaintiffs made significant expenditures towards the renovation of the property during the course of their occupation – where dispute regarding ownership of the property has arisen in an informal family context – where almost all crucial evidence has been lost to the passage of time – whether the plaintiffs are the beneficial owners of the property – consideration of the credibility and reliability of the available witness and expert evidence to reconstruct the relevant historical events – held that the silence of the first defendant as the legal owner of the property had the effect of reinforcing the assumption of the plaintiffs that the first plaintiff was the sole beneficial owner of the property – held that the plaintiffs suffered real detriment as a result of the first plaintiff having acted on the belief that he was the sole beneficial owner of the property – proprietary estoppel made out – orders made for the defendants to transfer the title to the property to the plaintiffs

Legislation Cited:

Conveyancing Act 1919 (NSW), s 23C

Residential Tenancies Act 2010 (NSW), s 94

Succession Act NSW (2006), s 58(2)

Cases Cited:

Brown v New South Wales Trustee and Guardian [2012] NSWCA 431; (2012) 10 ASTLR 164

Clayton v Clayton [2023] NSWSC 399

DHJPM Pty Ltd v Blackthorn Resources Ltd (formerly called AIM Resources Ltd) (2011) 83 NSWLR 728; [2011] NSWCA 348

Evans v Evans [2011] NSWCA 92

Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10

Hansen v Noble [2021] NSWSC 138; (2021) 20 BPR 41,181

John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

Orr v Ford (1989) 167 CLR 316; [1989] HCA 4

Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469

Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293

Shepherd v Doolan [2005] NSWSC 42

Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:

JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

George Sckaff (First Plaintiff/First Cross Defendant)
Anne Thompson (Second Plaintiff/Second Cross Defendant)
Richard Sckaff (First Defendant/First Cross Claimant)
Nada Sckaff (Second Defendant/Second Cross Claimant)

Representation:

Counsel:
N Obrart and C Angus (Plaintiffs)
D Knoll and J Sukkar (Defendants)

Solicitors:
AJB Stevens Lawyers (Plaintiffs)
Joseph G Capogreco & Associates (Defendants)

File Number(s):

2018/00054674

Publication restriction:

Nil

JUDGMENT

1. This case involves a dispute between two brothers and their respective wives concerning the beneficial ownership of a home in Dulwich Hill that I will call “No 6”.

2. The plaintiffs are George Sckaff and his wife Anne Thompson. The defendants are Richard Sckaff and his wife Nada Sckaff.

3. As most of the people closely involved in the events that are relevant to this case are members of the Sckaff family, I will, with no disrespect intended, refer to members of the family by birth or marriage by their first names.

4. No 6 was purchased on 5 February 1988, under a contract of sale in which Richard was the purchaser. Richard was the mortgagor in respect of the debt borrowed to complete the purchase. Richard became the registered proprietor of No 6. Yet, from a disputed date shortly after the purchase of No 6, George has been permitted to live in the property as his home without payment of any occupation fee. George and Anne have brought up their children in No 6. They have renovated the property at their cost on three separate occasions. Their belief that they were the sole beneficial owners of No 6 was not disturbed in any formal way until Richard served on them an eviction notice on 12 December 2014. On George’s reckoning, that was after George had occupied No 6, believing that it was his property, for about 25 years before Richard took any formal step to challenge his right to possess No 6.

5. In principle, the resolution of the dispute should begin with a determination of the circumstances in which No 6 was acquired in the name of Richard. There is a fundamental dispute as to whether Richard paid the whole of the price or whether the price was substantially paid by the brothers’ parents, in circumstances where the title was put in Richard’s name because the parents were concerned that George was too immature and unreliable, and that the arrangement was that Richard would hold the property on the basis that it would be George’s permanent home. As Richard was formally the purchaser, there are some records consistent with repayments of the mortgage occurring in Richard’s name. That is as expected, because Richard was the borrower and the mortgagor. There are no longer any records, if they ever existed, that prove the actual source of the funds used to purchase No 6 and to repay the mortgage. The parents have passed away. The brothers’ testimony is fundamentally inconsistent. What might have been thought to be the improbability of the property being placed in Richard’s name for George’s benefit is disproved by clear evidence of other properties being acquired in Richard’s name for that purpose. The objective evidence is almost entirely consistent with George occupying No 6 under the genuine and reasonable belief that he was the beneficial owner. The Court is presented with assertion and counter-assertion in the form of uncorroborated oral evidence of what was, or was not, said by various persons on many occasions over the years.

6. This case presents in an acute form the common problem of the Court being required to adjudicate a complex dispute that has arisen within the informal context of a family in circumstances where almost all of the crucial evidence has been lost to history, and the parties have persuaded themselves that total forensic success will follow a triumphant victory in the battle as to whether the Court should accept the say-so of one side’s witnesses to the exclusion of the other’s.

Background

7. I will begin by setting out the background facts that have been taken largely from the parties’ separate but comprehensive chronologies of relevant events.

8. George's and Richard's parents were their father, Fahad, and their mother, Souad, who were born in Lebanon in 1919 and 1927, respectively.

9. Fahad and Souad migrated separately to Australia from Lebanon in or around 1955, before marrying and starting a family that consisted of Mary, the eldest child, then Richard and George and finally Adele, the youngest child. Richard and George were born in 1964 and 1968 respectively.

10. Fahad and Souad acquired their family home at No 12 in the same street as No 6. According to Richard's evidence, they paid off the mortgage over No 12 in the early 1970s.

11. Fahad passed away on 27 February 1996, and Souad died on 18 October 2013, after having moved out of No 12 to live in a nursing home in 2007 as a result of the onset of dementia.

12. Richard was employed at a newsagency between 1974 and 1977 as a paperboy, and between 1977 and 1980 as a paperboy and shop assistant. Richard began working as a bank clerk at the Commonwealth Bank of Australia (CBA) on 28 April 1981, and continued in that employment until 1998. Richard was promoted over this period. In 1986, Richard commenced working as a newspaper delivery driver for John Fairfax Publications. This employment continued until 1996. Richard began working casually for the TAB, particularly during racing carnivals, in 1988. Between 1992 and 1994, Richard established a newspaper delivery business, in the name of R and N Sckaff Enterprises Holdings (Aust) Pty Ltd, in which he bought newspapers wholesale and resold them to retail outlets and home delivery vendors. Richard ceased his employment with the CBA on 23 October 1998, as his newspaper business grew and became his sole source of income. The evidence concerning the income earned by Richard and his expenditures is of particular relevance to the issue in this case of whether Richard had the financial capacity to save the money that was used to pay the deposit for the purchase of No 6, and to repay the mortgage debt on that property in an accelerated time of about six years. I will return to this issue in more detail below.

13. A residential property that I will call No 42 was purchased in the name of Richard and Mary on 13 April 1983 for a price of $95,000. Richard’s case, supported by Mary’s evidence, is that they purchased the property with their own money saved from their earnings. George’s case is that No 42 was purchased with money supplied by Fahad and Souad, notwithstanding that the mortgage was in the name of Richard and Mary. No 42 was leased to a tenant. George’s case is that the tenant paid the rent to Souad, who gave the money to Richard to deposit it in repayment of the mortgage. That claim is denied by Richard.

14. The mortgage over No 42 was discharged on 17 June 1986. On 21 September 1987, Richard bought Mary’s half share in No 42 for a price of $30,000, notwithstanding that the transfer of the property recorded the consideration as being $57,000.

15. Fahad was retrenched from his employment. There is a dispute about the date of the retrenchment and the amount of Fahad’s retrenchment pay. Richard says that it happened in about January 1982 and that Fahad received $15,000. George’s case was that the retrenchment occurred in around 1987 and Fahad received a retrenchment payment of about $60,000.

16. No 6 was purchased on 5 February 1988 for the price of $110,000. Until 9 January 2014, Richard was the sole registered proprietor of No 6. On that date, Richard transferred No 6 to himself and his wife, Nada, as joint tenants.

17. For some period after the initial acquisition of No 6, Richard carried out a renovation of the property. There is a dispute concerning the extent of the renovation and the time taken to carry it out. Richard’s case is that he asked George to move out of their parents’ house, where he had been living, and to go to No 6 in early 1990. George said that he moved into No 6 in around 1989. This difference in recollection is immaterial.

18. George has lived in No 6 up to the present, being a period of some 34 years. Anne moved into No 6 to live with George in around January 2001, and they married on 20 September 2013. No 6 has been their family home, in which they have raised their two children.

19. There has never been a formal legal arrangement between George and Richard concerning the entitlement of George to occupy No 6 to the exclusion of Richard. George has never been asked to pay, and has never paid, rent. There is a dispute between the parties about the period over which George has paid the costs of the rates and utilities for No 6. Richard claims that he met those costs until mid-1994, and thereafter they were paid by George by agreement. George says that he paid those costs from a much earlier date. Richard claims that he has always paid the house and contents insurance for No 6. George accepts that, but says that he has always repaid Richard in cash. That claim is denied by Richard.

20. Over the period of their occupation of No 6 as their home, George and Anne have carried out three separate renovations, in 2001, 2008 and 2013; the middle one being a substantial reconstruction of the dwelling on the property.

21. Over the period during which No 6 has been occupied by George, the property has been the subject of a number of mortgages. The first was a mortgage for $60,000 in favour of the CBA, by whom Richard was employed, that was granted at the time of purchase of No 6 to fund the payment of part of the price. Mortgages have also been granted over No 6 to fund the purchase of a bread delivery business by George, and to secure part of the purchase price of a rural property at Bargo, that was acquired by Richard and Nada with the view of subdivision in mind. On 9 January 2014, Richard and Nada granted a further mortgage over No 6 that remains outstanding. Exhibit P2 consists of two statements of account as at 30 June 2023 issued by the one lender to Richard and Nada in respect of separate loans of $290,000 and $350,000 made on 9 January 2014. The amounts outstanding as at 31 May 2023 were $232,434.80 and $283,779.36 respectively.

22. Richard and Nada moved into No 6 with George in about December 1991, after their marriage in November of that year. In around May 1992, Richard and Nada moved into No 42 as their home.

23. In or around 1994, Souad travelled to Lebanon, where she apparently owned five parcels of land. It is said that Souad sold three parcels and repatriated the funds to Australia. There is a dispute as to whether Souad used the money to repay part of the mortgage on No 6, as claimed by the plaintiffs, or whether she applied the proceeds of sale as claimed by Richard. Richard asserted that Souad divided the proceeds between the family of her brother and sister. Richard also said that Souad transferred the title to one of the remaining properties in Lebanon to him, and that later she transferred the title to the other to Richard's daughter. If Richard is correct, then Souad did not give any part of her five properties in Lebanon to George.

24. The mortgage in Richard’s name over No 6 was discharged on 24 August 1994.

25. Richard purchased No 10, which is in the same street as No 6. Richard’s chronology gives inconsistent dates for the purchase as June 2005 and 23 May 2008. The price was $550,000. Richard and Nada moved into No 10 in July 2008. Richard sold No 42 on 11 June 2008.

26. The single expert valuation witness prepared a report that valued No 6 at $2,200,000 as at 14 June 2023. The expert expressed the opinion that the renovations of No 6 that were carried out by George and Anne have added $250,000 to the value of the property in current terms.

