Supreme Court New South Wales Medium Neutral Citation: Jacqueline Pobjoy v Prudence Anne Reynolds [2013] NSWSC 885 Hearing dates: 1 July 2013 Decision date: 01 July 2013 Jurisdiction: Equity Division Before: Hammerschlag J Decision: Judgment for the plaintiff against the first defendant in the amount of $121,437.80 - charging order of the first defendant's interest in lot 28 in DP 270586 Catchwords: EQUITY - estoppel - proprietary estoppel - where the first defendant (daughter) promised the plaintiff (mother) that if she contributed to a property to be purchased by the first defendant and her husband, which would have a granny flat, she could stay there - the plaintiff duly contributed but the first defendant resiled - HELD - plaintiff entitled to relief Legislation Cited: Real Property Act 1900 (NSW) Cases Cited: Giumelli v Giumelli (1998) 196 CLR 101 Delaforce v Simpson-Cook (2010) 78 NSWLR 483 Category: Principal judgment Parties: Jacqueline Pobjoy - Plaintiff Prudence Anne Reynolds - First Defendant John Charles Reynolds - Second Defendant Representation: Counsel: H.E. Jewell - Plaintiff No appearance - First Defendant D. Parish - Second Defendant Solicitors: Craig Milne & Company - Plaintiff Mazengarb Family Lawyers - Second Defendant File Number(s): 2012/363787 EX TEMPORE Judgment 1HIS HONOUR: The plaintiff is a 79 year old pensioner. She is the mother of the first defendant. The first defendant was married to the second defendant but they are now estranged. By Statement of Claim filed on 22 November 2012 the plaintiff sought a declaration that the first defendant and second defendant hold a property at 2 Cunningham Close, Murrumbateman NSW, being lot 28 in DP 270586 ("the Property") on trust to pay the plaintiff $121,437.80. 2The plaintiff deposes to the facts giving rise to her claim in an affidavit sworn 25 February 2013. In short, she says she agreed with the defendants to sell her property at Sundown Village, Narrabundah in the ACT, on the footing that the proceeds would be applied to a new property which the defendants would purchase and which would have a granny flat for her occupation, that she would contribute to the utilities and that the first defendant would care for her. At the time the defendants lived at 2 Hartt Place, Dunlop ACT. 3The plaintiff moved into 2 Hartt Place with the defendants and duly sold her property at Sundown Village, which yielded $116,119.29 in clear funds. On 13 July 2007 she drew a bank cheque of $80,000 in favour of the first defendant. The money was applied to reduce the defendants' mortgage at 2 Hartt Place on the basis of a statement by the first defendant that this would "reduce the mortgage and secure better terms on a mortgage on the new place with the granny flat". 4The plaintiff accompanied the defendants to view properties with granny flats and commenced to contribute to utilities. A suitable property with a granny flat could not be found. Instead the defendants purchased the Property and commenced construction of a home on it. 5After the purchase the plaintiff says she agreed with the first defendant to contribute to the construction of the home and drew two amounts from her account providing additional funds in the amounts of $35,437.80 on 3 May 2011 and $6,000 on 4 July 2011. Her total contribution was thus $121,437.80. 6The first defendant and later, the second defendant, both moved into the Property. 2 Hartt Place was apparently sold. Relationships deteriorated. The plaintiff fell out with her daughter and the defendants became estranged. Subsequently both have left the Property. It is to be sold pursuant to arrangements reached in Family Court proceedings between them. 7The plaintiff was denied her expectation of moving into a granny flat at the Property. She subsequently moved out of 2 Hartt Place and found rental accommodation in Bombala, NSW, where she now lives. 8The first defendant did not appear to defend the proceedings against her. A mediation was ordered which she did not attend. 9The second defendant's case was to be that he was not party to any arrangement of the nature of which the plaintiff asserts. 10He does not dispute that the plaintiff gave the first defendant $80,000 in July 2007 and $6,000 in July 2011. He denies knowledge of the payment of $35,437.80. He disputes that as against him, the plaintiff has a right that affects his interest in the Property. 11At the hearing the plaintiff and the second defendant settled their differences. The terms of their agreement are reflected in the orders set out below. The plaintiff proceeded only against the first defendant. 12The type of equity which the plaintiff claims is well recognised. It is a form of proprietary estoppel known as estoppel by encouragement. It comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged, has changed his or her position to their detriment. Equity may compel the owner to give effect to the expectation in whole or in part: see Giumelli v Giumelli (1998) 196 CLR 101, and more recently, Delaforce v Simpson-Cook (2010) 78 NSWLR 483. 13The plaintiff was encouraged by the first defendant to contribute to the property on the representation made by, and an expectation created by, the first defendant, that the plaintiff would be entitled to reside there. The first defendant now seeks unconscientiously to depart from the representation and to deny the plaintiff fulfilment of the expectation which she created, and upon which the plaintiff acted to her detriment. In these circumstances, the Court will compel the first defendant to give effect to the expectation. 14A constructive trust should not be imposed if, in all the circumstances of the case, there is an appropriate equitable remedy which falls short of the imposition of a trust. The plaintiff does not suggest that a constructive trust is necessary but contends that appropriate equitable relief is for a charge to be imposed over the first defendant's interest in the Property. The plaintiff has made her case out against the first defendant, and I am satisfied that she is entitled to the relief now sought against her. 15I record that the plaintiff moved for an order for indemnity costs against the first defendant, relying on an exchange of emails and an affidavit of attempted service. Having considered that material, it seems to me that an order for indemnity costs is not warranted but that even if it was, the costs incurred as a consequence of the first defendant's conduct of the proceedings would have had little or no impact on the costs that the plaintiff would have had to incur in any event. 16The orders of the Court will be: 1. Judgment for the plaintiff against the first defendant in the amount of $121,437.80 plus interest at the prescribed rate from 22 November 2012. 2. The first defendant is to pay the plaintiff's costs of the proceedings as agreed or assessed. 3. The plaintiff has a charge over the first defendant's interests in the property situated at 2 Cunningham Close, Murrumbateman being lot 28 in DP 270586 ("the Property") for the amount of the judgment, interest and costs under orders 1 and 2 above and for the first defendant's liability to her under the indemnity in order 5 below. 4. The plaintiff has leave under s 74O(2)(a) of the Real Property Act 1900 (NSW) to lodge a caveat reflecting the interest in the Property described in order 3 above. 5. The plaintiff is to pay the second defendant's costs of the proceedings. The first defendant is to indemnify the plaintiff in respect of her liability to the second defendant under this order, but limited to the amount of any proceeds of sale of the Property which are available for that purpose after all other liabilities of the first defendant to the plaintiff under these orders have been discharged. 6. As between the plaintiff and the second defendant, by consent the Court orders that subject to order 5, the second defendant indemnify the plaintiff in respect of and pay to her the amount of any shortfall between the amount which the first defendant is obliged to pay pursuant to orders 1 and 2 above, and the amount received by the plaintiff out of the sale proceeds of the Property referable to the first defendant's share in the Property. 7. The plaintiff's proceedings against the second defendant are otherwise dismissed. ********** Amendments 03 July 2013 - "second" defendant in line 3 should read "first" defendant Amended paragraphs: paragraph 3 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. Decision last updated: 03 July 2013