Sckaff v Sckaff

1. [1]

   LEEMING JA: I agree with Mitchelmore JA.

2. [2]

   MITCHELMORE JA: This appeal concerns the beneficial ownership of a residential property located in Dulwich Hill, Sydney (the Property). The appellants, Richard Sckaff and his wife, Nada Sckaff, are the registered proprietors. The first respondent, George Sckaff, is Richard’s brother, and the second respondent, Anne Thompson, is George’s wife. Without intending any disrespect, I will refer to the parties by their first names.

3. [3]

   George has lived in the Property since around 1990, and Anne has lived there since around January 2001. Although George and Anne have not paid rent at any stage of their occupation, they have treated the Property as their family home and have raised their two children there. George has paid for at least the utilities since the early to mid 1990s; and George and Anne have carried out three separate renovations of the Property, in 2001, 2008 and 2013.

4. [4]

   In December 2014, Richard served an eviction notice on George and Anne, and in May 2017 he commenced proceedings in the NSW Civil and Administrative Tribunal (Tribunal) for an order terminating their residential tenancy. In February 2018, George and Anne commenced proceedings in the Equity Division, seeking a declaration that Richard and Nada held the Property on trust for them together with orders requiring the transfer of the Property to them on an unencumbered basis. On 23 February 2018, the Tribunal made an order, on the application of George and Anne, transferring the Tribunal proceedings to the Supreme Court, to be heard as a cross-claim.

5. [5]

   The circumstances surrounding the purchase of the Property were central to George’s claims (for convenience I will refer below to the respondents’ arguments by reference to George alone, and to the appellants’ arguments by reference to Richard). George contended that his parents, Fahad and Souad Sckaff, provided the funds for the purchase of the Property, intending that the Property belong to George. However, they put the Property in Richard’s name with a view to Richard holding it on trust for George. George further contended that even if his parents did not in fact purchase the Property for his benefit, he held that belief, and at no stage did Richard tell him otherwise before he served the eviction notice.

6. [6]

   Richard, on the other hand, denied that his parents purchased the Property for George. He contended that he purchased the Property with his own funds and allowed George to live there, rent-free, until the pressure of his financial circumstances made that impossible (although George has continued to live in the Property throughout the course of these proceedings). Richard also claimed that whenever George asserted in his presence that the Property was his (George’s) property, Richard corrected that assertion.

7. [7]

   The primary judge recognised that “[i]n principle, the resolution of the dispute should begin with a determination of the circumstances in which No 6 [being the Property] was acquired in the name of Richard” (at [5]). Ultimately, however, his Honour did not make findings as to those circumstances, taking the view that he was unable to do so. The issue of who purchased the Property, and his Honour’s approach to that issue, was the subject of grounds 1 to 4 of the notice of appeal. For the reasons which follow, I consider that his Honour’s approach to this issue was erroneous and that his Honour should have made a finding as to who purchased the Property. The evidence did not support a finding on the balance of probabilities that Fahad and Souad purchased the Property. Rather, it supported a finding on the civil standard that Richard had done so.

8. [8]

   Ultimately, the primary judge found that Richard and Nada held the Property on trust on the basis that Richard had acquiesced in an assumption that George formed, that he (George) owned the Property. On the appeal, Richard challenged the primary judge’s conclusion that he acquiesced in George’s belief that he (George) was the true owner of the Property and did not take any steps to correct that belief (grounds 5-8), and his Honour’s further conclusion that proprietary estoppel was made out (grounds 9-11). The primary judge’s reasoning in relation to the source of funds for the Property impacted on these aspects of the reasoning, in a manner that requires appellate intervention. The appeal should be allowed.

9. [9]

   George submitted that in the event that the appeal were allowed, the matter should be remitted for a retrial. Richard opposed that course. A retrial may not be ordered unless it appears to the Court that some substantial wrong or miscarriage has been occasioned: Uniform Civil Procedure Rules 2005 (NSW), r 51.53(1). As Payne and Kirk JJA recently observed in Saltalamacchia v Zamagias [2024] NSWCA 184 at [3], the rule recognises that a new trial “increases costs, delays resolution and cuts across the aim of finality.” Bearing in mind the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW), the Court will ordinarily, if error is made out, determine the point itself rather than remit to the court below, and to that end s 75A of the Supreme Court Act 1970 (NSW) empowers it to make findings of fact. As the following reasons disclose, I consider that the evidence in the court below is sufficient to make the necessary findings of fact to resolve the matter without remitting it for retrial.

George’s claims against Richard

1. [10]

   It was common ground, and the primary judge found, that the Property was purchased on 5 February 1988 for $110,000 and that Richard became the registered proprietor: at [230]. In order to succeed in his claims, George needed to displace the prima facie position that the beneficial ownership of the Property was commensurate with the legal title: Currie v Hamilton [1984] 1 NSWLR 687 at 690 (McLelland J), cited with approval in Foundas v Aramztzis [2020] NSWCA 47 at [47]; and Zhang v Metcalf; Metcalf v Zhang [2020] NSWCA 228 at [47].

2. [11]

   In his further amended statement of claim, George alleged that Richard held the Property on trust for him or for him and Anne jointly. In the alternative, George sought an order that Richard give restitution in respect of George’s contributions to the Property and a charge over the Property to secure the value of those contributions. George did not seek, by way of further alternative relief, a right to long-term occupancy of the Property.

3. [12]

   George sought a constructive trust on three bases: first, a trust arising from a common intention or joint endeavour, second, estoppel by representation, and, finally, estoppel by convention. Fundamental to each of these bases was his allegation that in or about 1988, Fahad and Souad purchased the Property and registered it in Richard’s name (FASOC [1]). Specifically, George alleged that his father, Fahad, paid $60,000 up front, and his parents paid the balance by way of a loan from the Commonwealth Bank of Australia (CBA), secured by a mortgage over the Property (FASOC [3]).

4. [13]

   The parties to the alleged common intention or joint endeavour were George, his parents and Richard. George alleged that the common intention or joint endeavour, at the time of purchase of the Property and at all times thereafter, was to the effect that the Property would be his property, but put in Richard’s name (FASOC [4], [5]). In accordance with this common intention or joint endeavour, his parents paid off the mortgage, giving Richard money for this purpose (FASOC [7]). George further alleged that in reliance on the common intention or joint endeavour, he moved into the Property and continued to reside there (FASOC [6], [10]), paying the rates, taxes and utilities (FASOC [11]) and making various improvements in 2001, 2008 and 2013 at a cost in excess of $300,000 (FASOC [13]). George next alleged that Richard’s transfer of the Property to himself and Nada, in about January 2014, was a departure from the common intention and a failure of the joint endeavour (FASOC [15]-[16]), as was the demand, in December 2014, that George vacate the premises (FASOC [17]-[17A]).

5. [14]

   George alleged, further or alternatively, that on or about the date of purchase of the Property or, alternatively, when he moved in, he adopted an assumption that he beneficially owned the Property (FASOC [18B]). Although he does not expressly plead the source of the assumption, reading the pleading as a whole the source can only have been what George earlier alleged about the circumstances surrounding the purchase of the Property. George next alleged that Richard “knew of [and] acquiesced in and induced the Assumption” by agreeing to George (and later Anne) moving in, making improvements and treating the Property as his own “for all purposes and in all respects” (FASOC [18C]). Relying on the assumption, George moved in and made the improvements, to his detriment (FAOSC [18D]-[18E]), and it would be unconscionable for Richard to deny that George was the beneficial owner (FASOC [18F]).

6. [15]

   George finally alleged, further or alternatively, that in or about 1988 or 1989, upon his moving into the Property, he and Richard adopted a “mutual assumption” that George beneficially owned it. Again, the source of the mutual assumption was not pleaded. George alleged that he relied on the assumption to his detriment by moving into the Property, making improvements and treating it as his own, such that it would be unconscionable for Richard to deny the mutual assumption (FASOC [18H]-[18L]).

7. [16]

   Separately, in relation to the improvements, George alleged that Richard both acquiesced in his undertaking of the improvements and had knowledge that they were undertaken by George in the belief that he owned the Property (at [20]-[21]). George claimed that the Property should either be held on a constructive trust in respect of the improvements, or that Richard should give restitution to George in respect of the contribution to the Property by payment of the outgoings and improvements (at [24]). The amount of restitution was pleaded as constituting “reimbursement of the cost to Plaintiffs of the Improvements being the sum of $535,315.08 as at September 2018 plus interest”, together with compensation for the project management and labour (which was not quantified) (at [25]).

8. [17]

   In his amended defence, Richard denied that his parents purchased the Property. He pleaded that he (Richard) purchased the Property, paying the deposit and the balance by way of a loan from CBA which was secured by a mortgage over the Property and which he paid off (AD [1], [3]). Richard denied the asserted common intention or joint endeavour (AD [4]), and denied that George moved into the Property in reliance upon it. Richard pleaded that he offered to permit George to live in the Property until he (Richard) married and moved in, and later agreed that George could remain there (AD [6]). Richard denied that his parents paid the mortgage, repeating that he made all mortgage repayments and discharged the original mortgage in 1992 (AD [7]-[8]). He also denied that George paid the utilities or made the improvements in reliance on a common intention or joint endeavour, alleging that George paid the utilities following a conversation between the two of them in 1994, in which they agreed that George could continue living in the Property on that condition, while Richard paid all insurance and land tax (AD [11]). George disputed Richard’s payment of the insurance for the Property but he did not dispute that Richard paid land tax.

9. [18]

   Richard admitted that George made improvements to the Property but denied that George did so in reliance on the pleaded common intention or joint endeavour (AD [12]-[13]). Richard also admitted the transfer of the Property in January 2014 to him and Nada jointly, and that he sent the eviction notice in December 2014, but he denied that either constituted a departure from, or failure of, any common intention or joint endeavour (AD [15]-[17A]).

10. [19]

    Richard did not admit the existence of the assumption that George alleged, further pleading that he did not know about it and did not acquiesce to it. Richard further pleaded that no act or omission on his part caused George to treat the Property as one for which he was entitled to be the registered proprietor (AD [18A]-[18F]). Richard denied the alleged estoppel by convention on a similar basis (AD [18H]-[18L]).