27. Richard did not seek to disturb George's and Anne's exclusive occupation of No 6 until 12 December 2014, when Richard prepared and served upon George and Anne an eviction notice. George and Anne did not accept the notice and they have remained in occupation of the property to this day. Richard caused a notice to terminate tenancy agreement to be served on George and Anne on 26 November 2015 that required that they give vacant possession by 31 May 2016.

28. Richard has claimed that he was forced into the course of seeking to evict George and Anne from No 6 because he began to suffer health problems in 2012 and his business of distributing newspapers began to fail. He claims that he needed to sell No 6 to put his own family finances on a more secure footing.

29. Whatever may be the true reason for Richard not seeking to disturb George's, and later George's and Anne's, exclusive occupation of No 6 for an unbroken period of about 25 years, it is the case that Richard did not seek to do so until after Souad passed away. That has had the important forensic consequence that the Court has been deprived of Souad's evidence, or any objective record of her understanding of the basis upon which No 6 was acquired in Richard's name, but used exclusively as George's home.

NSW Civil and Administrative Tribunal proceedings

30. The defendants commenced proceedings against the plaintiffs in the NSW Civil and Administrative Tribunal (the Tribunal) on 12 May 2017. The defendants applied for a termination order under s 94 of the Residential Tenancies Act 2010 (NSW) (the RT Act).

31. On 23 February 2018, a Principal Member of the Tribunal made the following orders:

(1) Pursuant to cl 6 of Part 5 of Sch 4 to the Civil and Administrative Tribunal Act 2013 the proceedings are transferred to the Supreme Court of New South Wales and to continue before that court as if the proceedings had been instituted there, to be heard with [these proceedings];

…

(3)    The Tribunal notes that the applicants' claim in these proceedings is to become a cross-claim seeking among other things declaratory relief in the Supreme Court proceedings;

(4)    The hearing listed for 26 February 2018 is vacated; and

(5)   The respondents are to pay the applicants' costs of 22 February 2018 and the costs thrown away by the vacation of the hearing listed for 26 February 2018, as agreed or assessed.

32. In reasons published on 23 February 2018, the Principal Member stated:

9 The order sought by the applicant in the Tribunal proceedings is for termination of the residential tenancy agreement under s 94 of the RT Act, which provides:

94 Termination of long term tenancies

(1) The Tribunal may, on application by a landlord, make a termination order for a residential tenancy agreement—

(a) if the tenant has been in continual possession of the same residential premises for a period of 20 years or more, and

(b) if the tenant occupied the premises under a fixed term agreement, the fixed term of the original agreement has expired, and

(c) if the Tribunal is satisfied that it is appropriate to do so in the circumstances of the case.

(2) A landlord may make an application under this section without giving the tenant a termination notice.

(3) The Tribunal must not make a termination order under this section that specifies a termination date that is before the end of the fixed term if the residential tenancy agreement is a fixed term agreement.

(4) The Tribunal, in determining the day on which vacant possession of the residential premises is to be given to the landlord, must not order that vacant possession be given earlier than 90 days after the order is made.

10 As identified in the procedural directions made on 31 August 2017, the determination of the application in the Tribunal requires consideration of whether there is between the parties a "residential tenancy agreement", that is, "an agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence" (s 13 RT Act), and if so, whether that residential tenancy agreement should be terminated pursuant to s 94 of the RT Act.

11 In summary, the applicants' case in the Tribunal as outlined in the affidavit of Richard Sckaff is that he purchased the Property in 1988, paying the deposit and the mortgage payments; that in 1990 George Sckaff started living there; that in 1992 after they were married Richard and his wife Nada moved to premises in Campsie; that in 2008-2009 Richard agreed to George undertaking renovations; that in 2014 Richard gave notice to George to vacate; and that in November 2015 he served a termination notice. In an Outline of Submissions on jurisdiction dated 2 August 2017, the applicants submit that at least since 1994 Richard Sckaff has permitted George Sckaff to reside in the Property in exchange for George Sckaff agreeing to pay utilities bills, and that it was an implied term of the agreement that George Sckaff and subsequently his partner would look after, maintain and repair the Property. The right of residence granted at least since 1994 was in exchange for the payment of utility bills, looking after, maintaining and repairing the Property and undertaking a renovation of benefit to the applicants as well as the respondents. That is sufficient to constitute "value" for the purposes of the definition of "residential tenancy agreement" in s 13 of the RT Act, and on that basis, the applicants contend there is a residential tenancy agreement between the parties.

12 The respondents dispute that contention. Based on the Statement of Claim in proceedings 2018/00054674, in summary the respondents' position is that the Property was purchased by the parents of Richard and George Sckaff in 1985, with the intention of their parents and Richard and George Sckaff that the Property was to be the property of George Sckaff, and further or in the alternative that at the time of the purchase the Property was to be purchased and put in the name of Richard Sckaff to be held in trust for George Sckaff; and that, in reliance on that George Sckaff moved into the Property, and paid the rates, taxes and utilities and made improvements in 2001, 2008 and 2013 at a cost in excess of $300,000.

13 In the Supreme Court proceedings the respondents seek a declaration that the Property is held on trust for George Sckaff or both respondents; an order to transfer the Property and discharge the mortgage registered against the Property, or an order to give restitution in respect of the respondents' contributions to the Property; and an order that the Property be charged in favour of the respondents.

33. The Principal Member then considered the reasons for making the orders that are set out above, and then added:

18 However s 81 of the RT Act does not confer power on the Supreme Court (or any other court) to terminate a residential tenancy agreement, and pursuant to s 109 of the RT Act only the Tribunal can make an order for possession. The recent amendment to the NCAT Act to insert Part 3A, in particular s 34C(3), which would confer on the District Court or the Local Court jurisdiction that the Tribunal would have, applies only in proceedings where the Tribunal does not have jurisdiction to determine the application or appeal because its determination involves the exercise of "federal diversity jurisdiction", being jurisdiction of the kind referred to in section 75 (iv) of the Commonwealth Constitution.

19 In similar circumstances to the present Tribunal proceedings, in Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944 Stevenson J held that the Supreme Court does have jurisdiction to adjudicate on the dispute concerning a residential tenancy agreement, and would have power to make a declaration as to any entitlement to have the residential tenancy agreement terminated, and to remit a matter to the Tribunal for the making of an order under s 81 and s 83 of the RT Act.

20 If the Supreme Court determines [these proceedings] in favour of the applicants in the Tribunal proceedings, that court could make a declaration in terms similar to those considered by Stevenson J. In those circumstances, the supreme court has jurisdiction in the matter as required by cl 6 of Part 5 of Sch 4. Transfer of the Tribunal proceedings would potentially save time and therefore costs as the Supreme Court can decide all the matters in dispute, other than to make orders terminating any residential tenancy agreement and ordering possession. Depending on the outcome, that court could remit the matter to the Tribunal for consideration of whether to make orders for termination and possession. The proceedings commenced in the Tribunal in RT 17/23730 should be transferred to that court. It follows that the hearing listed in the Tribunal on 26 February 2018 is to be vacated.

34. The substance of the Principal Member's reasons that have been set out above caused the defendants to make a submission that, depending upon the conclusions reached in these reasons, the matter should be relisted after the reasons are published to enable the parties to make submissions as to the orders that are appropriate in the light of the transfer of the proceedings in the Tribunal to this Court. That will only be necessary if the Court's decision is consistent with the defendants having a right to obtain an order that has the effect of ejecting the plaintiffs from No 6.

Statement of claim

35. George and Anne commenced these proceedings by statement of claim filed on 19 February 2018. The relief claimed was as follows:

1.    Declaration that the whole or such portion as this Honourable Court deems fit of the Property known as [No 6] ("Property") is held on trust for the First Plaintiff or the First and Second Plaintiffs.

2.    Order that the First and Second Defendants forthwith take all necessary steps to effect the transfer of the Property to the First Plaintiff or the First and Second Plaintiffs, and discharge the mortgage registered against the Property.

3.    Alternatively, an order that the Defendants give restitution to the First Plaintiff or First and Second Plaintiffs in respect of their contributions to the Property.

4.    Order that the Property be charged in favour of the First Plaintiff or First and Second Plaintiffs to the value of their contributions to the Property.

5.    Such other order as this Honourable Court deems fit.

6.    Costs.

36. The plaintiffs pleaded facts to support their claims for relief under the headings “failed joint endeavour”, “improvements to the property”, and “estoppel”. I will discuss the factual basis of the plaintiffs' claims more fully below. The plaintiffs pleaded that the purchase price of No 6 was approximately $110,000, and that Fahad paid $60,000 towards the price, and that the balance of the price was paid by means of a loan from the CBA to Richard secured by a mortgage over No 6. The plaintiffs also alleged that Fahad and Souad gave money to Richard for the purpose of paying the mortgage.

37. By the time of the five-day hearing that commenced on 19 June 2023, the plaintiffs relied upon a second amended statement of claim filed on 26 July 2019. The relief claimed was the same as in the statement of claim filed on 19 February 2018. By this stage, the basis of the plaintiffs' claims for relief was pleaded under the headings “common agreement or intention and constructive trust”, “joint endeavour and constructive trust”, “improvements to the property”, “failure of joint venture and departure from common intention”, “estoppel by representation concerning ownership of property”, “estoppel by convention concerning ownership of property” and “estoppel concerning improvements”.

38. The second further amended statement of claim also pleaded the granting of the mortgage over No 6 in December 2003 for the purpose of Richard and Nada purchasing a property at Bargo in this State. However, in the period after the filing of the second amended statement of claim, the Bargo property was sold for a price of $3.9 million and the mortgage over No 6 was discharged. The mortgage has been replaced by the further mortgage granted on 9 January 2014 that is referred to above. Accordingly, the plaintiffs still seek an order that Richard and Nada discharge a mortgage granted over No 6, albeit that the mortgage is a different one than was originally contemplated.

39. The Court Book included correspondence between the solicitors for the parties in relation to the provision of particulars of the plaintiffs’ statement of claim. There was no reference to the particulars that were given at the hearing or any suggestion that the particulars were relevant to the determination of the proceedings. Accordingly, I have had no regard the correspondence concerning the provision of particulars.

Cross claim

40. On 3 July 2018, the defendants filed a cross claim in this Court in which they sought the following relief:

1.    Declarations that:

a.    there is a residential tenancy agreement in place in respect of the property at [No 6] (the "Property") between the First Cross-Claimant as landlord and the First Cross-claimant [sic] as tenant (the "Residential Tenancy Agreement");

b.    the First Cross-Claimant is entitled to an order terminating the Residential Tenancy Agreement; and

c.    the Cross-Claimants are entitled to possession of the Property.

2.    An order pursuant to section 74MA of the Real Property Act 1000 [sic] (NSW) that the caveat having registered number AK693926 lodged by the First Cross-defendant on the title for the Property be withdrawn or removed within 28 days.

3.    An order that the proceedings be remitted to the NSW Civil and Administrative Tribunal to make orders:

a. terminating the Residential Tenancy Agreement pursuant to subsection 94 (1) of the Residential Tenancies Act 2010 (NSW);

b. granting vacant possession of the Property to the Cross-Claimants pursuant to subsection 94(4) of the Residential Tenancies Act 2010 (NSW); and

c.    that the Cross-Cross-claimants [sic] ensure that the Property is in good order and condition when they vacate.

