Awad v Awad (No 2)

1. [1]

   HIS HONOUR: By a cross-claim filed 24 May 2017 (“the cross-claim”), the cross-claimant Michael Awad (“Michael”) sought, inter alia, a declaration that he had a beneficial one-half interest in the property at Bexley in the State of New South Wales (“the property”) owned by his mother, the first cross-defendant, Nouhad Awad (“Nouhad”).

2. [2]

   At the outset, it should be noted that the parties and witnesses will be referred to by their first names, as was done during the course of the proceedings before the Court, noting that nearly all of the relevant persons have the same surname. The Court adopts that approach with no disrespect intended to the relevant persons.

3. [3]

   Michael’s primary cause of action, as pleaded in the cross-claim, was based upon equitable estoppel and, in particular, proprietary estoppel. In summary, Michael’s case was that in 1994 his parents, Tony Awad (“Tony”) and Nouhad, were registered proprietors of the property as joint tenants. At that time, Nouhad had a debt of $28,000 owed for legal costs arising from an unsuccessful workers compensation application by her. A solicitor’s bill was received from G H Healey & Co Solicitors about September 1994 in which a demand was made for payment within 28 days. That, it was submitted, constituted an “emergency” because Tony and Nouhad were not working; they were pensioners. It was alleged that Tony, in Nouhad’s presence and with her express approval, orally represented to Michael that, if he paid the legal costs and also paid costs of renovating the property, Tony and Nouhad would give Michael a beneficial one-half interest in the property and allow him to reside there during their lifetimes.

4. [4]

   It was contended, as a basis for the primary cause of action, that Michael was induced by and relied upon that representation or promise. Michael relied upon two formulations of the promise as expressed in Michael’s evidence, both constituting one promise. The first formulation of the promise is to be found in his affidavit filed 28 December 2016 (at para 29) and was in the following terms:

5. [5]

   Counsel for Michael also relied upon the evidence of, as he put it, a “slightly more detailed formulation” of the promise which Michael included in his affidavit sworn 28 March 2017 (at para 8). It should be noted that Michael also swore an affidavit on 13 April 2017 in which the promise was expressed in identical terms (at para 10) to the March 2017 affidavit. Paragraph 8 of the March 2017 affidavit was as follows:

6. [6]

   The promise was said by counsel for Michael to be constituted by the statement made by Michael’s father. In written submissions, counsel referred to the statement of “the same clear and unequivocal promise or assurance”.

7. [7]

   As mentioned, despite the differences as to the terms of the promise as expressed in the December 2016 affidavit and the March 2017 affidavit (or the April 2017 affidavit) above, Michael’s counsel contended that his case was there was only one representation made on a single occurrence. Counsel for Michael also contended that the promise was made by Tony around September 1994 in the presence of Nouhad and with her express approval. Thus, the promise was, it was submitted, as much Nouhad’s as it was Tony’s, and Nouhad was personally – not vicariously – liable. The claim against her is not a derivative from Tony.

8. [8]

   Tony died in 2004 and his interest in the property passed to Nouhad. Since 2004, Nouhad had been suffering from dementia and had headaches and forgetfulness. Since at least 2009, she had been suffering from Alzheimer-type dementia. Michael’s sister and Nouhad’s daughter, Zouha Habib (“Zouha”), was Nouhad’s tutor and had been Nouhad’s enduring guardian and attorney since 23 February 2013.

9. [9]

   Michael’s pleadings and particulars in the cross-claim were as follows:

10. [10]

    The pleadings in paras 10 and 11 were directed to the alternative claims.

11. [11]

    Michael sought the following relief in the cross-claim:

12. [12]

    The relief claimed in the sixth and seventh prayers for relief, namely, relief enabling Michael and his wife, Arze Awad (“Arze”), the second cross-defendant, to reside at the property, was no longer pursued. (It should also be noted “Arze” was also spelt “Arzi” in some documents in the proceedings. The Court will adopt the spelling used in her affidavit).

13. [13]

    Nouhad opposed the cross-claim by her tutor. The matter proceeded to hearing with respect to the primary claim as reflected in prayers for relief 1, 2 and 5 (“the primary claim”). By a judgment delivered on 8 April 2019, the Court rejected the primary claim: Awad v Awad [2019] NSWSC 385 (“Awad No 1”). Various findings were made with respect to the alternative claim, to which I will now turn.

THE ALTERNATIVE CLAIM

1. [14]

   Claims for relief 3, 4 and 9 were advanced as alternative claims (“the alternative claims”). Michael made opening and closing submissions during the hearing, albeit briefly, in that respect.

2. [15]

   In opening submissions made on 14 May 2018 (“the opening submissions”), counsel for Michael submitted:

3. [16]

   As to closing submissions, the following exchange with counsel for Michael and Nouhad regarding the prayers for relief 3 and 4 (“the closing oral submissions”) occurred:

4. [17]

   Following the closing oral submissions, the parties filed, by leave of the Court, supplementary written submissions: Michael filed supplementary written submissions dated 21 June 2018 (“the supplementary written submissions”). The submissions of Michael, in that respect, were summarised in Awad No 1 and extracted at [24(1)] below in the extract of relevant elements of Awad No 1 in the next heading of this judgment.

5. [18]

   In accordance with the directions of the Court in Awad No 1 (as later amended by the Court), Michael filed further written submissions dated 6 May 2019 (“the further supplementary submissions for Michael”). Counsel for Nouhad filed submissions pursuant to those directions on 3 June 2019 (“the further supplementary submissions for Nouhad”).

