Taylor v Streicher

[2007] NSWSC 1006

Reported Decision: 64 ACSR 300

New South Wales

Supreme Court

CITATION:	Doris Irene Taylor v Marian Streicher & Anor [2007] NSWSC 1006
HEARING DATE(S):	29, 30 and 31 August 2007
JUDGMENT DATE :	31 August 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	McDougall J at 1
DECISION:	See paragraphs [65] - [69] of the judgment
CATCHWORDS:	EQUITY – Equitable charges – “Windfall equity” – Money expended on real property of another – Breakdown in relations – Whether breakdown occurred “without attributable blame” – Whether unconscionable for defendants to hold property free of charge – Whether plaintiff entitled to equitable charge – amount which charge should secure.
LEGISLATION CITED:	Baumgartner v Baumgartner (1987) 164 CLR 137 Henderson v Miles (No. 2) [2005] NSWSC 867 Morris v Morris [1982] 1 NSWLR 61 Muschinski v Dodds (1985) 160 CLR 583
CASES CITED:	Uniform Civil Procedure Rules
PARTIES:	Doris Irene Taylor (Plaintiff) Marian Streicher (First Defendant) Hermann Streicher (Second Defendant)
FILE NUMBER(S):	SC 2573/06
COUNSEL:	E A White (Plaintiff) M K Rollinson (First and Second Defendant)
SOLICITORS:	Clark Rideaux Solicitors (Plaintiff) Teakle Ormsby George Solicitors (First and Second Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

31 August 2007 (ex tempore – revised 3 September 2007)

2573/06 DORIS IRENE TAYLOR v MARIAN STREICHER & ANOR

JUDGMENT

1 HIS HONOUR: These proceedings concern an arrangement, made with the best of intentions, for an elderly couple to live out their lives with a daughter and her husband. They provide a salutary warning as to the need to think through such arrangements with care, and to document them with precision. Those things were not done in this case. The result is a family divided.

The parties

2 For ease of reference and without wishing to be either condescending or offensive I shall do as was done in the affidavit evidence and refer to the parties and witnesses by their given names.

3 The plaintiff (Doris) and her late husband (Frank) were the parents of John, Lynne (as she is known), Marian and Stuart. Marian is married to Hermann. They have children, including Marcus.

Factual background

4 Doris and Frank lived for many years at Llandilo near Sydney. Marian and Hermann lived nearby at Londonderry. Robert and Lynne live on the far south coast of New South Wales, near Bega. Stuart, who is intellectually handicapped, lives in the vicinity of Coogee or Randwick.

5 In 1999, Frank was diagnosed as suffering from dementia. Doris looked after him, with home care support; and Frank spent a day a week in respite care.

6 At that time, the relationship between Doris, Frank, Marian and Hermann was close. Marian visited Doris and Frank daily. As Doris became more involved in caring for Frank, Marian assisted by performing household and other tasks for Doris and Frank. Hermann helped in this.

7 In about 2000 or 2001, Doris and Frank discussed the future with Marian and Hermann on a number of occasions. Various options were discussed. Two, involving a move to the south coast, were rejected because they would mean separating Doris and Frank from Stuart and his family. Finally, a decision was taken that Doris and Frank would sell their property and move to the Londonderry property to live with Marian and Hermann. Doris says that she discussed these matters with John and Lynne.

8 The Londonderry property (as I shall call it) comprises about two hectares. At the time, the improvements on it included a house, a smaller dwelling that was called a cottage or bunk house, and stables, riding rings and other things devoted to equestrian activities. Marian and Hermann lived in the house. Another couple, Graeme and Sandra Richards, lived in the bunk house. Marian and Hermann said that this was a right of residence for a term running until 2007, granted pursuant to an agreement to dissolve a partnership that had subsisted between Marian, Hermann, Graeme and Sandra.

9 Doris says that Marian and Hermann promised that Doris and Frank could live at the Londonderry property for the rest of their lives and that Marian and Hermann would care for them. Marian and Hermann accept this, although they say, and I accept, that it was expressly recognised that Doris or Frank might need to leave if their health deteriorated to the point that specialist nursing or other care was required.