11. [20]

    In relation to George’s claim for restitution in relation to the improvements, ultimately Richard did not dispute before the primary judge that George would be entitled to equitable compensation in that regard: at [43]. One of the alternative sets of orders that Richard sought on the appeal, in the event that the primary judge’s orders were set aside, included an order that he and Nada pay such compensation.

The purchase of the Property (grounds 1 to 4)

1. [21]

   Richard was 24 years old when the Property was purchased, and George was 20 years old. They both gave evidence of having made searches for documents that would assist their respective cases, with limited success. The primary judge acknowledged that the many disputes between them, about whether conversations occurred long in the past and the content of those conversations, exemplified the difficulties that McLelland CJ in Eq explained in Watson v Foxman (1995) 49 NSWLR 315 at 318: at [215].

2. [22]

   His Honour observed that “the parties conducted their cases on the assumption and in the hope that the Court would accept the credibility of one side’s evidence to the exclusion of the other, so that, on a ‘winner-takes-all’ basis, the Court would accept the case propounded by one side and reject the case propounded by the other”: at [219]. His Honour described that aspiration as having failed, as his Honour was “not prepared to accept unequivocally the evidence of either George or Richard on issues that are in dispute between them”: at [220]. His Honour also found “no basis to accept the evidence of one in preference to the other, particularly when the subject matter is significant conversations between them”: at [220].

3. [23]

   In his submissions on the appeal, George emphasised the need to recognise the advantages enjoyed by the primary judge, and so much may be accepted consistently with Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 (“Fox v Percy”) and Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. George submitted in this regard that although Richard relied heavily on his affidavit evidence in the appeal, the primary judge had not found his evidence persuasive and was satisfied that Richard had sought to downplay the level of his knowledge on certain matters: at [206]-[211]. In oral submissions, Senior Counsel for George cautioned the Court against accepting Richard’s attempt to rehabilitate his credit and emphasised the positive credit findings that the primary judge had made about third party witnesses, to whose evidence I will come.

4. [24]

   In a rehearing pursuant to s 75A of the Supreme Court Act, it is necessary for this court to conduct a real review of the trial and the judge’s reasons whilst observing “the ‘natural limitations’ that exist in the case of any appellate court proceeding wholly or substantially on the record”: Fox v Percy at [23]. Those limitations include the disadvantage that an appellate court has compared to the trial judge in assessing a witness’ credibility. Nevertheless, as the Court recognised at [24], “mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence”. What the Court said at [25] bears repeating in the present context:

5. [25]

   In the present case, the primary judge did not go so far as to find that George or Richard was not a credible witness. Rather, his Honour was not satisfied that he could “properly rely upon the uncorroborated evidence of either Richard or George as to the events that occurred before the purchase of No 6, and the circumstances in which No 6 was acquired, and the source of funds for the payment of the purchase price”: at [212]. The evidence on which George and Richard respectively relied by way of corroboration of their claims was thus significant and remains so in considering the grounds of appeal.

6. [26]

   The primary judge commenced his analysis with Richard’s account of the purchase of the Property. However, ground 1 of Richard’s notice of appeal contended that the primary judge reversed the onus. In light of that contention, it is appropriate to commence the analysis of grounds 1 to 4 with the account of the purchase on which George’s case rested. Before doing so, I will set out some uncontentious matters about the Sckaff family.

7. [27]

   Fahad and Souad migrated from Lebanon to Australia, where they met, married and started a family. Fahad worked in a factory until he was retrenched in the 1980s (the precise timing was in dispute), while Souad worked in the home. In addition to Richard and George, Fahad and Souad had two daughters, Mary being the eldest child and Adele the youngest: at [9].

8. [28]

   The family lived in Dulwich Hill, at No 12 in the same street as the Property (the family home). According to Richard, his parents paid off the mortgage on the family home in the early 1970s: at [10]. Fahad died in February 1996: at [58]. Souad remained in the family home until 2007, when she moved into a nursing home: at [11]. Souad died in October 2013: at [239].

9. [29]

   In 1974, Richard commenced working at Hurlstone Park Newsagency, initially as a paperboy and, from 1977, as a paperboy and shop assistant. In 1981, at the age of 17, he commenced as a bank clerk at CBA, while also maintaining his job at the newsagency. In 1986, while still working at CBA, Richard commenced employment as a delivery driver with John Fairfax Publications (Fairfax), holding that position until 1996. By the time Richard ceased employment with Fairfax, he had established his own newspaper delivery business, which traded through R and N Sckaff Enterprises Holdings (Aust) Pty Ltd. In 1998, Richard ceased his employment with CBA, by which time he had been promoted through various positions. After that time, the newspaper delivery business was Richard’s sole source of income.

10. [30]

    Richard and George’s older sister, Mary, gave evidence in the proceedings that Souad encouraged her children to save. Like Richard, Mary started working on a full time basis at the age of 17. According to Mary, she and Richard would give Souad their wages each week, from which Souad would give them an allowance to spend and bank the rest. Both Mary and Richard lived in the family home until they respectively married, in 1987 (Mary) and 1991 (Richard).

11. [31]

    At the time of purchase of the Property, George was unemployed. George gave evidence that his father told him that he and Souad were buying the Property for him, using a redundancy payout of $60,000 that he (Fahad) had received. Souad insisted that the Property be put in Richard’s name because she was worried that George was going to “gamble it away”. By George’s own admission, Richard was the more responsible of the two brothers at that time: Richard had a job (two jobs, in fact) and could obtain a loan, and although Richard also gambled, George described himself as “definitely the bigger gambler”.

12. [32]

    George recalled a further conversation with his father about the Property in similar terms, when his mother and Richard were also present (which Richard denied). According to George, Fahad said that he and Souad were helping George with the Property, just as they had helped Richard to buy a house in Campsie and had given Mary $30,000 as a wedding gift. George recalled his mother saying something to a similar effect at around the time the Property was purchased, as well as subsequently.

13. [33]

    On George’s evidence, then, his parents bought the Property for him, and they did so because they had done the same for Richard. In support of this contention, and that this was what his parents had told him, George called three witnesses: Claude Cacitti, Michael Geoghegan and Nasser Zahr.

14. [34]

    Mr Cacitti came to give evidence as a result of having seen a segment on A Current Affair in 2017 “about the feud between George and his brother Richard”. He gave evidence that around 1979, he was George’s primary school teacher and, in that capacity, he had visited Souad at the family home about six times, on her invitation, as she wished to discuss her children. Mr Cacitti stated in his affidavit:

15. [35]

    The primary judge described Mr Cacitti as “an entirely independent and credible witness”, and was prepared to give weight to his evidence notwithstanding “the inherent likelihood of dissipation of recollection over the decades”: at [90]. However, at its highest, Mr Cacitti’s evidence was of conversations in which Souad expressed a future intention to purchase houses for her sons, taking place at a time when Richard was 15 years old and George was 11 years old.

16. [36]

    Mr Geoghegan’s evidence was more proximate to the property purchases in issue. He grew up on the same street as the Sckaffs and had known George and Richard since they were children, frequently playing football and cricket with George during the 1960s and 1970s and, between 1973 and 1979, often working with Richard as a paperboy. Mr Geoghegan’s evidence included the following in relation to the Campsie house:

17. [37]

    In relation to the Property, Mr Geoghegan gave this evidence:

18. [38]

    The primary judge described Mr Geoghegan as a “reasonably careful and satisfactory witness”, to whose recollection he was satisfied was justified in giving some weight: at [82]. However, his Honour recognised that Mr Geoghegan’s credibility was “necessarily diminished by his recollection that both Souad and Richard told him that Fahad and Souad had bought Richard a house, as well as George” (at [83]), for reasons to which I will come shortly.

19. [39]

    Mr Zahr frankly admitted that he had been close friends with George since 1980 and that they remained friends. He gave evidence that he knew Souad well and spoke to her mostly in Arabic, and gave evidence of the following two conversations with her in around 1988, before George moved into the Property:

20. [40]

    The primary judge accepted that Mr Zahr “had a real recollection of the substance of the statements made to him by Souad, notwithstanding the passing of the decades since the conversations took place”: at [78].

21. [41]

    Contrary to what Fahad and Souad led George to believe (on his evidence) about their purchase of the Campsie house for Richard, Mary and Richard gave evidence that they jointly purchased a property in Campsie in 1983, to which their parents made no financial contribution. Mary’s evidence, which was not seriously challenged, was that she and Richard paid the deposit (which as best as she could recall was $9,500) and obtained a loan for the balance. She and Richard then jointly made all of the loan repayments (the mortgage was discharged in June 1986).

22. [42]

    Richard’s evidence was consistent with Mary’s in terms of the payment of the deposit on the Campsie house and the loan repayments. Richard also gave evidence that the Campsie house was leased between 1983 and 1990 to a single tenant, who would bring the rent to the family home and leave it with his mother, for Richard (who still lived in that home). Between 1990 and 1992, the Campsie house was rented to a couple from whom Richard generally collected the rent directly.

23. [43]

    The primary judge ultimately found at [227]:

24. [44]

    The circumstances surrounding the purchase of the Campsie house were contrary to George’s case and supported the credibility and reliability of Richard’s evidence regarding his property purchases. The evidence, from Mary in particular, that Fahad and Souad did not buy the Campsie house for Richard necessarily diminished the weight of the evidence of Mr Cacitti and Mr Geoghegan on whom George relied to corroborate his evidence that his parents had purchased a home for both of their sons. Mary gave evidence doubting that her father would have told George that he and Souad bought the Campsie house for Richard, when Fahad knew they did not contribute financially to its purchase.

25. [45]

    Specifically in relation to Mr Geoghegan’s evidence, the primary judge stated at [83]:

26. [46]

    Not only was there no objective evidence to support a finding that Fahad and Souad bought a house for Richard, Mary’s evidence, which his Honour accepted, was that they had not done so.