6. [19]

   In the further supplementary submissions for Michael, leave was sought to adduce expert evidence, inconsistently with the contention by counsel for Michael in the closing oral submissions.

7. [20]

   In the result, the Court listed the matter for directions on 30 July 2019 during which submissions were made by the parties as to the further programing of the matter (see the heading “The Directions Hearing” below). As will be discussed below, the parties agreed that the Court should, without further oral hearing, determine certain preliminary questions raised by counsel for Nouhad (which were described as threshold issues at the directions hearing), provided counsel for Michael could file submissions in reply. That leave was given to Michael and the submissions in reply were filed on 8 August 2019 (“the reply submissions for Michael”).

8. [21]

   The preliminary issues were described as “threshold issues” because they concerned issues ventilated by counsel for Nouhad, which were broadly of that nature, namely, whether the alternative claims based upon a common intention constructive trust or joint endeavour constructive trust fell outside the pleadings, the nature of the alternative claim for relief, whether there was an absence of evidence to support the basis for the alternative claim (and whether the bases relied upon to establish the trusts were contrary to findings made by the Court in Awad No 1) and whether the Court should refuse leave for Michael to adduce the expert evidence said to bear upon the alternative claim (they shall hereinafter be referred to as the “threshold issues”). Broadly speaking, those contentions advanced by Nouhad with respect to the threshold issues were threefold, were as follows:

   1. (1)

      The claim by Michael upon the basis of a common intention constructive trust or alternatively a joint endeavour between Michael, his father and Nouhad fell outside Michael’s pleaded case. Nouhad had not been put on notice as to the nature of the case which it had to defend.

   2. (2)

      There was no evidence before the Court that would sustain a finding of a common intention constructive trust. Further, the findings of the Court in Awad No 1 were inconsistent with any such finding. Similarly, the joint endeavour constructive trust, as framed, must fail because it cannot be established by Michael due to deficiencies in the evidence supporting such a claim and contrary findings, as to relevant elements, made by the Court in Awad No 1.

   3. (3)

      As the claim for relief based on a constructive trust is “hopeless”, there can be no proper basis to present evidence to be adduced in support of the claim plus there are further reasons bearing upon the Court’s discretion to refuse such a course (later discussed in this judgment).

9. [22]

   This judgment concerns those threshold issues.

The Primary Relief

1. [23]

   The findings of the Court in Awad No 1 as to the primary claim for relief, which are presently relevant, were as follows:

   1. (1)

      As to the nature of the primary claim for relief the Court found at [26] and [27]:

   2. (2)

      As to the applicable legal principles with respect to the basis for the primary claim, the Court observed at [38] and [39] as follows:

   3. (3)

      Michael made six contentions in support of the primary claim set out at [44]:

   4. (4)

      The basis for the contentions were developed by Michael and are described at [45]-[56] as follows:

   5. (5)

      As to background, the Court found at [107]:

   6. (6)

      As to the credit of Michael, the Court found, inter alia, (at [367]) as follows:

   7. (7)

      As to the promise underpinning the primary claim, the Court found at [372]-[374] and [378]-[380]:

   8. (8)

      As to reliance, the Court found at [381]:

   9. (9)

      Some observations were made about the reliance claim as follows (at [382]-[386]):

The Alternative Relief

1. [24]

   The following findings of the Court as to the alternative claim are relevant to the disposition of the threshold issues:

   1. (1)

      The Court commenced discussion of the claim for alternative relief at [59]-[62] and [81]-[83] as follows:

   2. (2)

      The Court then further turned to the alternative relief, dealing firstly with some preliminary considerations (at [388]-[394]):

   3. (3)

      The conclusions of the Court as to the alternative claim were in the following terms (at [395]):

2. [25]

   The Court made orders in Awad No 1 as follows (at [397]):

FURTHER SUPPLEMENTARY SUBMISSIONS FOR MICHAEL

1. [26]

   As earlier mentioned, in accordance with the orders of the Court (see Awad No 1 at [397(2)]-[397(4)]), Michael filed submissions as to alternative relief.

Support drawn from Awad No 1

1. [27]

   Counsel for Michael relied upon various aspects of the judgment in Awad No 1 in support of contentions in support of the alternative relief as follows:

Legal Principles relied upon by Michael

1. [28]

   Counsel for Michael then identified the legal principles underlying the alternative relief as follows:

Bases for the Alternative Claims

1. [29]

   The bases for the alternative claims were described as follows:

2. [30]

   In conclusion, counsel for Michael submitted (the last paragraph constituting the sole written submissions as to para 9 of the relief claimed as an alternative claim) as follows:

Expert Evidence Sought to be Adduced

1. [31]

   Michael also made an application to adduce evidence of the value of the property. He sought leave to adduce the evidence of an expert, Nicole Adamson, Valuer, dated 2 May 2019. Ms Adamson’s valuation of the property as at 30 September 1994, 31 May 1998 and 17 April 2019 was annexed to an affidavit of Michael’s solicitor, Mr Michael Shane Neagle, affirmed 6 May 2019, which was admitted to determine the threshold issues discussed below.

2. [32]

   In support of the application for leave to adduce that evidence, Michael relied upon the “explanations” contained in Mr Neagle’s affidavit. It was submitted in support of leave:

3. [33]

   In his affidavit, Mr Neagle referred to [62], [386] and [395] of Awad No 1. Mr Neagle then deposed as to counsel’s advice (at para 5):

4. [34]

   Reference was then made to the interlocutory proceedings before Johnson J.

