Aravanis (Trustee), in the matter of Gillespie (Bankrupt) v Gillespie

DISCUSSION 10 Jacob's Law of Trusts in Australia (7th ed) provides a convenient summary in respect of resulting trusts and the presumption of advancement: [1210] A resulting trust will be presumed where, on a purchase, the legal title to real or personal property is vested in someone other than the person who is proved (by parol or other evidence) to have provided the purchase money. … [1212] A resulting trust is raised in the foregoing circumstances because the court presumes, in the absence of evidence to the contrary, that the person paying the purchase money intended to obtain the beneficial interest in the property. But where the legal title is, on a purchase, vested in someone whom the person providing the purchase money is under an obligation to support, namely, a wife, child or someone to whom the person stands in loco parentis, there is no presumption of a resulting trust in favour of the purchaser; there is, on the contrary, a presumption that the property was vested as an absolute gift or as an advancement. In Nelson v Nelson [(1994) 33 NSWLR 740] the New South Wales Court of Appeal held that the presumption applied between mother and adult child. The further appeal to the High Court was decided on other grounds. However, all five members of the court supported the extension of the presumption to mother and adult child. In Wirth v Wirth [(1956) 98 CLR 228 at 237] Dixon CJ, in a passage which Gibbs CJ approved in Calvery v Green [(1984) 155 CLR 242 at 249-50; 56 ALR 483 at 487], said that: While the presumption of advancement doubtless in its inception was concerned with relationships affording 'good' consideration, it has in the course of its growth obtained a foundation or justification in the greater prima facia probability of a beneficial interest being intended in the situation to which the presumption has been applied. Also in Calvery v Green [at 267; 500], Deane J preferred to state the rule as not strictly a presumption but as one that in certain relationships equity infers that any benefit has been provided by way of advancement with the result that the prima facia position remains that the equitable interest is at home with the legal interest. 11 In Chao v Chao (No 3) [2008] NSWSC 1166 Brereton J said: [22] Where two or more parties provide the purchase money for property acquired in the name of one of them, they are presumed to intend to take beneficially in shares according to their proportionate contributions to the purchase money, and the nominal owner(s) will hold upon trust for those who provide the purchase money in those shares [Calverley v Green (1984) 155 CLR 242 at 246 (Gibbs CJ), 258-9 (Mason and Brennan JJ), 266-7 (Deane J)]. For those purposes, the purchase price includes the costs, fees and disbursements incidental to the acquisition of the property [Ryan v Dries [2002] NSWCA 3, [52]-[53]]. This presumption of a resulting trust is, however, rebuttable: it will yield to a contrary common intention of the parties, though it is not displaced by slight circumstances [Napier v Public Trustee (1980) 32 ALR 153 at 158; Shephard v Cartwright [1955] AC 431 at 445; Charles Marshall Pty Ltd v Grimsely (1956) 95 CLR 353 at 365; Brown v Brown (1993) 31 NSWLR 582 at 596; Dinsdale bht Protective Commissioner v Arthur [2006] NSWSC 809, [11]]. [23] In this context, where part of the purchase money is provided by a loan raised by one of the parties, that part is ordinarily regarded as being contributed by the borrower, who is liable to repay the loan, regardless of who actually services or repays it - although if one repays in whole or in part the other's loan, that may give rise to a right of contribution or a liability to account between them [Calverley v Green, 251 (Gibbs CJ), 257-8 (Mason and Brennan JJ), 267-8 (Deane J); Dinsdale, [11]]. 12 Other principles warrant emphasis: (1) "…both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase" (Calverley v Green (1984) 155 CLR 242 at 251. See also at 258). (2) "Regardless of whether the circumstances are such as to bring the case into one of the categories of advancement, evidence of the relationship - both legal and factual - between the parties will always be admissible", as will be "acts and declarations of the parties before or at the time of the vesting of the legal estate and admissions against interest" (Calverley v Green at 269). 13 In respect of constructive trusts: (1) "One class of case where equity will intervene to prevent the unconscientious denial by the legal owner of another party's rights, is where the parties agreed, or it was their common intention, that the claimant should have an interest in the property owned by the other, and the claimant acted to his or her detriment on the basis of that agreement or common intention" (Shepherd v Doolan [2005] NSWSC 42 at [31]). (2) "Where a constructive trust is imposed, based upon the parties' common intention as to the ownership of property upon which the claimant has acted to his or her detriment, the inquiry is as to the actual intention of the parties. The law does not impute a presumed intention to the parties based upon what the Court considers fair and reasonable persons in the position of the parties would have intended had they