Simpson-Cook v Delaforce

[2009] NSWSC 357

CITATION:	Susann Simpson-Cook v William John Martin Delaforce [2009] NSWSC 357
HEARING DATE(S):	19 March 2009
JUDGMENT DATE :	11 May 2009
JUDGMENT OF:	Bergin CJ in Eq
DECISION:	Plaintiff entitled to transfer of Property
CATCHWORDS:	[PROPRIETARY ESTOPPEL] - Whether the plaintiff established detrimental reliance on assurances - [DETRIMENT] - Where right is foregone - whether plaintiff must show that there was a real chance of achieving a better outcome had right been enforced - [RELIEF] - Whether expected state of affairs should be made good - [FAMILY PROVISION] - Whether deceased's assurances are to be taken into account - whether plaintiff has established an entitlement to provision
LEGISLATION CITED:	Family Provision Act 1982 (NSW)
CASES CITED:	Dillwyn v Llewelyn [1861 – 73] ALL ER Rep 384 Foran v Wight (1989) 168 CLR 385 Gillett v Holt [2001] Ch 210 Giumelli v Giumelli (1999) 196 CLR 101 Olsson v Dyson (1969) 120 CLR 365 Plimmer v Mayor of Wellington (1884) 9 App Cas 699 Ramsden v Dyson (1866) LR 1 HL 129 Sledmore v Dalby (1996) 72 P & CR 196 CA Taylor v Dickens & Anor (1998) 1 FLR 806 Vukic v Luca Grbin & Ors; Estate of Zvonko Grbin [2006] NSWSC 41
TEXTS CITED:	Meagher Gummow & Lehane’s Equity Doctrines and Remedies, 4th Edition Brewer's Dictionary of Phrase and Fable, 14th Edition
PARTIES:	Susann Simpson-Cook (Plaintiff) William John Martin Delaforce (Defendant)
FILE NUMBER(S):	SC 4407 of 2007
COUNSEL:	S Galitsky (Plaintiff) R Jefferis (Defendant)
SOLICITORS:	Websters (Plaintiff) Davis Legal (Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN CJ in Eq

11 MAY 2009

4407/07 SUSANN SIMPSON-COOK v WILLIAM JOHN MARTIN DELAFORCE

JUDGMENT

1 The plaintiff, Susann Simpson-Cook, is the former wife of the late Michael Edward Fiertag (the deceased) who died on 22 June 2007. The defendant, William John Martin Delaforce, is the executor of the estate of the deceased. The plaintiff claims a proprietary interest in an asset of the deceased’s estate being real property in Arncliffe in the state of New South Wales (the Property), in respect of which the executor obtained a valuation at $600,000. The plaintiff seeks a declaration that she is entitled to the full and beneficial interest in the Property and an order that the Property be transferred into her name free from encumbrance. There is an alternative claim for such an order under the Family Provision Act 1982. The defendant resists these applications.

2 The plaintiff has been employed as a flight attendant with Qantas Airways Limited for the last 20 years. She first met the deceased in 1988 and they commenced a relationship in October 1989. They began living together shortly after, in about 27 November 1989 in rented premises, but they separated on 29 June 1990. On 22 March 1991 the plaintiff purchased her house that is next door to the Property. The plaintiff paid $220,000 and only borrowed $46,000. The plaintiff’s home was next door to the Property consisting of a large parcel of land, including a heritage house and vacant land with two street frontages.

3 On 31 August 1991 the plaintiff and the deceased recommenced living together and they married on 31 March 1994, at which time the plaintiff was 33 years of age and the deceased was 50 years of age. It appears there were numerous discussions about the deceased’s way of life in not working fulltime and this caused friction in the relationship. There was also tension in relation to whether they would have a family. There are no children of the marriage. The marriage suffered an irretrievable breakdown and the plaintiff and the deceased separated in 2001. They were divorced on 28 December 2002 at which time the plaintiff was 41 years and the deceased 59 years.

4 For most of their relationship the plaintiff and the deceased lived in the plaintiff’s house. The deceased did not contribute to the purchase of that house or to the mortgage payments. He did not pay rent but he did contribute to some of the running costs of the household. At the commencement of their relationship the plaintiff’s salary was $23,400 per annum plus further amounts for additional hours, overtime and allowances. For the first two years of their relationship the deceased was employed as an architect earning approximately $50,000 per annum. For the remainder of their relationship, the deceased did not have regular employment or regular income. The plaintiff regularly worked extra hours to top up the household income.

5 During the relationship the deceased received two significant bequests following the death of his parents. The first, following the death of his mother, was an inheritance of approximately $340,000. Those funds were paid into the plaintiff and the deceased’s joint account on 8 June 1993. Following the death of his father, the deceased received $1.17 million from his father’s estate. That money was apparently invested, $500,000 through the deceased’s superannuation fund and $500,000 through the Fiertag Family Trust.