10 Doris and Frank agreed to sell their property at Llandilo in May 2001. Settlement occurred in August 2001. The net proceeds of sale, in round figures $610,000.00, were deposited into their bank account.

11 Doris and Frank moved into the Londonderry property in August 2001. They occupied part of the main house. Graeme and Sandra remained in the bunk house. Hermann had carried out work to make the main house more suitable for Frank: for example, installing safety railings.

12 Further works were carried out to the main house, including the installation of a new kitchen and the subdivision of a large games room. Doris and Frank paid for those works out of the proceeds of sale of their property. Doris says that the cost was about $15,000.00. Marian and Hermann say that there were other works included in that figure. In the absence of any records (at least, none were in evidence) it is not possible to resolve that dispute.

13 Marian and Hermann owed some $30,000.00 on their house. Doris and Frank paid out that debt. There is no suggestion that this was done other than out of love and family feeling. Nonetheless, Marian and Hermann have now repaid $20,000.00 of that amount to Doris, although not obliged to do so, and have offered to repay the balance. Doris has not accepted that offer.

14 Notwithstanding the various works that had been carried out in the main house, it proved to be unsuitable for Doris and Frank. Whether that was because of the nature of the house (as Marian and Hermann suggest) or because of the cramped conditions (as Doris appears to suggest) does not matter. It is common ground that Doris, Frank, Marian and Hermann turned their attention to the construction of a new dwelling for Doris and Frank.

15 One option considered was the purchase and erection of a demountable, or movable, home. Hermann said that the all-up cost, including the cost of providing services, would have exceeded $100,000.00. That proposal lapsed because the local council would not permit the erection and occupation of a third dwelling on the Londonderry property.

16 Doris saw an advertisement for a three bedroom project home offered by a builder, Eagle Homes. The base price was some $113,000.00. She, Frank, Marian and Hermann discussed this. They negotiated some changes in the design and finishes with Eagle Homes, and decided to demolish the bunk house and to construct a new three bedroom dwelling in its place. They signed a contract with Eagle Homes in October 2001. The contract price was something in excess of $148,000.00. Other amounts had to be spent. For example, about $12,000.00 was spent on a retaining wall, about $17,000.00 was spent on a new "Envirocycle" septic system to service the old and new houses, and an amount was spent on paving.

17 Marian and Hermann maintain that they contributed a substantial part of the total cost of the new dwelling and its associated services. They accept, however, that Doris spent at least $150,000.00 to $160,000.00 on the new house.

18 For the new house to be built, the bunk house had to be demolished. Thus, Graeme and Sandra moved into the old house. It was intended that they should remain there after the new house was completed, and that Doris, Frank, Marian and Hermann would move into the new house. As the new house was constructed, it was built to permit (de facto if not de jure) dual occupancy.

19 Frank suffered a fall in December 2001. He went into hospital. His health worsened, and he moved into full-time nursing care. He died in April 2002.

20 Construction of the new house had commenced in about March 2002. It was completed in July or August 2002. Doris moved into her designated half shortly thereafter. A little later again, Marian and Hermann moved into their designated half. Graham and Sandra remained in the old house.

Breakdown in the relationship

21 It appears that, notwithstanding the move into the new house, there continued to be some tension between Doris on the one hand and Marian and Hermann - especially, it is suggested, Marian - on the other. On the way the parties addressed the matter in final submissions, it is not necessary to look in detail at those tensions or their causes. Marian said that she thought that Doris "got a great big hole in her heart because me Dad died. We weren't filling that hole in her heart for some unknown reason. ...She figured out that if she sort of got some sympathy from people it would fill that hole." (T95.55) I think that there is something in this, and that at least some of Doris' complaints reflect her lonely state (she and Frank had been married for almost sixty years). It is certainly the case, and perhaps not surprising, that Doris has now been diagnosed as suffering from depression. At the same time, I think, it is possible that Marian may not have been as attentive to Doris as Doris thought she should be, and that Doris, at least subconsciously, may have come to build up a sense of grievance.