turned their minds to the issue" (Shepherd v Doolan at [34]). (3) "The intention may be established in various ways. There may be an agreement between the parties as to how the property should be held. There may be express statements as to their intention. Their intention may be inferred from their conduct. The question of what acts demonstrate an agreement or common intention referable to the beneficial enjoyment of the property is one of evidence, not law" (Shepherd v Doolan at [37]). (4) "The plaintiff must also show that she acted to her detriment in a way referable to the agreement or intention that she have an interest in the property (Shepherd v Doolan at [40])". (5) "The quantum of the claimant's beneficial interest will be that which the parties agreed upon or intended, if that can be established" (Shepherd v Doolan at [41]). 14 The applicant submitted that the respondent's contention that Peter held the property on trust for the sole beneficial interest of Mrs Gillespie was inconsistent with the following circumstances: (a) The Property being purchased in the Bankrupt's name alone on 3 September 2001. (b) That it was the Bankrupt in his name alone who borrowed $210,000.00 from Westpac on 3 September 2001 and contributed that amount towards the purchase price for the Property of $371,000.00. Mortgage No. 7903278 taken by Westpac as security from this loan was from the Bankrupt alone and only the Bankrupt was liable to Westpac for this borrowing. Mrs Gillespie was not a guarantor of the loan. No disclosure was made to Westpac of any contributions from her towards the purchase price. The loan from Westpac was a First Option Home Loan. (c) Between 3 September 2001 and 10 September 2002 the Bankrupt made repayments to Westpac under the Westpac Mortgage totalling approximately $15,080.00, that being a period when he was not residing at the Property but Mrs Gillespie and the Respondent were. The Respondent made no contributions to the mortgage repayments during period. (d) On 10 September 2002 the Bankrupt increased the principal amount borrowed from Westpac from $210,000.00 to $240,000.00, according to his evidence with the knowledge of Mrs Gillespie, and represented that the Property was his alone in his refinance application to Westpac. (e) On 4 June 2003 the Bankrupt drew down a further $12,213.80 under his Westpac loan, according to his evidence to purchase a car and again with Mrs Gillespie's knowledge and consent. It should be inferred that this was a gift. (f) Between 10 September 2002 and 30 June 2004 the Bankrupt made repayments to Westpac under the Westpac Mortgage totalling $31,047.70, that being a period when he was not residing at the Property but Mrs Gillespie and the Respondent were. The Respondent's evidence is that he made contributions to mortgage payments of $11,437.08 during this period, meaning that the Bankrupt's contributions to the mortgage repayments were $19,610.62. (g) On 30 June 2004 the Bankrupt refinanced the Property with ANZ Bank, increasing the principal amount borrowed under the ANZ Mortgage to $265,000.00 and discharging the Westpac Mortgage for $248,613.99, again according to the Bankrupt with Mrs Gillespie's knowledge (h) From 30 June 2004 when the Property was refinanced with ANZ Bank until 1 August 2008, the precise amount of mortgage repayments made by the Bankrupt to ANZ Bank is not known. However, assuming the ANZ Bank interest rate to be similar to Westpac's (5.99%), interest alone on the ANZ Mortgage for this period would have been approximately $76,519.60. The Respondent's evidence is that he paid $40,128.67 towards the ANZ Mortgage repayments during this period while he and Mrs Gillespie resided there, meaning that the quantum of the Bankrupt's contributions was approximately $36,390.93. The Bankrupt did however also reside at the Property from about mid-2006 until late 2007 when he was experiencing financial difficulties. (i) The payment of $35,000.00 to the Bankrupt on 1 August 2008 when the ANZ Bank Mortgage was discharged and the Property was transferred to the Respondent was thus less than and only partial reimbursement to the Bankrupt for the total amount of the mortgage repayments made by him to Westpac and ANZ ($15,080 + $19,610.70 + $36,390.93 = $71,081.63), to the extent that these should be taken into account at all without taking account of any corresponding occupation fee. (j) As at 1 August 2008 the true market value of the Property was $430,000.00, but only $304,200.00 was paid by the Respondent to the Bankrupt ($269,200.00 to discharge the ANZ Mortgage and $35,000.00 reimbursement to the Bankrupt). (k) In a letter dated 16 June 2008 the Bankrupt stated to Members Equity Bank that he was giving the Respondent an unconditional gift of $130,000.00 towards the purchase price of $430,000.00 for the Property. (l) On 16 July 2008 the Bankrupt entered into a Contract for Sale with the Respondent to sell him the Property for the price of $430,000.00. Both the Contract and the Transfer dated 1 August 2008 were marked exempt from duty under the first home buyers scheme. The Respondent also obtained a $7,000.00 first home buyer's grant, in connection with which he signed a declaration that he did not hold the Property on trust. (m) Between 1 August 2008 and 3 July 2013 the Respondent made