27. [47]

    I note that there was also no substance in George’s assertion that their parents had given Mary $30,000 as a wedding gift and on account of her share of the Campsie house, for Richard. Mary denied that her parents ever gave her this amount of money, as a wedding gift or at all. When she was asked about this in cross-examination, Mary’s evidence was that the only gift she received from her parents for her wedding was a bedroom suite. Richard and Nada both gave evidence that they received a bedroom suite from Richard’s parents, with Nada describing the giving of such a gift as a custom in the Lebanese community.

28. [48]

    As I have noted above, George’s evidence was that his parents told him that they purchased the Property using the $60,000 redundancy payout that Fahad said he had received, and a loan which was in Richard’s name but which, according to Fahad, he and Souad also paid off. Although George gave evidence, and maintained in cross-examination, that his parents paid $60,000 by way of a deposit, the primary judge found, consistently with Richard’s evidence, that the amount of the upfront payment was $50,000, with the balance of $60,000 the subject of a loan from CBA: at [190].

29. [49]

    Richard and Mary disputed George’s evidence about Fahad’s receipt of a redundancy payout, both as to the amount and its timing. Mary recalled a conversation with her mother shortly after Fahad lost his job (at a factory in Ashfield, not Alexandria as George recalled), in which Souad said that Fahad had only received $2,000 and she was worried about how they were going to manage. Mary said that $60,000 would have been a “huge” amount of money for her parents and she was confident that her father would have told the whole family if he had been given such a large sum (the clear implication being that she was not told).

30. [50]

    Richard recalled that in May or June 1981, he had a conversation with Souad in which she told him that the factory where Fahad worked was closing at the end of the year and she was worried about how they were going to manage. Richard also recalled his father returning from the work Christmas party and giving his mother an envelope containing his wages and four weeks’ holiday pay. Richard gave evidence that on or about January 1982, he took his parents to the Department of Social Security and completed unemployment forms for his father, providing the Department with copies of his parents’ bank books. His recollection was that at that time, there was around $15,000 in their account.

31. [51]

    In cross-examination, George said that he had no reason to dispute that Richard had taken Fahad to the Department of Social Security after he stopped working at the factory, or that his parents had only $15,000 in the bank at that time. Ultimately, the primary judge thought it was “probable that George's definite recollection of the date of the retrenchment and the amount received by Fahad was not reliable (given, in particular, that it seems that George did not recall the correct name of the suburb in which Fahad had been employed)”: at [229]. Without that finding in George’s favour, on his case his parents needed to have available at least $50,000 in the first half of 1988 for the upfront payment on the Property (having paid Mary (also on George’s evidence) $30,000 in 1986), along with funds to pay down the $60,000 loan by 1994.

32. [52]

    In so far as George gave evidence of his parents telling him that they were putting the rent money from the Campsie house towards the loan repayments, that was Richard’s money, as the owner of that property. George also gave evidence in cross-examination that his parents “had a lot of cash in the house” and they were not going to have everything in the bank. His evidence in that regard was not supported by Richard or, more significantly, by Mary, who in one of her affidavits described their parents as “poor” in the 1980s. In cross-examination, Mary accepted that her parents saved their money, that Souad saved cash, and that she would have cash around the house. Mary was not asked about the amount of cash her mother had around the house, or its source.

33. [53]

    There was evidence that Souad owned a number of parcels of land in Lebanon, three of which she sold in 1994. The primary judge said of these properties that “[t]he implication in the evidence is that the properties in Lebanon had value, but there is no evidence at all as to that value, or whether Souad received income from the properties”: at [229]. Specifically, his Honour did not accept George’s contention “that the mortgage over No 6 to the CBA was repaid by Souad from the proceeds of sale of her Lebanese properties”: at [231]. His Honour further found at [231]:

34. [54]

    I note that his Honour referred to what he described as “intriguing” evidence from Richard about what his mother did with the three remaining properties that she held in Lebanon (transferring one to Richard’s daughter, one to Richard, and one to another family member). The primary judge described this evidence as suggesting no reason why Souad would have acted in that manner, “unless she thought that George had already adequately been provided for”: at [232]. That speculation formed no part of George’s case, and it was not put to Richard.

35. [55]

    As I noted above, Richard denied George’s allegations that his parents paid for the Property. He gave evidence that he paid the deposit for the Property out of his own funds and borrowed the balance from CBA, utilising a staff housing loan. By contrast with George’s case, there was contemporaneous documentary evidence that supported his claims regarding his repayment of the loan.

36. [56]

    Richard gave evidence that loan repayments were automatically deducted from his CBA wages, and were described on his pay advices as “SHL”. Richard was able to locate a pay advice for the fortnight ending 27 May 1993, which listed a number of deductions including an amount described as “SHL”. On the basis of the amount of the deduction in the pay advice ($65.56), the primary judge calculated that the SHL deductions would total about $1,700 per year (assuming no change in the amount of the deduction): at [50]. In my view, there could be no serious question that the automatic deductions constituted payments, by Richard, towards the purchase price of the Property.

37. [57]

    In addition to those fortnightly deductions, Richard gave evidence that between 1988 and 1994 he made extra payments to reduce the balance of the loan. Richard tendered copies of deposit slip butts “to the extent available”. His Honour included a table of the deposit slip butts at [51] of the reasons. The respective amounts on the 45 deposit slips that were in evidence ranged from $150 (for 26 of the slips) up to, on one occasion, $6,000. On his Honour’s calculation, the total was $50,400: at [52].

38. [58]

    On their face, the deposit slips evidenced payments that Richard made into the loan account. In oral submissions on the appeal, Senior Counsel for Richard drew attention to one of the deposit slips in the amount of $5,000, which was dated 20 November 1991 and was annotated with the description “wedding money”. The date and description were consistent with the evidence of Nada and Richard that they married in late October 1991, following which they embarked on a three-week honeymoon.

39. [59]

    The primary judge accepted that “all repayments were apparently made through accounts in Richard’s name”: at [189]. Nonetheless, his Honour was “not prepared to accept that Richard was able to save the proportion of his income for the whole of the period from 1975 to 1994 that would have been necessary to enable him to make the initial payment for the purchase of No 6, and to repay the mortgage over No 6, from his own resources”: at [188].

40. [60]

    The manner in which the primary judge reached that conclusion, and how his Honour then used it, was the subject of grounds 1 to 4 of the notice of appeal. By ground 1, Richard contended that the primary judge effectively reversed the onus of proof on this issue, focusing on what Richard was or was not able to prove at the expense of assessing what the evidence did or did not establish on George’s case, as the plaintiff. By grounds 2 and 3, Richard took issue with his Honour’s finding that Richard did not prove that he had the capacity to fund, and had funded, the purchase of the Property, complaining specifically about an exercise that his Honour carried out involving interest on the loan for the Property. By ground 4, Richard contended that the primary judge erred in failing to hold that he (Richard) was the beneficial owner of the Property.

41. [61]

    In order to evaluate the alleged errors, it is necessary to refer briefly to the expert evidence that was led in the case. In response to evidence that Richard gave about how he was able to fund the purchase of the Property, George obtained a report from an accountant, Mariano Rossetto. Mr Rossetto was instructed to assume (against George’s case) that Richard’s evidence about funding the purchase was accurate, and to give an opinion as to whether Richard would have been able to make the necessary payments at the times they needed to be made, from his own resources. Richard retained a responsive accountant, Fiona Bateman.

42. [62]

    Ultimately, as the primary judge observed at [173], both parties accepted that the result of the expert accounting evidence was inconclusive. Despite that being the position of the parties, his Honour considered that an aspect of the experts’ conclusions was significant, namely, “a comparison between the total income of Richard (plus that of Nada after their marriage in 1991), total living expenses, the property payments that Richard claimed he made, the balances at end of financial year and, importantly, the proportion of Richard’s income that represented savings”: at [174]. His Honour found that the proportion of Richard’s earnings that he would have been required to save in order to make the payments he claimed to have made, both for the Property and other purchases (namely, two properties in Brisbane, purchased in 1991 and 1992 respectively (see [170])), was “extraordinary”: at [175].

43. [63]

    Senior Counsel for George accepted that this court was in as good a position as the primary judge to draw inferences about whether it was likely or unlikely that a borrower would spend between 60% and 80% of income on discharging indebtedness. Particularly having regard to Richard’s circumstances, the primary judge’s finding that the proportion of savings was “extraordinary” was not warranted. The period during which Richard put the highest proportions of savings towards loan repayments was when he was still living at home with his parents. I have referred above to Mary’s evidence that her mother put a strong emphasis on saving, which was encapsulated in her cross-examination as follows:

44. [64]

    In addition to his scepticism of Richard’s capacity to save the proportion of his and Nada’s incomes that would have been necessary, the primary judge relied upon a matter that, in his opinion, neither of the experts had been instructed to make any assumptions about. That matter was the interest that Richard was required to pay on his CBA staff home loan: at [177]. His Honour undertook a series of calculations “to compare the exercises carried out by the parties’ experts if, unlike their calculations, it was assumed that Richard’s outstanding mortgage debt on No 6 accumulated interest at the rate of 10% per annum”: at [180]. His Honour adopted that rate of interest on the basis that Richard’s expert, Ms Bateman, had adopted 8% per annum as an appropriate interest rate to assume that Richard had earned on his deposited savings: at [178].

45. [65]

    Starting with the debt of $60,000 in 1988, his Honour calculated interest at 10% to give the total at the end of the year. His Honour then allowed for the fortnightly deductions “that are assumed to have been made from Richard’s salary”, and for the additional payments for which there was evidence in the form of the deposit slips, to give the amount of the debt in the next year: at [180]. His Honour observed the following of his result at [181]:

46. [66]

    The primary judge acknowledged that the approach was necessarily, “imprecise because it does not allow for the effect of interest accruing and payments being made throughout the year”: at [180]. His Honour also acknowledged that as this issue only occurred to him after the hearing, “the conclusions have not been supported by actual evidence, and they have not been tested by cross-examination of Richard, and do not have the benefit of the responses of the expert witnesses”: at [185]. Nonetheless, and notwithstanding that his Honour accepted that he could not reliably act upon the precise result obtained (at [186]), his Honour relied upon the broad outcome of this analysis, stating at [187]:

47. [67]

    In his written submissions on the appeal, George sought to characterise this exercise as not a basis for his Honour’s decision-making but, rather, “an additional safeguard in the context of the evidence that was available to him”. The emphasis his Honour gave the exercise, and the conclusion to which it drove him, tells against that submission. As Richard submitted, in circumstances where no question about the interest payable on the loan was put to him during his evidence, and where the experts were not asked about interest and how that would ordinarily be dealt with, his Honour’s reliance on this exercise in a manner that was adverse to Richard was productive of unfairness.