6 Although the deceased did not have regular income, he sometimes worked as a distributor of products and also in an informal partnership with another architect. He apparently spent quite a deal of time studying environmental architectural design, web design and had an interest in trading in derivatives. The plaintiff claimed that the deceased was able to move into an established house with the plaintiff without capital outlay and was able to indulge his interests because he had received the significant bequests from his parents. He also enjoyed generous international travel benefits by reason of the plaintiff’s employment with Qantas.

Acquisition of the Property

7 In 1992 the plaintiff initiated action to purchase the Property by private negotiations with the two brothers who owned it at that time. The plaintiff was very keen to purchase the Property because it would have created a substantial compound of property holding in the street. Unfortunately those negotiations broke down. At this time the plaintiff and the deceased discussed and reviewed the plaintiff’s financial position. The deceased advised the plaintiff to pay off her mortgage as soon as possible and although this meant that the plaintiff had less cash available to further pursue the purchase of the Property, she decided to take the deceased’s advice and pay off the mortgage on her home as quickly as possible.

8 The following year the brothers decided to auction the Property and the plaintiff was still very keen to purchase it although her cash position was now reduced by reason of the increased mortgage payments. The banks that the plaintiff approached for finance to purchase the Property required her home as security for the loan. In discussions with the deceased, it was decided that his inheritance from his mother’s estate could be used towards the purchase and the deceased would borrow whatever was needed to make up the difference, using the Property as security.

9 The plaintiff attended the auction of the Property on 8 June 1993 in the deceased’s absence and, armed with the deceased’s Power of Attorney, purchased the Property in his name for $259,500. The deceased obtained a loan for $100,000 from the Bank of Melbourne that took a mortgage over the Property. The house on the Property was renovated and part of the land was sub-divided and sold to another neighbour. The Property remained in the deceased’s name and he repaid the amount of $99,953 to the Bank of Melbourne on 22 July 1998 from the Fiertag Family Trust and discharged the mortgage. The plaintiff and the deceased planned to increase the income from the Property by constructing a granny flat at the rear eastern boundary. The deceased proposed a plan for development and suggested it be lodged with the local council, however this plan had not been implemented at the time the plaintiff and the deceased separated in 2001.

Property Settlement

10 Approximately six months after their separation, the deceased and the plaintiff commenced negotiating their property settlement. They decided to do this themselves rather than through lawyers and they met and also spoke on the telephone from time to time. They had both contributed financially to the acquisition of their assets. The plaintiff had contributed capital at the commencement of the relationship and the income she had earned and the provision of the home that they lived in. The deceased had contributed the income he had earned during the first two years and the inheritances he had received from his parents.

11 There were a number of investment properties that the plaintiff and the deceased had purchased during their relationship and there was agreement in respect of how those would be divided. There were two parts to the Property at the time of the negotiations. There was vacant land immediately next door to the heritage house that the plaintiff had purchased in which they lived, with a lot on the other side of the vacant lot with a heritage house on it. The plaintiff and the deceased agreed that the plaintiff should have the vacant land, but negotiations in respect of the land with the other heritage house was not as straightforward. I will refer to this land and house from hereon as the Property.

12 There was approximately $3.5 million in matrimonial assets. In the early discussions, the proposed settlement included a cash payment of $100,000 to the plaintiff to make it an “even split”. Subsequently the deceased requested that the amount to be paid to the plaintiff be reduced to $70,000 and again later to $50,000. The deceased informed the plaintiff that he was planning to leave Australia and to move to New Zealand. He had apparently seen some property in New Zealand that he was thinking of purchasing and said that he did not want the responsibility of having to build a house in Sydney. They discussed the deceased’s desire to keep the Property as a “foothold” in the Sydney property market; the difference in their ages; and the prospect of the plaintiff outliving the deceased. It was at this time that they reached agreement that the deceased could retain the Property for his lifetime but that he would bequeath it to the plaintiff in his Will.

13 The plaintiff and the deceased agreed on the split with a $50,000 cash payment being made to the plaintiff by the deceased. They then instructed their joint solicitor to draw up some Consent Orders to be filed in the Family Court of Australia. The deceased instructed the solicitor that they had worked out what was to be done and it was only a matter of putting it into a proper legal form. That solicitor advised that they should have separate representation and the plaintiff then instructed a separate solicitor.

14 When the plaintiff first instructed her solicitor she did not tell her of the agreement that she had reached with the deceased that he would leave the Property to her in his Will. The solicitor drafted Consent Orders on about 14 May 2002 in the absence of such knowledge and they were then sent to the deceased for his approval. Those Consent Orders included the payment of $50,000 to the plaintiff and an order that the deceased be declared the sole beneficial owner as against the plaintiff of the Property.

15 After the Orders were sent to the deceased, he informed the plaintiff that he was no longer comfortable in paying her $50,000 and wanted that order removed. The plaintiff advised the deceased that she would forego the cash payment if he would agree to those funds being used towards the construction of a granny flat and leaving both the house and the granny flat to her in his Will. The deceased agreed that such a proposal sounded good but that he may not be able to get council approval to build the granny flat. The plaintiff suggested that at least he could attempt to obtain approval and if not, he could build a garage that would add to the value of the Property.

