Nendy v Armstrong & Ors

In this significant case, Holmes CJ was faced with conflicting and intriguing claims to the right to ownership of a property in Hamilton. On the one hand, the plaintiff, who cared for the deceased owner of the property, sought the property by means of equitable estoppel arising from an agreement with the owner to provide him with food, care and shelter in Papua New Guinea in return for the property. On the other, the second defendants claimed that their grandmother was an adverse possessor of the property as a tenant at will. Ultimately, her Honour found in favour of the plaintiff.

Holmes CJ

18 December 2020

A property at 37 Pine Street, Hamilton (the Property) is registered in the name of Terence Bridges, who inherited it after the death of his mother in 1974. [1]. Mr Bridges resided in Papua New Guinea (PNG) at the time of his mother’s death, and remained resident there for the remainder of his life, dying there in 2007. [1], [42]. Mr Nendy, the plaintiff, is the leader and customary landholder on whose land Mr Bridges came to live in PNG. [42]. He commenced proceedings, seeking a declaration that the Property was held on trust for him on the basis of an equitable estoppel. [1]. These proceedings were opposed by the second defendants, who asserted through a counterclaim a right to the property on the basis of adverse possession. [2].

Adverse Possession

Holmes CJ dealt with the adverse possession claim first. The second defendants’ grandmother, Mrs Humphreys, was the neighbour of Mr Bridges’ mother. [4]. During a period of illness before the latter’s death, Mrs Humphreys came to live with, and look after, her. [4]. With Mr Bridges’ agreement, Mrs Humphreys continued living at the Property after his mother's death in 1974, on the basis that Mrs Humphreys would pay the rates and utilities bills. [4]. Mrs Humphreys’ son moved in in 1989 and continued living there after her death in 2000 until his death in 2017. [4]. The son left his estate to his seven children in equal shares; they are the second defendants in these proceedings. [4].

The second defendants pleaded that Mrs Humphreys was a tenant at will of the Property that was determined in about June 1975. [11]–[12]. Thereafter, Mrs Humphreys was in adverse possession. [12]. At the expiration of the time in which Mr Bridges could bring an action to recover the property in June 1987 and by virtue of ss 13 and 24(1) of the Limitation of Actions Act 1974 (the Act), she acquired title to the Property. [12]. Conversely, Mr Nendy contended that, if there were a tenancy, in accordance with s 18(2A) of the Act the right of action would not accrue so long as Mrs Humphreys continued to pay rent (in the form of maintaining the property and paying outgoings), which she continued to do until June 2000. [17]. However, Holmes CJ disagreed, holding that s 18(2A) arose out of a renumbering of s 18 of the Act, and only operates in respect of s 18(2), rather than s 18(1) which was relied upon by the second defendants. [16]-[17].

Holmes CJ also noted the difference between adverse possession generally, and adverse possession where there is a tenancy at will. [25]. In the former, the possession has to be open, peaceful, and without the consent of the true owner. [24]. However, by force of ss 13 and 18(1) of the Act, time will begin to run for a claim to be brought from one year after the tenancy at will commences. [25]. Accordingly, if Mrs Humphreys was a tenant at will, Mr Bridges’ title to the land would have been extinguished in June 1987. [25]. Under s 185(1)(d) of the Land Title Act 1994, she would therefore have an interest in the Property which would both entitle her to apply for registration, and which is “effective against the registered proprietor and capable of transmission”. [26].

On the question of whether Mrs Humphreys was a tenant at will, Holmes CJ first found that on a proper construction of the pleadings, this question had not been admitted. [27]–[28]. Turning to the substance of the question, her Honour observed that merely having exclusive possession does not necessarily mean that a person will be a tenant. [29]. Here, the fact that Mrs Humphreys met the Property’s outgoings and rates and had exclusive possession were inconsistent with her holding a licence. [30]. As against this, evidence referred to the property as being “occupied” by Mrs Humphreys, rather than her being a tenant. [33]. Ultimately, Holmes CJ preferred this latter evidence, and the fact that, on the whole, the evidence did not support either that there was a landlord-tenant relationship between Mrs Humphreys and Mr Bridges, or that either party considered Mrs Humphreys to be a tenant. [38]–[40]. Accordingly, her Honour concluded that Mrs Humphreys was a licensee and so did not acquire any interest in the Property through adverse possession. [41].

Equitable estoppel

During his time in PNG, Mr Bridges fell upon hard times, first undertaking household chores and childminding tasks in return for accommodation for Mr Edward Kuylie. [42]. When Mr Kuylie returned to his home village and land, Mr Bridges sought permission from Mr Nendy, the village leader and customary landholder, to move with Mr Kuylie into the village. [43]. Mr Nendy’s evidence was that Mr Bridges promised that, if Mr Nendy provided him with food, accommodation and other living needs, he would give the Property to Mr Nendy. [43]. While he initially lived communally, Mr Bridges convinced Mr Nendy to build him a house of his own. [45]. In reliance on the promised gift of the Property, Mr Nendy did so. [45]. Mr Nendy’s uncontradicted evidence was that he would not have allowed Mr Bridges to live in the village, or provided him with the food, shelter and care which was extended to him, were it not for Mr Bridges’ promise to give Mr Nendy the Property. [46]–[47].

The second defendants sought to defeat Mr Nendy’s claim by submitting that, as he relied upon a legally binding promise made by Mr Bridges, he was obliged to sue in contract, rather than relying on equitable estoppel. [51]. As s 59 of the Property Law Act 1974 (PLA) precludes the bringing of an action on any contract for the disposition of land that is not at least in part in writing and signed, and as the purported contract or agreement was not made in writing or signed, they submitted that the claim could not succeed. [50]–[51]. In support of this proposition, the second defendants relied on the judgment of McPherson J in Riches v Hogben [1985] 2 Qd R 292, 301 for the proposition that equitable principles should apply where there was no legally binding promise, but if such a promise exists, then a plaintiff must rely on the law of contract to enforce it. [51].

In considering this submission, Holmes CJ doubted that McPherson J’s statement supported the proposition that equity would not intervene where a promise was caught by s 59 of the PLA. [53]. Rather, her Honour found “ample authority” for the proposition that, at least in cases of proprietary estoppel, “the court will intervene notwithstanding that the relevant promise is undocumented, because the action is to enforce the equities arising from the conduct and the expectations and the promise, rather than the contract itself”. [54]. Indeed, in the appeal from McPherson J’s judgment, the Full Court held that s 59 applied in that case, but the plaintiff was nevertheless entitled to succeed on the basis of equitable estoppel. [60]. Her Honour considered that the Full Court's approach was consistent with the High Court in Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, in relation to promissory (rather than proprietary) estoppel. [61].

Ultimately, her Honour considered that the fact that Mr Bridges’ agreement with Mr Nendy was not in writing was not a barrier to relief. [80]. Mr Nendy’s entitlement to relief is grounded in “the equity arising from Mr Bridges’ conduct in making the promise, and in encouraging Mr Nendy over the years to believe that he would honour it, and in allowing Mr Nendy to act to his own disadvantage in reliance on it; and on that detrimental reliance by Mr Nendy in the belief that the promise would take effect”. [81]. This also included a secondary promise that the first promise would be honoured and enforceable. [81]. Accordingly, Holmes CJ found that Mr Nendy established a right to relief based on proprietary estoppel, and declared that the Property was held on trust for Mr Nendy.

M Paterson