5. [35]

   As to expert evidence, Mr Neagle deposed that counsel for Michael informed his Honour of the following:

6. [36]

   It was then stated that the Court observed:

7. [37]

   Mr Neagle then further deposed:

8. [38]

   It may be observed that Mr Neagle made no reference in his affidavit to [394] of Awad No 1.

Submissions in support of leave to adduce expert evidence

1. [39]

   Michael made the following submissions in support of his application to read the affidavit of Mr Neagle:

Overall Approach to Alternative Relief by Michael

1. [40]

   The overarching approach taken by Michael as to the alternative relief was explained in his written submissions as set out above at [30] above.

FURTHER SUPPLEMENTARY SUBMISSIONS FOR NOUHAD

1. [41]

   The submissions of Nouhad raised three contentions which became the focus of the latter process before the Court at the directions hearing and, as mentioned, constituted the threshold issues.

2. [42]

   The summary of these contentions above requires elaboration, which appears below.

3. [43]

   First, Michael is departing from his pleaded case for the alternative relief. In that respect it was submitted:

   1. (1)

      Michael is advancing a new case for the alternative relief in the submissions filed pursuant to the Court’s order in Awad No 1.

   2. (2)

      The submissions of Michael made in accordance with the directions of the Court in Awad No 1 raise the alternative claim on two bases:

   3. (3)

      This is the first time that the claimed relief in para 4 of the cross-claim had been articulated in that way. Neither common intention nor joint endeavour constructive trust was pleaded in the cross-claim. Further, that case was not raised during the hearing or in previous written submissions. What Michael was doing was, in fact, advancing a new case through his submissions.

   4. (4)

      That approach is impermissible. The cross-claimant should be held to its pleaded case: see Dare v Pullham (1982) 148 CLR 658; [1982] HCA 70. No application has been made by Michael to now amend his pleadings or re-open the case.

   5. (5)

      Further, at no stage has Michael pleaded the elements of either a common intention constructive trust or a joint endeavour constructive trust. Seeking relief, without more, on the basis of a general constructive trust, is not sufficient, to put Nouhad on notice as to the nature of the case which she has to defend.

   6. (6)

      Nouhad would suffer irremediable prejudice if Michael was allowed to take this course. For example (and not exhaustively), Nouhad has lost the opportunity of taking one or more of the following steps:

   7. (7)

      The prejudice cannot be cured by re-opening the case. It is sufficient for Michael’s relief to be dismissed on these reasons alone.

   8. (8)

      Furthermore, by seeking to raise this new case now, Michael is acting in a manner contrary to his obligations under ss 55 and 56 of the Civil Procedure Act 2005 (NSW).

4. [44]

   Secondly, if the Court were to accept that the alternative claims can be introduced for the first time in submissions after the case has closed, then the relief should nonetheless be refused. As to a common intention constructive trust and Michael’s reliance on certain factors as the basis thereof, Nouhad submitted the claim must fail as there was no evidence of a common intention between Michael and his parents; the asserted common intention is contrary to the evidence and inconsistent with findings of the Court.

5. [45]

   The submissions of Nouhad as to there being no basis to impose a common intention constructive trust were as follows:

6. [46]

   Counsel for Nouhad then advanced submissions as to why a reliance by Michael upon a joint endeavour constructive trust must fail. Those submissions were as follows:

7. [47]

   As to any claim for relief upon the basis of an equitable charge or lien, Nouhad submitted:

8. [48]

   Thirdly, it is unnecessary to determine the application for leave to adduce evidence of the value of the property because the claim for relief on the basis of constructive trust is “hopeless”. In any event, it was submitted, there were three further bases to refuse leave:

THE DIRECTIONS HEARING

1. [49]

   In the light of this exchange of written submissions the Court listed the matter for directions on 30 July 2019.

2. [50]

   Both parties accepted that it was desirable for the Court to deal with the threshold issues on the written submissions before any further proceeding, provided Michael had the opportunity to reply in writing to the submissions for counsel for Nouhad.

THE FURTHER REPLY SUBMISSIONS FOR MICHAEL

1. [51]

   Pursuant to leave granted by the Court at the directions hearing on 30 July 2019, counsel for Michael produced a further written submission in reply dated 8 August 2019. Those submissions concerned the following topics, with respect to alternative relief:

   1. (1)

      paragraph [394] of Awad No 1;

   2. (2)

      legal aid;

   3. (3)

      the pleading of the cross-claim;

   4. (4)

      application to adduce new evidence; and

   5. (5)

      section 56 of the Civil Procedure Act.

2. [52]

   As to [394] of Awad No 1, the counsel for Michael advanced the following submissions:

3. [53]

   As to the relevance of Nouhad being legally aided, the following submissions were made:

4. [54]

   Turning to the pleading of the cross-claim, counsel for Michael submitted:

   1. (1)

      The pleading of Michael in paras 1 to 10 on pages 2 to 4 thereof, in conjunction with the evidence adduced during the hearing, and the findings of the Court and legal principles relied on in Michael’s primary alternative relief submissions, provide ample notice to Nouhad of a claim for, and an ample basis for, a Baumgartner type constructive trust.

   2. (2)

      In Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 (“Baumgartner”) (at 147-148), the plurality noted that in Muschinski v Dodds (1985) 160 CLR 583 Deane J “pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention ‘to preclude the retention or assertion of beneficial ownership of properly to the extent that such retention or assertion would he contrary to equitable principle', at p. 614: see also at p. 617. In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust”.

   3. (3)

      Michael is not advancing a new case through the primary alternative relief submissions.