48. [68]

    Additionally, the approach his Honour adopted assumed, wrongly, that such deposit slips as Richard had tendered constituted all of the additional payments that were made. The latter assumption was contrary to Richard’s evidence that he had produced the deposit slips to the extent they were available, which was unsurprising given the passage of time, and was not challenged. The passage of time undermined George’s reliance in this context on Blatch v Archer (1774) 1 Cowp 63; 98 ER 969. As Hodgson JA observed in Cook's Construction Pty Ltd v Brown & Anor [2004] NSWCA 105; (2004) 49 ACSR 62 at [42]:

49. [69]

    Further, George’s related submission that there was no objective evidence as to the payment of the purchase price before his Honour was not correct, at least in light of the pay advice that Richard was able to locate, if not also the deposit slips.

50. [70]

    More fundamentally, the primary judge’s conclusion regarding Richard’s capacity to pay, necessarily impacted by the exercise his Honour undertook without notice to either party, erroneously distracted his Honour from the correct question on this aspect of George’s case. The manner in which his Honour relied on the conclusion can be seen from [189] and [230] of his Honour’s reasons. First, in [189] his Honour stated:

51. [71]

    His Honour expressed a similar conclusion in [230], where his Honour stated:

52. [72]

    His Honour well appreciated, and indeed stated expressly, that the Court “must require a high level of satisfaction to be established before it will make an order that disturbs the proprietary rights of the registered proprietor of land”: at [248]. In answer to George’s case that his parents bought the Property for him, as they had bought the Campsie house for Richard, the evidence established that Richard and Mary, between them, purchased the Campsie house, and that their parents made no financial contribution. Without a finding that Fahad received a $60,000 redundancy payout, there was no evidence to support that Fahad and Souad had $50,000 available to put towards the purchase of the Property; or that they contributed (or had the capacity to contribute) to the repayment of the loan. Meanwhile the objective evidence showed loan funds being deducted from Richard’s salary, and Richard making additional payments into his loan account. His Honour accepted what the records reflected, namely that the mortgage was repaid through a CBA account in Richard’s name. So much was at least clear from the pay advice.

53. [73]

    The only alternative source of those payments on which George relied was his parents, yet his Honour was not prepared to accept that Fahad or Souad made, or could have made, any of those payments. That his Honour was not prepared so to accept reflected the dearth of evidence to support that Fahad or Souad had the means available to fund the purchase of the Property. The evidence thus did not support the basis on which George’s case rested.

54. [74]

    Nonetheless, his Honour left open the conclusion as to who had paid for the Property on the basis of what Richard had been unable to prove. In doing so, his Honour erred. George sought to submit that the primary judge did not so err, because the evidence gave rise to a practical onus that fell on Richard and that he had failed to discharge. His Honour addressed the question of onus at [249]. It is apparent from that paragraph that the practical onus to which his Honour referred arose not in relation to payment of the purchase price, but from what his Honour considered to be the forensic effect of all of the evidence. If Richard in fact purchased the Property, that evidence would bear a different complexion.

55. [75]

    I would uphold ground 1 of the notice of appeal. I would also uphold grounds 2 and 3 of the notice of appeal. I accept Richard’s submission that in finding that he had not proved that he purchased the Property, his Honour erred in proceeding on the basis that the proportion of savings was “extraordinary”, having regard to Richard’s personal circumstances. Further, in relying on his own interest calculation exercise, his Honour’s conclusion that Richard did not have capacity to pay for the Property involved an unfair process. It also rested on the erroneous premise that the deposit slips in evidence constituted all of the additional payments Richard had made.

56. [76]

    The evidence to which I have referred in [72] supported Richard’s claim that he purchased the Property and, accordingly, at all relevant times was both the legal and beneficial owner of the Property (this was the subject of ground 4 of the notice of appeal). The evidence that was contrary to Richard’s claim to have purchased the Property was the evidence of Damien Trad, which the primary judge described as “a beacon in an otherwise obscure landscape”: at [100].

57. [77]

    Mr Trad was a licensed finance broker who provided services to Richard in 2003 (some 15 years after the Property was purchased), when Richard was seeking to remortgage the Property to purchase an investment property in Bargo. At that time, the Property was unencumbered (both the original mortgage and a subsequent mortgage, taken out to assist George to purchase a bread business, had been discharged).

58. [78]

    Despite not complying with orders for the service of affidavits, Mr Trad was permitted to give oral evidence in chief. He gave the following evidence:

59. [79]

    The primary judge emphasised that Mr Trad’s evidence was quite different from that of every other witness: at [98]. One reason for that was the manner in which he was permitted to give his evidence. The reasons do not address whether his Honour had regard to that significant difference between Mr Trad and the other witnesses in concluding that his evidence was more reliable.

60. [80]

    The primary judge’s assessment of the credibility of Mr Trad’s evidence is at [98]-[100]. His Honour stated that “Mr Trad’s evidence suggested that he had retained his file in which he had included documents and notes created at the times of his dealings with Richard”: at [98]. His Honour then added that Mr Trad had not been required to produce his file, so there was no evidence of its contents. That was incorrect, including in ways that would have been obvious at the time of the trial to the primary judge.

61. [81]

    When Mr Trad gave evidence in chief, he was asked by leading (and uncontroversial) questions to confirm that he had produced his file on subpoena in the case, and had produced the whole file. In cross-examination, Mr Trad confirmed that in 2019, four years previously, he had received a subpoena to produce documents and agreed that until the previous week he had not produced any documents. In response to an open-ended question about why it had taken almost four years to produce documents, Mr Trad gave two answers. The first was that he did not have the file because it was closed 18 years ago, and the second was “it was a subject that I didn’t want to be involved in at the time”. Mr Trad gave no explanation to reconcile the availability of the entirety of his file in 2023 and his answer that the file was closed 18 years ago as an excuse for non-compliance with the Court’s order, although it may be inferred that production of an old file was not straightforward.

62. [82]

    The file was in fact recovered, and it was the subject of a call at the conclusion of his cross-examination. Ultimately both sides tendered contemporaneous documents from the file. Richard tendered a mortgage loan application which referred to the Property. The loan application was signed by Richard and dated 26 February 2003, and it identified the Property as an asset of his. The purpose for which Richard was taken to the document was the inclusion, in the list of his assets, of a property in Penshurst about which he gave evidence that he had no awareness. Richard accepted that he had signed the form, but maintained that he did not recognise the document and that the handwriting in the document was not his.

63. [83]

    Before he was cross-examined about the specifics of the loan application, Richard’s counsel put the following questions to Mr Trad:

64. [84]

    When he was asked about the loan application for the Bargo property, Mr Trad accepted that he had represented to the lender that it would be able to make the loan on the strength of the security over the Property. That led to the following exchange:

65. [85]

    The primary judge referred to that aspect of the cross-examination in the first sentence of [99], but without expressing a conclusion or dealing with Mr Trad’s evidence on the point or dealing with the documents from Mr Trad’s file which were tendered. It is probably unnecessary to say so, but asking a lender to lend money to a borrower who in truth had a bare legal title to the substantial real property proposed as security was both a civil wrong and a serious crime, irrespective of whether the Consumer Credit Code had commenced.

66. [86]

    None of this was mentioned in his Honour’s reasons. It is reasonable to infer, because of his Honour’s mistaken overlooking of the availability and tender of documents from Mr Trad’s file, that his Honour did not bring it into account when assessing the credibility and reliability of Mr Trad’s evidence. Instead, the primary judge treated the challenge to Mr Trad’s credibility and reliability as being the very serious allegation – which was not put to Mr Trad – that he had invented his evidence: at [134]. The result was that his Honour did not address the inherently more plausible possibility – which was put to Mr Trad – that he had no basis in 2002 or 2003 to conclude that George was the beneficial owner of the Property, and only came subsequently (in the intervening more than two decades) to hold that view, by reason of his friendship with George.

67. [87]

    His Honour ultimately described Mr Trad’s evidence as “[t]he most telling evidence in favour of the plaintiffs’ case concerning the circumstances in which No 6 was purchased” (at [233]). That said, Mr Trad’s evidence did not sufficiently persuade his Honour to make a positive finding in relation to the purchase of the Property in George’s favour, “given the level of inconsistency in the evidence on the issue taken as a whole”: at [234]. What his Honour was, however prepared to find was that Richard’s conduct in his dealings with Mr Trad was consistent with Richard “having a real belief that George was the true owner of No 6”: at [240].

68. [88]

    That his Honour reached both of those conclusions only highlights the difficulties with his Honour’s approach about which Richard complained in ground 1. The second conclusion highlights that his Honour’s assessment of the balance of the evidence on which George relied to make out his claim, not least the evidence of Mr Trad, was impacted by the erroneous manner in which his Honour approached the issue of who paid for the Property. The likelihood or otherwise of whether Richard engaged in the conduct about which Mr Trad gave evidence was affected, inexorably, by whether or not Richard paid the purchase price for the Property.

69. [89]

    Contrary to the primary judge, I have concluded on the balance of probabilities that Richard paid for the Property and was its legal and beneficial owner. Mr Trad’s evidence, regarding a conversation with Richard some 15 years after the purchase and almost 20 years before he gave evidence, did not outweigh the documentary evidence, including the evidence in Mr Trad’s own file, that identified Richard as the legal and beneficial owner of the Property.

