Brunoro v Brunoro & ors [2012] ACTSC 2 (31 January 2012)

Last Updated: 7 February 2012

EMILE BRUNORO v VIRGIL BRUNORO AND SELMAR NEBELUNG AND JUSTIN NEBELUNG AND ADAM NEBELUNG

[2012] ACTSC 2 (31 January 2012)

EQUITY – claim of equitable interest in or charge over real property – promissory estoppel – estoppel by conduct – no interest or charge made out.

Court Procedures Rules 2006, rr 1521, 1523, 6102

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387

Commonwealth of Australia v Verwayen (1990) 170 CLR 394

No. SC 548 of 2008

Master Harper

Supreme Court of the ACT

Date: 31 January 2012

IN THE SUPREME COURT OF THE )

) No. SC 548 of 2008

AUSTRALIAN CAPITAL TERRITORY )

EMILE BRUNORO

Plaintiff

v

VIRGIL BRUNORO

First Defendant

SELMAR NEBELUNG

Second Defendant

JUSTIN NEBELUNG

Third Defendant

ADAM NEBELUNG

Fourth Defendant

ORDER

Judge: Master Harper

Date: 31 January 2012

Place: Canberra

THE COURT DECLARES THAT:

The plaintiff holds no equitable interest in or charge over the premises at 5 Phillip Avenue, Downer.

1. The plaintiff commenced this proceeding in July 2008 against the first defendant only, asking for an order extending a caveat registered against the title to Block 45 Section 1 Watson, a suburban block on which stands a house with the address 5 Phillip Avenue, Watson. The first defendant is the registered proprietor of the property. The plaintiff is his son. The caveat was based on an asserted equitable interest in the property. I made an ex parte order extending the caveat for a short time to enable service of the originating application. In June 2008, the first defendant applied for lapsing of the caveat. In September 2008 the plaintiff by leave added the second, third, fourth and fifth defendants and filed an amended originating application accompanied by a statement of claim, seeking declaratory and injunctive relief and damages.

2. In November 2008 the first defendant made an application for an order that the caveat be removed. I was not satisfied that the plaintiff had established a caveatable interest in the property and ordered on 28 November 2008 that the caveat be removed.

3. On 30 November 2009, following application by the plaintiff’s solicitors, default judgment was entered against the five defendants. The default judgment was subsequently set aside and the defendants were given an extension of time to file defences and counterclaims.

4. Although the fifth defendant Nebelung Nominees Pty Limited was made a party to the proceedings pursuant to leave granted on 26 September 2008, and was named as a defendant in the amended originating application and statement of claim filed on that date, no relief was specifically sought against the fifth defendant, which was not mentioned in the statement of claim. In the circumstances it is something of a mystery how the plaintiff’s solicitors persuaded the Deputy Registrar to enter default judgment against it.

5. On 15 September 2010 the plaintiff’s solicitors filed a further amended statement of claim. They did not include the fifth defendant in the title of the document, and no mention was made of the fifth defendant in the statement of claim itself. The court had, on 13 May 2010, given the plaintiff leave to file and serve an amended statement of claim within fourteen days. Although that was not done, the defendants have not taken any point about the late filing and service of the amended statement of claim. The parties have since proceeded on the joint footing that the fifth defendant is no longer a party.

6. This is not an outcome which can be achieved in that fashion. It will be necessary for an order to be made disposing of the plaintiff’s action against the fifth defendant. I shall hear the parties in due course as to the appropriate order. Meanwhile, in compliance with rule 6102, documents should be headed in the abbreviated fashion there exemplified, in the interests of brevity and economy.

7. In December 2010 I ordered pursuant to rule 1521 that the court determine separately from the other matters at issue between the parties the question of whether the plaintiff is entitled to the relief claimed at paragraph 2 of the further amended statement of claim. That paragraph is in the following terms:

Declaratory relief, to the effect that the plaintiff holds an equitable right to inhabit the property at 5 Phillip Avenue, Watson:

(a) and injunctive relief restraining the defendants from interfering with the above equitable right; or

(b) damages arising from the loss of use of the above equitable right; or

(c) a declaration that the plaintiff holds an equitable charge over the property at 5 Phillip Avenue, Watson; or

(d) damages in lieu of the equitable charge referred to in paragraph 2 (c); and

(e) such other order as the court considers appropriate.

