Written by In the recent case of Wheatley v Salmon [2022] NSWSC 395, the NSW Supreme Court considered whether a representation made by the defendant that he would “buy you [the plaintiff] a house” was enough to ground a proprietary interest.
The plaintiff (sister) and defendant (brother) were siblings and both directors in Marketing Masters Qld Pty Ltd (MM). MM received a $550,000 loan from Westpac and both the sister and brother guaranteed their obligations to Westpac. The sister also granted Westpac a mortgage over her home.
After MM was placed into administration and liquidation, the sister sold her home in order to pay the debt owed to Westpac in satisfaction of her obligations as a guarantor. To compensate her for the loss suffered, her brother promised to buy her another house. The sister gave evidence that her brother said to her words to the effect of “I will buy you a house”. After purchasing what he described as an investment property in Bogangar, the brother allowed his sister to live in the property rent-free. The sister paid for utilities and various other expenses, while the brother paid the rates, strata levies and mortgage payments.
The issue arose when the brother sought to terminate the sisters’ occupancy so he could sell the property. The sister sought a declaration that her brother held the property on constructive trust for her and sought an order that he convey the property to her without any encumbrance. The sister also relied on the doctrine of proprietary estoppel by encouragement, claiming she acted in reliance on her brother’s promise to buy her a house.
The Court did not accept the sister’s evidence that her brother said to her words “I will buy you a house”, given the sister also gave evidence that she understood her brother was looking to build a property investment portfolio. When interpreted together, the claims were not compatible with the notion that the sister was being promised title to the property. The Court also found that the representation “I will buy you a house” was too uncertain to be relied upon to establish a proprietary estoppel claim, as it did not provide guidance on whether it was intended for the sister to obtain ownership or simply live in the property. As such, the Court held the sister was not entitled to remain at the property without the brother’s consent.
This case is of importance, given non-lawyers are prone to making uncertain statements, especially in family contexts, which may later be unsuccessfully sought to be relied upon.