70. [90]

    There was no corroborative evidence for George’s alternative contention that his parents paid for the Property, and it was directly contradicted by Mary, who gave evidence that her parents were poor in the 1980s; made no financial contribution to the purchase of the Campsie house; and did not pay her $30,000, as a wedding gift or otherwise. Mary also expressed doubt as to why her mother would tell George that the Property was his, and that she and Fahad had helped to pay it off, when Richard had told Mary, and, she assumed, had also told her parents, that he purchased the Property. The primary judge did not refer to this evidence.

71. [91]

    There was also no evidence to support that Fahad and Souad had access to the type of funds that would have been necessary to pay $50,000 up front and discharge a $60,000 loan within six years. By contrast, Mary’s evidence was that she and Richard were in a position jointly to purchase the Campsie house, with no assistance from their parents; and that Richard bought her out at her request in 1987. Following the purchase of the Property, automatic deductions were made from Richard’s CBA salary, in addition to which he gave evidence of making additional payments. For those reasons, I do not accept that the evidence supported a reasonable possibility that Fahad and Souad reimbursed Richard for those payments. Ground 4 must be upheld.

Events after the purchase of the Property (grounds 5 to 8)

1. [92]

   George submitted that the question that was the focus of grounds 1 to 4, involving who purchased the Property, was “adjacent” to his Honour’s ultimate conclusion, in the sense that the former did not operate directly upon the latter. I do not accept that submission.

2. [93]

   The primary judge found that the evidence required that the time period over which the relevant events occurred should be divided broadly into two periods (at [223]):

3. [94]

   The first period was the subject of grounds 1 to 4. In respect of that period, the primary judge hesitated to make “any positive findings”: at [224]. His Honour experienced no equivalent hesitation about the second period, stating at [225]:

4. [95]

   The primary judge recognised that this was not a case in which Richard made any representation to George that he would hold the Property for George’s benefit: at [235]. Rather, as is apparent from the above extract, his Honour found that Richard’s awareness related to what Fahad and/or Souad said to George at or around that time about the Property, arising by way of inference from “the entirety of Richard’s objective conduct since George commenced to live in No 6”. Specifically, his Honour considered that the evidence revealed the following about Richard’s conduct, and the absence of conduct that his Honour would have expected if Richard was the owner of the Property:

   1. (1)

      Richard allowed George to occupy the Property for some 25 years before he took any formal step to eject him, including after Richard and Nada moved in (and then moved out) and during periods when Richard and George were estranged, without requiring any payment of rent notwithstanding there was evidence that George was able to make substantial payments to bookmakers: at [236].

   2. (2)

      Between 1998 and 2005, Richard was aware that George purchased and then sold two units in Bankstown, from which “[i]t ought to have been understood by Richard that the plaintiffs were making no apparent attempt to buy an alternative family home because of their understanding that they had no need to do so”: at [265].

   3. (3)

      In 2001, Richard “stood by” while George renovated the Property at a cost of $30,000 and in a manner that was not “likely to be carried out by an occupier without any long-term tenure of the property”: at [265].

   4. (4)

      In 2008, Richard became aware of the more substantial renovations that George had embarked upon, which “in the ordinary course would only be undertaken by persons who believed that they were renovating a home that was their own property”, and “[y]et again, Richard stood by and said nothing”: at [265].

   5. (5)

      In 2013, George completed a further renovation, building a granny flat for Anne’s mother which was “outwardly consistent with the plaintiffs’ belief that No 6 was their home and that they had a right to occupy it as long as they wished”: at [265].

   6. (6)

      Richard only gave evidence of informing George that he was not entitled to ownership of the Property on two occasions, with his Honour finding it “extraordinary that, if Richard genuinely believed he was the beneficial owner of the property, he did not more clearly and consistently assert that position to George”: at [237].

   7. (7)

      Richard did not take any step to eject George until about a year after Souad’s death: at [239]. His Honour found that Richard “did not act as if [he was the beneficial owner] until 12 December 2014” (when he served the eviction notice): at [240].

   8. (8)

      There was “only the slightest evidence” that Richard ever asserted his formal legal ownership of the Property against George: at [226]. In any event, Richard did not explain the position to George “in a manner that was sufficient to disabuse George of his genuine belief”: at [226], [264].

5. [96]

   As Richard submitted, the inferences to be drawn about his state of awareness over the period depended upon what findings were to be made about George’s central contention, that his parents bought the Property for him. On that factual assumption, if correct, Richard must have been aware that the Property was in his name but he was not its beneficial owner. Absent that assumption, however, the inferences to be drawn about Richard’s awareness of what his parents told George and/or George’s beliefs, were more contestable, and even more so if, as I have found, it was Richard who purchased the Property.

6. [97]

   Richard contended that, notwithstanding his Honour’s criticism of the evidence as “slight”, his Honour did not make a finding about whether the conversations that Richard alleged took place with George, in 2003 and 2012, in fact took place (ground 5). If, as I have found, Richard purchased the Property, Richard submitted that it was more likely that these conversations occurred and were more significant in answering George’s case than the primary judge accounted for. Additionally, Richard challenged the primary judge’s finding that he did not sufficiently disabuse George of the belief he had formed (ground 6), contending that the primary judge effectively, and wrongly, imposed a duty on Richard to tell George that he was not the true owner (ground 7). Richard submitted that, particularly on the result of grounds 1 to 4 for which he contended, his Honour cast Richard’s evidence in an unduly unfavourable light.

7. [98]

   Richard submitted that there were four occasions on which he corrected assertions George made to him that he owned the Property, once in 2003 and three times in 2012. The primary judge referred to Richard’s evidence about the four occasions, but ultimately made no finding as to whether or not they occurred. True it is, as George submitted, that his Honour referred to George’s denial that two of the four conversations occurred, and described those denials as “credible”: at [205]. However, that paragraph is not properly to be characterised as a finding as to the four occasions on which Richard relied, not least because it referred only to two of them. Further, his Honour’s explanation for concluding that George’s denials were credible was that Richard “did not give evidence of any serious attempt over the years to make it clear that not only was the title to No 6 in Richard’s name, but that he reserved the right to eject George and his family at any time at Richard’s convenience”: at [205]. His Honour’s explanation emphasised the absence of any finding about whether Richard, in fact, made such attempts, serious or not.

8. [99]

   The latter part of his Honour’s explanation raised a matter that was not in issue between the parties, namely, whether George had a right of occupation of the Property, as opposed to beneficial ownership thereof. As I have noted above at [11], George did not seek a remedy by which he sought continued occupation of the Property other than as its owner. Whatever might have been the strength of George’s case in support of such a claim, he did not advance it.

9. [100]

   As Allsop P stated in Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2], in a passage to which Leeming JA recently referred in Curtis v Curtis [2024] NSWCA 136 at [91], “central controversies put up for resolution by the parties must be dealt with”, and “[t]he competing evidence directed or relevant to such controversies must be analysed and resolved”. Whether and, if so, how Richard reacted to assertions that George made about his ownership of the Property was critical to George’s claims, and to his Honour’s ultimate conclusion, that Richard “stood by” throughout the period of George’s occupation of the Property.

10. [101]

    It is necessary to consider the alleged conversations in their relevant chronological context, commencing with the 2003 conversation; and to do so against the background of the finding that I have made, that Richard paid for the Property.

11. [102]

    Shortly after purchasing the Property in 1988, Richard carried out a renovation. He was not challenged as to the fact of the renovation (although George disagreed about its duration and extent). That Richard carried out an initial renovation was consistent with his having purchased the Property.

12. [103]

    In around 1989 (on George’s evidence) or in early 1990 (on Richard’s evidence), George moved into the Property. As the primary judge observed, their difference in recollection in this regard was immaterial: at [17]. Richard’s evidence was that around the time the Property was purchased, his mother often complained to him that George was too much for her. Richard decided to ask George to move out of the family home, and said to George that he was putting George in the Property until he, being Richard, got married and moved in. George, on the other hand, contended that his mother furnished the house for him and he moved in.

13. [104]

    His Honour described Richard’s evidence in this regard as “significant for its brevity”, as the only positive evidence that Richard gave about why he allowed George to live in the Property for the next 25 years, save for his answer, in cross-examination, that he allowed this because George was his brother: at [54]. I will address that cross-examination in context; but for present purposes it is sufficient to note that the evidence disclosed other instances in which Richard assisted his brother and which would have warranted consideration in evaluating the plausibility of Richard’s response.

14. [105]

    One such instance occurred in 1990, when a second mortgage was granted over the Property for an overdraft facility in the order of $20,000, to fund George’s purchase of a bread delivery business. In cross-examination, Richard gave the following account of how that came to pass:

15. [106]

    George disputed that he approached Richard for assistance and gave evidence that his mother told Richard to help George. Irrespective of how it came about, the transaction showed Richard to be supporting George, on this occasion to take out the loan for him to buy a business. The nature of the challenge to Richard’s evidence on this subject related to the Property being used as security rather than the Campsie house, when the latter was unencumbered at the time. Richard’s explanation was consistent with both his employment and financial circumstances at the time:

16. [107]

    In November 1991, following their marriage, Richard and Nada moved into the Property. In his first affidavit, Richard gave evidence that he and Nada allowed George to stay and live with them on his mother’s request, as Fahad was unwell at the time. They lived there until around May 1992, when they moved into the Campsie house, leaving George in the Property.

17. [108]

    The mortgage that secured the overdraft for George’s bread run was discharged in 1992, when George sold the business. In August 1994, Richard paid off the loan he had obtained for the purchase, and the mortgage over the Property by which that loan was secured was discharged.

18. [109]

    Richard gave evidence that initially, he paid the utilities and insurance for the Property, as well as paying for maintenance. However, in about mid-1994, he had a conversation with George in which he asked him to pay the utilities. George agreed and from then on George paid the utilities while Richard continued to pay the insurance. Although Richard tendered a number of insurance premium invoices which supported his contention that he paid for the insurance, George contended that Richard was reimbursed. Ultimately, noting that Anne’s evidence was consistent with George’s, the primary judge found “without great confidence” that it was more likely than not that George reimbursed Richard for the insurance. This conclusion was “at least consistent with Richard’s evidence that he required George to meet other outgoings of No 6 from no later than 1994”: at [194].

19. [110]

    Richard also paid land tax on the Property. George did not dispute that Richard paid land tax, and there were contemporaneous documents to support that he did so.