8. Following the exchange of witness statements by the parties, the limited hearing proceeded before me on 28 April and 9 May 2011. Oral evidence was given in the plaintiff’s case by the plaintiff himself and by Ms Sarah Ryan, Mr Bayne Geikie and Ms Terry-Anne Harney. Evidence was also given by the first and third defendants.

9. Much of the factual background is not in contention. In about 1961 the first defendant bought the block of land at 5 Phillip Avenue, Watson. He built a shed on the land, and his family moved into it. He then built a garage and later the present house. The project took about eight years, and the family (father and mother, two sons and a daughter) lived there while the construction went on. The plaintiff was about ten years old when his father bought the land, so would have been about eighteen when the building of the house was completed. The plaintiff’s brother and sister eventually moved out when they were grown up, but the plaintiff continued to live in part of the house until January 2008.

10. During 1974 the plaintiff’s mother bought the house next door (3 Phillip Avenue), and leased it to tenants.

11. From about 1975 the plaintiff lived in a two-room area of the house on the ground floor which has been described as a flat, although it does not seem to have been entirely self-contained. The plaintiff did some work and spent some money on alterations to the building to achieve this, including putting in a kitchenette with plumbing.

12. In about 1978 the plaintiff’s brother bought a property at Murrumbateman, and in about 1981 an adjoining farm called “Gounyan”. In 1983 the plaintiff’s parents moved to the farm, where they lived for many years. The plaintiff continued to live at the house at Watson. The plaintiff’s evidence is that his mother asked him to look after the property and to rent it out. He let individual bedrooms out to tenants, and collected the rent, accounting to his parents weekly. At times some of the tenants got into arrears with their rent, and the plaintiff says that he made up the difference to his parents when that happened.

13. In about 1984 the plaintiff started a relationship with Sarah Ryan. In 1985 they had a daughter, but they did not live together or marry. Their relationship from about 1989 became more of a close friendship, and they are still friends.

14. The plaintiff says that during these years he regarded himself as the property manager of the house, and that he paid expenses including water rates, electricity, gas and telephone bills. He carried out minor repairs as necessary, and looked after the garden. He repainted the rooms from time to time.

15. The plaintiff’s sister had three sons. She died in 1997. Her three sons are the second, third and fourth defendants. In about 1994 the second defendant moved into the house with his partner, their child and his partner’s sister. They lived in the upper floor of the house for about three years.

16. The plaintiff says that in 2000, at his mother’s request, he took over the management of the house next door, from which I presume that he thereafter arranged for tenants, collected the rent, and generally looked after the house in the same manner as 5 Phillip Avenue.

17. During 2005 the plaintiff’s mother was diagnosed with cancer. She died in January 2006.

18. A few weeks before her death, the plaintiff’s mother had a will prepared by a Canberra firm of solicitors, and executed it. She appointed the plaintiff her executor. She left him some shares, and left the residue of her estate to her grandchildren.

19. In March 2007 the first defendant, the plaintiff’s father, became sick. He was admitted to Canberra Hospital. After his discharge he required regular nursing visits and decided to move back to 5 Phillip Avenue. In the company of two of his grandsons, the second and third defendants, he met with the plaintiff and told him that he was moving back into the house. He moved back in about April 2007 with one of the grandsons.

20. Over the next few months relations between the plaintiff and his father and nephews deteriorated. Eventually, at the direction of the plaintiff’s father, one of the grandsons spoke to each of the occupants of the house, making changes to their tenancy arrangements. Eventually all but the plaintiff left. There were unpleasant incidents, particularly between the plaintiff and his nephews. In their evidence the parties describe and perhaps recollect these differently, but it is not necessary for me, for the purposes of the determination of this part of the proceedings, to make specific findings of fact about what happened or who, if anyone, was at fault.