16 It was after this discussion that the plaintiff decided to instruct her solicitor in more detail and wrote to her on 24 May 2002 in terms that included the following:

When I add up the totals on the property settlement agreement…, I will be ending up with $1 920 240 and Michael with $1 663 120. These are the figures before I amend the document to include the updated values of the shares and property (which Michael has not asked me to do), which would make the settlement even more in my favour.

Michael has indicated that the part of the settlement agreement that he is unhappy with is the $50 000 cash payment. If Michael were to keep this $50 000, the figures would be $1 870 240 and $1 713 120. In this case, do you still hold the opinion that it is a favourable settlement? I’m not sure how much of my background that you remember – Michael has contributed more to our relationship, in dollar terms (I had more assets at the start of our relationship, but during the relationship Michael received a substantial inheritance), he is significantly older and has less income than I do.

Currently, I am the main beneficiary in Michael’s will. He has verbally undertaken to bequeath the property at [address] Arncliffe to me, in spite of our divorce. I have not sought to include this in the property settlement as I have seen it as something which would not be possible to guarantee…nice if it happens, but I’m not counting on it.

With the discussion of the $50 000 we have talked about Michael using this money to build a granny flat on the [property]. This would be a win-win (assuming that Michael did leave the property to me) as he would have additional income from the granny flat, and I would inherit a more valuable asset. Is there any way to formally include these understandings (the will and the granny flat) in the agreement, or should I continue to view it as “a bird in the bush”?

17 The plaintiff’s solicitor responded on 27 May 2002 in terms that included the following:

I think you are still getting a very good deal without the $50,000 payment so I would recommend that if that is a sticking point that you agree to foregoing it.

A suggestion for dealing with the will and granny flat issues would be to include these intentions by way of Notation on the Consent Orders. Whilst they are not enforceable as such they indicate the basis on which agreement has been reached and they provide good evidence of expressed intentions in the event of later non-compliance.

18 Subsequently the plaintiff and the deceased agreed on a notation to be included in the Consent Orders. They signed the Orders on 6 June 2002 and the Court made the orders and noted the matters in the Notation as follows:

NOTATION:

1) The parties have entered into this agreement on the basis that the husband:

a) will retain the wife as a beneficiary in his will and will bequeath the property [address] (the Property), unencumbered to her; and
b) will use his best endeavours to have a granny flat/combined garage erected on the said property …


2) Pursuant to section 81 of the Family Law Act 1975 the husband and the wife intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid any further proceedings between them.

3) The parties consent to the making of the Orders herein and to those Orders being of the same force and validity as if they had been made after a hearing by the Court.

19 Although there is no mention in the Notation of the $50,000 being used towards the construction of a granny flat/combined garage, the provision for payment of $50,000 to the plaintiff that had previously been in the orders was removed. Between 2002 and 2007 the plaintiff spoke with the deceased from time to time and subsequently became aware that he was unwell, although she was not aware that he had been diagnosed with lung cancer. The deceased demised on 22 June 2007 and Probate was granted on 16 July 2007. The deceased made his last will on 31 March 2007 and did not bequeath the Property to the plaintiff.

Proceedings

20 The plaintiff commenced these proceedings on 6 September 2007. The proceedings were heard on 19 March 2009 when Mr S Galitsky, of counsel, appeared for the plaintiff and Mr R Jefferis, of counsel, appeared for the defendant.

21 The plaintiff puts her case on two bases. The first is a claim for an order based on proprietary estoppel that she is entitled to an order transferring the property into her name. The alternative is a claim under the Act for further provision out of the deceased’s estate for an order that the property be transferred into her name. A pleaded claim in contract was not pressed.

Proprietary estoppel claim

22 The plaintiff relied upon Brereton J’s decision in Vukic v Luca Grbin & Ors; Estate of Zvonko Grbin [2006] NSWSC 41 in support of her claim based on proprietary estoppel. In that case the plaintiff, the sister of the first defendant/executor of their father’s estate, claimed that she was entitled to an equitable interest in the family home, the only real property of the estate (the House). The estoppel was said to arise from the plaintiff’s detrimental reliance on representations made by the deceased to the plaintiff that she would inherit a three quarter interest in the House on the deceased’s demise. The plaintiff made an alternative claim under the Family Provision Act for further provision out of the deceased’s estate.

23 In 1981 the deceased asked the plaintiff and her husband to live in and maintain the House. Over the following years the deceased made various representations to the plaintiff, upon which the plaintiff relied, the last of which was that if she continued to live in and maintain the House the deceased would leave her three quarters of the House in his will. The plaintiff and her husband separated in 1992 and divorced in 1993. The plaintiff continued to live in and maintained the House and spent money on the improvements to the House. The deceased died on 26 August 2002 but did not honour his promise to the plaintiff in his will. Brereton J said:

27 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 [ Grundt v Great Boulder Pty Gold Mines Limited [1937] HCA 58; (1937) 59 CLR 641; 675; Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 , 547; Waltons Stores (Interstate) Limited v Maher[1988] HCA 7; (1988) 164 CLR 387 , 404 (Mason CJ and Wilson J)]. It is essential to an equitable estoppel that the defendant knows or intends that the party who adopts it will act or abstain from acting in reliance on the assumption or expectation [ Crabb v Arun District Council[1975] EWCA Civ 7 ; [1976] Ch 179 , 188; Waltons v Maher, 423 (Brennan J)]. Such knowledge or intention may easily be inferred where the adoption of the assumption or expectation is induced by the making of a promise, but may also be found where the 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 [ Waltons v Maher, 423 (Brennan J)]. 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 with knowledge that it would be relied on, to fulfil the assumption or expectation or otherwise avoid the detriment which that failure would occasion [ Waltons v Maher, 423 (Brennan J)].