additional drawdowns upon his loan from Members Equity totalling either $26,791.69 or $34,812.33. (n) The payments made to the Respondent from the proceeds of sale of the Property for $585,000.00 on 3 July 2013 totalled $85,218.68. (o) The Bankrupt's statement as to disposing of his interest in the Property in his Statement of Affairs dated 14 November 2012. (p) The First Home Buyers Declaration by the Respondent dated 11 June 2008. (q) Exhibit D (the solicitor's file note). (r) Exhibit 6. (s) The occupation of the Property by Mrs Gillespie (and the Respondent) from 3 September 2001 to 1 August 2008 without there being any allowance for any occupation fee (save for the period mid-2006 to late 2007). (t) The continued occupation of the Property by the Respondent alone from about March 2011 to July 2013 after Mrs Gillespie had moved into a nursing home. (u) The complete absence of any contemporaneous document recording or referring to the "Family Agreement" or "Varied Family Agreement" pleaded. 15 According to the applicant: To this can be added the Bankrupt's admission that he treated the Property as his own, the Respondent's own dealings with and borrowings against the Property and the failure to call the sister Margaret to give evidence. All this objective evidence is not only against Mrs Gillespie having the sole beneficial interest in the Property, but also supports the presumption of advancement applying. If the presumption of advancement applies, then the Property was the Bankrupt's alone and he held a vendor's lien over it when it was transferred to the Respondent for an amount less than its true value. 16 It is not apparent why these circumstances, most of which are not in dispute, are inconsistent with the constructive trust in favour of Mrs Gillespie for which the respondent contends. 17 As to (a), the fact of Peter holding sole legal title is neutral. It was common ground between Peter and Ian that they believed, perhaps wrongly, that their mother could not go on the title because she could not take out the loan given she was a pensioner. 18 As to (b), Peter said he thought he did tell Westpac that the balance of the purchase price was from his mother. In any event, in the circumstances described in (a), the fact Peter took out the mortgage is neutral. 19 As to (c), this is true, but how it suggests that Peter was not a constructive trustee for his mother is unclear. The fact of Peter paying the mortgage is consistent with the evidence of Peter and Ian (and Mrs Gillespie for that matter) about the arrangement they made with their mother. As to Mrs Gillespie's evidence, there was a dispute about admissibility and weight. Mrs Gillespie swore an affidavit but became seriously ill before the hearing. I admitted the affidavit under s 63(2) of the Evidence Act 1995 (Cth) on the basis that Mrs Gillespie was unavailable. The relevant point in this regard is that, although the applicant seems to have perceived some material inconsistency between the evidence of Ian and Peter, I did not share that concern. Apart from the one issue about Peter having told or not told his mother about the drawdown and refinancing, the evidence of Peter and Ian was to the same effect, as set out above. Mrs Gillespie's affidavit is also to the same effect. Given this, there is no reason to entertain the applicant's submissions about Peter's credit and Ian's alleged lack of credit and the lack of weight which Mrs Gillespie's evidence should carry. 20 As to (d), apart from Mrs Gillespie knowing or not, this is true. However, Peter was clear in his evidence that while he thought he was entitled to increase the borrowing by $30,000 he did not think he could do whatever he liked with the property. The whole point had been to ensure his mother had a roof over her head. Moreover, the fact that Peter said he expected his expenses (the mortgage payments) to be repaid and in fact did repay himself (albeit before the property was sold) is inconsistent with the notion that Mrs Gillespie should be inferred to have gifted the property to Peter. If Mrs Gillespie's contribution to the purchase price of the property was a gift to Peter, then Peter would have no reason to expect his expenses to be repaid. 21 As to (e), again this was true (apart from the dispute about Mrs Gillespie's knowledge). Why this should be inferred to be a gift is unclear. Indeed, that Mrs Gillespie's consent should be sought or required is supportive of the inference that there was a common intention or understanding that Mrs Gillespie would have the beneficial interest in the property. The applicant's attempt to explain away the drawdown as a gift highlights the very difficulty with his case. 22 As to (f), this may be accepted but does not advance the applicant's case. To the contrary, if the property was a gift to Peter then why would Ian have taken it upon himself to make mortgage repayments over a period of more than a year and a half which, ultimately, would benefit Peter alone and without any suggestion of repayment by Peter? The answer cannot be to ensure Mrs Gillespie had a roof over her head. Ian could have ensured this by using the same funds to rent another property, rather than pay Peter's mortgage over a property in which Peter had the sole beneficial interest. The more probable inference