Mariango v Nalau [2007] VUCA 15; Civil Appeal Case 33 of 2007 (24 August 2007)

IN THE COURT OF APPEAL
OF THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)

CIVIL APPEAL CASE No.33 OF 2007

BETWEEN:

ANNA MARIANGO
Appellant

AND:

THOMPSON NALAU
Respondent

Coram: Hon. Chief Justice Vincent Lunabek
Hon. Justice Ronald Young
Hon. Justice Edwin Goldsbrough
Hon. Justice Oliver Saksak
Hon. Justice Hamlison Bulu

Counsel: Mr Hillary Toa for the Appellant
Mr Daniel Yawha for the Respondent

Date of hearing: 21 August 2007
Date of judgment: 24 August 2007

JUDGMENT

Introduction

1. This appeal concerns de-facto marriage property rights in Vanuatu. In the Supreme Court the Judge found that equitable principles based on such concepts as constructive trust, unjust enrichment and estoppel apply to such relationships in Vanuatu. As a result he concluded the Appellant should pay the Respondent VT500,000 for his contribution to the property the parties jointly developed. The Appellant says the Judge erred, both in finding in principle the Respondent had an interest in the property and in finding such an interest was worth VT500,000.
Background Facts

2. The basic facts which gave rise to this dispute are set out in the judgment as follows:

"1. The claimant and the defendant lived together on a de-facto relationship for some years. During that time, a rent house was built on a leasehold title registered in the names of the defendant and her former husband. The Claimant says that it was mostly built by him. He seeks the judgment for half of VT2,224,500, the valuation of the building as recompense for his contribution to it."

3. The parties began living together in 2001. At that time they intended to marry. They built the rental property after they began their relationship. The Judge found that after they began living together the parties had a common understanding about the house which was: (at (16))

• "That they were intending to legally marry each other in the future;

• That they would use their joint resources to built the rent house;

• That the Claimant’s contribution would be primarily the labour and skill necessary. The Defendant’s contribution would be primarily the money needed to buy materials and the land on which the house would be built.

• That the Defendant only would be the owner of the house. It was built on land which she part owned.

• While they were together the rental income would be used for their joint benefit."

4. As to the situation in the future the Judge said:

"I do not think they ever had any common understanding about what would happen if they separated." (17)

5. And so, over a period of 2 years, the Respondent mostly built the house with materials supplied by the Appellant. The Judge found that although the Respondent had some help from the Appellant’s relatives this was modest. He accepted that the Appellant therefore provided virtually all the materials and the Respondent a large portion of the labour.

6. The parties had agreed to marry in August 2003. However, just before the intended marriage the Respondent said he would not go through with it. The
Appellant claimed that he left her for another woman. Although some effort was subsequently made at reconciliation it came to naught and by about July 2004 their relationship was clearly at an end.

7. By separation the house had been sufficiently completed to be rented. There were 3 flats on the rental property providing a total income of VT49,000 per month. This rent has been exclusively paid to the Appellant. In February 2005 the house was valued at VT2,224,500.

8. Given the factual conclusions, the Judge turned to the law. He concluded that because there was no statutory provision for property rights for those living in de-facto marriage in Vanuatu it was necessary to fall back on Article 95(2) of the Constitution, and therefore to base any decision on the common law of England prior to independence. He adopted the New Zealand Court of Appeal approach to the common law relating to property disputes arising from de-facto marriages as explained in Gillies v. Keogh [1989] NZCA 168; [1989] 2 NZLR 327.

9. From Gillies he extracted the following principles: (at (23))

• "although the Court has used different legal concepts to address de-facto property cases (constructive trust, unjust enrichment, common intention, estoppel) ultimately the same factors must be taken into account.

• the essential issue is the reasonable expectations of persons in the shoes of the parties taking into account contemporary social attitudes. In assessing that, several factors have to be taken into account.

• the first factor is the degree of sacrifice by the complainant, the extent to which he or she has given up other opportunities.

• the second factor is the value of contribution made to an asset by comparison to the benefits he or she had received. These contributions may be direct or indirect.

• even if sacrifices and contributions have been made the Claimant cannot succeed if a reasonable person in his or her shoes would have

understood that the other party had beforehand positively declined to agree to any sharing of the property or payment of compensation.

• a simple monetary award, rather than the recognition of any interest in property may be the appropriate way of giving effect to reasonable expectations.

• a careful analysis of the facts is always important."

10. Before the Judge applied the principles to the facts of the case, he considered the Appellant’s submissions that the Respondent had lost any right to claim an interest in the house because of his refusal to marry the Appellant and, it was claimed, he had left her for another woman. The Appellant claimed the parties had agreed to proceed with the construction of the house on the basis they would marry.