28 Although numerous attempts have been made to identify the various components of equitable estoppel, for present purposes, the matters which a plaintiff must establish to found an equitable estoppel may conveniently be summarised, in the present context, as follows:-

· First, in relation to the plaintiff’s conduct: 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, in relation to the defendant’s conduct: that the defendant induced the plaintiff to adopt the assumption or expectation and encouraged the reliant activities 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 it 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, in relation to the interest or property: that the assumption or expectation was one which the defendant could lawfully satisfy.

[See generally, Waltons v Maher, 428-429 (Brennan J); Meagher, Gummow & Lehane, Equity: Doctrines & Remedies, (4th ed., 2002), [17-105]].

24 His Honour was concluded that these three elements had been satisfied and held that it would be unconscionable for the deceased and his estate to depart from the expected state of affairs. His Honour also held that the unconscionability of such a departure was accentuated by the benefit to the deceased and the estate from the plaintiff’s reliant conduct (at [32]). Although his Honour concluded that he would uphold the plaintiff’s claim to a three quarter interest in the House, he acceded to the plaintiff’s request to grant relief under the Family Provision Act (at [34]). Proceeding in this way his Honour made an order that the Property vest in the plaintiff subject to charges in respect of her siblings legacies.

25 In resisting the present claim the defendant relied on Taylor v Dickens & Anor (1998) 1 FLR 806. In that case the owner of the property in question informed her part-time gardener that she intended to leave her house to him in her will. The gardener then advised the deceased that he would not charge for his services in the future. The deceased did not tell the gardener that she would now change her will. The deceased made a number of wills in which this promise was reflected, however the last will did not reflect that promise. The deceased did not inform the gardener that she had changed her will. The original promise was made in 1988 and the deceased died in 1995. The gardener had provided his services during the whole of that period for no remuneration.

26 The gardener’s claim in contract failed. In his case based on proprietary estoppel the gardener submitted that there was a wide equitable jurisdiction to interfere where it would be unconscionable to enforce strict legal rights. This submission was rejected on the basis that there was no such general jurisdiction in the field of promises as to future conduct. His Lordship found that the deceased’s conduct in not telling the gardener that she had changed her mind did not raise an equity that would entitle the gardener to the residuary estate.

27 Although the case apparently went on appeal it was compromised before disposition. In any event that case is quite distinguishable from the present case. The promise in that case arose from apparent benevolence towards a part-time employee. The assurances in the present case were made in the context of terminating the marriage and dividing the matrimonial property acquired in part during that relationship, with the formal step of having the Family Court of Australia note the assurances.

28 Although Mr Jefferis did not refer to it, there has been a deal of criticism of Taylor v Dickens. Robert Walker LJ referred to that criticism in Gillett v Holt [2001] Ch 210 at 227 and concluded that it was well founded. Aptly to the circumstances of the present case, his Lordship said at 227-228:

The actual result in the case may be justified on the other ground on which it was put (no unconscionability on the facts); or … the gardener’s unremunerated services might have merited some modest restitutionary relief… Even when the promise or assurance is in terms linked to the making of a will … the circumstances may make clear that the assurance is more than a mere statement of present (revocable) intention, and is tantamount to a promise.

29 It is also important to remember Walker LJ’s caution that: (1) the “flexible doctrine” of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments; (2) the quality of the relevant assurances may influence the issue of reliance; (3) reliance and detriment are often intertwined; and (4) whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood: at 227 and 230. The following principles relevant to the circumstances of this case may be gleaned from Waker LJ’s analysis in Gillett v Holt: (1) promises unsupported by consideration are initially revocable, however detrimental reliance on such promises make them irrevocable; (2) there must be a sufficient link between the promises relied on and the conduct which constitutes the detriment; and (3) detriment can be financial or otherwise, however if other than financial it has to be substantial.

30 The defendant submitted that: (1) the plaintiff did not rely on the assurances made by the deceased; (2) even if the plaintiff did rely on the deceased’s assurances, she did not act to her detriment; and (3) even if the plaintiff’s conduct in reliance on the deceased’s assurances could be characterised as to her detriment, it does not entitle the plaintiff to the Property.

31 The relevant assurances were made in the circumstance of the deceased requesting the plaintiff to agree that he did not have to make a $50,000 cash payment in respect of which he had already indicated his preparedness to make as part of their property settlement. The assurances allegedly made by the deceased were that he would use the $50,000 on the improvements to the Property and bequeath the Property to the plaintiff in his Will.