is that Ian was making repayments to the mortgage in accordance with the understanding between him, Peter and Mrs Gillespie and on the basis that his expenses would be repaid in the same way. 23 As to (g), again this may be accepted but does not advance the applicant's case. 24 As to (h), again this may be accepted but does not advance the applicant's case. 25 As to (i), the calculations are incorrect. In fact, although Peter had paid out $71,080 on mortgage payments he had received $18,000 or $25,000 up front plus $30,000 on the first drawdown, $12,213.80 on the second drawdown and the $35,000 on the transfer to Ian. Accordingly, Peter did not receive "less than and only partial reimbursement … for the total amount of the mortgage repayments made by him to Westpac and ANZ". Peter in fact received at least about $24,000 and up to about $31,000 more than he had paid in respect of the property. 26 As to (j), there is no dispute. Again, however, the conduct of Peter and Ian is inconsistent with Peter beneficially owning the property and consistent with the arrangement as described by Peter, Ian and Mrs Gillespie, albeit with that arrangement having to be varied in 2008 due to Peter's unwillingness to continue to pay the mortgage. 27 As to (k), Peter in fact said he signed a different version of a letter to ME Bank and that he did so at Ian's request because the Bank required it. The letter made clear that Peter was not owed anything more than he had received in respect of the transfer to Ian. While the applicant made much of this, it was not clear to me why. The evidence of Peter, Ian and the solicitor on the sale, Mr Napoli, was all to the same general effect. The ME Bank wanted a letter of comfort that Peter was not claiming any continuing interest in the property given the discrepancy between the purchase price of $430,000 and the amount actually paid to Peter either to discharge the ANZ mortgage or directly (a total of $304,200). Given Mr Napoli's involvement and the fact that the comfort was given at the Bank's request, the applicant's submissions about Ian and/or Peter's alleged lack of credit go nowhere. 28 As to (l), this is true. Again, however, the attack on Ian's credit was misconceived. Ian acted on the advice of Mr Napoli, the solicitor. Mr Napoli's advice may have been wrong, but it cannot properly be said that Ian acted improperly given that advice. And as Ian explained, he did not then think of trusts as encompassing the arrangements with his mother. 29 As to (m), this is correct but why it is inconsistent with Ian then holding the property on trust for his mother is unclear. 30 As to (n), this too is true but its significance, if anything, is against the applicant. The evidence was that when Peter wanted to be free from the mortgage Ian effectively stepped in on the same basis - that he would be repaid his expenses. The payment to Ian is consistent with the variation of the arrangement between Peter, Ian and his mother. 31 As to (o), this is correct. In common with Ian, Peter appears to have had no particular knowledge of trusts, legal titles or beneficial interests (at least not before this case). It is hardly surprising that Peter would disclose that he had transferred his interest in the property to Ian in August 2008. Peter was on the title to the property. He did transfer title to Ian. Peter cannot be expected to have explained in a statement of affairs the details of the arrangement or their legal significance. 32 As to (p), Ian did declare on the First Home Buyer's application that the property was not held subject to a trust. However, the declaration was in a series of 15 statements in relatively small print. Ian had been told by Mr Napoli, the solicitor, he was entitled to the First Home Buyer's grant. Ian said he did not then understand that the arrangement with his mother involved a trust. 33 As to (q), the file note is not that of the solicitor. It is the note of a law clerk based on what might be inferred to be a short telephone conversation. The note records that Mrs Gillespie called on 2 May 2013 worried about Mr Napoli not being able to act for her and continued "[s]he loaned Peter some money to buy the place 13 years ago". The fact is Peter never said his mother loaned him money to buy the place. Mr Napoli, who had spoken to Mrs Gillespie, did not think this was so. Mr Napoli believed that Peter had no interest in the property and had received more than he was entitled to by the payment of $35,000 (a belief which accords with the objective circumstances, leaving aside the presumption of advancement). 34 As to (r), Exhibit 6 is a letter from Mr Napoli to the applicant's solicitor the contents of which are inconsistent with the applicant's case and support the respondent's case. Exhibit 5 is a file note of Mr Napoli which says "$120,000 to Mum". However, and contrary to the applicant's submissions, the explanation for this is that on the sale in 2013, once Ian had been fully repaid what he was owed (he paid about $95,000 in mortgage payments but was paid only $85,000), then there was meant to be $120,000 payable to Mrs Gillespie. This is the $130,000 which remains in the trust account (on Mr Napoli's view, $120,000 for Mrs Gillespie and another $10,000 to repay Ian). 