20. [111]

    In 1998, George wanted to purchase a unit in Bankstown as an investment property, for $163,500. George gave this evidence:

21. [112]

    As George also acknowledged, the property was purchased in Richard and George’s names as to 90% and 10% respectively as tenants-in-common. In 2001, George purchased another property in Bankstown for $206,500 with George and Richard as joint tenants. The two properties were later sold in 2005: at [146]. His Honour said of these transactions, at [246]:

22. [113]

    The point his Honour drew from these events assumed an equivalence between the purchase of the Property and the purchase of the Bankstown properties, a submission that George also advanced on the appeal. However, the significance of these transactions, to which his Honour made no reference, was that Richard assisted his brother without any expectation of a benefit from either of them. Richard gave the following evidence in relation to the first of those properties:

23. [114]

    In relation to the second property, Richard said he assisted George for the same reason. Although the respective recollections of George and Richard differed in terms of whether George involved a financial broker who made the approach to Richard, their evidence was consistent in terms of Richard’s preparedness to help his brother.

24. [115]

    In 2001, before their son was born in April, George and Anne carried out the first of their renovations of the Property. The renovations took place over a period of two to three weeks and included replacing rotten floorboards under the carpets, replacing skirting boards, fixing rising damp issues and painting the interior. George’s best recollection was that the cost was some $30,000. It was not in dispute that Richard was aware of the renovations at the time they were carried out. However, Richard gave evidence that George asked him if he could fix the rising damp in the house and he agreed.

25. [116]

    In cross-examination, Richard maintained that George asked for his permission. Richard denied that he stood by and watched George do the renovations without stopping him because Richard knew that it was George’s property. The limited nature of this cross-examination is relevant to the finding the primary judge made regarding Richard’s evidence about the renovations at [127]:

26. [117]

    I will return to this finding below when addressing the similarly limited extent of cross-examination on the 2008 and 2013 renovations.

27. [118]

    On 8 April 2003, Richard remortgaged the Property to fund the purchase of an investment property in Bargo (which was the transaction in which Mr Trad was involved). Richard’s evidence was that he did not have any discussions with George before he mortgaged the Property, consistently with the fact that he was both its legal and beneficial owner. Rather, Richard gave evidence that after he told Souad that he had bought the Bargo property, George contacted him shortly thereafter. Richard gave evidence of the following exchange:

28. [119]

    George denied that he heard about the Bargo purchase from his mother after it had happened, and he denied a conversation with Richard in the terms Richard alleged. His evidence was of a conversation that occurred before Richard purchased the Bargo property, in which:

    1. (1)

       Richard said to George that he was buying a property in Bargo and that Richard needed “to mortgage your house so I can get a loan and go ahead with the purchase”, in addition to putting a further mortgage on the Campsie house.

    2. (2)

       George said to Richard: “It is okay you can mortgage my house.”

    3. (3)

       Richard promised George that he (George) would make some money once the Bargo property was approved for subdivision.

    4. (4)

       George mentioned to Richard that he had gone to a car yard that day to look at purchasing a car. Richard said to George: “In return for you letting me mortgage your house to buy the land in Bargo, I will pay for the difference on the trade in and put the balance on my credit card.” Richard paid $33,000 from his credit card towards a BMW 2-door coupe.

29. [120]

    Richard denied this conversation, and he denied that he had contributed $33,000 towards a car for George around this time, not least because his credit card limit never exceeded $15,000. He was not cross-examined about the BMW purchase, and no call was made for his credit card statements. Nada also gave evidence that she looked after the finances and could not recall seeing a credit card statement showing any payment for a BMW. She was not cross-examined.

30. [121]

    His Honour did not consider it necessary to resolve the dispute about the BMW, primarily because of Mr Trad’s evidence about Richard telling him that the Property belonged to George: at [133]-[135]. Mr Trad’s evidence of his conversation with Richard, extracted at [78] above, included Richard saying he would need to speak to George to make sure he was happy for Richard to use the Property as security, and that he might buy George “a car or something” in exchange. Mr Trad did have a note on the file that he eventually produced, of the details of a salesman at the local BMW dealership, to whom George also referred in his evidence on which he sought to rely as support for what he recalled Richard said. However, he accepted in cross-examination that in circumstances where Richard also drove a BMW, he could not tell from the note whether he had made it in the context of a BMW that was Richard’s or George’s. On George’s own evidence it was unlikely that the note reflected what Mr Trad recalled:

    1. (1)

       On George’s evidence, he first mentioned the idea of a new car to Richard, in the same conversation as Richard asked for his permission to mortgage the Property.

    2. (2)

       At the time Richard spoke to Mr Trad about the Property, on Mr Trad’s evidence, Richard had not yet approached George to see if he could use the Property as security.

31. [122]

    The issue was of some significance in circumstances where, according to George, the car purchase was in return for his agreeing that Richard could place a mortgage on “his” property. Nonetheless, the position in which his Honour left this issue was that he was not satisfied that the evidence was “sufficient to support a finding on the balance of probabilities as to whether or not” Richard assisted George in that way: at [132]. The true position was that the evidence did not support that Richard assisted George in that way.

32. [123]

    Bringing to account my earlier finding that Richard purchased the Property makes it more likely that the events surrounding his mortgaging the Property to fund the Bargo property purchase occurred consistently with Richard’s evidence. There was no need for Richard to speak to George about mortgaging the Property before he did so. Richard’s responses when cross-examined about the exchange he had with George reflected his position:

33. [124]

    The question and answer emphasised in the above extract regarding George’s belief was premised on an acceptance that the 2003 conversation of which Richard gave evidence occurred. In so far as George held the belief put to Richard in this cross-examination, that he owned the Property, Richard directly disabused him of that belief in that same conversation.

34. [125]

    At some point between 2005 and 2008, Richard and Nada purchased a home in the same street as the Property and the Sckaff family home. The primary judge referred to this home as “No 10”. In June 2008, Richard and Nada sold the Campsie property and in July 2008 they moved into No 10.

35. [126]

    It was in relation to this point in the chronology that counsel for George asked Richard the question which led to him giving the answer about his conduct in allowing George to live in the Property for decades, paying only utilities and (on his Honour’s finding) the insurance, that his Honour found implausible. Shortly beforehand, Richard gave evidence that around this time he was paying off mortgages on the Bargo property, No 10 and the Property:

36. [127]

    Far from being implausible, Richard’s evidence that he did not charge George any rent because George was his brother was consistent with the evidence of other occasions on which Richard had assisted his brother. The evidence is more plausible if, contrary to what was put to Richard, it was Richard who paid for the Property and not his parents.

37. [128]

    The cross-examiner took Richard from a point in 2007 to the renovation in 2008, before returning to the subject with which it began. The state of Richard’s knowledge, as it was put to him, varied between knowing that George owned the Property and knowing that George believed he owned the Property. The question that included a reference to the 2008 renovations was the only question that was put to Richard on the basis that George held a belief that he owned the Property, as opposed to the fact of ownership. Again, it was premised on an acceptance of Richard’s evidence that the 2003 conversation occurred.

38. [129]

    The question in the above passage about the 2008 renovations was the only occasion on which he was asked about it. George gave evidence that he spoke to Richard about the 2008 renovations before they occurred, and asked for permission limited to him (George) moving into the Sckaff family home while the renovations took place (Richard used a room in the family home as an office). Richard indicated that he had no problem with that. In his own evidence, Richard accepted that he was aware of the 2008 renovations and, as was the case with the 2001 renovations, he again gave evidence that George asked for his permission. He could not recall the details of what George outlined, but the gist as he recalled it related to the kitchen and bathroom, and he thus had no concerns when he saw rubbish, building materials and skip bins out the front of the Property. If his Honour was relying on this evidence to make the finding that Richard downplayed the significance of the renovations, it was not a matter on which he was cross-examined.

39. [130]

    George gave evidence that in March 2012, a notice of eviction was served on the Property arising from Richard’s non-payment of the mortgage. He gave evidence that he confronted Richard about this, saying to him, “Why aren’t you paying the loan you borrowed against my house?” and that Richard replied, “I have been losing work from my business. I am doing it tough.” Richard’s responsive evidence was that he did not say those words. Instead, he directly contradicted what George said, saying to him, “George, it’s not your house. I’ll deal with this, it’s not your problem.”

40. [131]

    The next conversation about which Richard gave evidence occurred in June 2012, when he lost the work with Fairfax and became increasingly concerned about his financial position and the debts he had accumulated. According to Richard, he had a conversation with George in which he said, to George, that he was thinking about selling the Property to pay off his debts. George replied that if Richard did that, his family would move into their parents’ home. George denied a conversation in those terms.

41. [132]

    According to Richard, George told Richard that he knew an agent that Richard could use, and offered to arrange the sale. Richard signed the sale contract and agency agreement, but otherwise George dealt with the agent. George accepted that he arranged the agent, but not for the purpose of Richard selling the Property because it wasn’t Richard’s house.

42. [133]

    Turning then to the day of the auction, Richard gave evidence that George said to him:

43. [134]

    According to Richard, he replied:

44. [135]

    George denied Richard’s evidence. He deposed that after Richard disclosed to him difficulties he was having in keeping up his loan repayments, George, observing the stress Richard was under, had a conversation with Richard in which he offered to sell “my house”, being the Property, and move into the family home with a view to fixing it up. According to George, the arrangement he put to Richard, and that they shook hands on, was as follows:

45. [136]

    Although his Honour referred to the evidence I have summarised above, the differences between George and Richard about their conversations around the attempt to auction the Property were yet another aspect of the case that his Honour said that he was “not in a position to resolve”: at [162]. As with the other aspects of the matter as to which his Honour did not make a finding, this was unsatisfactory. In circumstances where his Honour ultimately characterised Richard’s conduct as “standing by” while George undertook renovations of the Property not only in 2008 but also in 2013, what was said and by whom in 2012, including surrounding the proposed auction of the Property, was both relevant and highly significant.