Reliance

32 The evidence establishes that at the time they attempted to instruct the joint solicitor the plaintiff and the deceased had reached agreement that, inter alia, the deceased would leave the Property to the plaintiff in his Will and there would be a $50,000 cash payment to the plaintiff. At this time the plaintiff viewed the deceased’s promise as “a bird in the bush”. That expression is a variation of the proverb “a bird in the hand is worth two in the bush” the meaning of which is that “possession is better than expectation”, from the Latin derivation, certa amittimus dum incerta petimus meaning “we lose what is certain whilst seeking that which is uncertain”: E Cobham Brewer, Brewer’s Dictionary of Phrase and Fable (14th ed., 1989) p. 115. The plaintiff’s attitude at that time was also described by her as “nice if it happens” but she was “not counting on it”.

33 In the circumstances the defendant submitted that the plaintiff viewed the prospect of receiving the Property as a mere chance and that at the time she signed the Consent Orders she did not believe that she “would” acquire the legal interest in the Property, and she did not rely on the deceased’s assurances.

34 In cross-examination the plaintiff gave the following evidence (tr 9-10):

Q. So I assume that at that stage, when Mr Fiertag said whatever he said to you about the promise to leave the property and the granny flat, you accepted what he said at face value?
A. Yes.

…

Q. But equally you knew that you couldn’t rely on what he was saying; he could change his mind, couldn’t he?
A. Yes.

Q. You accept that? He could change his mind later in time about how he made his will and whether you were left 5 Dowling Street?
A. I accept that now. At the time I believed that he would honour his commitment to me.

35 Mr Jefferis then asked the plaintiff about her email to her solicitor dated 24 May 2002 and the following evidence was given (tr 10-12):

Q. In your own words it says that as far as you taking 5 Dowling Street on Michael’s death, you acknowledged that was not something that was guaranteed. That’s what it says?
A. That is what it says. I can explain.

Q. And you go on to say, “nice if it happens, but I’m not counting on it”, don’t you?
A. Those are the words, yes.

Q. Those are your words?
A. Those are my words to my solicitor. When I wrote that e-mail I was in fact very embarrassed about the fact that I had not told my solicitor about this agreement and I was basically trying to save face and minimise the – I felt that I looked really foolish to her, because I had first of all accepted a verbal guarantee and secondly, I hadn’t told her about it. So in that e-mail I was basically trying to save face and act as if I wasn’t counting on it, whereas in fact I had been counting on it.

…

Q. At the end of that paragraph you ask a question and at the end of the question the last phrase is “or should I continue to view it as a bird in the bush?”
A. Yes.

Q. So up until then you were viewing this promise as a bird in the bush?
A. No. As I explained, I framed the question that way because I was embarrassed about the fact that I hadn’t disclosed that promise to my solicitor and by virtue of the fact that I was so foolish as to rely on it. I realised I’d made a mistake and I was really embarrassed.

Q. Embarrassed you say you were, but what’s the connection between being embarrassed and saying “should I continue to view it as a bird in the bush?”
A. The connection is that I was trying to pretend that I knew all along that Michael’s word would not be trustworthy, when in fact I had relied on it.

…

Q. If you thought in your mind you couldn’t trust what Michael was saying to you, did you think what you might do about that before 24 May?
A. Mr Jefferis, that was why I decided to separate from Michael, because I couldn’t rely on the things that he said to me and I was gradually coming to terms with that and there was an inconsistency in my logic and in my thinking that I couldn’t stay married to this man because he won’t keep his word to me, but I could still trust him in relation to his will. That was an error of thinking on my behalf, that I wanted to continue investing good faith in someone who had essentially demonstrated that he could not be trusted and as he reneged on the agreement we had about the financial settlement, as he gradually wanted to pay less cash as part of the settlement, I started to feel that if he couldn’t keep his commitment in relation to the $50,000 payment which had started out as 100, went to 70, went to 50 and then now he’s saying he’s not prepared to pay the 50, I started to realise that if he’s not prepared to meet that agreement, then what is the probability that he’s going to leave me that house in his will and that I, I gradually faced the prospect that he was basically saying that and not in a genuine way. So that’s when I sought her advice. I was really embarrassed that I hadn’t told her, but I just sought her advice about getting it included in the consent orders at that point, as I gradually realised.

Q. So as at 24 May, your evidence is that you weren’t relying upon what Mr Fiertag was saying to you about the house and [the Property] being given to you in his will?
A. From that point I realised that I needed to have it in writing.

Q. No, that isn’t the question I asked. Just listen to the question. As at 24 May, is it your evidence that you had come to the conclusion you couldn’t rely on what he’d said to you about giving you [the Property] in his will?
A. I had that concern.

Q. In other words, you didn’t think you could trust him to do what he said he was going to do?
A. I didn’t – yes – I didn’t think that he would automatically do what he’d said. Maybe he would, maybe he wouldn’t. Probably he wouldn’t.