35 As to (s), this is consistent with the respondent's case. It was Mrs Gillespie who decided that Ian could live with her. It must also be recalled that Mrs Gillespie was of advanced age. It is easy to infer that Mrs Gillespie wanted Ian to live with her for personal and practical reasons. Why this shows anything about the arrangement in 2001 is not apparent. How it can possibly found the attacks to Ian's credit which the applicant made is equally unclear. 36 As to (t), the same observations might be made. No doubt Ian sold the property when the market felt right. He was paying the mortgage for the entire period. Why should he not continue to live in the property if the time was not right to sell? 37 As to (u), the lack of any contemporaneous documents is unsurprising. The arrangement was between family members who were not legally trained, not sophisticated in property or legal matters (Ian and Peter had never previously owned a property) and who believed they could trust each other. It may be inferred that they felt no need to document their arrangement. 38 Otherwise, on a fair consideration of Peter's evidence as a whole, he did not think he could treat the property as his own. In fact, he denied this proposition except for a limited purpose. He said he thought he was entitled to make the further drawdowns and increase the mortgage because he expected to be repaid what he had paid out and considered that for the arrangement to work he had to be able to continue to pay the mortgage. In respect of Ian, as noted above, his dealings with the property are consistent with the arrangement as initially made and as varied. As to Margaret, there was an explanation for her not being called to give evidence. She had no involvement in the discussions in 2001. Her involvement was limited to locating the property with Ian. Given that Ian and Peter gave evidence, no Jones v Dunkel inference (Jones v Dunkel (1959) 101 CLR 298) can arise by reason of Margaret not giving evidence. 39 To the contrary of the applicant's case, the overwhelming weight of the evidence is against the application of the presumption of advancement and the existence of a resulting trust proportionally in favour of Peter and his mother. The weight of the evidence is inconsistent with anything other than the primary case for which the respondent contends, namely, that there was a common intention as between Mrs Gillespie and Peter (and Ian for that matter) that Peter would hold the legal title of the property as the constructive trustee for his mother. When Peter wanted to be rid of the mortgage, Ian assumed the role of constructive trustee for his mother on the same basis. When the property was transferred from Peter to Ian, Peter was repaid well more than he had paid out under the mortgage. Peter's constructive trust on behalf of his mother came to an end on the sale from Peter to Ian. Peter had no interest in the property other than the bare legal title up to 1 August 2008. From 1 August 2008 he had no interest in the property at all. Accordingly, the claims of the applicant for an unpaid vendor's lien cannot be sustained, and the claims arising under the Bankruptcy Act do not arise. 40 The objective circumstances were these. 41 In 2001, Mrs Gillespie was elderly and had been left in a difficult financial position by reason of the failure of the business with her husband (which Ian had run for some time) and her husband's death. She did not have enough capital to buy a place to live although she did receive the war widow's pension. She had five children who were all adults, either middle aged or approaching middle age. While they all wanted to help her, none had the means to do so, at least not with capital of their own. One of her children, Ian, was living at home and was unemployed when Mrs Gillespie's husband died. His health had been adversely affected by the stress of the failing family business. 42 Mrs Gillespie needed a place to live. Contrary to the applicant's case, it is inconceivable that she wanted a place to live only for so long as she was capable of living independently. The applicant said this should be inferred because the family never discussed what would happen if Mrs Gillespie was no longer capable of living in a unit. According to the applicant, the arrangement was that Mrs Gillespie would be entitled to live in Peter's unit (having gifted him most of her life savings by paying $176,000 towards the unit) for so long as she was capable of doing so and nobody thought about what might happen when she was incapable of independent living. This is highly unlikely given Mr Gillespie was in her late 70s at the time. It must have been in her contemplation, and that of Peter, that she might have to move into a different form of accommodation in time. This fact alone is inconsistent with the notion that Mrs Gillespie, uncaring of her future capacity to provide for herself, gifted Peter the unit, thereby depriving herself of any capacity to use the capital from the sale of the unit to ensure she always had appropriate accommodation. So too is the fact that Peter was one of five children; all middle aged or approaching it, none particularly well off and one, Ian, actually needing to live with his parents given his financial and health circumstances. Peter was the only child capable of getting a loan because he was