- Proprietary estoppel requires a plaintiff to assume that an interest in property will be granted but not always that a ‘particular legal relationship’ existed.
- Whether an assumption of a ‘particular legal relationship’ must be satisfied, will turn on the facts of the case (Brennan J’s narrow test in Waltons Stores (Interstate) Ltd v Maher (1988) HCA 7).
- A single set of principles will apply to both family and commercial cases, although this context will often be a relevant factor in determining if a narrower test must be satisfied.
In Doueihi v Construction Technologies Australia Pty Ltd  NSWCA 105 the NSW Court of Appeal determined a claim of proprietary estoppel involving a marriage breakdown resulting in a commercial lease dispute. The judgment of Gleeson JA (with Beazley P and Leeming JA concurring) provides an astute analysis of the authorities governing equitable estoppel including Waltons Stores (Interstate) Ltd v Maher (1988) HCA 7 (Waltons). Whilst the upshot of the decision is that each case will ultimately turn on its own facts, the judgment provides useful insight into the application of the Waltons tests and whether there is a distinction between cases involving commercial and family arrangements.
Mr Hogan was the director and major shareholder of Construction Technologies Australia Pty Ltd (CTA). In 2008, Mr Hogan’s then wife Nicole Hogan, mother-in-law Maria Vatselias, sister-in-law Katrina Scott and an unrelated party, Edward Doueihi (co-owners) purchased a property at Seven Hills. It was the intention that the tenants of the property would be CTA and Marble Plus Pty Ltd, a company owned and controlled by the co-owners.
In addition to marrying into the Vatselias family, Mr Hogan had also worked in the family’s businesses and had been involved in many of their business dealings. The co-owners had a history of purchasing commercial properties and then leasing these to their related companies. It was their practice to agree on lease terms but not to formalise the lease; instead relying upon the ‘honour of the family’ to uphold the agreement.
Mr Hogan was involved in the selection, financing and purchase of the Seven Hills property and the subsequent design and construction of premises. The premises were built to accommodate CTA’s manufacturing plant. During this period Mr Doueihi had discussed the terms of CTA’s lease with Mr Hogan. There was agreement on the rent that would be paid and Mr Hogan had advised Mr Doueihi that CTA would require a five-year term with a five-year option in order to justify expenditure on the fit-out.
The installation of CTA’s plant began in 2010 and was completed in 2011. The parties understood the significant cost to CTA for the fit out, and the difficulty in effecting its removal, if required.
In 2011, Mr Hogan and Mrs Hogan separated and in light of this development Mr Hogan sought to formalise a lease for CTA. The co-owners were unwilling to honour the prior arrangement and in mid 2012 they offered CTA a short term lease with a rental increase of 40 per cent. In October 2012 the co-owners issued a notice to quit to CTA, and in November 2012 CTA commenced proceedings seeking relief.