Butler v Wilson [2011] NSWSC 262

The son claimed a 38% interest as tenant-in-common with his sister in property pursuant to a deed made by their parents, the daughter and her husband. The land was purchased in equal amounts by the parents and daughter and a house was constructed on the property for them all to live in from contributions split 38:62 from the parents and daughter respectively. The deed provided that the parents had a 38% interest in the property. The father died and bequethed all his estate to his wife. The wife then died and bequethed all her estate to her son. The son claimed his was entitled to his mother’s share of 38% pursuant to her will and the deed. The daughter claimed the following defences:

  1. estoppel by representations made by her father that (a) the daughter was to have the entire property on their death and (b) the deed was to operate only until the death of the parents; and
  2. estoppel by conduct of the parents in encouraging the assumption that the property would be the daughters absolutely by representations that she “had the house”;
  3. the parents’ statements gave rise to a collateral contract modifying the deed;
  4. a Contracts Review Act defence based on unfairness or inequality of bargaining position.

Estoppel claim

Equitable estoppel requires proof of the following elements:

  1. The person making the representation induced the party to whom it was made to adopt the assumption or failed to deny the assumption, knowing that it was being relied upon;
  2. The party to whom the representation was made acted, or abstained from acting, to their detriment, in reliance upon the assumption.

The daughter claimed she adopted an assumption induced by her parents that the property would be hers absolutely and made improvements in reliance upon that assumption. This was rejected the court because it characterised any such representation as a mere statement of present (revocable) intention and not a promise intended to have legal effect. In any event, the court found the recollection of the daughter of the representation “the property will ultimately be yours” unreliable and at most, was a statement of general intention at the time given the fact that the subsequent deed which made no mention of it. The court found the second and third representations by the father that the purpose of the deed was to protect the parents’ interests only while they were alive were not in fact made. The court rejected the defence of estoppel by representaiton because the court found none of the representations were made and even if accepted, were not sufficiently clear. In addition, the court did not find the father authorising or acting on behalf of his wife in relation to her interest in the property. If the father had intended to limit their interests to their lifetimes, it would have been included in the deed and it was not.

The court rejected the defence of estoppel by conduct because the representations were imprecise, general and informal, and uncorroborated.

Collateral contract

The court rejected that the any statements by the parents constituted a collateral contract which modified the express provisions of the deed.

Contracts Review Act

The court rejected this defence because it did not find the deed unjust at the time it was made and did not find any material inequality in the bargaining power between the parties to the deed at the time it was made or at any time. The daughter was well able to understand the effect of the deed and admitted in evidence that she knew it had legal effect. The court found the brother did not mislead the daughter in any way and legal advice could have been obtained and there was no evidence of undue influence or any injustice at the time the deed was made or at any time. 
The court found for the son as to a 38% interest as tenant-in-common with his sister but ordered an account be taken for the value of the sister’s improvements to the property to the extent those improvements have increased the value of the property.

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