22 It had been John's practice to visit Doris from time to time and to stay with her. After Doris moved into the new house, John continued this practice. He stayed in a spare room.

23 John and Lynne gave some evidence of what they say was rude and abusive behaviour on the part of Marian towards Doris. In John's case, that evidence is based on what he says were observations made on a number of occasions at the Londonderry property. In Lynne's case, the evidence appears to be based mainly on what she said were things told to her by Doris. In any event, it appears that with one exception the alleged rude and abusive behaviour seems to have affected John and Lynne more than it did Doris. Doris said "I didn't take any notice much." (T38.35).

24 This analysis of the relative insignificance of the alleged rude and abusive behaviour receives some support from Lynne's evidence. In essence, Lynne said that her mother was concerned at the costs she had incurred and that this was a cause of her distress (T55.10-56.4):

“Q. Did she talk to you about living at the property with the defendants?
A. She did, her - yes she did on, on a couple of occasions during that visit.

Q. Are you able to tell the court what was said?
A. Mum said--

HIS HONOUR: Look this is proof of communication not of proof of the underlying factors.

WHITE: Yes.

HIS HONOUR

Q. Please continue Mrs Teale?
A. Mum said [sic] was very concerned at the amount of, mainly at the costs that she’d actually been, she’d been outlaying for the premises and her new way of life.

WHITE

Q. Yes, did she say anything further that you can recall and in direct speech if you can?
A. Well direct speech, she said that she’d, when I asked her what - to give me some details she said that she’d actually spent a lot of money on - putting an enviro cycle type water system because the council had said that the current system wasn’t satisfactory for the two houses that were built on the property and it had come to the vicinity of about $17,000. There was one more example that she said that the council had insisted that a concrete pathway be placed all around the house and that she’d actually outlaid about $12,000 for that and she was very upset about that. I haven’t seen the house so I don’t know what it’s like.

Q. Did she talk to you about going back to live at Londonderry after Christmas?
A. No.

Q. Are you able to say how she appeared to you?
A. She was distressed, she appeared to me to be very distressed and very uneasy, her health was failing clearly by, yeah her health, she was starting to get frailer, however, she was distressed.

Q. Did she discuss that with you?
A. She did and I said to her, “Why are you so edgy about these things”, and she actually said back to me that she was very concerned at the rate of, the rate that her finances were dwindling, that the money she had spent was far in excess of what she thought she would spend.”

25 In my view, this evidence identifies a - probably the - key reason for Doris' dissatisfaction: the amount that she had spent pursuant to her arrangements with Marian and Hermann. I think that Doris, perhaps with some encouragement from John and Lynne, was beginning to regret her decision.

26 Lynne gave some evidence of her mother's state in January 2004, when Doris returned to Bega with John (T56.44-57.28):

“Q. And did you talk to your mother about her return?
A. I did.

Q. And are you able to say what she said?
A. She was extremely upset and she said to me that she just could not possibly think of returning because of the whole atmosphere, the aggression that she’d faced and the disappointment so yeah she just, and then she came back and she was, needed some time to make some decisions. At that time she stayed with my brother and over the course of the next two months I actually visited her three times a week, went to the house and we talked about where she needed to be or what she needed to do and what were her choices.

Q. When you say that she spoke to you about not wanting to go back and that she was very disappointed had she raised any issues about that other than the financial issues you talked about over Christmas, had she raised any of those other issues?
A. She had - yeah, she - yeah there was a common knowledge between her and I that she was very unhappy.

Q. That doesn’t assist the court?
A. Sorry, sorry.

Q. Are you able to tell his Honour what was said by your mother?
A. Your Honour all I can say to you is that basically on the conversations that my mother and I held she felt that she was, that she wasn’t given - she wasn’t allowed to unpack her boxes from her house when they had been moved, they were in a shed up the back, they were very - all in dirt and dust and that was upsetting her. Generating a garden outside the front of the house had upset her, there’d been an issue where Marion [sic] had cancelled the truck driver’s delivery of soil and rocks that my brother had organised to build. There was several instances throughout a, probably two year period that she had discussed with me that made me feel that she was warranted in her, her, her feelings, she was - the way she felt or she just actually come to a saturation point of being able to cope any more.”