4.    Costs.

5.    Such further or other orders as the Court may determine.

41. It appears that the confusion in the prayers for relief by which the present plaintiffs are referred to as cross claimants has occurred because both the plaintiffs and the defendants are called cross claimants in the title page to the cross claim.

42. By the time of the hearing, the defendants' claim was as pleaded in an amended statement of cross claim filed on 14 June 2023. Apart from correcting the references to the plaintiffs in the prayers for relief, the defendants sought the further additional relief:

4.    In the alternative, either:

a. an order that the proceedings be remitted to the NSW Civil and Administrative Tribunal for determination as to whether to (i) determine whether to terminate the Residential Tenancy Agreement pursuant to section 94 of the Residential Tenancies Act 2010 (NSW), (ii) make an order to grant vacant possession of the Property to the Cross-Claimants pursuant to section 94 of the Residential Tenancies Act 2010 (NSW) and (iii) make an order that the Cross-Cross-claimants [sic] ensure that the Property is in good order and condition when they vacate; or

b.    an order that within 28 days the Cross-defendants give to the Cross-Claimants vacant possession of the Property in good order and condition.

43. At the hearing, the defendants acknowledged that, even if they were entitled to succeed in the proceedings, the plaintiffs would be entitled to an order compensating them for their expenditures in carrying out the three renovations of No 6 that the defendants acknowledge were carried out. The defendants' position, as explained at T326.17, was:

Despite all that, Richard and Nada do not contest that this is a case in which a balancing of equities is required. We accept that. However, if orders are made in favour of George and Anne, at the end of the day, your Honour will find a remedy for them that does not involve the full transfer of the property. By way of the renovations, it is uncontested evidence that George and Anne added $250,000 to the capital value. That appears in the valuation of Mr Niall Moore, the valuer. It is now the position, contrary to the pleading, on Mr Stewart’s evidence this morning, that his figure of $412,643 represented a de-escalated amount identifying what the works were worth at each of the dates when they were made.

44. The defendants also accepted that, if the Court makes orders that require the plaintiffs to vacate No 6, the orders should allow the plaintiffs an appropriate number of months to do so.

Acquisition of No 6

45. In addition to the facts that have been set out above in the Background, it will be necessary to examine in more detail aspects of the evidence that are more complex or contentious. Because of the way in which the evidence was presented, that consideration will necessarily be episodic.

46. I will begin by examining the evidence concerning the circumstances in which No 6 was acquired and the evidence that bears upon the beneficial ownership of the property. (I will consider the evidence given by Richard directed at establishing that he had the funds to pay the whole of the purchase price separately below, in conjunction with the expert accounting evidence called by the parties on that issue).

47. Because multiple issues have a bearing on the credibility of the evidence given by Richard and George, it will be necessary to defer the consideration of that issue until I have set out my findings on all of the other issues that are relevant to the reliability of their evidence. However, it will be more meaningful if I set out my conclusions about the credibility of the evidence given by the other witnesses after I have set out their evidence relevant to the basis upon which No 6 was purchased.

Richard’s 12 May 2017 affidavit in the Tribunal proceedings

48. Even though Richard is one of the defendants, it is appropriate to start with his evidence because his 12 May 2017 affidavit in support of his application in the Tribunal was the first evidence served on the subject.

49. Richard said in par 6 that, when he purchased No 6 in 1988, he paid for the deposit out of his own funds and borrowed $50,000 from the CBA, using a staff housing loan. In a later affidavit, Richard corrected that evidence to say that the amount borrowed was $60,000, as it was evident that loan security duty for $60,000 was paid on the mortgage.

50. Richard said that repayments for the mortgage loan were automatically deducted from his wages, and that the payments were described as "SHL" (meaning ‘staff housing loan’) on his pay advices. Richard annexed one pay advice for the fortnight ended 27 May 1993, which showed that $65.56 had been deducted for ‘SHL’. The SHL deductions would total about $1,700 per year. An amount of $108 was deducted for ’CREDIT UNION’.

51. Richard said that he also made extra payments to reduce the balance of the mortgage loan between 1988 and 1994. He annexed deposit slip butts that recorded as follows:

28.3.88	$150	11.7.88	$150	17.2.89	$500
5.4.88	$150	18.7.88	$150	6.3.89	$1,000
11.4.88	$150	25.7.88	$150	28.3.89	$1,000
18.4.88	$150	2.8.88	$150	8.5.89	$1,000
26.4.88	$150	8.8.88	$150	21.9.89	$4,000
2.5.88	$150	15.8.88	$150	28.12.89	$6,000
9.5.88	$300	22.8.88	$150	14.6.90	$4,000
16.5.88	$150	23.8.88	$150	13.9.90	$5,000
23.5.88	$150	7.9.88	$150	20.11.90	$5,000
30.5.88	$150	14.9.88	$150	20.11.91	$5,000
6.6.88	$150	19.9.88	$150	11.1.93	$2,000
14.6.88	$150	26.9.88	$150	6.8.93	$3,000
20.6.88	$250	4.10.88	$150	27.11.93	$2,000
27.6.88	$150	24.10.88	$450	13.12.93	$3,000
4.7.88	$150	2.2.89	$1,000	5.1.94	$2,000

52. The total of these amounts is $50,400. The words "Wedding Money" were written on the deposit slip butt relevant to the $5,000 payment on 20 November 1991. That was the month in which Richard married Nada.

53. Richard said that, for about 12 months starting in 1989, he carried out renovations on No 6, working each weekend. He said that it was his intention to move into No 6 once he was married. He said that, at this time, George was unemployed and that he exhibited behaviours that made his parents anxious and even angry. Richard gave the following evidence:

14. My mother often complain to me about George's behaviour. I recall that she sometimes said to me words to the effect of:

"George is too much for me, I'm too tired."

"He hasn't got a job, he will never settle down."

15. I decided to ask George to move out of my parents' house and into the Property. In early 1990, I said to George words to the effect of:

"George, I'm putting you in number 6 until I get married and moved in."

16. Initially, I paid all the utilities on the Property as well as keeping up-to-date the building and contents insurances as well as paying for maintenance of the Property.

54. This evidence is significant for its brevity. It is the only positive evidence given by Richard as to why he allowed George to live in a house of which he was the registered proprietor, save for an answer that Richard gave to a question in cross-examination as to why he did not charge George any money for living in No 6. Richard’s response was: “He was my brother” (T 243.30). Given the evidence of the relationship between Richard and George generally, I do not find this response at all credible. Richard did not give any evidence that explained in a positive way why he allowed George, and later his family, to live in No 6 without the need to pay rent, and without any apparent agreement between the two brothers as to the terms upon which George would be allowed to live in No 6. Richard gave no evidence of discussions with George, Anne or his parents on the subject, save for a couple of occasions when Richard claims that he asserted his ownership in response to conduct by George that showed George believed that he was the owner of the property.

55. George said that in 1992, he and Nada moved into No 42. This property had been tenanted and the tenants moved out in April 1992.

56. Richard said that in August 1994, he paid out the balance of the mortgage on No 6.

57. Sometime in mid-1994, according to Richard, he learned from George that George was in receipt of Centrelink payments and he and George agreed that George would pay the utilities bills for No 6. From then on, Richard continued to pay for the insurance. Richard also said that he paid land tax for No 6, which is an issue that I will consider separately below.

58. Richard said in par 29 that he did not speak to George for approximately three years until Fahad's health became terminal. Fahad passed away on 27 February 1996. Richard said in par 34 that he started to speak with George civilly again around the time Souad took up residence in a nursing home in November 2007.

59. In 2003, Richard purchased another investment property at Bargo. He granted a mortgage over No 6 to help secure the loan in respect of the new property. Richard said in par 46 that he had the following conversation with George:

George: "Why did you mortgage my house?"

Richard: "it's not your house, George, you know that."

60. Richard said that, on about 28 December 2012, he had a stroke and was hospitalised for 3 to 4 days. In par 56, Richard gave the following evidence of a conversation on about 30 December 2012 with George at the hospital:

George: "I want the deeds to number 6."

Richard: "No, it's not your house. You know that I paid for the house."

George went silent.

George: "Well, I have decided to get married, later in the year."

Richard: "It's none of my business what you do."

61. It is relevant to a consideration of the probability that the conversations deposed to by Richard as having taken place in 2003 and 2012 occurred, or that, if they did, they were sufficient to inform George that Richard asserted he was the sole owner of No 6, that George and Anne carried out the 2008 and 2013 renovations after the first alleged conversation, and the 2013 renovations after the second alleged conversation. The circumstances in which both renovations were carried out are not consistent with George and Anne understanding that they were not entitled to No 6.

George’s evidence

62. George's first affidavit was sworn on 18 July 2018. George did not reply to Richard's 12 May 2017 affidavit in this affidavit, but did so separately in a further affidavit sworn on 4 March 2019.

63. In his 18 July 2018 affidavit, George gave the following evidence of his understanding of the circumstances in which No 6 was purchased:

36. [No 6] was purchased for the sum of approximately $110,000 in 1988.

37. It was purchased by my parents in my brother Richard's name. At around this time, my father said to me words to the following effect: –

"This is your house, but we put it in Richard's name.

I wanted it in your name, but your mother doesn't. She's worried you're going to gamble it away."

38. Prior to buying the house in 1988, my father was made redundant from his work.

39. My father said words to the following effect to me: –

"I have received a payout from work for $60,000. We bought Richard the Campsie house. This money from work we will put a deposit on a house for you."

40. The $60,000 was used to pay the deposit on [No 6].

41. After [No 6] was purchased, Richard painted the inside of the house over a few weekends. I cannot recall what the circumstances were of how Richard came to paint the house.

42. I recall shortly after the house was purchased my father said to me and my brother Richard in the presence of my mother words to the following effect: –

"We have put [No 6] in your brother Richard's name as you are a gambler and Richard is not. Your mother is worried that you would gamble the house away. Because it is in Richard's name it will be protected. You won't be able to gamble it away and he will hold it for you."

43. In about April 1989, referring to [No 6], my mother said to me words to the following effect: –

"I will buy furniture for the house so that you can move in. This house we buy for you. Now you can live in it."

44. My mother furnished the house for me and purchased for me a bedroom suite which I still have to this day.

45. I moved into [No 6] in about July 1989. I moved into the property as my home and have lived in it as my home and treated it as my home ever since.

…

49. During one of his visits my father said to me words to the following effect:–

"Your mother and me have been paying the $50,000 loan from the rent money we are getting from the Campsie house.

50. After Richard and Nada moved into the Campsie property in around May 1992, my father said to me words to the following effect:–

"Your mother and me have been giving Richard money to continue paying the mortgage for [No 6]."

64. It is relevant to the evidence in par 49 concerning the rent money for No 42 being used by Fahad and Souad to pay the mortgage on No 6 that George gave evidence, in pars 32 and 33, that Fahad had told him when George was about 18 years old that he and Souad had bought No 42 for Richard, and that he had told Richard to get a loan from the CBA so that he could get a cheaper interest rate. George said that he witnessed the tenants paying the rent money to Souad.