   4. (4)

      Given the nature of a Baumgartner type constructive trust, the pleading of the cross-claim does not need amendment, and Nouhad is not prejudiced by such pleading.

5. [55]

   As to the application to adduce new evidence, reliance was placed upon the following passages from the judgment of Clarke JA in Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 (with whom Mahoney and Meagher JJA agreed) (at 476-478):

6. [56]

   Further, it was submitted the evidence should be admitted in the interests of justice. In particular, it was submitted:

7. [57]

   Finally, a submission was advanced with respect to s 56 of the Civil Procedure Act:

Clarification of Further Supplementary Submissions

1. [58]

   Following receipt of the submissions identified above, the Court sent a communication inquiry as to whether counsel for Michael had, in fact, made a reply to the submission of counsel for Nouhad under the heading “No Evidence for a Common Intention or Joint Endeavour Constructive Trust” in his written submissions dated 3 June 2019. Counsel for Michael sent the following communication in reply:

CONSIDERATION

1. [59]

   It is appropriate to commence the discussion of the threshold issues by first examining the general nature of constructive trusts and the primary claim.

2. [60]

   The general nature of constructive trusts and equitable estoppel was described by Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 (“Giumelli”) at 111-112 (see also Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 (“Sidhu”) at [1]-[2] (per French CJ, Kiefel, Bell and Keane JJ) and Zupicic v Angela La Camera Paino as Trustee for the Estate of the Late Mario Novick [2018] NSWSC 692 at [67]-[75] (per Sackar J).

3. [61]

   The primary action was predicated upon equitable estoppel and, in particular, proprietary estoppel. The nature of and basis for that claim were broadly described at the outset of the judgment and in the extract from Awad No 1 at [23] above. That claim is made in paras 1, 2 and 5 of the relief claimed and paras 1 to 9 of the pleadings and particulars of the cross-claim. Without repeating or derogating from that analysis, the claim was predicated (unsuccessfully) upon the existence of an unperformed promise and what was said to be the conduct of Michael in acting upon the expectation to which the promise gave rise. In fact, this was the description of the primary claim given by counsel for Michael in the context of giving advice as to the need for valuation evidence, as disclosed in the affidavit of his solicitor set out at [33] of this judgment.

4. [62]

   This remedy, in the field of estoppel, was described in Giumelli at [5]-[6] and [35] (in acceptance of the judgment of McPherson J in Riches v Hogben [1985] 2 Qd R 292), as follows:

The Alternative Claim: Paras 3 and 4 of the Relief Claimed

1. [63]

   As to the alternative claim, I will first turn to paras 3 and 4 of the claim for relief.

2. [64]

   The basis for the claims in paras 3 and 4 of the relief claimed in the cross-claim was expressed in quite general terms.

3. [65]

   As earlier discussed in this judgment, paras 3 and 4 of the alternative claims respectively sought an inquiry (into all payments by Michael since 1994 on behalf of Nouhad and his father) and a declaration that Nouhad held the property on constructive trust for herself and Michael beneficially in such proportions as may be found by the Court. Whilst Michael contended that the Court had already conducted such an inquiry, in substance, both forms of the alternative relief derived, in my view, from a common foundation expressed in para 10 of the pleadings, namely, that Nouhad held the property “on constructive trust” for herself and Michael beneficially in terms specified in the pleading. There is no other stipulation as to the basis for claims for relief in paras 3 and 4 in the pleadings other than para 10 of the pleadings.

4. [66]

   The basis for the alternative claim in paras 3 and 4 was distinguished in the cross-claim from the primary claim by the fact that the Court could declare the existence of a constructive trust held by Nouhad for Michael and Nouhad and that monies held beneficially would be in such proportions as found by the Court. The Court could construe, it was pleaded, any benefit in favour of Michael held and find that the property was held on a constructive trust, broadly, in the manner discussed in Giumelli at [2]. Thus, the claim did not involve a proprietary estoppel of the kind relied upon in the primary claim but the basis was otherwise ill-defined.

5. [67]

   The closing oral submissions and the supplementary written submissions by counsel for Michael offered only limited further insight into the basis for the alternative claim, save for a contention that the alternative claim could be made upon the basis of a “tenancy in common” and the authorities relied upon as proving a legal foundation for that claim, principally, Giumelli and Sidhu.

6. [68]

   Counsel for Nouhad was correct to submit the basis for the alternative claim described by Michael in the further supplementary submissions was either a constructive intention constructive trust (see further supplementary submissions for Michael on Behman v Behman [2015] NSWSC 1787 at [33], adopting Shepherd v Doolan; [2005] NSWSC 42 at [8], [12] and [13]) or a joint endeavour constructive trust (hereinafter, collectively, “the trusts”) (see the further supplementary submissions for Michael at paras 17-18).

7. [69]

   Counsel for Michael did variously refer to the Court imposing a “Baumgartner type constructive trust” in the further supplementary submissions as a remedy but the contentions ultimately do not extend beyond the trusts. The reference to a Baumgartner type trust was a reference to the judgment of the High Court in Baumgartner. It may be noted, in that respect, that, in the submissions made by Michael in the supplementary submissions seeking to demonstrate the legal basis for the alternative claim reliance was not placed on Baumgartner as such. It may also be noted that the High Court in Baumgartner distinguished the circumstances in that matter (vis-à-vis estoppel) from the contributions to a joint endeavour as discussed in Giumelli (at 113).

