Duic v Duic [2012] NSWSC 76
A recent decision made by the Supreme Court of New South Wales confirms the rule that where a promise has been relied upon to one’s detriment it becomes irrevocable and the court of equity may step in to enforce the promise.
In Duic it was held that a father’s promise that his property would belong to his son was an irrevocable promise. As a result the Court ordered Josip, (‘the father’) to transfer the property to Emil (‘the son’).
Facts
The father was the registered proprietor of a property that was used by the son to operate a radiator service business. The father assisted the son in the business for part of the time. Following a disagreement between the two, the son allegedly forced the father out of the property and the father brought an action seeking possession of the property. The son cross-claimed on the following grounds:
- That the property formed part of partnership assets of radiator business carried out jointly by the parties and therefore the father held the property on trust for son.
- In the alternative, the son claimed that the father had promised the property to the son and in reliance of that promise the son paid the father the weekly amount of $350, made improvements to property and forwent an opportunity to buy another property.
Partnership
The son failed to make out the partnership claim as the evidence was not sufficient to give a finding of a partnership. This was because there was:
- No joint bank accounts for the business;
- No partnership tax records or accounts; and
- No evidence of any express agreement between the parties that they were partners and would share the liabilities and profits of the business.
Promise
On the second ground, the Court established that the father had made a promise to the son that the son would own the property. It based the finding on two independent witnesses, namely the son’s brother and a Liberal Councilor for the Ryde City Council. Both witnesses gave evidence that the father had promised the property to the son. However whether the property was to be given at some time in the future or had already been given was unclear.
The Court further found that the father was living in a de facto relationship at another address which indicated that the property was left for the son to operate his radiator business.
Believing that the property was his, the son made improvements to the driveway and carports on the property for the benefit of his radiator service business and forwent the opportunity to purchase another property for that purpose. Consequently the Court held that the son was entitled in equity to be compensated for the detriment he suffered in reliance of the promise.
Remedy
In determining what was to be a suitable remedy in the circumstances the court applied the fundamental principle as articulated in Guimelli v Guimelli (1999) 196 CLR 101, namely “the Court must look at the circumstances… to decide the way the equity can be satisfied”.
A strict application of the promise would have resulted in the son holding a life interest in the property and the father remaining the registered owner on the condition that he does not sell the property during this lifetime. Considering the problematic relationship between the father and the son, this would have created the potential for further dispute.
As a result, the Court ordered the following:
- The property be transferred to the son;
- A sum of $88,000.00 be awarded to the father representing payments the son was supposed to have made as part of the promise;
- An additional sum of $25,000.00 be awarded to the father to cover the father’s expenses associated with the transfer of the property and the costs of moving.
Lessons
This case highlights that the making of a promise you do not intend to keep can have expensive consequences.
This article is intended to provide general information only and is not a substitute for legal advice. To obtain legal advice tailored to your situation please contact the author.
Author:
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