27 This aspect of Lynne's evidence is not entirely consistent with the evidence of Doris to which I have referred of not taking "any notice much". Nor is it consistent with the decision made by Doris to return to the Londonderry property after Christmas. In my view, this aspect of Lynne's evidence is of little value as evidence of Doris's reasons for returning to Bega after the New Year in 2004.

28 To return to the chronological narrative: in September 2002, Doris suffered a fall. She was taken to hospital. There was apparently some suspicion that she may have been the victim of an assault, because she was bruised. But there had been no assault. The bruising was caused when Hermann lifted Doris from the floor. Doris is a large woman - according to Marian, some ninety kilograms - and Hermann would have to have grasped her very firmly to lift her from the floor. Nonetheless, a social worker interviewed Doris and Marian, and I suspect that this may have caused some aggravation of their relationship.

29 In December 2003, John visited Doris, and invited her to return with him to Bega (which is a convenient but slightly inaccurate description of the place where John lives) to spend Christmas with his family. On the appointed day, John arrived to collect her. On the evidence of John and Doris, there was a contretemps when Marian, being told that they were leaving, told them (or Doris) to "fuck off". Marian denies this. I have to say that, from my observations of Marian in the witness box, she did not impress me as someone who would thus address her mother and her brother. At the same time, neither Doris nor John struck me as someone who would tell a deliberate lie. But I do not need to resolve this issue, because plainly, if anything of the kind were said, it did not deter Doris from returning to the Londonderry property after Christmas. (If it were necessary to resolve the disputed fact, I would not be prepared to find, on the balance of probabilities, that Marian did use the words attributed to her.)

30 John brought Doris back to the Londonderry property in early January 2004. Marcus and his family had moved into Doris's half of the new house. They moved out forthwith, at Marian's instruction, and the house was thoroughly cleaned. Doris did not appear to have regarded this as anything wrong or upsetting. On the contrary, she paid a bond for rental accommodation for Marcus and his family.

31 John appears to have decided that Doris should return to Bega, apparently for good. In paragraph 32 of her affidavit sworn 4 August 2006, Doris said (so far as that paragraph was admitted):

“In January 2004, John took me back to my home. Marcus and his family had moved in and were living in my part of the house. My home was dirty and untidy. Marcus and his family moved in with Marion [sic] and Hermann. John stayed with me in the home

…
John decided that I should come back and live with him. I returned to the Bega area with John.”

32 She expanded on this in cross-examination (T38.16-39):

“Q. But when you came back early in the new year to the house at Londonderry, having spent Christmas down here at Bega, Marcus and his children had moved into this new--
A. Next door, yeah.

Q. That’s right, the one you helped them with?
A. Yes.

Q. So by that stage it was just you and Marion [sic] and Hermann living in the new house, wasn’t it?
A. Yes.

Q. A few days after that you came back down to Bega with John, you just decided to do that of your own volition, didn’t you?
A. We decided to come down, John was a bit angry over the way Marion spoke to me, we, she, she was shouting at the children and then she said something to me and John says, “Does she talk to you like that all the time?”, I said, “Mostly”. I didn’t take any notice much, I said, “Yeah mostly”. And he said, “Well you know what”, he says, “You’re going to pack your bags and you’re going to come home with me”, he says, “She’s going to come back with me”, so we did, that’s what we done.

Q. So that same day you pack your bags--
A. Not that same day, a couple of days after, about three or four days after because John had a lot of Christmas orders to deliver and that.

Q. And a couple of days after, which is the day you finally left, John just said to Marion [sic] that you and he were leaving, you were going to Bega?
A. Says, “We’re going to Bega for Christmas” and she said, “Eff off”.