8. [70]

   The elements of each class of trust constituting the trusts necessary to establish before a court of equity will declare a person a constructive trustee requires some elaboration both to further address the question of notice to Nouhad of the basis for the claim and whether there was evidence in the proceeding, supportive of the imposition of the trusts, taking into account the findings of the Court in Awad No 1 (and findings in Awad No 1 inconsistent with finding such a constructive trust in the circumstances relied upon by Michael).

9. [71]

   A common intention constructive trust may operate where the parties agreed, or it was their common intention that the claimant should have an interest in the property owned by the other, and the claimant acted to his or her detriment on the basis of that agreement or common intention: see eg Grant v Edwards [1986] Ch 638 at 654 (per Viscount Browne-Wilkinson); Green v Green (1989) 17 NSWLR 343 at 355 (per Gleeson CJ); Maharaj v Chand [1986] AC 898 at 907 (per Cooke J).

10. [72]

    Where a constructive trust is imposed, based upon the parties' common intention as to the ownership of property upon which the claimant has acted to his or her detriment, the inquiry is as to the actual intention of the parties. The law does not impute a presumed intention to the parties based upon what the Court considers fair and reasonable persons in the position of the parties would have intended had they turned their minds to the issue: Behman v Behman [2015] NSWSC 1787 at [33] (per Rein J), adopting Shepherd v Doolan [2005] NSWSC 42 (“Shepherd”) at [34] (per White J).

11. [73]

    The question of what acts demonstrate an agreement or common intention referable to the beneficial enjoyment of the property is one of evidence, not law: Shepherd at [37].

12. [74]

    In Grant v Edwards, Nourse LJ said (at 648) that to qualify as acting on the common intention, the conduct must be such that the plaintiff could not reasonably have been expected to embark upon it unless he or she were to have an interest in the property.

13. [75]

    A joint endeavour constructive trust was discussed in Baumgartner (at 147-148) by reference to the judgment of Deane J (with whom Mason J agreed) in Muschinski v Dodds, as follows:

14. [76]

    The characteristics of a constructive trust which arise on this basis were explained by Campbell J in West v Mead [2003] NSWSC 161 at [52]-[64]. His Honour said (at [59]):

15. [77]

    Counsel for Michael contended that the pleadings, the evidence led by Michael at the hearing, the legal principles relied upon by Michael in the supplementary written submissions provided “ample notice” to Nouhad as to the alternative claim and “a Baumgartner type constructive trust”. I do not agree (so far as paras 3 and 4 of the alternative relief are concerned corresponding, as they do, to para 10 of the pleadings and particulars of the cross-claim).

16. [78]

    As discussed above, the pleadings (and relief) provide only a very broad, non-specific description of the claim based upon a constructive trust.

17. [79]

    The opening submissions of Michael gave no indication of the basis for the alternative claim beyond that stated in the pleadings. The evidence in the proceedings was directed to the primary claim, namely, the issue of the existence of a promise and reliance.

18. [80]

    Whilst stating some general principles concerning equitable estoppel and constructive trusts, the legal authorities relied upon by counsel for Michael in supplementary written submissions, such as Giumelli and Sidhu, are more clearly aligned with the primary claim and placed no reliance upon Baumgartner as such (in fact, the circumstances in Baumgartner were, as noted above, distinguished from the factual circumstances in Giumelli).

19. [81]

    Further, the supplementary written submissions do not advance upon the general basis for the claim via a constructive trust. Nor does a reference in the supplementary written submissions to the claim being based upon a tenancy in common significantly further elucidate the basis for the claim. Under s 26(1) of the Conveyancing Act 1919 (NSW), any beneficial interest for two or more persons will result in the property being held as tenants in common. The reference to a tenancy in common does not imply any further detail about the basis of the claim of constructive trust.

20. [82]

    It may be further observed that, as stated at the outset of this judgment, the primary claim of which Nouhad did have notice was pursued on a quite particular basis, namely, the existence of a promise made by Tony in the presence (and with the approval) of Nouhad that, if Michael paid, inter alia, certain legal costs and paid costs of renovating the property, Michael would be given a beneficial interest of half of the property. The Court made adverse finding as to the promise and found, without a necessity to decide, the issue that reliance had not been established. Whilst counsel for Michael agreed (unconvincingly, as will be observed in relation to prospects of the alternative claim) that the rejection of Michael’s evidence as to the promise does not stand in the way of the Court drawing an inference that when Michael and his parents borrowed monies from the Arab Bank in September 1994, their common intention was that Michael’s repayment of the loan would give him a beneficial interest in the property, it does not follow that the stipulation of the primary case, as prosecuted by Michael, could have given Nouhad proper notice of that basis for the alternative claim.

21. [83]

    It may be further observed (as a matter also concerning the second issue as to prospects of the alternative claim) that the common intention now asserted is inconsistent with Michael’s evidence. Michael’s evidence was that in reliance on a representation made by his father in 1994 he paid $90,000 for the Arab Bank loan. That evidence was rejected by the Court in Awad No 1. Michael now asserts (in submissions, not evidence) that his common intention was in relation to a payment of $50,000. I agree with the submissions made by counsel for Nouhad, that this Court would not find a common intention on the part of Michael, which is inconsistent with his own evidence.

22. [84]

    The elements of common intention (and joint endeavour) were simply not disclosed by pleading or in argument so that Nouhad was on notice of the nature of the case she had to defend.