21. In January 2008, a domestic violence restraining order having being obtained against the plaintiff, he was evicted from the house with police assistance, and has not lived there since. During 2008 the grandson who was living there with the plaintiff’s father moved out, and the plaintiff’s father has been living there alone since. He now wishes to sell the house and to move to the South Coast where his grandsons are living.

22. There is some difference in the evidence about conversations the plaintiff had with his parents about the arrangement for him to live in the house. His evidence is that following a conversation with his mother, in his father’s presence, at about the time when his parents moved to Murrumbateman, he was left with the impression that he would be able to live at 5 Phillip Avenue indefinitely.

23. He says that during 2005, after his mother’s cancer diagnosis, he had a conversation with her in which she told him that she intended to make a will leaving a half share in the house at 3 Phillip Avenue to him and the balance to her grandchildren. The plaintiff says that his mother told him that she had spoken to his father and that he intended to make a will leaving a half share in 5 Phillip Avenue to the plaintiff, with the other half going to the grandchildren. The plaintiff says that he suggested to his mother that it would be easier for everyone if his father left 5 Phillip Avenue to him, and his mother left 3 Phillip Avenue to the grandchildren. His mother said that she thought that was a good idea and would speak to his father. She later said that she had done so, and that they were to have wills drawn up accordingly.

24. The plaintiff’s father says that a number of years before his wife’s death he discussed with her the idea of their leaving 5 Phillip Avenue to the plaintiff and 3 Phillip Avenue to the grandchildren, but he denied having any conversation with his wife during 2005 consistent with what the plaintiff says he was told by his mother.

25. The other witnesses for the plaintiff testified to his close relationship with his mother before her death, and the hostility which developed between the plaintiff and his nephews in the months leading up to his eviction.

26. The plaintiff’s father and his nephews in their evidence were critical of the manner in which the plaintiff looked after 5 Phillip Avenue, describing the premises as dirty, dangerous and a health hazard. Photos of the grounds were tendered. Different people vary in their standards in maintaining houses, grounds and gardens. It can reasonably be said that the house and grounds shown in the photographs would fall well short of the standards of many people, but that there are probably quite a number of houses in the suburbs of Canberra which are no better maintained.

27. In the further amended statement of claim the plaintiff asserts an agreement between himself and his mother acting as agent for his father, the latter being aware of the agreement and having confirmed it by his conduct. The agreement is said to have been entered in about 1979. Its terms were that:

(a) The plaintiff would maintain the property at 5 Phillip Avenue.

(b) He would arrange for parts of the house to be leased to tenants and would act as landlord.

(c) He would collect rent, and account after paying for maintenance and repairs and other expenses to his parents.

(d) Payments would be made by cash to his mother each Saturday morning.

(e) In return for the above, the plaintiff would be permitted to reside at 5 Phillip Avenue.

28. The plaintiff then asserts that pursuant to the agreement he performed the agreed duties, and suffered detriment. His parents by their conduct between 1979 and his mother’s death in January 2006 represented to him that the agreement would continue indefinitely. The agreement operated without interference until about May 2007. The agreement constituted a contract with due consideration.

29. Alternatively, the plaintiff says that his father’s representations were made to him in circumstances where his father knew he would rely on them, and the plaintiff suffered detriment in reliance on the representations.

30. The plaintiff then pleads a further agreement arising from his conversations with his mother about the intention of his parents to make wills, initially leaving him half of both 3 and 5 Phillip Avenue, and subsequently altering this to an intention that he should inherit 5 Phillip Avenue, with his nieces and nephews inheriting 3 Phillip Avenue. He asserts that his mother acted as agent for his father in informing him that this had been agreed. He says that his father knew of this, and knew that the plaintiff would rely on the representations to his detriment, as he did.

31. Much else is asserted in the statement of claim, and relief is sought in the form of damages, and also provision from his late mother’s estate.