Q. Well Mrs Taylor you just said a moment ago, “Going to Bega for Christmas”. I’m talking about the occasion after Christmas, in January of 2004, when you and John finally left Londonderry?
A. Yeah.

Q. Do you know what I mean?”

33 Doris was a little confused in this aspect of her evidence, and appears to have conflated the events that occurred shortly before Christmas 2003 with those that occurred in early January 2004.

34 John described the events of January 2004 thus in his evidence in chief (T62.38-63.7):

“Q. You stayed with your mother, you say, for another two or three days?
A. Three days it was, yes.

Q. Are you able to tell his Honour what occurred during that period?
A. The abuse to my mother was just so bad that--

Q. Rather than giving a generalised statement are you able to--
A. It’s continuous, it just did not stop, and it was - she even stopped the grandchildren going in to see her. They weren’t allowed, little kids, beautiful little kids, weren’t allowed to go into mother’s for a biscuit or to talk to her.

Q. Did you do anything as a result of that?
A. We sat down having an evening meal and we gave a lot of discussion to it and I suggested to mother that she should come down to Bega for a while because she didn’t need all this abuse all the time. It took a while to persuade her but she eventually agreed that she just couldn’t live with it any more or she needed a break. She’d just come back from Bega and had a thoroughly happy time and then just comes back to abuse.

Q. You returned to Bega with your mother that day?
A. Correct.”

35 Although John sought to suggest that this was not a permanent departure, he described it in cross-examination as "the day we left to come down here permanently" (T64.25). I am satisfied that the events of that day were such as to convey to Marian, and through her to Hermann, that Doris was leaving for good, going to live in Bega. That impression would have been confirmed some weeks later when John or his wife rang to arrange for the collection of Doris' possessions.

36 John says that on this latter occasion, Marian said words to the effect that Doris could not return. Marian denies this. I do not think that Marian would have said such words, and I do not find that she did so.

The issues

37 In final submissions, Mr E S White of counsel, who appeared for Doris, restricted his case very substantially from that which had been pleaded and opened. He narrowed it down to one issue: what he called the "windfall equity". He accepted that (contrary to the pleaded case) there was no legally binding agreement between Doris and Frank on the one hand, and Marian and Hermann on the other, in relation to the arrangement that I have described. He accepted further that what he said was a breakdown in the relationship had occurred "without attributable blame" on either side.

38 By "windfall equity" Mr White sought to invoke the principle identified by Deane J (with whom Mason J agreed) in Muschinski v Dodds (1985) 160 CLR 583 at 620:

“… where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do …”

39 The concept was explained succinctly by Young CJ in Eq in Henderson v Miles (No. 2) [2005] NSWSC 867 at [13]:

“Where a family joint venture breaks down without attributable blame, it is unconscionable for one of the parties to retain a windfall which the parties never contemplated that that party would receive.”

40 Thus, the issue of principle for decision is whether that concept is invoked on the facts of this case. If it is, there then arises an issue of quantification: what is the value of the "windfall"?

The authorities

41 It is not necessary to go in detail to the authorities. What Deane J said in Muschinski has been adopted and applied many times. See for example Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148, where the majority (Mason CJ, Wilson and Deane JJ) set out the passage from Muschinski to which I have referred and applied it to the facts before them.

42 A similar concept was articulated by McLelland J in Morris v Morris [1982] 1 NSWLR 61 at 63-64. That case too involved a parent who had spent money on improvements to a child's property for the construction of extensions in which the parent would live. The parties did not formalise their arrangements; nor did they consider all foreseeable ramifications or complications.

43 McLelland J held at 63 that there was no express or implied trust. However, his Honour said, that did not leave the plaintiff without remedy. His Honour described the available remedy at 63-64. I shall set out the relevant passage:

“However, in my view wider equitable principles operate in the present case. The plaintiff spent money on the defendants’ property in the expectation, induced or encouraged by the defendants that he would be able to live there indefinitely as a member of their family. This expectation has been defeated by the occurrence of events which were not in contemplation when the money was spent and as a result of which any subsisting right of residence by the plaintiff in the property is now of no practical consequence. In my opinion, on the facts of this case, it would be unconscionable and inequitable that the defendants should now retain the benefit of the expenditure by the plaintiff of his money on their property free of any obligation of recoupment to him. Consequently an equity arises in favour of the plaintiff and the court must determine how in all the circumstances justice requires that that equity be satisfied. What a plaintiff in such a case as this should in justice receive will not necessarily correspond with what, when the relevant expenditure was made, he expected to receive.”