46. [137]

    There is force in Richard’s submission that given Richard was not challenged as to either his denial that George owned the Property or his refusal to offer George the proceeds of sale, his Honour erred in not accepting this evidence. The only matter in which his Honour saw “considerable force” was in George’s submission that “if Richard genuinely believed that he was the beneficial owner of No 6, his conduct in not dealing personally with the agent and not attending the auction in order to be able to give instructions as to whether the highest bid should be accepted is extraordinary”: at [162]. Having regard to all of the evidence, that characterisation involves an overstatement of the position. Richard gave evidence that he had signed the contract and an agency agreement. He accepted in cross-examination that he did not attend the auction, stating, consistently with his affidavit evidence, that he and George had a falling out that day.

47. [138]

    It does not follow from Richard’s non-attendance at the auction that the instructions for the auction were left in the air. Richard did not suggest that the price at which the Property was passed in was inconsistent with his instructions. Further, Richard gave evidence that he understood that George wanted to get the best price for the Property, which was also consistent with his affidavit evidence as to what George had said to him earlier in the day.

48. [139]

    The final occasion on which Richard and George had a conversation in 2012 that involved ownership of the Property occurred on 30 December 2012. Two days earlier, on 28 December 2012, Richard suffered a stroke and was hospitalised for several days. He gave evidence that on 30 December 2012, George visited him in hospital and asked Richard for the deeds to the Property. Richard replied: “No. It’s not your house. You know that I paid for the house.” Although George denied that there was a conversation in those terms, he accepted that he had asked for the title deeds to the Property, that Richard had refused to provide them, and that George had never asked for them again. Richard submitted on the appeal that George’s acceptance that he did not pursue the title deeds in the face of Richard’s refusal undermined George’s case that he was led, by Richard at least, to believe he owned the Property. I accept that submission.

49. [140]

    George renovated the Property in the latter half of 2013. Those renovations involved converting the garage into a granny flat so that Anne’s mother could move in, along with modifying the back veranda to assist with access. George’s evidence was that Richard would have been aware of the renovations given it involved building materials and skip bins being placed at the front of the house. Richard’s recollection was that the garage conversion occurred in 2008, and that he was not aware of it initially. The cross-examination of Richard about the 2013 renovation comprised the following:

50. [141]

    The primary judge considered that the circumstances in which the 2008 and 2013 renovations took place were not consistent with George understanding that he was not entitled to the Property: at [61]. So much may be accepted, as may George’s submission on the appeal that the fact that he did not make verbal assertions about ownership of the Property at other times was consistent with him believing it was his. However, what George believed was not the key issue for the purposes of George’s estoppel claims (his joint endeavour claim failing on the basis of the primary judge’s conclusion that there was insufficient evidence to justify a finding that his parents purchased the Property). The key issue was Richard’s role, if any, in George having and maintaining that understanding or belief. That is why the conversations about which Richard gave evidence in 2003 and 2012 were so important.

51. [142]

    That the conversations in which Richard asserted to George that he (Richard) was the owner of the Property were limited, was consistent with the conclusion I have reached above that Richard paid for the Property. His Honour found it extraordinary that if Richard genuinely believed he was the beneficial owner of the Property, he did not do more to clearly and consistently assert that position to George: at [236]-[237]. Of course, his Honour erroneously referred to there being only two such occasions, when there were four. More fundamentally, however, as Richard submitted on the appeal, there was no need for Richard to say to George that he was the owner, save for when circumstances directly called for it. George did not make any assertion about ownership of the Property between 2003 and 2012. By the time George undertook the extensive renovations in 2008, Richard had corrected George’s assertion that he owned the Property, which he had emphasised on four further occasions in 2012, before the 2013 renovations.

52. [143]

    I do not accept George’s submission that ground 5 did not raise a basis for appellate intervention, and sought to relitigate questions of facts and findings that were open to his Honour. The point to which ground 5 was directed was that his Honour had failed to make necessary findings. The finding sought, that Richard informed George that George was not entitled to ownership of the Property once in 2003 and on three times in 2012, should be made.

53. [144]

    By ground 6, Richard took issue with the primary judge’s finding that Richard did not explain the position to George in a manner that was sufficient to inform him that Richard asserted he was the sole owner of the Property, or disabuse George of his belief that Richard held the title for George’s benefit. Richard submitted that in making these findings, his Honour erroneously placed an onus on Richard. It is not clear that his Honour erred in that manner. As George submitted, the fact that his Honour did not accept Richard’s evidence does not amount to placing an onus on him incorrectly or at all.

54. [145]

    Nonetheless, the primary judge’s characterisation of Richard’s evidence about what he said to George, as insufficient to disabuse George of his belief, was inextricably linked with his Honour’s failure to make a finding about who paid for the Property. George described Richard’s submissions as ignoring the undisputed matrix and supplementary witnesses and the 25-year period involving a continuing sequence of events. The difficulty with that submission was that it relied on his Honour’s characterisation of a course of events in the absence of key findings about those events. When viewed against the background of Richard having paid for the Property, Richard could not have been clearer in terms of what he said to George, namely, that he paid for the Property and that it did not belong to George. The conversations in 2003 and 2012 certainly did not demonstrate Richard doing anything that encouraged George to maintain the contrary belief.

55. [146]

    On Richard’s evidence in cross-examination about the 2013 renovation, he did stand by when the 2013 renovations took place. However, that must be considered in the context of the preceding conversations, including in the context of the proposed auction of the Property towards the end of 2012 and the conversation with George at the hospital following Richard’s stroke in late December 2012.

56. [147]

    By ground 7, Richard contended that his Honour erred by effectively imposing a duty on him as the registered proprietor of the Property to make clear to George that he (George) was not the true owner of the Property. His Honour posited that Richard did not act as the true owner until the eviction notice of 12 December 2014, which begs the question of how one acts as a “true owner”. On the facts as I have found them, Richard made it clear to George that he (Richard) was the true owner long before then, in 2003 and again in 2012. It did not follow from Richard’s conferral of a right of rent-free occupation on George that any estoppel of the nature he pleaded arose. The fact that George undertook the various renovations did not change that position, particularly having regard to the conversations between Richard and George in 2003 and the further conversations in 2012.

57. [148]

    By way of a summary ground, Richard contended that when added to grounds 1 to 4, it followed from grounds 5-7 that the primary judge erred in the following respects (ground 8):

58. [149]

    For the reasons I have outlined above, I accept that the primary judge erred in the first, second and fourth respects. As to the third finding, I have referred at [95] above to the inference on which this finding was based, namely, its consistency with “the entirety of Richard’s objective conduct since George commenced to live in No 6”. Having regard to my reasoning above, the entirety of Richard’s conduct was not consistent with an awareness on his part that his parents had told George, contrary to the fact, that they had purchased the Property for him.

Proprietary estoppel (grounds 9-11)

1. [150]

   I outlined at [11]-[15] above the three bases on which George put his claim for a constructive trust. The primary judge dismissed George’s claim for a constructive trust on the basis of a common intention or joint endeavour: at [255]-[256]. His Honour also rejected George’s claim relying on estoppel by representation, there being no evidence that Richard made any express representation to George concerning his ownership of the Property: at [257].

2. [151]

   That left the primary judge with George’s claim for estoppel by convention. His Honour had earlier described the present case as one in which “the Court may properly be satisfied that the property is held on a constructive trust, but where it is difficult to place the circumstances within an established category, or the circumstances may fall within a number of categories or evolve from one category to another over time”: at [252]. Consistently with this description, his Honour stated at [258]:

3. [152]

   His Honour then turned to a number of authorities on proprietary estoppel, starting with Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293, in which Brereton J set out the oft-quoted passage from the judgment of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429; [1988] HCA 7 and, at [59], summarised the matters that “at least generally speaking” a plaintiff must establish to found an equitable proprietary estoppel as follows:

4. [153]

   The primary judge next extracted a passage from the reasons of Meagher JA in Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469 in which, at [15], Meagher JA articulated the distinction between estoppel by encouragement and estoppel by acquiescence, and, at [16]-[17], said the following about the latter:

5. [154]

   The primary judge also referred to Evans v Evans [2011] NSWCA 92, in which Campbell JA referred to a passage in Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 at [81] and the backward looking nature of the exercise of ascertaining whether an equitable estoppel has arisen, “from the moment when the promise falls to be due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.” His Honour stated at [264]:

6. [155]

   Richard did not challenge the primary judge’s finding as to George’s genuinely held belief that his parents had purchased the Property for him, as his home. Rather, by ground 9, Richard contended that his Honour erred in finding that a proprietary estoppel “(presumably by acquiescence)” arose in favour of George in circumstances where, whenever George asserted a claim to own the Property, Richard put George on notice of Richard’s claim, as:

7. [156]

   The difficulty that Richard raised with the primary judge’s analysis was that it involved the finding that Richard was silent over a significant period of time, where the circumstances would otherwise have reinforced the belief that George’s parents engendered in him. Looking backwards from the point of the eviction notice in December 2014 revealed, in his submission, that whenever George asserted his belief to Richard, he disabused George of it, first in 2003 and then in 2012. Significantly, the first of those occasions was before the substantial renovation in 2008, and the further conversations took place in 2012. The timing undermined, in his submission, his Honour’s finding that it would be highly improbable for George and Anne to have undertaken significant renovations if they had understood Richard to be the real owner of the Property and they had no security of tenure to use the Property as their family home. In any event, George’s belief was not as to security of tenure as to use, it was as to ownership.

8. [157]

   Although his Honour considered that the disabusing conduct in which Richard engaged was insufficient, that conclusion rested on a premise that Richard had not established on the balance of probabilities that he purchased the Property. Contrary to what his Honour found, the conduct of Richard from the date of purchase of the Property was not objectively consistent “with something happening at the time of the purchase that caused both brothers to think that the property would be George’s permanent home” (at [256] (emphasis added)).

9. [158]

   For the reasons I have addressed, Richard was not silent about the critical assumption that George made, that he was “the true owner of [the Property]”. In those circumstances, Richard’s conduct was not unjust or unconscionable in a manner that equity would intervene to protect by way of a constructive trust. I would uphold ground 9.

10. [159]

    In those circumstances, it is not necessary to consider grounds 10 and 11, which both took issue with his Honour having ordered a constructive trust over the whole of the Property.

