New South Wales Supreme Court CITATION : Perman v Wentholt-Dwyer & Anor [2005] NSWSC 168 HEARING DATE(S) : 07/03/05 JUDGMENT DATE : 15 March 2005 JUDGMENT OF : Brownie AJ DECISION : 1.Order that the defendant pay to the plaintiff the sum of $23,908.42, including interest to date, together with interest from 16 March 2005 until the date of payment, at the rates prescribed by s95 of the Supreme Court Act; 2.Order that an equitable charge be imposed on the interest of the defendant in the whole of the property contained in Certificate of Title Folio Identifier 1/874893 located at Deua River, Parish of Bucken Bowra, County of St Vincent in the State of New South Wales in favour of the plaintiff to secure to the plaintiff payment of the sums mentioned in par 1; 3.Order the defendant to pay the plaintiff's costs as assessed or agreed; 4.Liberty to either party to apply. CATCHWORDS : Interest - from what date should s94 interest run, when the plaintiff's claim is in the nature of equitable compensation, arising from a proprietary estoppel. Supreme Court Act 1970 s94,95 LEGISLATION CITED : Conveyancing Act 1919 s54A PLAINTIFF Gwendolyn Edith PERMAN FIRST DEFENDANT PARTIES : Lisette Wilhelmine WENTHOLT-DWYER SECOND DEFENDANT Commonwealth Bank of Australia FILE NUMBER(S) : SC 5085/02 R C Freeman - Plaintiff COUNSEL : J Laucis - First Defendant Baker Deane & Nutt - Plaintiff SOLICITORS : CC Law - First Defendant LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BROWNIE AJ Tuesday 15 March 2005 5085/02 GWENDOLYN EDITH PERMAN v LISETTE WILHELMINE WENTHOLT-DWYER AND ANOR JUDGMENT 1 HIS HONOUR: On 12 February 2004 I held that the plaintiff had established that she was entitled to an equitable charge over certain property of the defendant, the plaintiff having improved the property whilst relying upon a representation made by the defendant to the plaintiff that the plaintiff could occupy the property for the rest of her life. I assessed the value of the improvements as being $25,000, and expressed the view that the parties should confer about certain details that apparently needed to be worked out between them. 2 Later, I granted the defendant leave to reopen her case, so as to prove, or attempt to prove that the defendant was not lawfully entitled to use some of the improvements in question, by reason of a lack of council approval, and therefore that the defendant had not had the benefit of these improvements. That claim by the defendant has since been abandoned. 3 By letter 11 November 2004 from the defendant's solicitors to the plaintiff's solicitors, the defendant announced an intention to argue two other matters. First, the defendant claimed to be entitled to set off against the compensation of $25,000 held to be payable by the defendant the sum of $51,300, said to be the cost to be incurred by the defendant in removing certain items left on the property by the plaintiff; and secondly, the defendant thought to resile from a concession made at trial that the date from which interest should run upon the compensation awarded was 21 January 2000, that being the date when the defendant sought to expel the plaintiff from the property. 4 When the case was called on for hearing again on 31 January 2005 the defendant sought leave to reopen her case to argue yet another matter. She said that the plaintiff had removed certain "improvements" from the property and therefore that the amount of compensation should be reduced accordingly. The case was adjourned until 7 March 2005, upon which date I granted the defendant leave to reopen her case again, but limited the leave granted to this one question: because the reasons for judgment of 21 February 2004 had assumed that the defendant would continue to have the benefit of certain improvements effected by the plaintiff, and that assumption had now been shown to be false in that, after 21 February 2004, the plaintiff took away some of those improvements, the defendant was now at liberty to show by how much the sum of $25,000 should be reduced on this account. 5 The evidence now advanced shows that the defendant claimed to be entitled to a credit of $51,300, on the basis that she would need to spend this sum removing certain items from the property. There was provided a copy of a detailed quotation for the removal of these items, listing some 37 of them, for the total sum of $51,300. This claim, for a credit for this amount, or indeed for any amount, has also since been abandoned, but the point that the plaintiff makes now is that the defendant effectively demanded that the plaintiff remove all these items (described in address as "rubbish", although some of the items were not aptly so described), failing which the defendant claimed to be entitled to recover from the plaintiff the cost of removing them. 6 The plaintiff thereupon removed 34 of the 37 items. Most of these are of no continuing significance now, but the defendant does say now that the value of the improvements, originally assessed at $25,000, should be reduced because some of the improvements removed were, after all, and notwithstanding what the defendant said earlier, of value to the defendant. First, there was a corrugated iron water tank, situated on the top of a tank stand. The tank stand remains, but the tank was removed. Secondly, certain plumbing items were removed. To state the position briefly, if probably inaccurately, these constituted the parts of a hot water service, including a pump. 7 Two valuers gave evidence about these matters, the evidence being admitted on the basis that it would go to the diminution in the value of the improvements which the plaintiff left upon the defendant's property, the subject of the earlier assessment of $25,000. Each valuer spoke, not of the changed value of the property in consequence of the removal of these improvements, but of the cost that the defendant might incur now if she were to replace them. Each valuer approached the case on this basis, and neither objected to the other approaching the case on this basis. In all the circumstances, it probably constitutes a sufficiently just practical solution. 