employed. The applicant would have it that Peter was being rewarded by his mother for taking on the substantial risk of the mortgage. The truth is there was no great risk to Peter. He was employed. He could afford the mortgage provided his existing debts were cleared. He was going to be repaid anything he paid out when the property was sold. 43 Moreover, if Mrs Gillespie was gifting her contribution to the purchase price to Peter then why did Peter show no interest in the unit he was being gifted? Ian and Margaret found the unit on the basis it was suitable for their mother. Peter never even inspected the unit before it was purchased. He did not speak to the solicitor on the purchase. He did not move into the property but continued to rent his own property until he lost his job. Mrs Gillespie moved into the unit with Ian after she had renovated the unit. She paid all the outgoings and expenses except the mortgage. When Peter did not pay the mortgage, Ian stepped in and started paying. At the time the arrangement was first made, the idea being to ensure their mother had a roof over her head, Peter said he expected to be repaid the mortgage payments which he would make. As noted, this only makes sense if Peter did not have any beneficial interest in the property. 44 The applicant's case, that the arrangement involving putting a roof over Mrs Gillespie's head was one in which Mrs Gillespie gifted her contribution to Peter in exchange for Peter taking out and paying the mortgage, seems to be based on nothing more than the mother-son relationship and the supposed risk Peter took in taking out the mortgage. It fails to have regard to all the circumstances of the transaction, which in the present case point overwhelmingly to a common intention between Mrs Gillespie, Ian and Peter that Peter hold the property on trust for his mother, rebutting any presumption that the transaction was intended to be for Peter's advancement. There is no evidence that Mrs Gillespie ever said that she was giving Peter the money. Peter certainly did not think the unit had been gifted to him. Nor is there any credible evidence that Mrs Gillespie's contribution was a loan to Peter. The law clerk's file note 13 years after the event is outweighed by the objective circumstances referred to above and the consistent evidence of Peter, Ian and Mrs Gillespie about the arrangement. Similarly, none of the discussions which were recalled by Peter, Ian and Mrs Gillespie from the time of the initial arrangement contain any reference to Mrs Gillespie gifting Peter her contribution to the unit or any form of exchange whereby Peter was given the contribution because he was willing to take out the mortgage or that the contribution was Peter's reward for the risk of having done so. 45 While I accept that recollection of conversations from years before is likely to involve some element of reconstruction, the important thing in the present case is that the various versions of the conversations reported contain the same basic elements. Peter's version, which the applicant seemed to consider more reliable, had Peter, Ian, Jan and Margaret agreeing that their mother needed a place to live but that she could not afford the purchase price. Further, that Ian was not working and neither their mother nor Ian could have the mortgage in their name as a result. Peter said he was working, earning about $50,000 a year and the unit could be put in his name given that "we need to keep a roof over Jose's (their mother's) head". Their mother then said she would repay Peter whatever he paid towards the mortgage. After the unit was found (not by Peter who never looked at it), Peter said he needed to clear his debts if he was going to be liable for the mortgage payments. Their mother agreed to do so. 46 None of this is consistent with the applicant's case. Mrs Gillespie agreeing to repay Peter the mortgage payments, about which the evidence was all consistent, is fundamentally at odds with Peter having any interest in the property. So too is Peter wanting his debts cleared up front and his mother agreeing to do so. For the reasons already given, the objective circumstances are against the applicant's case as well. 47 The same objective circumstances rebut any presumption of a resulting trust and confirm the existence of a common intention between Mrs Gillespie and Peter, on which Mrs Gillespie relied to her detriment, that she would have the full beneficial interest in the property. As the respondent submitted: The uncontroverted evidence establishes that Mrs Gillespie is the owner of the entire beneficial interest in the Property, and the sale proceeds thereof, for two alternative reasons. First, a constructive trust arises because it was the common intention of Peter and Mrs Gillespie that Peter would hold the Property on trust for Mrs Gillespie and Mrs Gillespie acted to her detriment in reliance on that intention. The parties subsequently formed a common intention that Peter would transfer the legal interest in the Property to Ian so that he could continue to hold the beneficial interest on trust for Mrs Gillespie. The requisite common intention is evident from the express statements of Peter and Mrs Gillespie, as well as their conduct, including the following: a. the Family Arrangement made between