Conclusion and relief

1. [160]

   The appeal should be allowed. As I would allow the appeal, it is unnecessary for me to consider ground 12, which was premised on the Court otherwise dismissing the appeal.

2. [161]

   The primary judge made the following orders:

3. [162]

   In addition to an order allowing the appeal, Richard sought an order setting aside each of those orders (order 2), together with the following orders (excluding orders 8 and 9, which were put in the alternative to orders 2 to 6 in the event that the court did not disturb the primary judge’s findings regarding George’s estoppel claim):

4. [163]

   The proposed orders raise a number of issues, in particular the amount of compensation payable to George in relation to the improvements to the Property, and what further orders should be made.

5. [164]

   I have set out the relief that George sought in relation to the improvements and his pleading in [11] and [16] above. In Richard’s opening submissions, consistently with the concession that the primary judge recorded, he acknowledged that “in good conscience” he and Nada “cannot take the benefit of the improvements which George and Anne at their own cost effected”. In the closing submissions, Richard repeated that acknowledgment. The issue was thus limited to the value to be ascribed to that benefit.

6. [165]

   As is apparent from the figures I have extracted above in Richard’s proposed order 4, there was evidence before the primary judge as to: (i) the increase in the capital value of the Property by reason of the renovations; and (ii) the cost of the renovations. The source of the figure relating to the increase in the capital value was the evidence of the joint expert valuer, Niall Moore. As his Honour noted at [43], Mr Moore’s evidence was that the renovations added $250,000 to the capital value of the Property: at [43]. The source of the figure as to renovation costs, as the primary judge noted at [136], was the report of an expert quantity surveyor, Robert Stewart, dated 15 October 2018. Mr Stewart assessed the combined cost of the 2001, 2008 and 2013 renovations at $412,643.01 (inclusive of GST): at [142]. At trial, Richard contended that the latter figure did not represent the cost of the renovations but he did not take that point in this court, as was apparent from his advancing Mr Stewart’s figure as one of the alternative orders that the court could make.

7. [166]

   In his opening submissions before the primary judge, George submitted that he sought an order for restitution “based on unjust enrichment in respect of his contributions to the value of the Property by affecting the improvements to it in 2001, 2008 and 2013”. He referred to a decision of Bryson J in Fensom & Anor v Cootamundra Racecourse Reserve Trust & Ors [2000] NSWSC 1072, in which Bryson J observed that although the remedy was not discretionary, “the range of considerations available for determining what sum of money is appropriate is not highly defined and may include some of the considerations which affect the selection of an equitable remedy: at [98]. In that case, his Honour awarded the plaintiffs an amount representing the value of improvements they made when they occupied a property, as caretakers, over several years, in anticipation of an arrangement that did not eventuate and in any event would have been unenforceable, less the amount of an outstanding loan that the defendant had taken out to assist them: at [103].

8. [167]

   Henry J dealt with a similar scenario in Donnelly v Kempsey Local Aboriginal Land Council [2021] NSWSC 1699, the plaintiff having made improvements to land owned by the defendant land council and both parties being under the misapprehension that the plaintiff had a long-term lease. Her Honour held that the defendant “was aware of, or at least acquiesced in, Ms Donnelly occupying and carrying out works to the Property on that basis” and in circumstances where it “knew, or ought reasonably to have known, that Ms Donnelly was not undertaking the works to the Property gratuitously and for [the defendant’s] benefit”: at [166]. The evidence before her Honour demonstrated that the works the plaintiff carried out were improvements and had improved the market value of the property: at [164]. Her Honour concluded that restitution should be assessed as a sum of money quantified by reference to the value of the improvements: at [168]-[169]. That amount fixed the upper limit, which her Honour then reduced, having regard, inter alia, to Ms Donnelly’s acceptance that she had been trespassing and receiving a benefit from storing her possessions and animals on the land without any right to do so since the land council took possession in November 2016: at [283].

9. [168]

   George did not make any further reference to this claim in his closing oral submissions or in his closing written submissions, including in reply to Richard’s submissions. In both his opening and closing written submissions, and in his oral submissions, Richard contended that the value should be the quantum of increase in capital value. He relied by analogy on a number of first instance decisions, including the decision of Henry J to which I have just referred, and other decisions where the issue of quantum had arisen in relation to the breakdown of a joint endeavour. In one such case, West v Mead [2003] NSWSC 161; (2003) 13 BPR 24,431, Campbell J referred to an acceptance by counsel that so far as improvements to property were concerned, it was the increase in value of the property as a result of effecting the improvements which ought to be taken into account. This seemed to his Honour to be “right in principle”, according with “the equitable principle upon which an allowance for improvements is made upon a partition suit between co-owners”: at [89].

10. [169]

    Richard also relied on decisions concerning the assessment of improvements made after entry into possession of land pursuant to a contract of sale (such as an instalment contract) where the contract was subsequently terminated for default. In Clancy & Anor v Salienta Pty Ltd & Ors [2000] NSWCA 248; (2000) 11 BPR 20,425, Beazley JA observed that there have been a number of cases where a defaulting purchaser has been compensated for the value of improvements, or where the availability of such a claim had been recognised (although her Honour was in dissent as to the availability of the claim in that case): at [83]. What is instructive for present purposes is how the claim has been assessed.

11. [170]

    In Revell v PC Developments Pty Ltd (1990) NSW ConvR 55-527 the plaintiff sought equitable relief against the defendant in circumstances where he failed to complete the purchase of six lots of land. The contract had conferred a right on the plaintiff to enter upon the land before completion, demolish existing structures and commence building work for his own purpose; and the plaintiff had exercised that right and partially completed such work. The defendant terminated the contract and forfeited the deposit; the contract also contained a term providing that the plaintiff should not have compensation for what he had done on the land, which the plaintiff argued was a penalty. Cohen J upheld the penalty claim and concluded that the plaintiff should be compensated for the work he had carried out. In terms of the assessment of that value, Cohen J stated:

12. [171]

    As Richard pointed out in his submissions to the primary judge, an appeal from Cohen J’s decision was allowed in PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615, with a majority concluding that the relevant clause was not a penalty and thus rendering it unnecessary to consider the manner in which his Honour assessed the compensation. Clarke JA dissented on the question of whether the relevant provision of the contract was a penalty and thus proceeded to consider compensation, making the following observations at 649:

13. [172]

    The contributions that George made to the Property took the form of three sets of renovations. The first lot of renovations occurred in 2001 and the last in 2013, while the most significant renovation was undertaken in 2008. Living in the Property rent-free at all times, George and Anne have had the benefit of each of those renovations for a significant period. Accepting, consistently with Richard’s concession, that compensation was required to be paid to George, having regard to the circumstances I consider that the appropriate compensation is the capital value that the renovations added to the Property, rather than the cost of the renovations.

14. [173]

    Richard proposed that the second amended statement of claim should be dismissed in its entirety. However, George made a claim for the value of the improvements, and Richard has conceded that claim. An order should be made to reflect that outcome.

15. [174]

    I have referred above at [4] above to the Tribunal proceedings that Richard commenced before George commenced the Equity Division proceedings, and which were transferred to the Supreme Court to be heard as a cross-claim. The relief that Richard sought in that case included the orders that he now seeks in orders 5, 6 and 7. However, Richard sought that relief by reference to a residential tenancy agreement that he alleged existed as between himself and George. Thus, the relief in the amended cross-claim included:

16. [175]

    The issues to which this relief gave rise were canvassed as between the primary judge and counsel for Richard, in the context of Richard’s counsel tendering the Tribunal’s reasons for transferring the matter to the Supreme Court:

17. [176]

    In his closing written submissions before the primary judge, Richard submitted, in summary, that if George did not beneficially own the Property, Richard was entitled to an order for possession. He submitted that if there was an enforceable oral agreement between Richard and George as to the latter’s occupation of the Property subject to paying the utilities (as pleaded in the cross-claim), it was an oral residential tenancy agreement within the meaning of s 13 of the Residential Tenancies Act 1970 (NSW). If there was such an agreement, Richard submitted that George was, by the transfer of the Tribunal proceedings to the Supreme Court, effectively estopped from asserting that the Supreme Court was not an appropriate forum for the determination of the claims. If, on the other hand, there was not a legally binding agreement but an intra-family agreement, the Court could make an order for possession without remitting the proceedings to the Tribunal. Accordingly, he submitted that the Court should make the following orders:

18. [177]

    As his Honour upheld George’s claim for a constructive trust, his Honour dismissed the cross-claim without needing to consider the merits of it or what relief should be granted in respect of it. By his proposed orders on the appeal, Richard did not seek to disturb his Honour’s dismissal of the cross-claim, and yet at the same time sought relief that he had sought on that claim. It is difficult to reconcile those two positions, to which no written or oral submissions were directed in this court. That Richard advanced no submissions is perhaps understandable given that George does not appear to have made any submissions on the cross-claim before the primary judge, or in relation to the orders that Richard proposed at the conclusion of his written submissions (both his opening and closing submissions proposed a similar set of orders), including in his written reply. However, the issues are not without some complexity, one possibility being that they should be remitted.

19. [178]

    The parties should have an opportunity to consider these reasons and, if unable to resolve the way forward as between themselves, be heard as to the balance of the relief sought, including the question of costs. I have proposed a timetable for written submissions to address the remaining issues, including as to whether the Court can determine those issues on the papers. Accordingly, I propose the following orders:

    1. (1)

       Appeal allowed.

    2. (2)

       Set aside orders 1 to 9 inclusive made on 15 December 2023 and in lieu thereof, order that:

    3. (3)

       Order pursuant to s 74MA of the Real Property Act 1900 (NSW) that the caveat having registered number … lodged by the first respondent over the Property be withdrawn or removed within 28 days of today.

    4. (4)

       Direct the parties to supply agreed short minutes of order in relation to the balance of the relief sought by the appellants within 14 days of today, or, in lieu of agreement:

20. [179]

    STERN JA: I agree with the orders proposed by Mitchelmore JA and with her Honour’s reasons for proposing those orders.