Q. And you couldn’t rely on him doing what he said?
A. I couldn’t rely on it, yes.

36 Mr Jefferis suggested to the plaintiff that her belief did not change when the deceased signed the Consent Orders incorporating the Notation. The plaintiff gave evidence that her belief did change and gave the following further evidence (tr 13):

Q. So what made you think that he was going to be any more reliable now than he’d been in the past?
A. He had – we’d negotiated on the terms of the notation and my lawyer advised me that the notation would secure my claim against anybody currently in Michael’s life, so.

Q. Is it your position you were advised by your solicitor that the effect of the signing of the notation by Michael Fiertag was that that protected you against any other person?

…

A. No. Her advice was that it would protect me against any person currently in Michael’s life and that if Michael subsequently remarried or had children, that those people would have a claim upon the property, but that the people currently in Michael’s life such as the beneficiary of the will, that my claim was guaranteed against him.

Q. Did you rely upon the advice you received from your solicitor about that when you signed the notation?
A. I did.

37 The plaintiff gave evidence that had the deceased refused to consent to the Notation being included in the Consent Orders she would have sought orders from the Family Court. She was cross-examined about this evidence as follows (tr 19-20):

Q. You wouldn’t have, you accept, been able to seek orders about the matters in the notation.
A. I would have taken it further. We had an agreement and I realised that I had to get that agreement in writing for it to hold up and, so if Michael had not been prepared to put that agreement in writing then we would have had, I would have to take it further.

…

Q. You know because [your solicitor] told you that what was included in the notation in the consent orders wasn’t enforceable in the Family Court?
A. What she said to me was that if Michael had remarried that his future wife and if he had children that they would have had a claim over the property as well as the fact that I had a claim over that property and she said that in that context a Family Court would be reluctant to make orders in relation to a future will but she said that in relation to everybody currently in Michael’s life that my claim was assured. So I accepted that if Michael had remarried that I may not inherit that property that that notation may not have guaranteed me the inheritance of that property but Michael did not remarry.

38 On being further pressed about the advice that she had been given by her solicitor, the plaintiff said that she was relying upon the Notation as evidence of the agreement that she had struck with the deceased (tr 20).

39 As the negotiations developed the proposed payment of cash to the plaintiff was whittled away. When the deceased broached the prospect of reducing the cash payment to her, the plaintiff reluctantly agreed until the time that it had been reduced to $50,000. It is clear that although the plaintiff was not particularly happy with the reduction, she was willing to tolerate a settlement at that level. However when the deceased wanted to diminish the plaintiff’s entitlement to a cash payment even further, indeed to remove it altogether, the plaintiff consulted her solicitor. It was when the deceased baulked at the order for payment of $50,000 that the plaintiff’s attitude to the assurances changed and she decided to see if the promise could be included in the Consent Orders. That was when the plaintiff advised her solicitor that she had viewed the deceased’s assurances as “a bird in the bush” and wondered whether she should continue to view it that way or whether she could include the promise, referred to by her as an “understanding”, in the “agreement” to be filed with the Family Court.

40 Although I have some reservations about the plaintiff’s ‘explanation’ in her evidence of the expressions she used in her email of 24 May 2002 to her solicitor, I accept her evidence that once the deceased was willing to have the assurances in relation to the Will and the improvements to the Property included in the Notation to the Consent Orders, she relied upon them and was willing to forgo the payment of $50,000 on the basis that the deceased used the money to improve the Property. The assurances that had previously been viewed by the plaintiff as unreliable, were, by the deceased’s agreement to use the $50,000 on the Property and include the assurances as a Notation in the Consent Orders, converted into assurances upon which the plaintiff relied.

Detriment

41 The plaintiff and the deceased had decided to finalise their property settlement without the assistance of lawyers. In doing so they attempted to divide the matrimonial assets in what appeared to them to be a fair and reasonable manner. They were each entitled to have the Family Court of Australia rule upon their respective claims to the matrimonial property, however in approaching the property settlement in the way that they did, each gave up the opportunity to have the Court decide their respective rights.

42 The question arises as to whether the foregoing of the opportunity or chance per se to make application to the Family Court for orders other than on a consensual basis, was conduct to the plaintiff’s detriment, or whether it was necessary for the plaintiff to call evidence to establish the likelihood of a better outcome if she had litigated the property settlement before the Court.

43 The line of cases dealing with payments that are made by tenants and others making improvements on properties as a result of encouragement by landlords or land holders: Ramsden v Dyson (1866) LR 1 HL 129; Plimmer v Mayor of Wellington (1884) 9 App Cas 699 and Dillwyn v Llewelyn [1861–73] ALL ER Rep 384, was referred to in Meagher Gummow & Lehane’s Equity Doctrines and Remedies 4th Edition. The learned authors referred to the common factors that may be gleaned from such cases including conduct in reliance upon an expectation or belief whether by expenditure upon the property or the “giving up or not enforcing other rights”. The example given in this regard was the claim for testator’s family maintenance allegedly waived in Olssen v Dyson (1969) 120 CLR 365 [at par 17-105].

