Australian Building & Technical Solutions Pty Limited v Boumelhem; Boral Australia Limited v Boumelhem; Boumelhem v Jones & Ors

LEGISLATION CITED : Defence Service Homes Act 1918 (Cth) Evidence Act 1995

Ampolex Limited v Perpetual Trustee Company (Canberra) Limited (1995) 37 NSWLR 405 Austin v Keele (1987) 10 NSWLR 283 Bathurst City Council v PWC Properties Pty Limited (1998) 195 CLR 566 Baumgartner v Baumgartner (1987) 164 CLR 137 Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 Bridge Wholesale Acceptance Corporation (Australia) Limited v Burnard (1992) 27 NSWLR 415 Buffrey v Buffrey & Anor [2006] NSWSC 1349 Calverley v Green (1984) 155 CLR 242 Cadorange Pty Limited (In Liq) v Tanga Holdings Pty Limited (1990) 20 NSWLR 26 Cetojevic v Cetojevic [2006] NSWSC 432 Cetojevic v Cetojevic [2007] NSWCA 33 Charles Marshall Pty Limited v Grimsley (1956) 95 CLR 353 Damberg v Damberg [2001] NSWCA 87 Disctronics Ltd v Edmonds [2002] VSC 454 Draper v Official Trustee in Bankruptcy (2006) 236 ALR 499 Drever v Drever [1936] ALR 446 Flack v Chairperson, National Crime Authority (1997) 80 FCR 137 Friend v Brooker & Anor [2008] HCATrans 344 Friend v Brooker [2009] HCA 21 Gazzola v Gazzola (1990) 92 ALR 45 Gissing v Gissing [1971] AC 886 Giumelli v Giumelli (1999) 196 CLR 101 Grant v Edwards [1986] Ch 638 Green v Green (1989) 17 NSWLR 343 CASES CITED : Grey v Grey (1677) 2 Swans 594 at 598; 36 ER 742 In Re Kerrigan; ex p Jones (1946) 47 SR (NSW) 76 Henderson v Miles (No 2) (2005) 12 BPR 23,579 Jones v Dunkel (1969) 101 CLR 298 La Housse v Counsel [2008] WASCA 207 Martin v Martin (1959) 110 CLR 297 Morris v Morris [1982] 1 NSWLR 61 Muschinski v Dodds (1985) 160 CLR 583 Nelson v Nelson (1995) 184 CLR 538 Parianos v Melluish [2003] FCA 190 Parsons v McBain (2001) 109 FCR 120 Payne v Parker [1976] 1 NSWLR 191 Re Jonton Pty Limited [1992] 2 Qd R 105 Re Osborn (1989) 25 FCR 547 Re Sharpe (a bankrupt); Ex parte Trustee of the Bankrupt's Property v The Bankrupt [1980] 1 WLR 219 Re: Sabri; Ex parte Brien v Sabri (1996) 137 FLR 165 Ryan v Dries [2002] NSWCA 3 Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 Shephard v Cartwright [1955] AC 431 Shepherd v Doolan [2005] NSWSC 42 Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 Sui Mei Huen v Official Receiver (2008) 248 CLR 1 Victoria University of Technology v Wilson [2004] VSC 33 Watson v Foxman & Ors (2000) 49 NSWLR 315 Wentworth v Lloyd (1864) 33 LJ (Eq) NS 688 (HL) West v Mead, [2003] NSWSC 161

A W Scott and W L Fratcher, The Law of Trusts (4th ed) vol V Cross on Evidence TEXTS CITED : G E Dal Pont, Equity's Chameleon - Unmasking the Constructive Trust (1997) 16 Aust Bar Review 46 J D Heydon and M Leeming Jacob's Law of Trusts in Australia 7th ed K R Handley, Estoppel by Conduct and Election 2006 Patrick Parkinson, Doing Equity between de facto spouses: From Calverley v Green to Baumgartner (1988) 11 Adelaide Law Review 370