44 His Honour concluded at 64 that the appropriate remedy was an equitable charge for the sum expended together with interest.

Analysis

45 It is necessary to bear in mind that it was inherent in the arrangements made between Doris, Frank, Marian and Hermann that Marian and Hermann would receive the benefit of the expenditure on their property at some stage. I am satisfied that Doris at least appreciated this at all times. In this case, and in those circumstances, I think that the word "windfall" is inappropriate to describe the situation that arose.

46 I am satisfied that the relationship between Doris, Marian and Hermann has broken down, if and only to the extent that the word "relationship" is used to denote the arrangements that were made back in 2001. In other words, I am satisfied that there is no real prospect that Doris will ever move back to the Londonderry property, and resume occupation of what had been her half of the new house.

47 Doris is now settled in a retirement village in Bega, for which privilege she has paid a substantial premium. Her health is not now good. It is likely that if she moves again, it would be to premises that can offer more intensive care.

48 I am satisfied also that the breakdown or failure of the arrangements occurred without attributable blame, in the sense that I do not think that it was caused by the behaviour of Marian and Hermann. The reality, I think, is that Doris was deeply unhappy and depressed after Frank's death; that there were unhappy interactions between her and Marian; but that John in effect decided that Doris should leave Marian and Hermann and move to Bega. Having said that, I conclude also that in her own mind Doris thought that she had some reason to do so.

49 It is necessary to bear in mind also that the arrangements made between Doris, Frank, Marian and Hermann contemplated that Doris or Frank might need to move out once they could no longer live at the Londonderry property with such support and care as would be there available. Indeed, this occurred in Frank's case. Thus, it is not correct to say that the arrangements contemplated that Doris and Frank would of necessity live their lives out with Marian and Hermann at the Londonderry property.

50 The arrangements have come to an end undoubtedly earlier than the parties back in 2001 might have contemplated. They came to an end for a reason that the parties did in general contemplate - that Doris might decide to move out. Having said that, I am satisfied that the parties did not contemplate (nor was there any reason for them to do so) that Doris would move out in the precise circumstances, or for the precise alleged reasons, that prevailed.

51 It is therefore necessary to ask whether in those circumstances Marian and Hermann have received a benefit that it would be unconscionable for them to retain. Clearly, it was intended that they should receive the full benefit of the improvements, without having to house or care for Doris, at some time. But they have received that full benefit earlier than intended, in circumstances where, but for the breakdown, Doris in all likelihood would still be living at the Londonderry property.

52 The question thus focuses attention on the circumstances in which Doris left. As her case was put in final submissions, she was not expelled - actually or (if it be a correct use of language) constructively.

53 If Doris left without any cause - i.e, if she left at a time when all was sweetness and light, and the arrangements were working perfectly - it would be difficult to see how that could impose any obligation of conscience on Marian and Hermann in relation to the benefit of the improvements. But, on reflection, I do not think that this is a correct characterisation of the circumstances in which Doris departed.

54 It is clear that John and Lynne thought that Doris was being treated badly, and that this had caused her distress, to the point where she felt that she did not want to continue to live with Marian and Hermann. Doris gave evidence of continued rude and abusive behaviour, especially on the part of Marian. Marian denied that, as did Hermann. Nonetheless, and making allowance for Doris' understandable feelings after Frank's death, I think that there was, or developed, some tension in the relationship between Doris, Marian and Hermann. I think that the tension may have been exacerbated by Doris' alarm at what she had spent. I suspect that it may have been fed by John and Lynne telling Doris, in effect, that she should not have to put up with what they perceived to be the situation at the Londonderry property.