44 In Olssen v Dyson the widow, Mrs Dyson, was promised £20 per week by her husband, the deceased. That promise was unenforceable at law by reason of lack of writing. Kitto J said at 377:

Next it is said on behalf of the widow that the antenuptial promise by the deceased to leave her £20 a week, though for lack of writing it was unenforceable at law, was enough to give her good prospects of success if she had applied under the Testator’s Family Maintenance Act (S.A.) for additional provision out of the deceased’s estate, and that in reliance upon the purported assignment as being effectual she abstain from taking any proceedings for an order under the Act. The learned judge evidentially accepted evidence that she gave to the effect that it was her belief in the efficacy of the assignment that led her to desist from making such an application; and on the footing that this was so an argument is submitted, expressed in terms of the estoppel, that the executors will not now be allowed to deny her title to the debt owed by the company.

45 This passage of Kitto J’s judgment suggests that prospects of success, as opposed to a right simpliciter to make a claim, is a necessary aspect of a claim. It seems to me that in a proprietary estoppel claim, where the alleged detriment is the giving up or non-enforcement of a right in reliance on assurances, a plaintiff must establish more than the mere existence of a chance to exercise that right . It seems to me that it is necessary to prove to the requisite standard that if the right had been enforced instead of given up, there were prospects of doing better than that which was achieved in reliance upon the assurance. There has to be a “real chance” that the plaintiff would have been able to achieve a better outcome: Foran v Wight (1989) 168 CLR 385, per Deane J at 436. However I should qualify these conclusions by saying that much will depend upon the nature of the right and the circumstances of the particular case.

46 There is some evidence that the plaintiff may not have achieved a better outcome in the Family Court in the email from her solicitor, that suggested that even without the $50,000 payment the plaintiff was achieving a “good deal”. There is no evidence as to the expertise or experience of the plaintiff’s solicitor and there is also the problem of the generality of the expression, a “good deal”. Such an expression does not necessarily translate into there being no chance of doing better, if the plaintiff had litigated her property claims. Whether the plaintiff acted to her detriment in giving up her right to have the Family Court determine her property rights on the merits cannot be ascertained in the circumstances of and on the evidence in the case. It is just not possible to know whether the plaintiff would have achieved a better outcome than she did achieve by negotiating with the deceased. Although the plaintiff gave up the opportunity I am not satisfied that it can be characterised as conduct to her detriment.

47 The next aspect of the conduct relied upon is the plaintiff’s foregoing the $50,000 cash payment and agreeing for it to be used on the improvement of the Property. I am satisfied that at the time the deceased said he would agree to the Notation being included in the Consent Orders, the plaintiff relied upon the deceased’s assurances that he would bequeath the Property to her and acted to her detriment in agreeing to the $50,000 being used on improvements to the Property. In those circumstances I am satisfied that it was unconscionable for the deceased not to honour his promise to the plaintiff to leave her the property in his Will.

Relief

48 In Vukic, Brereton J discussed whether relief in proprietary estoppel cases should be “based on the assumed or expected state of affairs which the defendant is estopped from denying [Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394, 443 (Deane J)], or is limited to the minimum equity needed to avoid the relevant detriment”. His Honour concluded that there is a “strong case in principle” that in a proprietary estoppel case (as distinct from a “windfall equity” case), the expectation basis of the equity favours the view that the prima facie entitlement is to satisfaction of the relevant expectation: at [33].

49 Such a remedy may be declined where it would be disproportionate; for example, a claimant who established a proprietary estoppel on the basis of his expenditure on improvements to the subject was refused relief because he enjoyed 18 years of rent-free accommodation: Sledmore v Dalby (1996) 72 P & CR 196 CA. It may also be declined where there are special circumstances; for example, in Giumelli v Giumelli (1999) 196 CLR 101, the plaintiff’s younger brother who had done considerable work on the subject property, was awarded the alternative remedy of a a monetary sum.

50 This is not a windfall equity case. There are no special circumstances. There is no evidence in relation to the sole beneficiary’s financial situation, other than the value of the deceased’s estate which includes a very valuable property in Vaucluse in Sydney. It was the plaintiff, rather than the deceased, who was motivated to acquire the Property. It had, and has, a special significance to the location and ambience of the plaintiff’s house. It was the plaintiff, rather than the deceased, who approached the brothers in the hope that they might sell the Property to the plaintiff. If the plaintiff had not taken the deceased’s advice to reduce the mortgage on her home that they lived in throughout their relationship, the plaintiff may have been in a position to purchase the Property in her name. It is clear that the deceased understood the significance of the Property to the plaintiff by his willingness to have his assurances included in the Consent Orders and noted by the Family Court of Australia. Here, as in Vukic, the unconscionability is accentuated by the benefit to the deceased and the deceased's estate from the plaintiff's reliant conduct. The deceased’s unconscionable conduct requires that the expectation be made good.