65. In George's affidavit sworn on 4 March 2019, he denied the evidence that I have set out above given by Richard in his affidavit filed in the Tribunal proceedings. George said that he paid for all of the utilities for No 6, and that, although Richard paid for the building and contents insurance, George always reimbursed him in cash.

Anne’s evidence

66. Anne's evidence in her 18 July 2018 affidavit was that she first met George in 1998 and they were married in 2013. She has lived with George permanently since January 2001.

67. Anne said in par 18 of her affidavit:

18. After I met Souad but before I moved in with George into [No 6] in January 2001, I had a conversation with Souad who said to me words to the following effect: –

"My husband and I buy one house for my son Richard and one house for George. George, his house is number 6. My daughters I give them money when they married."

19. Souad also said to me words to the following effect: –

"I buy all the furniture for George's house before he move into it."

68. Anne gave evidence that she and George paid all of the utilities and rates for No 6. She agreed that Richard paid the home and contents insurance premium, as he had three properties insured under the same policy. Anne said that every year she and George paid their portion for No 6 in cash separately.

Credibility of Anne’s evidence

69. I accept Anne as being a credible and truthful witness whose evidence was as reliable as could be expected given the passage of time since some of the important events took place.

70. The manner in which Anne gave her evidence in cross-examination gave me no reason at all to doubt her candour. Anne appeared to give careful but brief attention to the questions that she was asked, and then a direct answer that appeared to me to be credible and responsive.

71. I accept Anne's evidence that she was the one who provided the photo album to the plaintiffs' solicitors that enabled the solicitors to select photographs relevant to the renovation of No 6 and that Anne was not responsible for selecting the photographs or causing the same photographs to be annexed both to her affidavit and George's affidavit. This observation arises out of an attempt to discredit the evidence given by Anne and George because they both annexed the same photographs of the renovation of the property to their affidavits.

72. A particularly telling part of the evidence given by Anne in cross-examination was that she applied part of her inheritance from what I understood was her grandmother's estate towards the renovation of No 6. It is improbable that a person of her general means would have taken that course, unless they believed that they, or their husband, was the unchallenged beneficial owner of the property on which the money was spent, and that they were not aware of any circumstances inconsistent with that belief. I am satisfied that, if Anne had had any inkling that Richard would claim beneficial ownership of No 6, she would not have expended her inheritance on the renovation of the property without at least raising the issue with Richard and being satisfied that Richard accepted that George was the beneficial owner of the property, so that the money expended would not be for Richard's benefit.

Evidence of Nasser Zahr

73. Nasser Zahr is a friend of George who met George when they both attended the same public school in 1977. Mr Zahr said that he got to know Souad really well and spoke to her mostly in Arabic, but occasionally there would be words in broken English in the conversation. Mr Zahr said that he had long conversations with Souad as he is fluent in both Arabic and English.

74. Mr Zahr gave the following evidence in his 1 March 2019 affidavit of conversations with Souad, in around 1988:

21. While I was at the house getting ready to watch the grand final, Souad, came in and we had a conversation. She said to me words to the following effect: –

"Fahad (George's dad) and I have purchased this house for George but we put it under Richard's name because Richard is working with the Commonwealth Bank and has settled down. George is not ready to settle down and accept responsibilities and has only just finished school. George is only interested in having fun like most young men of his age."

22. Not long after that conversation and before George moved into [No 6], I remember visiting George at [No 6]. I had another conversation with Souad, his mother, when she said words to the following effect: –

"This is George's house and it is my wish that one day George will settle down in the house and marry and have children and look after his affairs and stop going out and partying."

Credibility of Mr Zahr’s evidence

75. Mr Zahr was also a satisfactory and straightforward witness who appeared to give his evidence in an honest and reliable way.

76. Mr Zahr readily admitted he was a friend of George, and that he had been a close friend of George since the two played rugby league together after they left school. It appears that Mr Zahr had a relatively close relationship with Souad, in the sense that whenever the two were in the same place he would have a cordial discussion with Souad.

77. I accept Mr Zahr's evidence that he was not influenced in the evidence that he gave of his conversations with Souad by any representations made to him by George in order to encourage Mr Zahr to provide evidence that corroborated the evidence given by George and supported George's case.

78. Mr Zahr's demeanour when giving evidence was entirely natural and forthcoming, and instilled confidence in the Court that Zahr had a real recollection of the substance of the statements made to him by Souad, notwithstanding the passing of the decades since the conversations took place.

Evidence of Michael Laurence Geoghegan

79. Michael Laurence Geoghegan was raised at No 5 across the street from No 6. Mr Geoghegan said that he has known George and Richard and the Sckaff family since he was a child in their capacity as neighbours. He attended the same primary school as the Sckaff children and, during the 1960s and 1970s, he frequently played football and cricket with George, and on occasions with Richard. Mr Geoghegan gave evidence that, from 1973 to 1979, he often worked with Richard on a paperboy run. Mr Geoghegan continued living at No 5 until the mid-1990s. Mr Geoghegan’s mother continued living at No 5 until 2015.

80. In his 6 March 2019 affidavit, Mr Geoghegan gave the following evidence concerning the acquisition of No 42 and No 6:

[No 42]

19. In approximately 1983, Richard told me, words to the following effect:

"Mum and dad bought me a house at [No 42]."

20. At about the same time, George told me, words to the following effect:

"Mum and dad bought Richard a house at [No 42]."

…

[No 6]

24. In 1988, Souad Sckaff ("Souad") told me words to the following effect:

"We bought Richard a house and we bought George this one too. It is our Lebanese custom to buy your sons a house."

25. When Souad said "we bought this one too," she gestured by pointing to [No 6].

…

31. I have always assumed that [No 6] belonged to George because of conversations with George and his mother about the house.

32. Around that time, George told me words to the following effect:

"Because Richard works at the Commonwealth Bank, we put [No 6] in his name. That way we can get a better interest rate."

81. At the end of his affidavit, Mr Geoghegan said:

58. Richard has told me words to the following effect:

"[No 6] belongs to my little brother."

Credibility of Mr Geoghegan’s evidence

82. Mr Geoghegan was also a reasonably careful and satisfactory witness. Although he gave evidence of statements made to him by Richard and Souad many decades ago, I am satisfied that the Court is justified in giving some weight to his recollection. The issue that Mr Geoghegan was called upon to remember was the substance of statements as to who was the owner of the house in which George lived, and did not involve nuances of meaning of those statements. While the weight that the Court may give to the evidence must be diminished by the passage of time, I am prepared to accept that Mr Geoghegan was relaying in his evidence a real recollection.

83. The credibility of Mr Geoghan’s evidence is necessarily diminished by his recollection that both Souad and Richard told him that Fahad and Souad had bought Richard a house, as well as George. While there is no positive reason to disbelieve Mr Geoghan’s evidence on this subject, which was broadly consistent with the evidence given by some other witnesses, it is inconsistent with the evidence on the subject given by Richard and Mary, and the Court has had to decide the issues in this case on the basis that there is no objective evidence to support a finding that Fahad and Souad paid for houses for George and Richard.

Evidence of Claude Cacitti

84. Mr Claude Cacitti was one of the teachers of George at his public school. He swore an affidavit that was filed on 5 March 2019.

85. Mr Cacitti's affidavit was prepared in somewhat unusual circumstances, in that in 2017 (according to Mr Cacitti), he saw a segment on the television program A Current Affair "about the feud between George and his brother Richard." This information triggered a recollection in Mr Cacitti about conversations that he could recall having with Souad. Mr Cacitti contacted George through a person associated with the A Current Affair program and offered to provide evidence.

86. Mr Cacitti said that Souad invited him, as George's teacher, to attend the Sckaff family home at No 12 during 1979 to discuss the Sckaff children with her. Mr Cacitti visited Souad on around six occasions that year. Mr Cacitti gave the following evidence:

19. We discussed our respective traditions and when discussing the Lebanese traditions, she said to me words to the following effect:

"It is the parent's responsibility to look after kids and make sacrifices. If George doesn't get a good job, he will have a house and something to start a family with."

20. On several occasions, Mrs Sckaff mentioned that it was her intention to provide her sons with a house so that they would have a good start in life. I have always remembered her words on this matter, as I found it a very generous thing to do, which reflected the caring and supportive nature of George's parents as well as recognising the sacrifices that they endured to make such a gift possible.

21. The fact that she was trying to provide as much as she could for her children resonated with me because I came from an Italian background and I wasn't the brightest child in primary school. I am aware that in certain parts of Italy, parents have the same values.

22. She would often say words to the following effect: –

"I want to make sure my kids are provided for in life. Adele would get money because her husband's family would provide her with a home. I will buy George and Richard each home [sic] so that they are prepared."

87. Mr Cacitti gave evidence that he was George's classroom teacher in grade six for two consecutive years as George repeated grade six.

88. His evidence was that he had visited Souad in her home in response to a request from her to discuss George’s schooling and his future. Mr Cacitti said that he had a relatively detailed conversation with Souad, which included Souad making the statements related by Mr Cacitti in his affidavit.

89. Mr Cacitti said that he lost contact with George after a couple of years and had not spoken to George since that time. Mr Cacitti said that he became aware of the A Current Affair program that had ventilated the dispute between George and Richard over Richard's attempt to evict George and his family from No 6. Mr Cacitti said that he inferred from what he had heard on the television program that it was Richard's position that of the two sons in the Sckaff family, Richard had been given ownership of two houses and George had been given none. Mr Cacitti formed the view independently that Richard's claim was completely inconsistent with what he had been told by Souad. Mr Cacitti initiated his own enquiries through the television station and was given contact details for George that ultimately lead to Mr Cacitti being approached by George's solicitors to give evidence.

Credibility of Mr Cacitti’s evidence

90. Mr Cacitti appeared to me to be an entirely independent and credible witness, who gave his evidence in a very sober and careful way. I am prepared to give weight to the evidence given by Mr Cacitti, even allowing for the inherent likelihood of dissipation of recollection over the decades.

91. Mr Cacitti maintained his evidence under cross-examination, and gave a persuasive explanation of how he could remember the substance of the conversations with Souad of which he had given evidence, even though he conceded that he could not clearly remember many of the other events that happened at that time.

Evidence of Damien Trad

92. Mr Damien Trad is a licensed finance broker who provided his services to Richard starting in about 2002. Mr Trad was called in the plaintiffs’ case to give his evidence orally. It is not clear whether the plaintiffs issued a subpoena to require Mr Trad to attend court to give evidence, but I infer that he was not willing to provide affidavit evidence in the plaintiffs’ case. In the circumstances, the appropriate way to convey the effect of his evidence will be to extract the more significant portions, as follows.

93. Mr Trad gave the following evidence in his evidence in chief at T 118.28-119.35:

Q. Are you able to recall that dealing with Richard, at all? The details of it?

A. Yes, I am.

Q. To the best of your ability, could you recall the details of the dealing with Richard in respect of [No 6]? Let's start with the start, how that transaction started, or originated?

A. Richard, as I said, approached me through his accountant, and in one of the meetings we had in my office, he indicated that he was interested in a property, some acreage. I can't recall the suburb. It's in my file. And he needed to raise some money as a deposit towards purchasing that property, that 50-acre property. That property being acreage, an ability to borrow money using it as security required a large deposit. So, Richard - I went through a loan application process and going through assets and liabilities, singled out [No 6] as a possible security property to use. In the - in the completion of the forms in listing assets and liabilities, if somebody has a rental property or an investment property that he wasn’t living in, a normal question would be, so, what are you earning in rent for [No 6]? I remember that question being asked, because it's part of the application. Richard's response was the house is in my name, I'm not getting any rent for it.