Ian, Peter and Mrs Gillespie in July 2001, pursuant to which: i. Peter agreed to obtain a mortgage and purchase the Property in his own name only because Mrs Gillespie and Ian were not able to do so; ii. Mrs Gillespie agreed to pay Peter's existing debts prior to his obtaining the mortgage; and iii. Mrs Gillespie agreed to repay Peter for all of the mortgage payments he would make on the Property upon the sale of the Property or when she was otherwise in a position to do so; b. the parties' financial contributions to the purchase and maintenance of the Property: although Peter obtained the mortgage to purchase the Property, Ian made the majority of the mortgage payments on Mrs Gillespie's behalf and Mrs Gillespie paid all of the other expenses associated with owning and maintaining the Property; c. the Varied Family Arrangement made between Mrs Gillespie, Peter and Ian in late 2007, pursuant to which Peter was to transfer the Property to Ian at a price set by reference to the discharge amount on the ANZ Mortgage plus $35,000, which approximately represented the amount of mortgage payments Peter had made as at the date of that arrangement; and d. the putting into effect of the Varied Family Arrangement in mid-2008, at which time Peter did not assert any interest in the Property exceeding the discharge amount for the ANZ Mortgage other than the additional amount of $35,000, despite the valuation of the Property at $430,000. It is also evident that Mrs Gillespie acted to her detriment in reliance on the common intention in applying her life savings in the purchase of the Property and paying all of the other expenses associated with purchasing and maintaining the Property (other than the mortgage payments). 48 As a result it is unnecessary to consider the respondent's alternative argument that a constructive trust arose in another way, described in these terms: a constructive trust arises on the basis of the principles laid down by the High Court of Australia in Muschinski v Dodds [(1985) 160 CLR 583 at 620 and 623] and Baumgartner v Baumgartner [(1987) 164 CLR 137 at 147 - 149, 152 and 155]. This species of constructive trust arises from the following facts: a. in around July 2001, Peter and Mrs Gillespie entered into a joint endeavour pursuant to which Peter was to provide the debt finance that would enable the purchase of a Property for Mrs Gillespie to occupy with Ian; b. Mrs Gillespie contributed the equity to the joint endeavour, as well as the funds necessary to cover expenses ancillary to purchasing the Property and the cost of maintaining the Property; c. the joint endeavour failed in late 2007 when Peter decided that he no longer wished to be liable for the ANZ Mortgage and Ian, Peter and Mrs Gillespie made the Varied Family Arrangement; and d. an amount in excess of Peter's total contribution to the joint endeavour has been repaid to him: he was given $18,000 (or $25,000) to repay his existing debts prior to taking out the Westpac Mortgage, was reimbursed for the mortgage payments he had made up to the transfer of the Property to Ian in mid-2008 (in the amount of $35,000) and obtained an additional (unauthorised) benefit of about $55,000 when he refinanced the Property in June 2004. In circumstances where Peter has already been more than entirely reimbursed for the financial contribution he made to the Property, and he was paid either $18,000 (or $25,000) by Mrs Gillespie to offset the risk associated with taking out the initial Westpac Mortgage in his own name, it would be unconscionable for Peter (and the Trustee-in-Bankruptcy on his behalf) to assert or retain a beneficial interest in the Property. 49 As said in Muschinski v Dodds at 620 this form of constructive trust arises where: the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do 50 Suffice to say that if necessary I would also accept this alternative argument. While the respondent's submissions may give the arrangements made in 2001 and 2007 an appearance of greater formality than they had at the time, this is an inevitable consequence of the process by which legal labels and consequences are given to circumstances after the event. 51 It is also sufficient to adopt the respondent's submissions which concisely point out the problems with some other arguments put for the applicant. 52 Section 23C of the Conveyancing Act 1919 (NSW) does not apply to constructive trusts (see s 23C(2)). Accordingly, there was no requirement of writing. Section 54A of the same Act is also inapplicable because: a. Peter has not brought any action or proceeding for the sale or other disposition of land or any interest in land; b. an agreement between persons that one will purchase land on trust for another does not fall within section 54A: Stafford v Kekatos (No 3) [2008] NSWSC 1093 at [19] per Brereton J (upheld on appeal: [2009] NSWCA 219); and c. the enforceability of a constructive trust over a beneficial interest in land is not inhibited by section 54A because, if it were, that would make the provision an instrument of fraud: Ogilvie v Ryan [1976] 2 NSWLR 504 at 525-6 per Holland J; see also Sharp v Anderson (1994) 6 BPR 13,801 (Santow J). 