23. [85]

    In Jacobsen v Jacobsen [2017] NSWSC 1590, Ward CJ in Eq (at [109]) held that the claim for a constructive trust had to be clearly set out in the pleadings:

24. [86]

    In Silvia (Trustee) v Williams [2018] FCAFC 194, the pleadings raised the issue that part of the interest in land was “held on trust” and elsewhere referred to a “joint endeavour” carried on by the couple. The appellant argued that the pleadings raised the issue of a common intention constructive trust. One argument raised to support this was that no other kind of trust was available on the evidence. However, the Court held that a common intention constructive trust could not be inferred from the pleadings (at [29]). The pleadings did not mention a common intention or identify the detriment suffered by the respondent. The Court also stated at [29] that a constructive trust could not be “deduced” from the pleadings:

25. [87]

    Overall, I do not consider that Nouhad had adequate notice of the basis for Michael’s alternative claim vis-à-vis the trusts (as formulated in his further supplementary submissions) either during the hearing of the cross-claim or in the supplementary written submissions.

26. [88]

    It follows that those bases for the alternative claims were not, therefore, in contemplation when the Court considered the question as to whether Michael should be permitted to prosecute the alternative claim (see findings in Awad No 1 at [8]). The Court’s consideration of the legal authorities advanced by Michael did not indicate more than the authorities relied upon broadly permissive of remedies with respect to equitable estoppel (per the primary claim) and constructive trust.

27. [89]

    In the circumstances, Nouhad was entitled to contend she would suffer prejudice if Michael was allowed to take the course proposed in his further supplementary submissions vis-à-vis the trusts, with respect to claims in paras 3 and 4 of the relief claimed, because she had lost the opportunity of, inter alia:

    1. (1)

       cross-examining Michael on an alleged common intention or joint endeavour with his father and mother and the elements of those causes of action; and

    2. (2)

       leading responsive evidence from the witnesses for the cross-defendant as to a common intention or joint endeavour between the cross-claimant and the father and mother.

28. [90]

    I do consider the prejudice can be cured by a re-opening of the evidence in the proceedings and/or an order for costs (although counsel for Michael did not make a concession as to costs if such a course were taken or, for that matter, he was permitted to call expert evidence).

29. [91]

    Further, the Court has already made credit findings concerning Michael and his wife, together with findings about Nouhad’s witnesses in the context of the primary claim. As previously mentioned, the common intention constructive trust requires a resolution as to whether there was a common actual subjective intention to create a trust in a construction which will attract credit issues: see for example, Baumgartner at 145.

30. [92]

    It may also be noted, in that respect (and in relation to the latter discussion about the prospects of the alternative claim), that the Court found in Awad No 1 (at [380]) that, irrespective of other findings with respect to the promise, that no personal equity was enforceable against Nouhad.

31. [93]

    This conclusion brings into sharper and emphatic focus the submissions for Nouhad made as supplementary submissions at the time of the hearing, which were summarised (with observations) in Awad No 1 at [392]-[394]. Those passages were set out earlier but for convenience are repeated here, with the further observation that one significant basis for the Court’s acceptance for the alternative claim being prosecuted, notwithstanding an acceptance otherwise of the submissions advanced by Nouhad, was that Michael did not intend to call further evidence (a position now changed):

32. [94]

    It is evident from the opening submissions made on behalf of Michael and the evidence of Mr Neagle that he had made, on the advice of counsel, a deliberate, forensic choice not to particularise the claim as such, upon the basis of the trusts, nor lead evidence specifically described to that end. No explanation was advanced for the changed position, with respect to the calling of expert evidence, save that counsel for Michael had given advice that the evidence was not required.

33. [95]

    It was submitted by Michael that it was in the interests of justice that he be permitted to call expert evidence appended to Mr Neagle’s affidavit, and that such interests were brightly illuminated by the fact that the overwhelming likelihood was that without such evidence the Court would almost certainly be unable to determine the proportions of beneficial interest.

34. [96]

    As to [394] of Awad No 1, it was submitted by Michael:

    1. (1)

       The basis for the trusts had always been part of the cross-claim.

    2. (2)

       Michael had sought to defer the hearing of those claims.

    3. (3)

       The Court had determined there was a power to grant the alternative relief.

    4. (4)

       It would have been an unnecessary waste of time, effort and costs if the alternative claim was not deferred because if the primary claim had been granted it would have been unnecessary to prosecute the alternative claim.

    5. (5)

       Leave was given by the Court to seek to call further evidence, subject to conditions.

35. [97]

    Further, Mr Neagle deposed that he had been advised that evidence as to the valuation was not required for the primary claim (and acted upon that advice), there was no issue about expert reports during the course of the proceedings, and that as soon as the primary claim was determined adversely to Michael, he formed an opinion that such expert evidence was required.

36. [98]

    However, I do not consider that Michael has established a basis for the grant of leave to call the valuation evidence and I do not consider it is in the interests of justice to grant that leave for the following reasons:

    1. (1)

       As found above, Nouhad did not have adequate notice of the bases of the alternative claim vis-à-vis the trusts.

    2. (2)

       I have earlier rejected that a contention by Michael that the Court had found there was power to grant the alternative claim (as verification that adequate notice had been given by Michael) so far as the claim was based upon the trusts.

    3. (3)

       Counsel for Michael stated at the close of the proceedings that the alternative case would “go forward on submissions”. He stated emphatically, after taking instructions, that Michael would not put on any more evidence, notwithstanding counsel for Nouhad identified, at the time, that there was no evidence as to the value of the property.