It's a property that is in my name but belongs to my brother, George. And I said, "How? Why is that? Why is it in your name and not George's name?" Richard told me that his parents chose to put it in Richard's name in trust for his brother, because at the time George was - his activities weren't such that the family supported which included gambling and befriending girls that they weren't happy with at the time. So Richard freely offered that to me, and - and I just listed the property as security. And I - and in the application. And he asked, "So can I use it as security?" And I said, "Well, if the property has your name on it, you can use it as security." We continued with the completing of the forms, and he seemed to be happy that he was given the green light to be able to use it as security to raise a deposit. And I recall him saying to me:

"Before we complete the application, I'll need to go and speak with George, so - to make sure that he's happy with me using his property as security. And if he gives me the green light, then I will do something to - to reward him."

And I think he said, "I might buy him a car or something in exchange for letting me use his house as security." That's what took place at that time, at the initial completion of the application.

Q. Did you have any response to Richard at that time about that or--

A. Not really. I - I - I received the information through the ears of someone who understood the background, the culture of - the trust that a parent would have if one - one appeared trustworthy and the other one best not to put the asset in the name of a gambler.

Q. What's your basis for saying that you received that information with the ears of someone who understood it?

A. Well, it's something that I've lived through my life. My mother - Dad passed away early and Mum entrusted me with power of attorney, authority over her bank accounts. There's a background of somebody working in a bank, compared to my younger brothers who weren't as fortunate, the trust that a parent would have. They would, in their view, select someone that they trust for looking after younger brothers', siblings' assets.

Q. What's your cultural background?

A. Lebanese. Christian.

94. Later in his examination in chief, Mr Trad said at T 120.15-120.40 in relation to a proposal that No 6 be sold at auction:

Q. Do you recall the content of those conversations at all?

A. I recall the conversations with Richard. I remember him contacting me and wanting to speak to me. And the indications were that he really needed to clear the mortgage against [No 6], and indicated that if I could have any influence over George in George expecting whatever auction price received at that time, that George should sell or encourage him to sell. So Richard, knowing that I was then introduced to George some years later - because I didn't know George at the time when I first was engaged with Richard - came to me with the - with the view of maybe I could encourage George to sell, so he could clear the debt of [No 6]. The conversations I had with George at that time was such that he was hoping to get 1.2 million, and that there's not much else that he could relocate his family to live in, a property in that area or where he wanted to live if the price didn't get to 1.2. So my response to George was, "Well, don't sell, if you don't get what you need to relocate, because the market is depressed. And I don't know that this is a good time to put a property on the market to sell."

Q. Does that exhaust your connection with the auction event, as it were, or the selling event?

A. I - I don't think I had anything more to do, other than understanding the - that there was a need for the property to sell and - and the need seem - seemed to come from Richard, because he approached me with the - with the view of trying to encourage George to accept the offer at auction. And as far as George was concerned, "I have a price. I have a limit. I'm not going to sell unless I can actually be effective or do something with the - with that amount of money that I receive."

95. The following exchange took place during the cross-examination of Mr Trad at T 127.1-127.30:

Q. Mr Trad, earlier you accepted from me the proposition that as a lender in a bank, if you had been told that the person who was a borrower did not beneficially own the property, that would be important information to know?

A. For me personally, yes.

Q. And once you became a broker, did you recognise that that would be important information for whoever was now going to be the lender to know?

A. In my assessment at the time, I was comfortable that Richard was using the loan application for the specific purpose of purchasing an asset. Whilst I didn’t know his brother George at the time, I was comforted with the fact that Richard said that he would speak to his brother George, seek George’s permission to continue using the property, and in fact reward George for having done so. In my assessment of the application process, I’m safeguarding the lender by providing them a first mortgage security over an asset, and the applicant was looking to expand his asset holding, and in the event of a family dispute, there would be sufficient assets to satisfy whatever complaints were there.

Q. And did you take any step to confirm that position with George?

A. No, not at all. I did not know George.

Q. Did you take any step to confirm with Richard that the proposed conversation occurred?

A. No, I didn’t.

Q. And I’m going to suggest to you, sir, the reason that you didn’t do that is because the point of time when you were informed that George had an interest in that property was in fact much later when you met George and befriended him.

A. That wasn’t the case.

96. Later in the cross examination, the following exchange occurred at T 132.19-132.44:

Q. But since 20 February 2017, you and Richard haven't had a conversation, have you?

A. Since?

Q. 20 February 2017.

A. I don't recall speaking to Richard for a long time. I attempting to speak with him, I think I went and visited him at his house when - when he was sick, going through some health issues, and then didn’t think it would be appropriate to try and bring up the subject of mediating between him and his brother. That - that text would have related me playing a role to mediate between him and his brother rather than go through the court system.

Q. It was at that time, when you sent that text, that George told you that it was his property and that Richard had, in George's view, offered him a car at the time of the Bargo loan. He told you that, did he?

A. That - that is not the case. If you--

Q. When did George tell you that?

A. When did George tell me that?

Q. Yes.

A. I don’t have a date for that, but it may not have been George that told me that, because the notation I made on file listed Canterbury BMW at a time where I did not know George, and it would not have been George who mentioned that. It would have been Richard, because it was listed in the loan file.

97. Mr Trad thus gave evidence that Richard told him that even though No 6 was in Richard’s name, it belonged to George, and that the brothers’ parents chose to put the property in Richard’s name in trust for George. Mr Trad said that Richard told him that he would need to get George’s approval to the proposed mortgage being secured on No 6, and further, that Richard would reward George by buying him a car. This last matter was relevant to an unresolved evidentiary dispute as to whether Richard bought George a BMW motor vehicle. Mr Trad’s evidence about Richard asking him to intercede with George to persuade George to sell No 6 in order to alleviate Richard’s financial difficulties is also telling, as Richard would not have needed to seek Mr Trad’s assistance if Richard believed at the time that he was the legal owner of No 6 and that there was no impediment to him selling the property.

Credibility of Mr Trad’s evidence

98. As I have noted, Mr Trad gave his evidence orally in the witness box. Although it is probable that he was subpoenaed, he gave his evidence as if he had just walked in off the street. The effect was very impressive, as is sometimes the case when the Court enjoys the benefit of hearing a witness’ evidence out of the witness’ mouth without any opportunity for that evidence to be mediated by a party’s lawyers. There was a distinct air of verisimilitude about Mr Trad’s evidence and the way he appeared to recall his interactions with Richard and George. Mr Trad’s evidence suggested that he had retained his file in which he had included documents and notes created at the times of his dealings with Richard. Mr Trad was not required to produce his file, so there was no evidence of its contents. The manner in which Mr Trad gave his evidence suggested that he had refreshed his memory by reference to the contents of his file.

99. Richard’s counsel sought to cast doubt on Mr Trad’s evidence by suggesting that it was in some way a breach of duty for him as a finance broker to submit an application for finance to a bank that partially relied upon security over property that was not beneficially owned by the proposed borrower. He also put to Mr Trad that, at some time after the relevant events, Mr Trad had come to learn George’s version of the facts through conversations with George. This suggestion was denied by Mr Trad. Counsel relied upon the concession made by Mr Trad in cross-examination that he had met with George at their club for lunch and that he had loaned George money over the years to complete the renovations. Mr Trad’s evidence, which I accept, was that he had not met George at the time of his dealings with Richard in relation to the purchase of the rural property at Bargo. Implicit in counsel’s submission was that Mr Trad had either concocted his evidence in league with George, or, if not, George had casually made statements during his occasional meetings with Mr Trad that gave Mr Trad all of the information that would have been needed by Mr Trad to invent the evidence that he gave to the Court. That is particularly so for Mr Trad’s evidence concerning Richard’s statement that “I might buy him a car or something in exchange for letting me use his house as security” as a reward for agreeing to the mortgage being granted over No 6, and also the proposed auction of No 6. Counsel, quite properly, did not put this suggestion to Mr Trad in cross-examination. There is no basis for the Court to conclude that Mr Trad made up his evidence to support George’s case. The subject matter of the evidence is such that it would have required a high level of dishonesty on Mr Trad’s part to concoct the evidence that he gave. The whole manner in which Mr Trad gave his evidence was entirely inconsistent with the evidence being a recent invention or dreamed up in collusion with George.

100. I accept Mr Trad as a truthful, independent and reliable witness. While the demeanour of a witness in giving evidence is not always a valid indicator of the reliability of the evidence that is given, Mr Trad satisfied me that I should accept the evidence that he gave. Given the level of inconsistency between much of the evidence on significant issues, I consider that Mr Trad’s evidence is very significant and something of a beacon in an otherwise obscure landscape.

General comment on the evidence given by the third-party witnesses

101. There is a difficulty that is commonly faced in general equity cases, where the outcome depends upon conversations and events that occurred in the distant past. This was explained by McLelland CJ in Eq in a different context in Watson v Foxman (1995) 49 NSWLR 315, where his Honour said at 318:

… Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

102. Given these considerations, it is necessary for the Court to carefully consider the weight that should be given to the evidence of the third-party witnesses called by the plaintiffs, given that it concerns relatively isolated statements said to have been made by Richard a considerable time ago.

103. The subject matter of the evidence is significant in my view, insofar as it concerns statements said to have been made by Richard concerning the beneficial ownership of No 6, or as to Souad's intentions in relation to the acquisition of property for her sons. Particularly in the case of Mr Trad's evidence, where the context made it clear that Richard's statement was made as to the true beneficial ownership of a property that was in his name, I consider that the subject matter is more likely to have been accurately remembered than many other subjects. The relative consistency of the evidence given by multiple witnesses in my view adds some collective weight to the evidence. It was also consistent with the evidence given by George and Anne, as well as the apparent objective basis on which George and Anne occupied No 6 for a number of decades.

104. Although my acceptance of the evidence must be guarded to some extent, my preparedness to accept it has been enhanced by my view of the credibility of the way the witnesses supported their evidence orally, particularly in the case of Mr Trad, who appeared to be as credible a witness as I have experienced.

105. Consequently, even allowing for the imperfection of memory as a result of the passing of time, I have found that the evidence given by the third-party witnesses should be given considerable weight, and provides substantial support for the plaintiffs' case.

Renovations of No 6

106. George and Anne carried out three renovations of No 6 in 2001, 2008 and 2013. George gave evidence that he would not have carried out those renovations if he had not believed that he was the owner of No 6. I accept that evidence. It is highly improbable that George and Anne would have spent the money that they did, and taken the trouble that the renovations involved, if they had understood that Richard was the real owner of No 6 and that they had no security of tenure to use No 6 as their family home. Moreover, the fact that they did carry out the renovations without seeking some form of long-term secure tenure tends to corroborate their evidence that they believed George was the real owner of the property.

107. I accept George's evidence that the 2001 renovation of No 6 included the following:

(a)   Replacement of the rotten floorboards under the carpets with new boards and tiles;

(b)    Replacement of the skirting boards throughout the house;

(c)    All the interior doors of the house were painted;

(d)   The rising-damp issues were fixed;

(e)    The house was painted on the inside.