11. As to this, the Judge said:

"28. Nor do I think that a Claimant will lose rights already acquired by sacrifice and contributions because the relationship breaks down, whoever may be at fault for the breakdown. It is only because the relationship has ended that claims are made. In none of the common law cases, does the Court venture to adjust rights to property on the basis of fault for the breakdown."

"29. In my view, the reasonable expectations of persons in the shoes of the parties would be that, if the relationship broke down before marriage, the Claimant’s contribution to the construction of the rent house would be recognised by fair monetary compensation."

12. The Judge then turned to the application of these equitable principles to this case. He accepted the parties had never intended the Respondent would become a part owner of the house. He said:

"31. However, I do not think that anyone would expect him not to be compensated in the event of relationship breakdown. The extent of his sacrifice and his contribution was substantial. He must have expended a great amount of time, skill and energy over 2 years in constructing the house. He really got nothing in return because the relationship did not last."

"33. ... As a professional builder, he could have spent that time earning income from building work. It is a reasonable expectation that he should be compensated by the Defendant who retains the house and the income from it."

13. The Judge then turned to consider "compensation" for the Respondent’s contribution. He said there was a paucity of evidence. However he concluded that given the Appellant had contributed VT1.300.000 in materials to a house worth VT2.224,500 million then the Respondent’s labour was worth approximately VT1,000,000. He adopted a conservative approach to that sum. Given the contribution made by the Appellant’s relatives to the construction and given the absence of any precise calculation of labour he concluded he could safely assume VT500,000 was the appropriate award.

Counsel’s submissions

14. The Appellant’s Notice of Appeal contained 13, ostensibly separate, grounds of appeal. However most were an attack on the factual findings by the Judge on which he based his assessment that this was a de-facto property case which required Court intervention and an award of compensation.

15. The Appellant’s submissions therefore can be reduced to these propositions:

(a) The law of Vanuatu does not and should not recognise a de-facto property regime.

(b) In any event, the Respondent’s refusal to marry the Appellant after he had promised to do so disentitled him to any share in the property.

(c) If the law does recognise such a regime then the facts of this case do not justify any award of monetary compensation.

(d) There was insufficient evidence from the Respondent to prove the amount of any contribution.

Discussion

16. Counsel for the Appellant accepted, as he was obliged to, that the equitable principles that have application to this case including constructive trust, unjust enrichment, imported common intention or estoppel are incorporated into the law of Vanuatu by virtue of Article 95(2) of the Constitution. These equitable principles were known to the common law of England before the relevant date in the constitution of 30 July 1980.

17. The first question therefore is whether these principles should be applied to de-facto marriages in Vanuatu. These equitable principles have, over the last thirty years or more, primarily developed through disputes which have risen from the end of de-facto relationships. The Courts have recognised, in the absence of any statutory guidance for the resolution of property disputes in de facto marriages, that they must ensure fairness between the parties in such circumstances. A set of principles and rules to ensure equity between those who choose to co-habit but not through the formal arrangement of marriage is, in our view, essential in a society which is, as the Constitution of Vanuatu says, based on "fundamental rights and freedoms of the individual, without discrimination..." [Article 5].

18. Counsel for the Appellant could not suggest any reason why such principles should not apply in Vanuatu. We see no reason why these equitable principles should not therefore be applied to de-facto marriages within this jurisdiction and every reason to do so, given the development of this area of law internationally and the constitutional imperatives.

19. As the Judge in the Supreme Court observed the New Zealand Court of Appeal, in Gillies, undertook an invaluable review of the law of this area. We consider the principles and approach of the Court in Gillies should govern the approach to de-facto marriage property disputes in Vanuatu.

20. As we have said the primary Judge summarised the approach of the Court in Gillies. We would add from the same authority these observations as particularly relevant to this case;

(a) Whether or not, on the facts of the case an equitable interest in land is established the facts may still satisfy the requirements for promissory estoppel. (Cooke P, p331).

(b) Estoppel requires-

(i) creation or encouragement of the believe or expectation;

(ii) Reliance;

(iii) Detriment as a result of reliance

(Richardson J, pp. 345, 346,347).

(c) Damages may be awarded for breach of constructive trust (Cooke P, p.332).

21. Having satisfied ourselves that these principles are the law of Vanuatu we turn to the second ground of appeal. The Appellant submits that because the Respondent refused to marry the Appellant this disentitled him to any compensation. The Appellant did not suggest that there was any direct agreement between the parties that if the parties did not marry the Respondent would not be entitled to compensation. It is clear the parties made their contribution to the construction of the house on the basis and in the belief that they would marry and the rental house would provide them with an income. In the absence of any expressed agreement between the parties that if one party called off the marriage then they would effectively forfeit their contribution to the property to the other, we would not be prepared to infer such an agreement. Certainly the Appellant did not accept if she had called off the wedding she would have forfeited her share in the house to the Respondent.