55 Thus, I think, it is correct to say that the arrangements between Doris, Marian and Hermann broke down. Further, I think, it cannot be said that the arrangements simply terminated as a result of some unforced and unreasoned decision on the part of Doris to move to Bega.

56 In this context, it is important to recall that Doris (and, during his lifetime, Frank) felt particularly responsible for Stuart. As I have said, when there were discussions as to the future in 2000 and 2001, Doris and Frank rejected proposals that would require them to move away from Stuart. In those circumstances, I find it difficult to believe that, three or four years later, Doris would have decided to move away from Sydney, and therefore away from Stuart, unless she thought she had no real alternative.

57 In my view, Doris moved away from Londonderry because in her mind she felt that she could not continue to live there. I do not think that, viewed objectively, this was the case. Nor do I find that, viewed objectively, the behaviour of Marian and Hermann was such as might have been expected to cause Doris to leave. But I do find, that in her own mind, Doris left for reasons that indicated to her that she could not continue to live at Londonderry.

58 I therefore find that the arrangements made between Doris, Frank, Marian and Hermann broke down when Doris left to move to Bega in January 2004, or relatively shortly thereafter, and that they did so without attributable blame. As a result, Marian and Hermann have received the full benefit of the improvements earlier than otherwise would have been the case.

59 On the authorities to which I have referred, those conclusions mean that it is unconscionable, as equity uses that term, for Marian and Hermann to retain the benefit. As the case was put, and consistently with the reasoning of McLelland J in Morris and Young CJ in Eq in Henderson, the appropriate remedy is an equitable charge to the extent of the benefit thus received.

60 It was common ground, based on uncontested valuation evidence, that the value of the improvements as at September 2002 was $50,000.00, and at today's date $100,000.00. Those figures were derived in effect by comparing the market value of the Londonderry property at the relevant times with the improvements, and without the improvements but with the bunkhouse. The fact that the benefit of the improvements does not equal the amount spent is not a matter of concern, or at least a matter of relevance in these proceedings.

61 Mr White submitted that Doris was entitled to an equitable charge reflecting the value of her interest in the value of the improvements. The way in which he put this aspect of his case varied, but as it was last put, he relied on Doris' life expectancy as at September 2002, when she moved into her half of the new house. At that time, she was aged 80 and her life expectancy, it was agreed, was some 10.75 years, or 129 months.

62 Mr White accepted that Doris had had the benefit of the arrangement for some 15 months. Thus, he submitted, she was entitled to a charge representing the value of 10.75 years "purchase" of the benefit, discounted by 15/129, discounted again to allow for contingencies, but with interest from January 2004 when the relationship broke down.

63 Mr M K Rollinson of counsel, who appeared for Marian and Hermann, did not dispute that, if I were to conclude that Doris is entitled to some relief, it should be assessed in principle in the way that I have outlined. Mr Rollinson did put submissions based on the fact that the arrangements had worked themselves out in Frank's case. That may be accepted, but it does not bear on the assessment of the relief to which Doris is entitled. It is the breakdown of the arrangements insofar as they concerned her that engenders the entitlement to relief; and it is the circumstances as they pertain to her that govern the moulding of that relief.

64 Mr White submitted that the charge should extend to the full value of the improvements. In essence, his case was that it was unconscionable for Marian and Hermann to retain the full value of those improvements once the relationship had broken down. I do not accept that submission. It was an integral part of the arrangements made that Marian and Hermann should have the right of full use and enjoyment of their one half of the new house once it was ready to occupy. The breakdown of the arrangements has had no impact on that right. It has not accelerated their receipt of the benefit of that right. In my view it has no impact on, nor does it render unconscionable, their continued enjoyment of that right.

65 Thus, I conclude, Doris is entitled to an equitable charge over the Londonderry property in a sum to be calculated by reference to one half the value of the improvements effected with the use of her money. The calculation is to be carried out as at September 2002. (Mr White had submitted in the alternative that it might be carried out at August 2001, when Doris and Frank moved to Londonderry. But it seems to me that the equity arises by the combination of the expenditure of money on the new house and the circumstances in which the relationship relating to that new house broke down, so that the calculation should be carried out as at September 2002.)