    4. (4)

       This was the very issue referred to by the Court at [393] and [394] of Awad No 1. Notwithstanding the Court’s observations as to the “force” of Nouhad’s submissions based on ss 56 and 57 of the Civil Procedure Act 2005 (NSW), the Court permitted Michael to “prosecute” the alternative relief, as pleaded, upon the basis, inter alia, that the “cross-claimant had indicated that he did not envisage any further evidence being called in support of the alternative relief”. The Court determined, in directions, that no further evidence would be allowed except by leave having regard to “concession made by counsel during the hearing”; plainly a reference to counsel’s submissions that Michael would not call further evidence on the alternative relief (as reflected in [394] of the judgment) as a basis upon which the alternative relief may go forward.

    5. (5)

       As earlier mentioned, there was a deliberate forensic decision to defer the hearing of the alternative claim (although no formal application was made for separate hearings) without disclosing properly the basis for the alternative relief. Similarly, there was a deliberate forensic decision not to call evidence of valuations. Counsel’s concessions as to not calling evidence were given at the close of the proceedings in circumstances where it was plain that an application to call such evidence could be adverse to the application to prosecute the alternative application. Again, this occurred in circumstances where counsel for Nouhad had expressly raised the prospect of further evidence, including valuation evidence, in resistance to the Court allowing Michael to prosecute the alternative claim.

    6. (6)

       The proposition that time and costs could be saved by separating out the alternative claim, as submitted by Michael, is doubtful when that proposition is examined in the light of the fact the evidence that would bear upon the establishment of the trusts would necessarily have derived from the evidence given by Michael.

    7. (7)

       There is no explanation for the forensic decision taken by Michael other than the bare proposition that the decision was taken under advice of counsel. It is not submitted and Mr Neagle gives no evidence that the advice was erroneous or incompetent. It is plain the approach adopted was made upon instructions.

    8. (8)

       The assessment as to the calling of the further evidence should be considered not only in the light of the question of notice, but in the light of significant questions as to the prospects of Michael making good the claims for equitable relief based upon the trusts with respect to pars 3 and 4 of the alternative claim in the light of the evidence before the Court. I will now discuss that issue below.

37. [99]

    Counsel for Nouhad advanced submissions that, if Michael was permitted to prosecute the alternative claim upon the evidence presently before the Court (aside from valuation evidence) it should be found that the alternative claim was without merit.

38. [100]

    In the context of the threshold issues, the Court is not dealing with the merits of the claim, per se, but it was nonetheless appropriate for counsel for Nouhad to point to the lack of prospects for success of the alternative claim based on the trusts in the context of Michael essentially seeking an indulgence to press the alternative claim in the circumstances earlier discussed in this judgment (whether adequate notice had or had not been given) and an application for leave to call expert evidence (see as discussed above). This is particularly so given, as I have mentioned, the Court’s previous decision to permit the alternative claim to go forward in Awad No 1 was predicated upon Michael’s then stated basis for the claim, a presumed notice of the basis for the claim based on the pleadings (the Court has not in this judgment ruled upon the scope of the pleadings as such), and the contentions of counsel for Michael as to whether evidence would be called on the alternative claim.

39. [101]

    As to the question of prospects of the alternative claim based upon the trusts, I have earlier set out the components of Awad No 1 relied upon by Michael together with his submissions as to how upon the existing evidence (and findings of the Court in Awad No 1), the alternative claims based on the trusts may be established. I have also mentioned that counsel for Michael elected to make no reply to the further supplementary submissions of Nouhad bearing upon that issue.

40. [102]

    The submissions by Nouhad as to the particular evidential basis for doubting the merits of the alternative claim based upon the trusts were summarised and extracted at [46] and [47] above.

41. [103]

    I accept the contentions by counsel for Nouhad in that respect provide a sound basis, with respect to the alternative claim based on the trusts, for doubting the prospects for success of that claim. I note, in particular, that I do not accept, based upon my findings in Awad No 1 that it was “extremely unlikely”, as submitted for Michael, that Michael would have undertaken having a formal commitment “without some agreement or undertaking with his parents at the time that in return he would receive a beneficial interest in the property”. The findings of the Court in Awad No 1 at [385(4)] and [385(7)] (as extracted above) are apposite. Further, I accept the submission of Nouhad (based on those conclusions and the findings at [385(2)] of Awad No 1), and the absence of any urging by Tony and Nouhad to complete the renovations, that it would not be reasonable for the Court to infer that payment for any renovations would be pursuant to a common intention to provide Michael with a beneficial interest in the property.

42. [104]

    In terms of the question which immediately excited the Court’s attention after the further supplementary submissions for Michael, namely, the receipt of expert evidence, I consider that the application for leave to read the affidavit of Mr Neagle with the accompanying expert report should be refused for the reasons given above. It is not in the interests of justice that the leave be given to Michael.

The Alternative Claim: Para 9 of the Relief Claimed

1. [105]

   I turn then to the claim for relief in para 9 of the relief claimed.

2. [106]

   This claim attracted, by far, the least attention of the parties in the proceedings.

3. [107]

   By para 9 of the relief claimed, Michael sought, without more, equitable damages. In the pleadings (at para 11), Michael claimed “repayment of the payments as equitable damages” as well as “damages resulting from his ejectment from the property, further particulars of which will be provided in due course, together with interest”. No such particulars were before the Court. Nor were submissions made, as such, regarding damages arising from ejectment from the property.

4. [108]

   In the further supplementary submissions for Michael, counsel stated that the submissions were made “as to the alternative relief claimed in paras 3 and 4 of the Cross Claim”. Nothing is said, of substance, regarding the claim in para 9 until the conclusion of the submissions where it was contended (at para 33) that, if the Court would not impose “a Baumgartner type constructive trust”, the Court should “at least” grant to Michael an equitable charge or lien over the property, thereby “securing the repayment of those payments to him totalling about $80,000”. Reliance was placed, in that respect, upon Giumelli and Sidhu.