51 The appropriate relief is the transfer of the Property, unencumbered, to the plaintiff.

Family Provision Act Claim

52 The Inventory of property of the deceased’s estate reveals a value of $2.6 million. The Property is valued at $600,000 and the property at Vaucluse is valued at $950,000. The balance is made up of shares, funds, cash, furniture and personal belongings. The deceased’s cousin is the sole beneficiary of the Will. The deceased’s cousin, who lives in England, did not give evidence other than by way of affidavit.

53 The plaintiff is a person eligible to make a claim under the Act: s 6(1)(c). Section 9 of the Act requires the Court to determine whether, having regard to all the circumstances of the case, there are factors that warrant the making of the application. If not the Court must refuse to proceed with the determination of the application.

54 The plaintiff’s present circumstances are set out in detail in her affidavit and her Statement of Assets and Liabilities. Her evidence was that despite her net worth of $2.5 million, the balance between her income and her expenses is very tight. This evidence was unchallenged. The plaintiff presently lives with her partner who is a truck driver. Although she was not cross-examined in detail about her partner’s income and financial position, it appears that he may be dependent upon her financially as she has provided him with an unsecured loan of $2,000.

55 The plaintiff’s financial future is a little uncertain. The plaintiff’s mother has been diagnosed with lung cancer and she will possibly be required to give up some of her income earning time to assume the role of the fulltime carer for her mother. Additionally her partner has several degenerative health problems which may impact upon the plaintiff’s capacity to work fulltime. As I have already indicated, the plaintiff has been a rather astute property investor and presently owns four properties, including the home in which she lives. Two of those properties are heavily mortgaged. It is apparent from her Statement of Assets and Liabilities that the majority of her net worth, $1.97 million, is held in real estate. One of the investment properties requires urgent repairs. The plaintiff is very concerned that with her sizeable debt she will find it very difficult to raise the required funds of $150,000 to complete those urgent repairs.

56 The plaintiff is also quite concerned about her status with Qantas. The employment arrangement with Qantas protects the plaintiff’s base pay in the short term but it allows Qantas to employ new staff at effectively half the plaintiff’s hourly rate. That apparently prevents her having access to work on new aircraft unless she agrees to work an additional 25% more hours for no additional pay. She expressed the view that in the medium term, perhaps five years, redundancy may occur or substantial increase in productivity, more hours for less pay, may be implemented.

57 As Brereton J said in Vukic [at 38], promises made and expectations raised by testators have always been regarded as relevant to the ascertainment of what is proper provision for a claimant. In this instance the plaintiff agreed to forego the $50,000 in 2002 and from the conversations she had with the deceased she understood that he was going to utilise that amount towards the construction of a granny flat or alternatively a garage at the property. The use of the expression “best endeavours” in the Consent Orders was only to accommodate the possibility that the local Council may not approve the development application. It also has to be understood that if the plaintiff had not foregone the $50,000, her financial position would be better than it is. The use of that money towards either her investment properties or her general living expenses would have put her in a better financial position today.

58 However the issue is whether the promise made by the deceased should be taken into account in ascertaining the proper provision for the plaintiff. I am of the view that it should be taken into account. At the time that the deceased and the plaintiff divorced they each had in mind that the plaintiff would receive the Property on the deceased’s demise. The promise was of such importance that each of them agreed to have the Family Court of Australia note the matter in the Consent Orders that finalised their property settlement.

59 It has to be remembered that the deceased lived in the plaintiff’s house throughout the whole of their relationship without contributing to its purchase or mortgage payment. The fact that a person may have what appears to be relative wealth of assets does not preclude the Court from exercising its discretion. The matter must be determined by reviewing the whole of the circumstances of the case. In this instance the plaintiff and the deceased pursued property investment with the plaintiff providing the energy and capacity to work many hours to obtain increased income and attractive travel benefits whilst the defendant provided financial assistance from his inheritance.

60 The plaintiff and the deceased’s relationship had spanned twelve years. They had been divorced for five years at the time of the deceased’s demise. There had been some contact between them during those years and the deceased had informed the plaintiff on at least one of those occasions that she was still a beneficiary under his will. The deceased did not remarry nor did he have any children. The plaintiff’s hard work over the years and willingness to support the deceased in his hobbies, together with her obvious nous and good judgement, at least in relation to property opportunities, and the forgoing of the $50,000, assisted in the gaining of the estate.

61 I am satisfied that these are all factors warranting the making of the application. This plaintiff has worked extremely hard for the last 20 years with the aim of consolidating her assets and making a life for herself in which she would be able to care for her mother, if necessary, but perhaps more importantly to look after herself and live in a manner to which she has become accustomed in her later life. The pursuit of this enclave of heritage buildings was obviously extremely important to the plaintiff and the deceased recognised this in making the promise that he did that was noted in the Consent Orders.

62 I am satisfied that the plaintiff has established that she has been left without adequate provision from the deceased’s estate for her maintenance, education and advancement in life. I am satisfied that an order should be made transferring the Property, unencumbered, to her.

63 The parties are to bring in Short Minutes of Order including declarations and orders and an agreed order as to costs. The matter is listed at 9.30 on 14 May 2009 for that purpose and to hear argument as to costs if the parties are unable to agree on a costs order.

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