Blog 51. Promise to make will in favour of caveator – Whether creating interest in land – But constructive trust based on proprietary estoppel.

Goldberg v Campbell and Shaw & Anor [2021] VSC 647 (8 October 2021), Matthews AsJ.  is the third round in the legal bout between Mr Mathers and the late Mr McColley.  The first two rounds were at VCAT under Part IV of the Property Law Act (ie co-ownership disputes): [2017] VCAT 1529, Mathers v McColley [2019] VCAT 1230.  See generally on Co-ownership Disputes the author’s paper on Foley’s site in June 2020.  The facts were –

  • The second defendant (Mathers) and Alexander McColley were registered proprietors as tenants in common in equal shares of a residential property.  Mathers deposed that they had on 29 March 2005 entered into a deed of arrangement whereby McColley could live there rent-free for life, or until he permanently vacated the property, on the proviso that he execute a will devising his share in the property to Mathers.
  • McColley lived there until August 2016 when he went into a nursing home.  He never made the contemplated will.
  • On 10 March 2017 Mathers caveated claiming a freehold estate on the grounds of an agreement with McColley dated 5 August 2016.
  • McColley died in 2019 leaving a will made in 2008.  The plaintiff, who was his executor and beneficiary, obtained probate of this will.  This half interest was the main asset of the estate.  In 2021 McColley’s daughter commenced a proceeding under Part IV of the Administration and Probate Act against the estate for testator’s family maintenance.

The plaintiff sought orders under s. 90(3) of the Transfer of Land Act for removal of the caveat and under Part IV of the Property Law Act for sale of the property and division of the proceeds.  The first defendant, a firm, were Mathers’ solicitors.

Matthews AsJ ordered removal of the caveat but granted a stay pending any application to amend the caveat, holding –

  1. There was no evidence of an agreement dated 5 August 2016. In any event an application to amend the caveat would have been futile because, assuming the deed was valid and enforceable, Mathers only had a contractual right to its performance sounding in damages.   Further, even a will of McColley devising his moiety would not have given Mathers a proprietary interest in that moiety, but merely a right to an order for due administration of the estate.   And even if there had been such a devise, the moiety would have been part of the estate subject to the claim for testator’s family maintenance. [34]-[40], [43]
  1. However, it was highly likely that Mathers had a prima facie case of a freehold estate in the moiety on the grounds of a constructive trust arising from the doctrine of proprietary estoppel. McColley had made a promise as to the future acquisition of ownership of his moiety by Mathers on which Mathers had been induced to rely to his detriment.  This trust came into existence at the time of reliance: while it was for a court to determine whether to declare the trust, the equitable interest arose from the date when the detrimental reliance rendered it unconscionable to depart from the promise.  There was a credible argument that the constructive trust came into existence when McColley commenced living at the property rent‑free after entering into the deed.  It was also possible that the trust came into existence when McColley made his will. [44]-[53]
  1. The balance of convenience favoured maintenance of the caveat provided it was amended to assert this trust. This supported a possible future order for transfer of McColley’s moiety to Mathers. [61]
  1. For identical reasons to those concerning the balance of convenience, any application for an order for sale under the Property Law Act Part IV was premature. [69]


Philip H. Barton

Owen Dixon Chambers West

     Tuesday, October 19, 2021

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