5. [109]

   In reply, Nouhad submitted that no relief on the basis of an equitable charge or lien had been pleaded. Nothing was said in reply by Michael to that submission.

6. [110]

   Counsel for Nouhad made three submissions in respect of Michael’s claim for relief on the basis of an equitable charge or lien. First, no relief on that basis was pleaded. Secondly, the entitlement to an equitable charge or lien was suggested to be on the same grounds as the constructive trust. If the claim for a constructive trust fails, so does the claim for an equitable charge or lien.

7. [111]

   A pleading for equitable damages does not allow a claim for an equitable lien as the two remedies have different grounds in law. Equitable damages are awarded under the Court’s power in s 68 of the Supreme Court Act 1970 (NSW) where specific performance or injunction would otherwise be awarded: Madden v Kevereski (1983) 1 NSWLR 305 at 307 (per Helsham CJ in Eq). An equitable lien arises as a security for actual or potential indebtedness. The nature of an equitable lien was discussed by Deane J in Hewitt v Court (1983) 149 CLR 639; [1983] HCA 7 at 663:

8. [112]

   As to the second, even if this claim, as advanced in the further supplementary submissions for Michael had been properly pleaded, I agree that it would appear from the limited submissions advanced by Michael, with respect to this claim, that the entitlement to an equitable charge or lien was proposed upon the same grounds as the trusts. Counsel for Nouhad submitted that “if the Court is not satisfied that a constructive trust can be established, there is no basis for the Court to impose an equitable change or lien over the Property in favour of the Cross-Claimant”. In principle, that submission must be accepted but the Court has confined its deliberations and the threshold issues as to the prospects of success of the claims predicated on that basis. Nonetheless, having regard to the findings of the Court as to those claims, if prosecuted on that basis, Michael’s claim under para 9, must be described as weak.

9. [113]

   The third basis identified by Nouhad in resisting this claim is also of substance. Nouhad submitted that, if Michael’s case is simply that there is proof of the existence of the payment of money to his parents (putting aside issues concerning loans), Michael had failed to identify any authority to support that constituted an equitable lien or charge.

10. [114]

    Counsel for Nouhad did not submit, as such, that an equitable lien or charge is not known to law as a form of equitable relief: see Morris v Morris [1982] 1 NSWLR 61 at 63-64 (per McLelland J). Rather, she referred to the content of the limited submission advanced by Michael in support of this contention which is very much peripheral to that necessary to establish an equitable lien or charge. The authorities referred to by Michael do not seem to be on point, namely, Giumelli and Sidhu (or at least their relevance was not identified). Further, Michael did not either identify how unconscionability, in this context, was to be established or its basis (see Morris v Morris at 63-64 (per McLelland J); Hewett v Court at 668 (per Deane J)), or, the requisite relevant connection between the loan taken out and the property (see Hewett v Court at 668 (per Deane J); Morris v Morris at 63-64 (per McLelland J)), particularly in light of the findings of the Court in Awad No 1 at [385(2)] and [385(4)].

CONCLUSION

1. [115]

   In the circumstances, I consider Nouhad is correct to submit that leave to adduce the evidence of Mr Neagle, beyond that necessary to determine the threshold issues, should be refused.

2. [116]

   I further accept the submission that it is not in accordance with the requirements of ss 55 and 56 of the Civil Procedure Act, or more generally the interests of justice, that Michael should be granted such leave, particularly having regard to the Court’s resolution of the threshold issues.

3. [117]

   That conclusion suggests that the alternative claim as brought with respect to paras 3 and 4 of the relief claimed may be dismissed. (It may be noted in that respect that, as earlier mentioned, the relief under para 3 was predicated upon the same basis as the relief under para 4).

4. [118]

   There are other factors pointing to such an outcome.

5. [119]

   Whilst the Court has not resolved the merits of the alternative claim (vis-à-vis paras 3 and 4 of the relief claimed) per se in this judgment, the threshold issues have been determined adversely to Michael.

6. [120]

   Further, the Court’s judgment in Awad No 1 to allow the alternative relief to proceed at the close of the proceedings was predicated upon the concessions made by counsel upon the final day of hearing. The departure from those concessions removes important bases upon which the Court entertained the alternative claim after the close of the proceedings. No explanation or proper basis has been demonstrated by Michael for leave to be granted in those circumstances.

7. [121]

   As to para 9 of the relief claimed, there is a disjunct between the pleadings and the basis for the relief sought in Michael’s further supplementary submissions (and, in any event, further difficulties with the claim discussed above).

8. [122]

   It follows that the question of dismissal also arises in that context as well.

9. [123]

   Costs of the alternative claim were dealt with in Awad No 1 upon the basis that any prejudice suffered by Nouhad would be met by an order for costs, but otherwise costs of those claims were reserved.

10. [124]

    Having regard to the determination of the threshold issues, and when viewed in that light, Nouhad should have costs of the disposition of those issues and, subject to hearing from the parties as to the final disposition of the proceedings, costs of the alternative claim.

DIRECTION

1. [125]

   The Court makes the following directions:

   1. (1)

      Counsel for Nouhad shall provide short minutes of order reflecting this judgment and as to the final disposition of these proceedings within 14 days of the publication of this judgment.

   2. (2)

      In the event of any dispute as to the form of the orders proposed in accordance with (1) above: