Blog 92. No proprietary estoppel.

This Blog deals primarily with Saad v Saad & Anor [2025] VSC 15 in which Gobbo AsJ removed a caveat claimed to be justifiable on the basis of proprietary estoppel.  However, in passing I mention Milenkovic v Milenkovic [2024] VSC 763 in which alleged (and disputed) delay in lodging a caveat and other matters were held not to give rise to the defence of laches against a claim for proprietary estoppel.

 Saad v Saad & Anor [2025] VSC 15, Gobbo AsJ.  (31 January 2025)

The facts were as follows.

• The plaintiff (Khadigi) and her husband Abboud (the couple) had 13 children including the first defendant (Waleed) who was married to the second defendant (Hala).
• In 1975 the couple became registered proprietors of 179 Union Street Brunswick West (the Land).
• In 1983 Waleed purchased a property elsewhere.  In about 1986 Abboud encouraged him to purchase 181 Union Street (No. 181), which adjoined the Land.  In 1986 the defendants became registered proprietors and residents of No. 181, which had its own driveway and was divided from the Land by a fence.
• Waleed deposed that from 1982 he was the primary income earner in the family, paying his entire wages to Abboud who used them for all family expenses, including property related expenses of the Land.
• The couple determined to develop the Land with a double story dwelling and a granny unit.  In about 1987 Abboud requested Waleed to provide 57.7 sq. m. (the parcel) from No. 181 to enable this development.
• The defendants each deposed to the existence of an agreement made in 1987 (the alleged 1987 Agreement), which Khadigi denied.   Waleed deposed –
  • In late 1987 Abboud explained his development intentions and showed him architectural plans.  Abboud said in effect –
  • for the development he needed approximately a further 1.22 metres running along the entire boundary, which he asked Waleed to provide by changing the common boundary;
  • this development would provide a ‘family complex’ for the benefit of the entire family;
  • there would be no dividing fence but rather a shared driveway and communal gathering space for the family;
  • both new dwellings would be utilised for the benefit of the entire family.
  • Because the couple’s only income was Centrelink benefits, Abboud asked him to continue making financial contributions to the family for the costs of this development.
  • Abboud further said in effect that –
    • if Waleed provided the parcel and contributed to the development’s financial costs by continuing providing his earnings to Abboud, he would receive a proprietary interest in the Land commensurate to this parcel and his financial contributions;
    • “if either of us determined to sell our respective properties in the future, we would offer the property to the other party for purchase at first instance”.
  • He agreed to Abboud’s proposal.  This agreement was not documented, he trusted his father, and the family was very close during Abboud’s life.
  • Abboud told Khadigi of this Agreement and it was openly discussed within the family.
  • Waleed paid his business earnings, being financial contribution toward the costs of the development, to Abboud in Khadigi’s presence.  Relying on the alleged 1987 Agreement, he paid his parents 60% – 70% of his earnings from July 1987 to 1996. And (he subsequently deposed) he “continued to provide Abboud with [his] entire wages and earnings”.   He contributed $120,000.
  • After the development was completed Khadigi said in effect that “if it wasn’t for you helping us with providing the land and money, then we wouldn’t be where we are”.
  • He disputed her evidence that in 1988 he agreed to make a gift of the parcel.   Before April 2023 she had not told him that she did not agree with this Agreement or refer to the parcel as a “gift”.
• Hala deposed –
  • Abboud handed her a document which he asked her to sign but which she could not read or understand.  He told her that it was to transfer a small part of the land between the two properties for the development.
  • Abboud said that he intended to build these properties for the benefit of the family, and that her and Waleed’s contributions would not be lost because they would have an ownership in the Land and, if it was ever to be sold it would be to them for a price taking into account their contributions.
• Waleed’s brother Khaldoun deposed that: he discussed with Abboud the need for Waleed to transfer some land for the development; Abboud told him that Waleed would be contributing to construction costs; between 1989 and 1996 he frequently witnessed Waleed giving cash to Abboud for the construction costs and for repayment of an ANZ loan;  it was common knowledge that in accordance with Lebanese custom Waleed as the oldest son would have the first right to purchase the Land.
• Khadigi substantially denied the contents of the above affidavits, denied that the defendants were promised an interest in the Land, and deposed that the parcel was a gift.  She also relied on affidavits of her sons Saad, Bessim and Zafir.  Their evidence included that they were told that the Land was to go to Saad and had never heard of the alleged 1987 Agreement, which Agreement would have been contrary to Lebanese culture.
• Khadigi and Zafir deposed that the construction of the development was funded from the proceeds of sale of another property, plus (as deposed to by Khadigi) loans from family and friends.
• A plan of consolidation was prepared.  In January 1988 a Transfer of the parcel recorded the consideration as $500 (which Waleed deposed was determined by Abboud but not paid, Khadigi also deposing to non-payment), with stamp duty of $70 on an assessed value of $5,000.  The duty was paid and the Transfer was registered in January 1988.
• In 1989 the couple borrowed $62,000 from the ANZ bank secured by a mortgage over both pieces of land.  Simultaneously they entered another ANZ mortgage (the collateral mortgage) using the same security for a loan of $33,200.  The collateral mortgage named Waleed and Zafir as the customers.  Whether the named parties in fact entered into the mortgages, the reason for the mortgages and the underlying debts which they secured were disputed.
• The plan of consolidation and mortgages were registered in 1991.
• Abboud died in 2016.
• In August 2023 Khadigi entered a contract to sell the Land and Saad caveated over it claiming as purchaser.
• On 25 September 2023 the defendants caveated over the Land claiming an implied, resulting or constructive trust.
• In September 2023 the defendants’ then solicitors wrote inter alia: asserting that Khadigi “holds on trust for our client (sic) the portion of land at 179 Union Street, Brunswick West VIC 3055 … consolidated on or about 31 January 1991”; advising that “our client’s [sic] portion has now been secured by caveat lodged by our office”; and stating that an in principle agreement had been reached in relation to their clients’ interest, which was set out including that “Our client is [sic] to obtain a valuation in relation to their portion of your client’s property” upon receipt of which Khadigi would pay “our client” the said value in return for withdrawal of the caveat; and stating that that firm was drafting an Agreement outlining the above for signing.  The letter did not refer to an option to purchase.
• In October 2023 those solicitors forwarded a draft deed (Deed) to Khadigi’s solicitors which included that the caveat would be withdrawn in exchange for payment of $750,000.
• Waleed’s affidavit did not explain why the solicitor’s letter was sent.  He deposed that he did not see the Deed before it was sent.  Hala’s affidavit did not refer to the letter or Deed.
• Khaldoun caveated over the Land in January 2024 alleging an implied, resulting or constructive trust.  He withdrew this caveat in April 2024.
• Khadigi applied under the Transfer of Land Act s. 90(3) for removal of the defendants’ caveat.  Subsequently the defendants issued, but had not yet served, an Originating Motion against her claiming relief related to the alleged 1987 Agreement, which allegedly founded a proprietary estoppel or constructive trust either based on unconscionability or common intention.  Evidence was given that the parcel was now worth $50,000.