8 Mr Hanrahan, for the defendant, said that the cost would be $3,000 to $5,000. Mr O'Dea, for the plaintiff, said it would be $1250 to $1400, including all labour costs. Neither man was really cross-examined about these figures. I think that the evidence of Mr O'Dea is more likely to be reliable, in that he had evidently thought about the matter in advance, and his figures had at least the air of having been calculated, whereas Mr Hanrahan seemed to be considering the matter, as if for the first time, whilst in the witness box, and the figures that he quoted were relatively imprecise. Additionally, he gave his evidence quite hesitantly. Presumably, he came to Sydney, expecting to give evidence on a different topic. 9 I conclude that the amount of $25,000, originally assessed, should be reduced by $1400 that is to $23,600. 10 At trial, the plaintiff contended and the defendant accepted that if compensation was to be awarded, interest on that compensation should be calculated as from 21 February 2000. The defendant's counsel now said that he made that concession in error, and the defendant's primary submission is that interest should run from 29 January 2004, this being the date upon which the plaintiff filed in court her amended summons, claiming equitable compensation for the first time, rather than a life interest in the land in question. The plaintiff did not oppose the course of rearguing the question of interest. 11 I approach this on the basis that compensation is payable, by reason of the defendant having made a representation to the plaintiff, upon which the plaintiff relied, with the plaintiff improving the property at her expense, in circumstances where the defendant subsequently renounced her representation, and sought to expel and eventually did expel the plaintiff from the property. Her renunciation took place on 21 February 2000, but the plaintiff did not vacate the property completely until 21 January 2005. 12 Section 94 of the Supreme Court Act 1970 confers a discretionary power to award interest. If there is a judgment for debt or for damages, interest is awarded as a compensation to the plaintiff upon the basis that it can now be seen that in the interim the defendant has had the use of money now known to have been the plaintiff's money. However, in this case, there is a question thrown up as to when the defendant ought to have paid the plaintiff the compensation in question, $23,600 – at what point might it be said that the defendant started to have the use of the money which should now be seen to have been the plaintiff's money, and at what point might it be said that the defendant can be seen to have been having the use of the plaintiff's money? 13 On the plaintiff's case, this was when the defendant demanded that the plaintiff vacate the property, on 21 January 2000: the defendant ought then to have paid the plaintiff the appropriate amount of compensation. On the other hand, the defendant did not then obtain the benefit of the improvements, for the plaintiff continued to occupy the property, at least from time to time, and to the practical exclusion of the defendant, and one can see from the events that happened later that the plaintiff was able to remove some of the improvements during December 2004 and January 2005. 14 The defendant eventually embraced the date 21 January 2005, and I think that this is the appropriate date. Until then, it was the plaintiff and not the defendant who should be taken to have had the benefits of the improvements in question. It follows that until then, it cannot be said that the defendant had the benefit of the use of what should now be regarded as the plaintiff's money. 15 I propose therefore to award interest under s94 on the sum of $23,600, calculated from 21 January 2005 to today's date at 9 percent per annum, a total of $308.42. 16 Finally, there were competing submissions made as to costs. The defendant's point was that until 29 January 2004, or about a week before that date, she had only to meet a claim that the plaintiff had a life estate in the property. The plaintiff conceded that much, but pointed out that the work done on behalf of the parties in that connection was very limited indeed: when the plaintiff's claim was reformulated, there was no additional evidence filed at all. The plaintiff relied upon the same affidavits as had been filed before the amendment was foreshadowed. On the plaintiff's case, whilst the defendant's lawyers might have expended some very small amount of time and therefore money contemplating the available defence under s54A of the Conveyancing Act 1919, those costs are likely to have been relatively trifling. More to the point, perhaps, the defendant continued to resist the plaintiff's claim, saying that the plaintiff had no rights to relief at all. 17 The defendant did not submit, and I think could not properly have submitted, other than that she must pay the costs incurred since 29 January 2004. 18 In the result I will make orders generally as sought by the plaintiff in her written submissions of 4 March 2005, adjusted as to the amount of compensation, and the interest thereon as recorded above, but also so that the plaintiff's charge does not extend to the payment of costs. Although there was no submission made orally about this, I do not see any juristic basis for making an order for the imposition of a charge in respect of money that is payable only by way of costs. 19 I make the following orders: 1. Order that the defendant pay to the plaintiff the sum of $23,908.42, including interest to date, together with interest from 16 March 2005 until the date of payment, at the rates prescribed by s95 of the Supreme Court Act . 2. Order that an equitable charge be imposed on the interest of the defendant in the whole of the property contained in Certificate of Title Folio Identifier 1/874893 located at Deua River, Parish of Bucken Bowra, County of St Vincent in the State of New South Wales in favour of the plaintiff to secure to the plaintiff payment of the sums mentioned in par 1. 3. Order the defendant to pay the plaintiff's costs as assessed or agreed. 4. Liberty to either party to apply. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.