53 The applicant cannot claim an equitable lien over the remaining proceeds of sale of the property (in the sum of $130,000) because Ian is not indebted to Peter in that (or any other) amount (see Hewett v Court (1983) 149 CLR 639 at 668 which makes plain that for an equitable lien there must be actual or potential indebtedness). As the respondent submitted, the applicant's claim for an equitable lien "entirely ignores the uncontroverted evidence that": a. the agreed 'purchase' price for the Property upon its transfer from Peter to Ian was $304,200, being the cost of discharging the ANZ Mortgage and reimbursing Peter for mortgage payments he made in the amount of $35,000; and b. the standard-form contract for sale listed the purchase price as $430,000 only because this was required by the ME Bank and to enable Ian to access the First Home Owners Grant. Peter has never claimed (and, in fact, denies) that there was an agreement that he would be paid $430,000 (or any amount in excess of $339,200, inclusive of the mortgage discharge costs) to sell the Property to Ian. 54 The applicant's reliance on the provisions of the Bankruptcy Act is also misplaced for the reasons the respondent gave. It is strictly unnecessary to deal with these provisions given the conclusions reached above. Accordingly, I will deal with the provisions only briefly. 55 Under s 120(3)(a) of the Bankruptcy Act, a transaction at an under-value is not void as against the trustee if "the transfer took place more than 4 years before the commencement of the bankruptcy" and "the transferee proves that, at the time of the transfer, the transferor was solvent". The evidence proves that transfer from Ian to Peter occurred more than 4 years before the commencement of the bankruptcy on 15 November 2012 and that Peter was solvent as at 1 August 2008. As at 1 August 2008 Peter was in full-time employment earning about $850 per week with fixed expenses up to about $385 per week and some variable living expenses on top of that. While he had credit card debt, it is not the case that the full amount of his main debt was due and payable at the time. To the contrary, he was required to repay only certain amounts each month. It is not necessary to recite the figures because the applicant's case rested on the false premise that Peter was somehow liable to immediately pay all credit card debt as at 1 August 2008. From the face of the monthly invoices, this was not so. As the respondent also pointed out, the applicant's case is internally inconsistent. If Peter did have the beneficial interest in the property as the applicant contends then there is no possible way he was insolvent as at 1 August 2008. Leaving aside this incorrect contention, the evidence proves that as at 1 August 2008 Peter could pay his debts as and when they fell due. Whatever financial troubles he might have had when he lost his job were resolved. He was working and solvent at the time. It follows that the transfer of the property to Ian is not void pursuant to s 120(1) of the Bankruptcy Act. 56 Section 121 of the Bankruptcy Act is also not engaged. As the respondent submitted: First, it cannot be reasonably inferred from all the circumstances that Peter was, or was about to become, insolvent at the time that he transferred the Property to Ian. On the contrary, such a suggestion almost borders on the ridiculous: …when the transfer occurred - over 4 years before Peter became bankrupt - he was in a comfortable financial position. Secondly, the uncontradicted evidence of Peter, Ian and Mrs Gillespie is that: a. Peter transferred the Property to Ian because he wanted to discharge the ANZ Mortgage and cease his role as the legal holder of Mrs Gillespie's beneficial interest in the Property; and b. the Property was transferred to Ian at an amount that was less than its value because Peter did not consider that he had any entitlement to the equity in the Property, and was entitled only to reimbursement of the amount of the mortgage payments he had made to Westpac and the ANZ. There is no evidence that Peter wished to prevent the Property from being divisible amongst his creditors or to hinder or delay the process of making the Property available for division amongst his creditors. In fact, there was no suggestion, until over 4 years later, that Peter was unable to pay his debts as and when they fell due. 57 Section 37A of the Conveyancing Act is inapplicable. As the respondent submitted: Section 37A of the Conveyancing Act will only render the transfer of the Property to Ian voidable if Peter transferred the Property with the intent to defraud his creditors. This claim is just as far-fetched as the claim under section 121 of the Bankruptcy Act, for the same reasons set forth above. 58 It should be apparent from this discussion that I consider the applicant's claims to be baseless. The claims are based on an unrealistic and untenable view of the circumstances in which the members of the Gillespie family found themselves in 2001 and again in 2008, and an untenable view of Peter's financial circumstances between 2007 (when he moved out of the property having again found full-time employment on a decent wage) and 1 August 2008. 59 For these reasons the application should be dismissed, an order should be made to the effect set out in para 6 of the notice of cross-claim and for costs. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

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