 Gobbo AsJ ordered removal of the caveat, holding –

1. Khaldoun’s affidavit was unpersuasive because: he did not explain the circumstances surrounding his caveat or its withdrawal despite the possibility that his claimed interest was inconsistent with the rights asserted by the defendants; it contradicted Waleed’s evidence, particularly on the option. [63]
2. No party’s version of events was consistent with the mortgage documents. [88]
3. The defendants had not established a prima facie case of Waleed’s alleged financial contributions to the development.  The court could not safely conclude that Waleed had made any financial contributions to the Land pursuant to the alleged 1987 Agreement or otherwise. [89], [105]
4. The solicitor’s letter was inconsistent with the rights now asserted by the defendants. [97], [106], [112]
5. The position taken in the Deed was inconsistent with the case now advanced by the defendants. [107], [112]
6. Waleed’s assertion that after the Land was sold an agreement was reached with Khadigi concerning any claim over the Land was untenable.   The assertion that the alleged 1987 Agreement included an option to purchase was inconsistent with the solicitor’s letter, the Deed, and with Waleed’s demand to Khadigi not to carry out the sale to Saad.  The demand for payment of $750,000 was also inconsistent with the terms of the alleged 1987 Agreement, in particular as to any option to purchase.  Permitting the sale to Saad to proceed (in return for payment of $750,000) was also inconsistent with the argument that removal of the caveat would be unjust because depriving the defendants of their intended family complex on the Land and No. 181. [108], [109]
7. A contract was not binding and enforceable if one of its essential terms had not been agreed.   Although the court was required in construing a commercial contract to approach its task in a commonsense way to attempt to give effect to the bargain, it may encounter ambiguity so obscure as to indicate no agreement, leading to a particular contractual provision be held void for uncertainty.  This was so with the alleged option to purchase.  The court could not be satisfied of a prima facie case of the alleged 1987 Agreement including the option to purchase – the existence of which was critical to maintenance of the caveat. [115]-[117], [122]
8. The defendants had not established a prima facie case of an implied, resulting or constructive trust over the whole of the Land in the terms of the alleged 1987 Agreement.  Their evidence of it was ambiguous and too general to establish a prima facie case save of the transfer of the parcel.  In particular: its existence was disputed; assuming it existed it was disputed whether the couple or just Waleed had a proprietary interest, and whether in all the Land or limited to the value of the parcel or to the value of Waleed’s financial contributions, and whether the agreement included an option to purchase. [127], [128]
9. If a caveator established a prima facie case but there was a conflict of testimony the court may order removal of the caveat unless the caveator took steps to establish the caveator’s title within a certain time.  However, as stated in holding 8, as to the whole of the Land there was no prima facie case  [128]
10. The caveators had only established a prima facie case of the transfer of the parcel, although not necessarily pursuant to the alleged 1987 Agreement.  At its highest their interest in the Land was limited to value of the parcel, being $50,000.  It was inappropriate to maintain the caveat when that interest could be protected by payment of $50,000 into trust pending determination of the terms on which the parcel was transferred. [125]
11. The balance of convenience also favoured removal of the caveat because: of the contract of sale to Saad; Khadigi was elderly and needed the sale proceeds to purchase a residence; she had agreed to pay $50,000 into a solicitor’s trust account or into court; the defendants would have continued access to No. 181 notwithstanding the sale; the foregoing outweighed the defendants’ desire to purchase the Land to develop their own family compound. [137], [138]

Gobbo AsJ stated the legal principles of: common intention constructive trusts ([51], [52]); proprietary estoppel ([53]-[57], [121); and contractual interpretation ([115]-[120]).