108. George's evidence was that he paid for all of the renovations, and that the builder was paid $25,000 and the painter separately was paid $5,000.

109. George's evidence was that Richard knew that he and Anne were doing the renovations because he regularly visited Souad who was living three doors up at No 12 during the course of the renovation, and Richard visited No 6 shortly after George's first child was born in April 2001, by which time the renovations had been completed.

110. George gave evidence in his 18 July 2018 affidavit of the following conversation with Richard before the commencement of the second renovation in about mid-June 2008:

100. Prior to my wife and children moving into my mother's house, I spoke to Richard and said words to the following effect:

"Anne, and I will be renovating our house. There is a lot of work to be done and I can't have Anne and the kids staying in the house while we are renovating it. Do you have a problem with Anne and the kids moving into Mum's house for a few months during the renovation? I will be sleeping in my bedroom and will be helping with the renovations".

101. Richard said words to the following effect:

"No, I have no problem with that".

111. George said that the reason why he asked Richard for his approval was that Richard used a room in No 12 as his office for his newspaper delivery business and George wanted to make sure he would not be inconvenienced with George's family moving in.

112. The renovations commenced in about mid-June 2008 and took approximately seven months to complete and finished by the end of January 2009. For four of those months, Anne and the couple's two children stayed at No 12.

113. George said that he slept in the front bedroom of No 6 during the renovation and that he assisted the builder by driving him to various places to hire equipment and purchase materials. George did a lot of labouring type work including rubbish removal, working as a brickie's labourer, moving building material, and collecting building material from the hardware store.

114. The 2008 renovations included the following:

(a)    Stripping the house completely of all fixtures and fittings;

(b)    The flooring in the hall, lounge, kitchen and bathroom was removed;

(c)    The foundations were underpinned and secured, and the joists replaced;

(d)    A brand-new modern kitchen was installed, complete with new appliances;

(e)    A new bathroom was installed, complete with modern fixtures and fittings, including a new bath tub, vanity and toilet;

(f)    The electrical wiring in the house was completely rewired;

(g)    All the plumbing was redone with new copper pipes;

(h)    New gas lines were connected to the house;

(i)    All the skirting boards were replaced;

(j)    All light fittings were replaced with new fittings;

(k).    Windows were installed with new blinds;

(l)    The front of the house was completely redesigned;

(m)    The rear of the house was completely redesigned;

(n)    New front and back verandas and pathways were installed;

(o)    All doors were replaced and painted, as were all the walls inside and out;

(p)    Security gates at the front of the house were installed;

(q)    The gardens were really landscaped.

115. The work was paid for by George and Anne and cost about $200,000.

116. George's evidence was that Richard knew that No 6 was being renovated because, by that time, he was living close by in No 10 with his family. The fact that substantial renovations were being undertaken was obvious because skip bins were placed at the front of the house, as were building materials. The front of the house was redesigned as well as the front landscaping. George said that Richard visited and went into No 6 during the renovation.

117. No 6 was further renovated in mid-2013, because Anne's mother was becoming frail and her eyesight was failing. George and Anne converted the garage into a granny flat for Anne's mother to live in, so that she could feel independent but be close enough for Anne and George to look after her. The backyard veranda had to be modified so that Anne's mother could access the house from the granny flat.

118. George said that the modifications and renovations cost about $60,000.

119. George said that Richard was aware that the 2013 renovation was carried out for essentially the same reasons as for the 2008 renovations.

120. Anne gave evidence in her 18 July 2018 affidavit that confirmed George's evidence concerning the circumstances and cost of the three renovations.

121. Richard responded to George's and Anne's evidence concerning their renovations of No 6 in his 10 December 2018 affidavit.

122. Richard claimed that George asked him for his permission to fix the rising damp in the house in 2001. He said that he was not surprised by the visible evidence of the renovation being carried out because he had permitted the renovation to occur.

123. As to the 2008 renovation, Richard said in par 26 of his affidavit that George asked him for permission to do a renovation, and added: "But I do recall that the gist of his request was related to the kitchen and bathroom".

124. In paragraph 28, Richard stated his recollection of the works done as part of the 2008 renovation. He identified some of the works listed by George and Anne that he accepted were done, and other items of which he was unaware, and stated that, in his view, a number of the items were cosmetic only.

125. Richard acknowledged that he was aware of the visible evidence of the renovation being undertaken, but said that he had no concerns about that because he had given his permission for the renovation to occur.

126. Richard said in par 30 of his affidavit that he did not initially know about the conversion of the garage to a granny flat. Richard said that he became aware of work being done, and, at some point, he asked George about the garage and George said: "I am converting the garage to a granny flat". Richard says that he believes the granny flat conversation took place in 2008, not in 2013.

127. I am satisfied that Richard sought in his evidence to downplay the level of his contemporaneous understanding of the nature and extent of the renovations of No 6 carried out by George and Anne. Those matters should have been obvious to Richard. Although a subtle matter, I found Richard’s evidence on this issue to be discrediting, as he was not prepared forthrightly to acknowledge the extensiveness of the renovations.

Mortgage of No 6 to purchase the Bargo property

128. Richard gave evidence in his 12 May 2017 affidavit prepared for the proceedings in the Tribunal that he simply granted a mortgage over No 6 to assist in the purchase of the Bargo property, as he was the registered proprietor of No 6. At par 46, Richard gave the evidence set out above at [59] of George asking him why Richard mortgaged his house and Richard responding that No 6 was not George’s house.

129. George gave evidence in pars 72 to 82 of his 18 July 2018 affidavit concerning the circumstances in which the mortgage was granted over No 6 to secure part of the purchase price of the Bargo property. George said that, in late 2003, Richard told him that he was buying a 44 acre property at Bargo for $880,000, and that he needed to mortgage No 6 because No 42 already had a mortgage on it. George said that he agreed to a mortgage being granted over No 6, and that, in return, Richard paid $33,000 on his credit card to assist George in buying a BMW motor vehicle for $64,000. George gave the name of the BMW dealer and the salesman.

130. Richard responded in pars 20 to 22 of his 10 December 2017 affidavit, by denying that conversations occurred as asserted by George, and in particular, denying that he paid $33,000 to assist George in buying the BMW motor vehicle. Richard added that, at the time, he did not have a credit card with a limit of more than $15,000.

131. The Court is at least able to find on the basis of this evidence that, from George’s perspective, he consented to Richard granting a mortgage over No 6 to assist with the purchase of the Bargo property. It is implicit in George’s evidence that, even if the Court accepts the plaintiffs’ case that they believed that No 6 belonged to George, they agreed to the mortgage remaining on the title to the property on the basis that Richard would pay off the debt that was secured by the mortgage over time in accordance with its terms.

132. I am not satisfied that the evidence is sufficient to support a finding on the balance of probabilities as to whether or not Richard assisted George in purchasing the BMW motor vehicle. I note that, in par 7 of her 11 December 2018 affidavit, Nada supported Richard’s version of events, and said that she managed the business and family accounts and she could not remember seeing a credit card statement indicating payment for a BMW motor vehicle.

133. The evidence given by Mr Trad in chief that is set out above at [93] tends to support George’s case, in that Richard said to Mr Trad that he would need to speak with George to make sure that George was happy with Richard using No 6 as security. Mr Trad also recalled that Richard said that he might buy George a car or something in exchange for letting Richard use his house as security.

247. The plaintiffs submitted that there was: “Excessive delay caused by the defendant” and that the defendants should not be permitted to reap the benefits of “bringing the case now”: T 316.37. But although Richard commenced proceedings in the Tribunal on 12 May 2017, it is the plaintiffs who commenced these proceedings on 19 February 2018. It is plainly true that significant evidentiary difficulties have arisen because of the lapse of time since the purchase of No 6, but it is also true that both George and Richard allowed that time to elapse without resolving the legal effect of the unconventional arrangement between them concerning the title and right to occupy the property.

248. The plaintiffs went so far as to claim that the defendants’ title to No 6 was defeated by the equitable defence of laches because of the time that they had allowed to elapse without taking proceedings to establish their beneficial ownership of No 6. But that defence is not available to the plaintiffs, because the defendants have asserted their legal title to No 6 by reason that they are registered proprietors, and laches is only a defence to an equitable claim: see Orr v Ford (1989) 167 CLR 316; [1989] HCA 4, per Deane J at [12], with whom Mason CJ agreed.

249. There are difficulties in characterising the nature of the equitable interest of the plaintiffs in No 6 that may have existed or arisen as the result of the changing circumstances over the 25 years to the time when the defendants demanded possession of the property from the plaintiffs. I am reminded of the observations made by the learned editors of JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (LexisNexis Butterworths, 8^th ed, 2016) at [13-02] (Jacobs’), where they said: "The difficulty is in isolating or defining those circumstances in which equity will treat it as unconscionable for a party to deny the trust. Up to a point, the difficulty is diminished by the existence of well-recognised categories of cases in which a constructive trust arises…" [emphasis added]. There may be cases, of which I believe the present is one, where the Court may properly be satisfied that property is held on a constructive trust, but where it is difficult to place the circumstances within an established category, or the circumstances may fall within a number of categories or evolve from one category to another over time. Furthermore, the objective circumstances may demonstrate the existence of a constructive trust in fact, even though the effect of frailties in the evidence is that the Court cannot determine, on the balance of probabilities, how those circumstances arose. There may be cases where the Court can properly infer the existence of the elements required to establish a constructive trust even though the effect of the passage of time is that the Court cannot distinguish the real cause of those circumstances from a number of possibilities.

250. By the plaintiffs' second amended statement of claim and their outline of opening submissions, the plaintiffs claimed that the defendants hold the title to No 6 on constructive trust for them on the basis of the principles concerning common intention and the failure of a joint endeavour, as considered by this Court in Shepherd v Doolan [2005] NSWSC 42, Hansen v Noble [2021] NSWSC 138; (2021) 20 BPR 41,181 and Clayton v Clayton [2023] NSWSC 399. I do not accept that the circumstances of this case are capable of supporting a finding, in any relevant sense, that there was a joint endeavour between George, Richard and their parents that has failed in circumstances where the legal title to No 6 resides with the defendants.

251. If the evidence had satisfied the Court that No 6 had been purchased with money provided by Farhad and Souad, or that they had provided a substantial part of the purchase price, upon the basis of an agreement within the family that the title to the property would be placed in Richard's name on trust for George, then the Court may have been justified in finding that Richard held the property on trust for George from the date of its transfer to him, because his claim of ownership would have been unconscionable. The Court would in those circumstances have enforced an express trust notwithstanding the absence of writing required by s 23C of the Conveyancing Act 1919 (NSW), as it would have been a fraud on the statute for Richard to have denied the trust: see Jacobs’ at [7-09].

252. That case would not fall within the general understanding of the circumstances that give rise to a common intention constructive trust, where the parties agree that the beneficial ownership of property legally owned by one of them will vary in favour of the other in proportion to the contributions or benefits conferred by the other on the party who is the owner. In the present case, the plaintiffs' claim that George was the beneficial owner of No 6 from the time the title was transferred to Richard is an all or nothing claim dependent upon the common intentions of Richard and his parents in the context of the provision of the purchase price by the parents. There was never any question of George paying any part of the price or making any other contribution that would lead to the proportionate transfer of beneficial ownership of the property to George.