22. Nor do we think there is any basis to introduce "fault" for the relationship break up into property division unless directly relevant to such matters as contribution or asset preservation. Fault, in any event, is notoriously difficult
to reach clear conclusions about in relationship break-ups and is often in the eye of the beholder. We agree with the approach of the Supreme Court Judge as to this aspect of the claim. The Appellant could not identify any authority where fault was said to be relevant. We reject this ground of appeal.

23. The third ground of appeal is a general challenge to the conclusion that the facts of the case did not justify an award. We agree with the Judge’s conclusions. We consider this is exactly the type of case where compensation (as opposed to a declaration of an interest in land) should be ordered. The Judge found that the parties jointly agreed to develop on the land (jointly owned by the Appellant and her previous husband) a 3 flat property which would be rented out to provide a joint income to the parties after marriage.

24. The Judge found the Appellant used her savings of VT1.3 million for the building materials and the Respondent used, with minor help from the Appellant’s family, his expertise to build the flats. After construction the flats (with the leasehold interest on the land) were worth VT2,224,500. The Respondent always accepted that the Appellant would "own the property" and he had no claim to it.

25. The facts of this case have some similarity with those in Gillies where the male claimant was awarded a sum of money for his contribution to the renovation of a house owned by the woman with whom he lived.

26. We are satisfied that a reasonable person, in the Respondent’s position, would have expected to receive monetary compensation for his work should the marriage not have eventuated. And we consider a reasonable person in the Appellant’s position would have expected to concede an entitlement by the Respondent.

27. The Appellant’s attitude in this case is understandably clouded by her view that the Respondent was at fault for the break-up of their relationship and in those circumstances she does not concede he had any entitlement.

28. The Supreme Court Judge properly identified the legal principles and applied them to the facts of this case and reached what we view as an inevitable conclusion that the Respondent was entitled to compensation pursuant to these equitable principles. The key facts were, the parties agreed the benefits from the property would be shared between them. They agreed to share the rent from the property. And so they both contributed to the property in this expectation. Thus when the relationship broke down it is reasonable and fair that they both share in the value of the asset created. The Respondent and the Appellant therefore proceeded with the construction relying upon this arrangement. Now the relationship has broken down the Respondent has no equitable or legal interest in the property he helped build in reliance on the shared rental agreement. This analysis satisfies the ingredients of estoppel; belief, reliance and detriment. Thus compensation should be payable. Other equitable principles will also apply here.

29. A constructive trust may also arise; through the efforts of the parties and their reasonable expectations (Oliver v. Bradley) [1987] NZCA 70; [1987] 1 NZLR 586); or the Court’s desire to ensure one person is not advantaged at the expense of another (unjust enrichment) (Pettkus v. Beckar [1980] 2 SCR 843); or through the Courts interpretation of what may be a common intention to be implied from the circumstances (Pettit v. Pettit [1962] 2 ALL ER 780).

30. As the New Zealand Court of Appeal said in Gillies we do not think it matters which of the equitable principles are adopted in this case given the similar underlying approach. We therefore reject this ground of appeal.

31. The final ground of the appeal is the quantum of the claim. Assessment of quantum in this area is notoriously difficult. For self event reasons in a situation such as this the Respondent is hardly likely to have kept an account of his work. It is, after all, not to be equated with a commercial contract for the construction of a house where details of labour costs might be expected.

32. We consider the Judge undertook an assessment of quantum as well as he could
given the circumstances. What the Judge knew was that the total value of the rental house was approximately VT2.3 million of which the Appellant had contributed VT1.3 million for materials. On a crude measure that meant the value of the labour was approximately VT1 million. The Judge then took a properly conservative approach to the Respondent’s claim. He no doubt took into account the contribution of the Appellant’s family to the construction, the fact the Appellant provided the land on which the flats were built and factored in an allowance for the uncertainty as to exactly how the value of the property was divided between materials and labour. We are satisfied that the Judge’s conclusions were properly open to him and have not been shown to be wrong.

33. For these reasons therefore the appeal will be dismissed. On delivery of this Judgment we will hear submissions as to costs.

DATED at Port-Vila this 24th day of August 2007

BY THE COURT

Vincent LUNABEK CJ
Ronald YOUNG J
Edwin Goldsbrough J
Oliver SAKSAK J
Hamlison BULU J