That statement has implicit in it a recognition that even a beneficial ownership of property (such as can be derived from application of a presumption of resulting trust) can be altered by the imposition of a constructive trust.
38 As the passage quoted from Baumgartner at para [35] above shows, a constructive trust will not be imposed to alter legal property rights which were specifically intended, or specially provided to apply at the end of the joint relationship or endeavour. That is because if the parties have specifically considered how the ownership of the property should lie at the end of their relationship, and intend that the ownership should be in accord with the legal interests in that property, there would be nothing unconscionable about the ownership being as they had intended, regardless of what contributions each of them had made to the property (cf Little v Saunders [2004] NSWSC 655 at [37] - [39]). However, a merely presumed intention concerning the proportionate beneficial ownership, of the type which can give rise to a resulting trust, is not enough to show that there is nothing unconscientious in one party seeking to keep a legal proportionate interest which is greater than the total proportionate contribution which that party made to the acquisition of the property.
39 In the present case, the acquisition of the title proceeded in two stages - first by acquisition of the lease and keeping it on foot through payment of rentals, then by the acquisition of the freehold. Concerning the acquisition of the lease, John paid the first four of the six-monthly instalments of rental which fell due, totalling $92.36. The rental payments made by John were made on 8 September 1966, 11 January 1967, 20 July 1967, and 10 July 1968. He also paid a transfer fee of $6 in connection with the Department's consent to the transfer of the lease into the names of the three brothers. Robert paid all other rental instalments, down to the time that David undertook the obligation to purchase the land. The payments so made by Robert include five he can specifically identify (which he identifies as on 20 January 1969, 6 August 1969, 3 August 1970, 12 January 1971 and 7 February 1971) totalling $111.29. It might be that there is a typographical error in his affidavit, so that the reference to 12 January 1971 should be to a date in January 1970, but that possibility does not affect the outcome of the case. As well, Robert paid a transfer fee on 17 April 1969 to the Lands Department, of $8. Insofar as there are rental payments which I have not so far accounted for, (January 1968 is one) it is likely that they were paid by Robert, and were of an amount of $21.25 each.
40 The total amount paid by David to acquire the freehold, inclusive of interest, was $6,286.29.
41 I make at this stage of the judgment these findings about the amounts which could arguably be said to be contributions to the purchase price in case this matter receives the attention of the Court of Appeal. However, in my view, those findings should not be used to lead to any conclusion about the beneficial ownership of the property, on the basis of contributions to purchase price by way of a resulting trust. Rather, they should be subsumed in a larger enquiry about overall contributions to the joint venture, for the purpose of ascertaining the respective interests of John, Robert and David pursuant to a Baumgartner constructive trust.
Basis for a Baumgartner Trust
42 In the present case, there is, in my view, the basis for the imposition of a Baumgartner constructive trust. There was a joint endeavour between the three registered proprietors of the land, to acquire the land, construct a house on it, and keep that house available for use by themselves and members of their family. They all made contributions to that joint endeavour, both in money and in kind. No contributions were made by anyone else. I will deal later with the detail of the contributions by the three registered proprietors, insofar as the evidence permits it. The basis of their joint endeavour has been removed by the lodgement of the Notice of Severance of Joint Tenancy. Further, given that it is an inherent attribute of a joint tenancy that it can be severed, and my finding that there never was an agreement that the joint tenancy would not be severed, the substratum of their joint endeavour has been removed without attributable blame. The three brothers never gave a thought to how the benefit of the various contributions which they made to the venture should be divided if that venture came to an end. At the time they were going through the acquisition of the land and construction of the house, it did not occur to them that the venture would end. To say this is, of course, vastly different to saying that they actually agreed that it would not end.
43 The extent of any adjustment which needs to be made, to the respective proportionate interests in which the legal title is held, is dependent upon the Court reaching a positive conclusion that allowing the beneficial interests to be divided in the same way as the legal interests would be unconscionable. The relevant principle of unconscionability here, though, is that, when the parties have not together foreseen and provided for the way in which the asset committed to the joint enterprise should be disposed of when the enterprise comes to an end, it would be unconscionable for it to be divided up in a way which results in the proportion received by any party being materially greater than the proportion which that party contributed. The application of that principle is tempered by the requirement laid down by the majority in Baumgartner, at 150, that:
"The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest."
Problems with Establishing Relative Contributions
44 The evidence in the present case presents some particular difficulties about establishing the relative contributions of the three registered proprietors to the joint enterprise. One is that the joint enterprise has been on foot for 38 years, with contributions being made of different types, and at different times, by different people. So far as monetary contributions are concerned, any proper assessment of the respective proportions in which the equity in the property is now held would need to take into consideration the effect of inflation. Yet there is no evidence of how the Consumer Price Indices have moved over that period, and only very slight evidence how another, possibly more relevant, measure of changing monetary values, namely land values in the Norah Head area, have moved in that time. There is evidence that the house is now worth somewhere between $550,000 and $679,000. That evidence itself is based on real estate agents' appraisals, not on proper valuations. While one knows the purchase price of the land, one does not know the cost of construction of the house on it, so even the imprecise evidence about the present value of the house does not enable any calculations to be done of present value of expenditure occurring many years ago. The problem concerning inflation is exacerbated by the fact that there have been contributions made to pay outgoings of the property, and for repairs and maintenance, over the whole 38-year period.