253. I have found that the plaintiffs have not established the existence of a trust in George's favour on the basis alleged, even though the circumstances are murky, and the conduct of George and Richard from the date of purchase of No 6 is objectively consistent with something happening at the time of the purchase that caused both brothers to think that the property would be George's permanent home.

254. The plaintiffs also relied in their second amended statement of claim and written opening submissions on the principles concerning the existence of a proprietary estoppel by representation and by convention. The former is not relevant to the present case, at least to the extent that there is no evidence that Richard made any express representation to George concerning his ownership of No 6 or that George acted on the faith of any such representation. In fact, the plaintiffs did not plead the making of an express representation in their second amended statement of claim, and instead in that part of their pleading that related to estoppel by representation they alleged in par 18B that George “adopted an assumption” that No 6 was beneficially owned by him when he moved into the property.

255. The appropriate analysis of the circumstances that most closely conforms with recognised principle is in terms of proprietary estoppel based upon an assumption or convention, although, as I will explain below, there is a basis for a finding that Richard’s conduct in standing by, over a period as long as 25 years, knowing of George’s assumption that he was the true owner of No 6, impliedly affirmed to George the truth of George’s belief. The effect of the passage of time and the consequent paucity of the evidence is to make it difficult to isolate the circumstances in which relevant assumptions were made or the convention as between George and Richard that George was the true owner of No 6 developed. But in my view, the evidence strongly establishes that from some presently unidentifiable time, at or within a few years of the purchase of No 6, George formed the assumption that he was the true owner of No 6, and that a convention developed as between George and Richard that that was the real situation.

256. The basic principles concerning the circumstances in which a proprietary estoppel may arise were not in issue. In Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293, Brereton J (as his Honour then was) said (footnotes omitted):

[57] The plaintiff’s case is put primarily on the basis of an equitable proprietary estoppel, the elements of which were articulated by Brennan J in Waltons Stores (Interstate) Ltd v Maher as follows:

… it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.

[58] Equity comes to the relief of a plaintiff who has acted to his or her detriment on the basis of a fundamental assumption, in the adoption of which the defendant has played such a part that it would be unfair or unjust if he or she were left free to ignore it, on the footing that it would be unconscionable for the defendant to deny the assumption. While it is essential to an equitable estoppel that the defendant knows or intends that the party who adopts the assumption will act or abstain from acting in reliance on it, and such knowledge or intention may easily be inferred where the adoption, assumption or expectation is induced by the making of a promise or representation, it may also be found where a defendant encourages a plaintiff to adhere to an assumption or expectation already formed, or acquiesces in an assumption or expectation when, in conscience, objection ought to be stated. The unconscionability which attracts the intervention of equity is the defendant’s failure, having induced or acquiesced in the adoption of the assumption or expectation, to fulfil it, or otherwise to avoid the detriment which that failure would occasion.

[59] While numerous judicial and academic attempts have been made over the years to catalogue the elements of an estoppel of this type, it suffices for present purposes to observe that, at least generally speaking, the matters that a plaintiff must establish to found such an equitable estoppel may be characterised as comprising certain conduct of the plaintiff, certain conduct of the defendant, and certain qualities of the subject matter, which for present purposes, may be sufficiently summarised as follows. First, as to the conduct of the plaintiff, that the plaintiff acted, or abstained from acting, in reliance upon an assumption or expectation that a particular legal relationship existed or would exist between the plaintiff and the defendant or that the plaintiff had or would acquire some interest in the defendant’s property. Secondly, as to the conduct of the defendant, that the defendant induced the plaintiff to adopt the assumption or expectation and encouraged the reliant activity of the plaintiff, or at least failed to deny the assumption or expectation with knowledge that the plaintiff was relying on it to the plaintiff’s potential detriment, and that the expectation could be fulfilled only by transfer of the defendant’s property, a diminution of the defendant’s rights or an increase in the defendant’s obligations. Thirdly, as to the subject matter, that the assumption or expectation in respect of it was one that the defendant could lawfully satisfy. Ordinarily the relevant conduct of the plaintiff (assumption or expectation) and that of the defendant (encouragement or acquiescence) will be factually interrelated and interwoven.

260. In Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469, Meagher JA said (Leeming and Payne JJA agreeing):

[15] Q’s argument in support of this ground emphasises the distinction between proprietary estoppel by encouragement and proprietary estoppel by acquiescence, the latter understood in the sense of “standing by”. The former, as formulated in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [6], is founded in an assumption as to the future acquisition of ownership of property which has been induced by a representation or promise upon which there has been detrimental reliance by the plaintiff. As Mr Handley observes in Estoppel by Conduct and Election (2nd ed, Thomson Reuters, 2016) at [3–001], a representation or promise “may be implied wholly or partly from conduct or inferred from silence or inaction”. Whether any, and if so what, representation has been made is to be judged “objectively according to the impact that whatever is said [or done] may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee” per Mance LJ in MCI [2004] 2 All ER (Comm) 833 at 844. See also Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18 at [24]–[27] (Lord Rodger) and at [80], [84]–[86] (Lord Neuberger). In this Court, see Galaxidis v Galaxidis [2004] NSWCA 111 at [93]; Sullivan v Sullivan [2006] NSWCA 312 at [85]; and Evans v Evans [2011] NSWCA 92 at [124].

[16] Proprietary estoppel by acquiescence, on the other hand, describes a much narrower principle, and arises “where a person improves land in the mistaken assumption that it is his own, the true owner being aware of the mistake and deliberately doing nothing to undeceive the other” per Jordan CJ in NSW Trotting Club Ltd v Council of the Municipality of Glebe (1937) 37 SR (NSW) 288 at 308. In such circumstances equity regards it as “fraudulent” for the true owner to set up his existing rights as against the person who has made a mistake as to his legal rights and acted to his detriment on the basis of that mistaken belief: Willmott v Barber (1880) 15 Ch D 96 at 105–106 (Fry J). See generally Estoppel by Conduct and Election at [11–002], [11–008]. As the author observes, “Estoppels by standing by are rare”. The “conduct of the owner which attracts the estoppel is his silence, but it differs from other estoppels by silence because there may be no pre-existing relationship or duty, and no dealings direct or indirect” (at [11–011]). The “improver acts on his mistaken belief and not on any representation by the land-owner” (at [11–012]).

[17] Mr Handley’s reference to “other estoppels by silence” recalls the statement of Lord Eldon LC in Dann v Spurrier (1802) 7 Ves Jun 231 at 235–236; 32 ER 94 at 95 that a court of equity “will not permit a man knowingly, though but passively, to encourage another to lay out money under an erroneous opinion of title; and the circumstance of looking on is in many cases as strong as using terms of encouragement” (emphasis added). In Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 at [109] this statement was taken to support the undoubtedly correct view that silence or inaction, in the context of other conduct, may constitute an “element of assurance” in support of a claim to a proprietary estoppel by encouragement.

261. An important aspect of the legal principles that govern the existence of a proprietary estoppel by acquiescence is that the significance of events must be determined as at the time when the party who has acquiesced seeks to depart from the assumption upon which the other party has acted. As Campbell JA said in Evans v Evans [2011] NSWCA 92 (Giles JA and Sackville AJA agreeing):

[107] The expectation that Peter and Sophie could reasonably derive from Robert’s words and actions need not depend on the words of a single conversation, but could arise from conduct over a period of time. The equity involved in proprietary estoppel operates by considering whether it would be contrary to good conscience (measured according to equity’s standards) for a defendant to disappoint the expectation that the plaintiffs have. The relevant time for the consideration is the time that the defendant seeks to disappoint that expectation.

[108] In Delaforce v Simpson-Cook [2010] NSWCA 84 at [81], Handley AJA (Allsop P and Giles JA agreeing) quoted with approval a remark of Hoffmann LJ in an unreported judgment of Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unreported), that had in turn been adopted in Thorner v Major [2009] 1 WLR 776 by Lord Walker at 794 and Lord Neuberger at 805:

“… equitable estoppel [by contrast with contract] … does not look forward into the future [it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.”

[109] Similarly, in Green v Green (1989) 17 NSWLR 343 at 355–356 Gleeson CJ (Priestley JA agreeing) pointed with apparent approval to an aspect of the reasoning in Grant v Edwards (1986) Ch 638:

“Mustill LJ (at 651) observed that although a number of judgments in this area refer, for simplicity of expression, to intention or conduct “on acquisition” of the relevant property, in a given case the relevant events leading to a finding of an interest in the claimant may occur after the acquisition, and beneficial interests may change in the course of the relationship between the parties. This observation was expressly approved by the Privy Council in Austen v Keele [(1987) 10 NSWLR 283 ; 61 ALJR 605 ; 72 ALR 579] 290; (at 609; 587).”

[110] That enables all the conduct up to the time of Robert’s disappointing or attempting to disappoint the expectation to be taken into account. The expectations that Peter and Sophie show that they had from time to time, and the extent to which Robert knew about them or induced or encouraged them, are relevant to deciding whether it would be contrary to good conscience for Robert to disappoint the expectation that Peter and Sophie had come to have. This is because it is acts done in reliance on the expectations which the plaintiffs have from time to time that generate an equity in their favour…

262. To the same effect, see the judgment of Meagher JA (Macfarlan JA agreeing) in DHJPM Pty Ltd v Blackthorn Resources Ltd (formerly called AIM Resources Ltd) (2011) 83 NSWLR 728; [2011] NSWCA 348 at [72]-[73] and Campbell JA (Bergin CJ in Eq and Sackville AJA agreeing) in Brown v New South Wales Trustee and Guardian [2012] NSWCA 431; (2012) 10 ASTLR 164 at [80].

263. The judgment of Campbell JA in Evans v Evans is helpful in the present case in relation to the significance of the reliance by the defendants on the assumption that they made and the detriment that they suffered as a result. His Honour said:

[113] Peter and Sophie’s subsequent conduct was to make no attempt to purchase a house or other dwelling for themselves and to spend significant money on the property over many years. Robert’s response (or more accurately, lack of response) to their subsequent conduct is a significant matter adding justification to Peter and Sophie’s assumption that the house was theirs. While they did not ask Robert’s permission for the work they carried out, there were repeated improvements to the property. On their case, these modifications must have been visible to Robert when he visited, yet he never made a word of complaint about them having effected the alterations without his approval. Indeed according to Sophie he said, concerning the kitchen alteration “Well, it’s your house”. That conduct, taken in combination with what Peter and Sophie say were the representations made to them before they moved into the property, amount to Robert standing by with knowledge that they were acting in the belief that the house was theirs.

[114] On Peter and Sophie’s case, they have suffered significant detriment by acting on the basis that the house was theirs. There was express evidence to the effect that they would not have moved into the house at all if they thought they were renting, and would not have carried out the improvements if they thought they were renting. There are the objective facts that they made no attempt to acquire a home for themselves, and that Peter is now in his mid-fifties, which is quite an unpromising age at which to be seeking a mortgage to buy a property.