66 For the reasons that I have indicated, that charge should extend only to one half of the value as at September 2002; i.e to $25,000.00. In conceptual terms, the charge would be for X per cent of $25,000.00, where X represents the percentage value of Doris' agreed life expectancy. As I have said, whatever is the result of that calculation should be reduced by 15/129.

67 It should be reduced further by some contingency figure to reflect the prospect that Doris might not have lived out her years in the Londonderry property, for example because of increasing ill health. The selection of a contingency figure is, in the absence of evidence, an entirely arbitrary exercise. In circumstances where the parties did not put any evidence before me that would assist me in making the calculation, but bearing in mind Doris' age, I think that an appropriate contingency allowance is 5 per cent.

68 That leaves the question of interest. Mr White submitted that interest should run from January 2004, when Doris vacated the property. I think that is in principle correct. It should run at the rates from time to time applicable under schedule five to the Uniform Civil Procedure Rules. The charge should extend to interest thus calculated.

69 As I think I have made clear, the evidence does not permit me to quantify the value of the charge having regard to the principles that I have set out. At this stage, I propose to stand the proceedings over to 9.30am on Wednesday 5 September 2007 before me, and to direct the parties to bring in short minutes of order to give effect to these reasons. I so order.

70 I order also that the exhibits remain with the papers for 28 days from 5 September 2007, and that thereafter they be dealt with in accordance with the rules.

71 I will hear the parties on costs.

(For submissions on costs see separate transcript.)

72 Mr White submits that the plaintiff has succeeded and that costs should follow the event. Mr Rollinson accepts that the plaintiff has had some success, but points out that it was minimal compared to the pleaded case.

73 In her statement of claim filed on 2 May 2006, the plaintiff claimed reimbursement of some $344,000.00, comprised of $319,000.00 that she said she had spent on the construction of the new house together with some $15,000.00 said to have been spent on the renovation of the old house and the $10,000.00 balance of the $30,000.00 that she gave to the defendants in the circumstances that I have described.

74 As the plaintiff's claim was pleaded, it relied on contract, constructive trust, and some form of proprietary estoppel. All those pleaded bases were abandoned. The concept of the “windfall equity,” and the plaintiff's reliance on it, was articulated for the first time in final submissions.

75 I accept that in the usual case a successful party is entitled to costs. However, that really raises the question of what success might mean in the context of this case. It is likely that the full extent of the plaintiff's charge will fall between $15,000.00 and $20,000.00. I cannot believe that if the case had been articulated in that way from the outset, it would nonetheless have required the Court's decision.

76 Mr Rollinson pointed to a "Calderbank" offer made on 12 June 2007. That offered the plaintiff the opportunity, open for 28 days, to walk away on the basis that she and the defendants would each bear their own costs.

77 Mr Rollinson submitted that the Calderbank offer contained an element of compromise, because the defendants were foregoing their prospective entitlement to costs. That seems to me to be an attempt to put the best possible face on a less than satisfactory base. The reality is that the plaintiff has done somewhat better, so far as the outcome is concerned, than was offered by that Calderbank letter.

(Further submissions on costs.)

78 Mr White belatedly sought to rely on a letter of 3 August 2005 (written some 10 months before the proceedings were commenced) in which the plaintiff offered to settle for $155,000.00. The plaintiff has done significantly less well than that. The letter in question did not appear to take account of the relevant principles. I do not regard it as any real basis, any more than the Calderbank letter to which I have referred, to mould an appropriate costs order.

79 In my view, it would be entirely inappropriate in this case to order that costs should follow the event when, as I have said, the plaintiff's success has been so minimal. Equally, the plaintiff having succeeded, there is no basis on which the defendants should have their costs. As I hope I have made clear, I do not regard the Calderbank letter as leading to that conclusion.

80 I therefore make no order as to costs to the intent that each party pay her or their own costs.

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