Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220

Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220

Q's conduct in establishing and implementing the family business encouraged his sons’ inheritance expectation, leading to life-changing detrimental reliance. The expectation was ambulatory, attaching to properties acquired after reliance commenced. Relief is warranted for proprietary estoppel, but acceleration to immediate transfer requires conditions including payment of the present value of notional rent and repayment of book debts. Compulsory purchase of shares not justified.

Parties
Appellant: Q (a pseudonym); First Respondent: E Co (a pseudonym); Second Respondent: EM Co (a pseudonym); Third Respondent: A (a pseudonym); Fourth Respondent: B (a pseudonym); Fifth Respondent: C (a pseudonym)
Jurisdiction
Australia
Judgment Date
21 September 2020
Procedural Posture
Appeal / Court of Appeal Decision
Outcome
Appeal allowed in part
Legal Topics
Proprietary Estoppel, Constructive Trust, Succession, Family Business, Detrimental Reliance, Relief Conditions
Equity Property Law Proprietary Estoppel Constructive Trust Succession Family Business Detrimental Reliance Relief Conditions

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Parties

Q (a pseudonym)

Appellant

E Co (a pseudonym)

First Respondent

EM Co (a pseudonym)

Second Respondent

A (a pseudonym)

Third Respondent

B (a pseudonym)

Fourth Respondent

C (a pseudonym)

Fifth Respondent

Procedural Posture

Appeal / Court of Appeal Decision

Legal Issues

  1. 1 Whether Q's conduct gave rise to a proprietary estoppel by encouragement or acquiescence
  2. 2 Whether detrimental reliance could give rise to an equitable interest in after-acquired properties
  3. 3 Whether C relied on inheritance expectation in joining family business

Ratio Decidendi

Q's conduct in establishing and implementing the family business encouraged his sons’ inheritance expectation, leading to life-changing detrimental reliance. The expectation was ambulatory, attaching to properties acquired after reliance commenced. Relief is warranted for proprietary estoppel, but acceleration to immediate transfer requires conditions including payment of the present value of notional rent and repayment of book debts. Compulsory purchase of shares not justified.

Court Disposition

Appeal allowed in part

Orders

  • Direct parties to attempt to agree short minutes of order within 14 days giving effect to these reasons; otherwise written submissions (max 5 pages) to be exchanged and filed within a further 14 days, orders to be determined on the papers.
  • Primary judge's decision varied to impose conditions on acceleration: respondents to pay Q net present value of notional rent ($80,000 per year; $640,000 total) and repay book debts ($2.123 million); no compulsory purchase of shares ordered.