45 Another problem with the evidence is that, while there are some items of expenditure which have been proved to the last cent, the records of the total expenditure are incomplete.
46 A third problem is that there were very significant contributions in kind. All three registered proprietors did work in connection with the construction and maintenance of the property, but that work is described in fairly general terms in the evidence, and no attempt is made to value it with any precision, either as to its value at the time it was performed, or in terms of present-day dollars.
47 A fourth problem is that there were some periods when the house was rented, either commercially, or to friends of the family. There is no full account of the amount of rents received. However, as it is likely that all receipts of rent were spent on outgoings of the property, that lack of evidence is unlikely to complicate making findings about what amounts actually were contributed by the three brothers.
48 Notwithstanding these difficulties in the evidence, counsel for both David and Robert submitted that I ought not order an inquiry before the Master, but rather should do the best I could, on the basis of the evidence now before me, to ascertain the various entitlements of the parties. I can, with respect, see the sense in this submission - at an inquiry before the Master some greater precision might be obtained concerning some of the evidence, but large areas would be likely to remain imprecise.
49 It follows from this that it is only at the level of broad impression that a conclusion can be arrived at about what has been established concerning the proportionate contributions made to the present value of the property. In arriving at even those broad impressions, I bear in mind that it is only to the extent to which it is established that it would be unconscionable for the proportionate beneficial interests to lie in accordance with the legal title that a constructive trust should be imposed at all. Thus, any room for doubt in the estimation process should be resolved by choosing the end of the spectrum of doubt which lies closer to a one-third, one-third, one-third division.
Contributions to Acquisition of the Land
50 These are identified at para [39] [40] above.
Contributions to Construction of the House
51 Each of the registered proprietors contributed the money to which he was entitled from his mother's estate towards the construction costs. This was of the order of $700 each.
52 At the time building commenced David was a plumber, who was able to do a significant amount of building work himself, and arrange for other building work to be done by contacts in the building industry. He paid for the following materials and costs:
· All plumbing, drainage, gas, roof gutters and downpipe materials to complete the project, including bath, two toilets, two basins, kitchen sink and cabinets, laundry tub, taps spouts and drains, external wall cladding, paint, tiles, cement and adhesives, grout, bathroom fittings, light fittings, staircase materials, 2,000 face bricks, steel reinforcing, formwork, sandfilling material, building inspection fees, and the wages of his employees on the occasions they worked there.
53 David carried out significant building work himself (detailed in paragraph 4 of his affidavit of 22 July 2004), and exchanged his own labour as a plumber for the work of tradesmen in other trades. He has identified, in an affidavit, an incomplete list of expenditure which he made on the property, up to 1979, as totalling $4,590.57. His estimate of the total value of his contribution to the building, up to 1979, including the value of work done or traded, is $10,000. He was not challenged on that estimate. At the trial he was able to produce an additional schedule of expenditure supported in part by a file of invoices and other vouchers, which added up to ($9,016.18 minus duplicated items and those not vouched for, of $3,657.46 equals) $5,358.72. I accept his estimate of $10,000.
54 Robert is able to identify expenditure of the order of $4,000 made by him in connection with construction costs of the house. That amount is, as I understand it, inclusive of his contribution from his mother's estate. He did some physical work towards construction of the house, but its precise extent is not made clear by the evidence.
55 Apart from the rent and transfer fee totalling $98.96 identified in para [39] above, payments by John, in the period from 1966 to 1968, can be identified of $287.30. Robert and David also accept that he did some work concerning construction, although the nature and extent of that work is also unclear on the evidence.
56 I conclude, however, that the amount of work done by each of Robert and John on construction was less than the amount of work done by David.
Property Outgoings and Maintenance
57 There have been some sporadic attempts to rent the property over the years. Insofar as rent has been received, it appears to have been expended on the periodical costs of paying the outgoings connected with the property, and in maintaining the property. However, the outgoings and maintenance costs connected with the property have significantly exceeded rentals earned. It has largely been Robert who has paid those outgoings and maintenance costs. Over the years, he can identify specific expenditure he has made of around $35,000 on rates, taxes, electricity and insurance, and around $10,000 on repairs, maintenance and capital improvements. These items are part of a list, in Exhibit 2, of identifiable expenses he has made totalling $49,826.69.
58 Since 1998, David has carried out various repairs and maintenance also, at a cost of around $8,000. He has been able to produce vouchers for nearly $2,200 of this.
59 In 1989 Robert, after a change in his marital circumstances, began to take an increased interest in the property. On visiting it, he found it in a poor state of repair. He set about renovating it during 1989 and gives affidavit evidence that he:
"had flooring replaced, replaced gas bottles and an instant gas heater with an electric hot water system, installed a new electric stove, carpeted it, had kitchen flooring, new light fittings, plate glass mirrors in the bathroom plus other fittings, fly screens and blinds installed, and repainted the inside."