…

[116] … The upshot of their evidence is that their understanding was that they had been given the house, and that they had the obligation to make the payments. They organised their lives around that understanding for decades. It would be belittling for a lawyer to denigrate or deny the reality of their understanding on the basis that it did not fit into a lawyer’s categories of analysis. An equity concerning proprietary estoppel arises by virtue of the expectations that the plaintiffs actually had, that were induced or encouraged by the defendant and on which the plaintiffs actually acted to their detriment. Those are questions of fact, not of legal analysis.

264. As the defendants did not act to assert their legal ownership of No 6 until Richard served an eviction notice on the plaintiffs on 12 December 2014, it is necessary for the Court to assess the significance of the parties’ conduct by looking back at events from that date. I have found that Richard was aware from a time at or shortly after the date of purchase of No 6 that it was George’s belief that the property had been purchased for him as his home indefinitely. Whatever Richard in fact thought about the matter, it ought to have been obvious to Richard as time passed by that George’s, and later Anne’s, belief that George was the real owner of No 6 would be continually reinforced by his silence in the face of the plaintiffs’ treatment of the property; that is, their occupation without the requirement of a lease or the obligation to pay rent, their continuing payment of outgoings and insurance, their three renovations and day-to-day maintenance of the property. In this context, Richard’s silence as the legal owner had a greater effect than mere acquiescence or standing by. It would in the circumstances have had the effect of cementing the assumption of the plaintiffs that George was the true owner of No 6.

265. It may be that in the period up to the commencement of the first renovation carried out by the plaintiffs in 2001, Richard could reasonably have claimed that the plaintiffs had suffered no real detriment as a result of George having acted on the belief that he was the true owner of No 6, because George had enjoyed the benefit of living in the property rent-free upon payment only of outgoings for much of the period. But in 2001, Richard stood by while the plaintiffs paid about $30,000 for a relatively minor renovation. Although minor, the renovation was obviously not one likely to be carried out by an occupier without any long-term tenure of the property. Richard was aware of the purchase and sale of the Bankstown home units in the period August 1998 to March 2005, as Richard was on the title to both properties as a registered proprietor, and Richard must have learned of the manner in which the net proceeds of sale were disbursed by George because Richard was the sole signatory on the bank account into which the proceeds of sale were paid. Richard was also aware of George’s dealings with the funds in George’s account (that was controlled by Richard) that Richard claims substantially involved payments to bookmakers. It ought to have been understood by Richard that the plaintiffs were making no apparent attempt to buy an alternative family home because of their understanding that they had no need to do so. Then, in 2008, Richard became aware that the plaintiffs had embarked upon a relatively substantial home renovation that in the ordinary course would only be undertaken by persons who believed that they were renovating a home that was their own property. In relative terms, given the means of the plaintiffs, the 2008 renovation involved a substantial rebuilding of the property at a cost of about $200,000 plus George’s personal efforts, and was the type of project that ordinary people might undertake to prepare their forever home. Yet again, Richard stood by and said nothing. This state of affairs continued until after the plaintiffs completed their 2013 renovation at a cost of about $60,000. The building of a granny flat for Anne’s mother to occupy is outwardly consistent with the plaintiffs’ belief that No 6 was their home and that they had a right to occupy it as long as they wished.

266. The detriment suffered by the plaintiffs in acting on the faith of their assumption as to George’s ownership of No 6 is not measured solely in their expenditures based upon their understanding, but also should be measured by their lost opportunity to make alternative arrangements to acquire their own home.

267. The defendants submitted that the consequences of any proprietary estoppel that the Court might find against them in this case could be remedied by the dismissal of the plaintiffs’ claim, subject to an order that the defendants pay to the plaintiffs an amount equal to the value added to No 6 in current terms as a result of the three renovations that the plaintiffs have carried out to the property, which on the expert evidence is the sum of $250,000. The defendants also accepted that the plaintiffs should be given six months to find alternative accommodation.

268. The defendants submitted that Richard’s contribution to the capital value of No 6 included the deposit and all mortgage loan repayments, which would have a present value of between $705,195 and $1,897,569. Those amounts were calculated by the defendants’ expert accountant, Ms Bateman, in a letter dated 21 June 2023 (MFI 1) on the basis that Richard paid the total amount of $112,247. The lower amount was calculated on the basis that Richard had instead invested his money on term deposit. The higher amount assumed interest at the Court’s pre-judgment interest rates. But although I have accepted that the mortgage was repaid through an account in the name of Richard, by reason of the absence of relevant records and the Court’s acceptance of evidence that Richard made admissions that are inconsistent with him having paid the purchase price for No 6 from his own funds, the Court has not made a finding that Richard paid the purchase price for No 6.

269. The defendants’ evidence concerning other payments made by Richard in relation to the ownership of No 6 was not comprehensive and they provided no submissions to the Court on the subject. As explained above, I have calculated for myself an amount that Richard appears to have paid for land tax as a result of his legal ownership of No 6. The Court received no submission from the defendants concerning the significance of these payments. That may be because the evidence was tendered without comment and there was no contest between the parties on the issue.

270. The evidence establishes that George consented to Richard granting a mortgage over No 6 to secure part of the purchase price of the Bargo property on the apparent basis that Richard would comply with the terms of the mortgage in respect of the making of payments. There is no evidence as to what those terms were. Had that mortgage still been in place, there may have been an argument that it would be equitable for the Court to maintain the status quo. However, there was evidence that the Bargo property has been sold, and the mortgage over No 6 has been discharged. The price received by the defendants for the Bargo property was a substantial sum, though there is no proper reason for the Court to disclose that amount in these reasons. The defendants have re-mortgaged No 6 to secure substantial debts, as has been recorded above. Those mortgages were granted without the consent or knowledge of the plaintiffs. Although part of the relief sought by the plaintiffs in this case is an order that the defendants cause the mortgage over No 6 to be discharged, the defendants have not provided any evidence to show that the making of the orders sought by the plaintiffs would cause them to suffer undue hardship. There is some background evidence that would tend to suggest that the defendants have the resources to refinance the present mortgage on No 6, but that issue was not explored at the hearing, as it was not raised by the defendants, and it is a subject upon which the Court cannot make any finding.

271. I am prepared to infer on the basis of the background evidence concerning George’s occupation and the plaintiffs’ apparent ages and their station in life that they would not be able to acquire ownership of any suitable alternative home, if the result of these proceedings was only that the defendants were ordered to pay to them the sum of $250,000. In that event, I am satisfied that the plaintiffs would have wholly lost their opportunity to acquire ownership of a suitable home. I am also satisfied that, if Richard had not stood by and allowed George and later both plaintiffs to treat No 6 as if it was George’s property, for the 25 odd years that he did so, then it is probable that the plaintiffs would have rearranged their affairs no later than about 2001, when they carried out their first renovation of the property. It is probable that, in the period that has elapsed since then, the plaintiffs would have been able to acquire a property that is broadly comparable with No 6.

272. Although there is not a promissory element to the proprietary estoppel to which I have found the defendants to be subject, in the sense that Richard did not make a promise to transfer No 6 to George or the plaintiffs, I have found that Richard’s acquiescence had a more wide-ranging effect than that he had merely stood by and allowed the plaintiffs to carry out the renovations of the property without informing them that he was not only the legal owner but that he could at will cause them to be ejected from the property. The plaintiffs knew that George was not the legal owner of the property, but their assumption was that he was already the true owner. I have used the expression true owner because of my inference that the plaintiffs would not have been aware, before the commencement of these proceedings, of the technical differences in the concepts of legal and beneficial ownership of property. I have found that Richard was at all material times aware that the plaintiffs had that understanding, and by implication his consistent failure to clearly inform the plaintiffs that it was Richard who was the true owner had the same effect, although by implication, as would a positive representation by Richard that he would always treat George as the true owner of No 6.

273. It is necessary for the Court to consider whether there is an appropriate equitable remedy falling short of the imposition of a trust: Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [10] per Gleeson CJ, McHugh, Gummow and Callinan JJ. The only alternative suggested by the defendants is an order that they pay the plaintiffs an amount equal to the increase in the value of No 6 that has resulted from the renovations carried out by the plaintiffs, measured as at the present day. In my view that would be an entirely inadequate remedy. The defendants have not propounded a coherent alternative case that, as a condition to the making of an order that the defendants hold No 6 on trust for them, the plaintiffs should be ordered to pay an amount to the defendants that represents payments by them in respect of the property from which the plaintiffs have benefited. Some such payments may have been made, but the defendants have not made this claim in a way that could be contested by the plaintiffs. This is not a case where the Court has been satisfied on the evidence that, at the date that No 6 was purchased, Richard was both the legal and beneficial owner of the property. It is an exceptional result of the fundamental inconsistencies in the evidence in this case – exacerbated by the effect of the passage of time – that the Court has not been able to make any positive finding as to the beneficial ownership of No 6 at the date of its acquisition. The Court has found that Richard did more than merely stand by, but that the effect of his conduct over some 25 years was to reinforce the assumption made by the plaintiffs that George was the true owner of No 6. Consequently, the plaintiffs have acted on that basis over the whole of the period and organised their lives accordingly, in a manner that they have no realistic prospect of retrieving. This is a proper case in my view for equity to give effect to the assumption upon which the plaintiffs have acted, which is the same as to say to give effect to the convention that has operated between George and Richard, and their wives over later periods.

274. In these circumstances, I am satisfied that the appropriate remedy to avoid the detriment that the plaintiffs will suffer if the defendants are permitted to eject the plaintiffs from No 6 on the terms submitted by the defendants is for the Court to make a declaration that the defendants hold the title to No 6 on trust for the plaintiffs, and to make appropriate consequential orders. The formal orders that the Court will make will contain the title details for No 6.

275. As Anne’s claim to have a beneficial interest in No 6 is narrower than George’s, because Anne’s understanding was that George, and not Anne, was the owner of the property, and the only detriment suffered by Anne was her contribution to the cost of renovating No 6, which was indistinguishable on the evidence from George’s contribution, and perhaps indirectly the failure to acquire a home jointly with George, there is strength in the defendants’ argument that the Court should not make an order that has the effect that Anne will become the joint beneficial owner of No 6 with George. However, the defendants did not suggest that they would suffer any additional disadvantage if orders were made in favour of George and Anne jointly, in accordance with the relief sought in the second amended statement of claim. I will in these circumstances make the orders sought by the plaintiffs.

276. Given the outcome in this matter, it will not be necessary to transfer the proceedings to the Tribunal.

Orders

277. The Court’s orders are:

1. Declaration that the defendants hold the property known as [No 6] (“Property”) on trust for the plaintiffs.

2. Order the defendants to cause the mortgage on the Property to be discharged within six months of the date of these orders.

3. Order the defendants to transfer the title to the Property to the plaintiffs unencumbered within one month of the discharge of the mortgage referred to in order 2.

4. Order the defendants to perform the covenants on their part contained in the mortgage referred to in order 2 until the date of its discharge.

5. Grant leave to the parties to apply to the Court on five days' notice for any further orders that may be necessary or convenient to give effect to these orders.

6. Note that the plaintiffs will be entitled to lodge a caveat against the title to the Property to protect the interest in that property to which they have become entitled as a result of these orders.

7. Otherwise dismiss the second amended statement of claim.

8. Dismiss the cross claim.

9. Order the defendants to pay the plaintiffs’ costs of the proceedings.

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Decision last updated: 15 December 2023