32. The fourth defendant, Adam Nebelung was not called to give evidence. Counsel for the plaintiff submitted that I should draw an adverse inference from this, referring to the decision of the High Court of Australia in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298. As I said when the submission was made, I draw the inference that any evidence the fourth defendant would have given if called would not have advanced the case for the defendants. In fact there was no evidence of any conversations or incidents at which the fourth defendant was present and where there was a conflict between the plaintiff’s witnesses and the defendant’s witnesses. I made it clear at the time the submissions were made that the inference was effectively a neutral one in these circumstances, and fell far short of any inference that the fourth defendant might, if called, have damaged the case for the defendants or helped the case for the plaintiff.

33. The question for determination is resolved fairly simply. Firstly, as to what happened when the plaintiff’s parents moved from 5 Phillip Avenue to Murrumbateman: I am not satisfied that anything in the nature of a contract came into existence. I am not persuaded that any promise was made to the plaintiff that the arrangement for him to live in the house and to let out rooms was to continue indefinitely, or for any particular period of time. It seems to me more probable than not that neither the plaintiff nor his father nor his mother gave any thought to how long the arrangement might continue, or generally as to the future beyond the short to medium term. It seems to me that what happened was in the nature of an informal arrangement between family members and that none had any intention to create enforceable legal rights or obligations.

34. It does not seem to me that the later arrangement between the plaintiff and his mother, for him to look after the house at 3 Phillip Avenue, was in any different situation, or made any difference to the existing arrangement.

35. I am, additionally, not satisfied in any event that the plaintiff, by relying on any representation which may have been made to him, suffered any detriment. The fact is that the plaintiff was able to live rent-free in the family home, as he had done while his parents lived there, for a further twenty-five years or so after his parents moved out. The evidence does not enable me to find as a fact that the plaintiff spent any of his own money on improving the house. The evidence is at least equally consistent with all money spent by the plaintiff having being taken out of the rent he was collecting from the other occupants. His counsel concedes that nothing by way of expenditure or work by the plaintiff can be identified as having improved the value of the property. It seems to me that such work as the plaintiff carried out, and such of his own money as he may have spent, was more than offset by the benefit of his having accommodation in the house at no charge over a lengthy period of years.

36. As for the alleged agreement between the plaintiff and his parents about their wills: in the first place I am not satisfied that there was any contract made to which the plaintiff was a party, either as to his mother’s will or as to his father’s will. Secondly, I am not satisfied on the evidence that his father bound himself in any way to make a will, or a new will, in any particular terms. I am not satisfied that the plaintiff’s mother was her husband’s agent for any such purpose. Finally, if there was an arrangement made as the plaintiff asserts, to date there has been no departure from it. The plaintiff’s mother did what the plaintiff says she told him she intended to do. The plaintiff’s father is still alive and his present will has not been discovered, nor is it in evidence.

37. It follows that I am not persuaded that the plaintiff holds any equitable right to live in the house at 5 Phillip Avenue, or that he holds any equitable charge over that property. The relief sought by the plaintiff at paragraph 2 of the further amended statement of claim dated 15 September 2010 will be refused.

38. Counsel for the plaintiff referred me in address to three decisions of the High Court of Australia in relation to promissory estoppel, Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406; Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387; and Commonwealth of Australia v Verwayen (1990) 170 CLR 394. Counsel took me in particular to the passage in Verwayen on the content and operation of the general doctrine of estoppel by conduct in the judgment of Deane J commencing at paragraph 443. I have taken the principles emerging from those decisions into account to the extent appropriate having regard to my findings of fact and my characterisation of the arrangements between the plaintiff and his parents.

39. I shall hear the parties as to any specific orders which they submit should be made pursuant to rule 1523.

I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Harper.

Associate:

Date: 31 January 2012

Counsel for the plaintiff: Mr T Crispin

Solicitor for the plaintiff: S&T Lawyers

Counsel for the defendants: Ms EJ Godtschalk

Solicitor for the defendants: Nicholl & Co

Date of hearing: 28 April 2011, 9 May 2011

Date of judgment: 31 January 2012