Australian Building & Technical Solutions Pty Limited (Plaintiff in 1648/08 and Second Defendant in 4401/08) John Boumelhem (Defendant in 1648/08 and 4017/08 and Fourth Defendant in 4401/08) PARTIES : Boral Australia Limited (Plaintiff in 4017/08 and Third Defendant in 4401/08) Michael Boumelhem (First Plaintiff in 4401/08) Elane Boumelhem (Second Plaintiff in 4401/08) Michael Jones as the Official Trustee in Bankruptcy) (First Defendant in 4401/08)

FILE NUMBER(S) : SC 1648 of 2008; 4017 of 2008; 4401 of 2008

M S Willmott SC (Boumelhem in all matters) COUNSEL : S B Loughnan (Australian Building & Technical Solutions Pty Limited) P Walsh (Boral Limited)

Uther Webster & Evans (Boumelhem in all matters) SOLICITORS : Drake & Associates (Australian Building & Technical Solutions Pty Limited) Sally Nash & Co (Boral Limited) Gilles Delaney (Official Trustee in Bankruptcy - submitting appearance)

• 61 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1648/08 AUSTRALIAN BUILDING & TECHNICAL SOLUTIONS PTY LIMITED V JOHN BOUMELHEM 4017/08 BORAL AUSTRALIA LIMITED V JOHN BOUMELHEM 4401/08 MICHAEL BOUMELHEM V MICHAEL JONES & ORS JUDGMENT 1 These matters were before me for hearing on an expedited basis, orders having earlier been made by the Registrar for the three matters to be heard together and for evidence in each proceeding to be evidence in the other proceedings. 2 The application for expedition was made by the plaintiffs in proceedings 4401/08 on the basis that judgment had been obtained by Perpetual Trustees Australia Limited ("Perpetual") as mortgagee in possession of property the subject of these proceedings ("the Dundas property") and that Perpetual had indicated that it was not prepared to defer exercising its rights in relation to the Dundas property until such time as the proceedings might otherwise be heard and determined in the ordinary course. 3 Of the three matters, the proceeding which logically needs to be determined first is 4401/08 - a claim brought by Michael and Elane Boumelhem ("the Boumelhems"), by statement of claim filed 15 December 2008, seeking relief by way of the declaration of a constructive trust as to a half share in the Dundas property (said to arise under the principles outlined in Baumgartner v Baumgartner (1987) 164 CLR 137 or alternatively on the basis of an equitable estoppel founded in a common intention or assumption as to the future acquisition of ownership of the Dundas property); or alternatively a claim for a declaration that the Dundas property is held on a resulting trust (on the principles set out in Calverley v Green (1984) 155 CLR 242 at 246, 258-259 and summarised in Buffrey v Buffrey [2006] NSWSC 1349 at [14]), by reference to the Boumelhems' contribution towards the acquisition of the Dundas property by the fourth defendant, their son John Boumelhem. 4 On 25 August 2008, John Boumelhem having filed a debtor's petition, the first defendant was appointed Trustee in Bankruptcy in respect of his bankrupt estate. Orders were obtained shortly prior to this hearing by the respective plaintiffs in each of the three proceedings (see Exs E, D2/1 and D3/2 respectively) from the Federal Court granting leave for these applications to be brought for orders against the Trustee in Bankruptcy. The Trustee in Bankruptcy has filed a submitting appearance in these proceedings. 5 Amongst John Boumelhem's creditors are the second defendant (Australian Building and Technology Solutions Pty Limited ("ABTS")) and the third defendant (Boral Australian Gypsum Limited ("Boral")), each of whom seeks a declaration that it has an equitable interest, inter alia, in the Dundas property, by way of equitable charge to secure debts arising under personal guarantees given by John Boumelhem in his capacity as director of Jayvue Pty Limited and Jayvue (Qld) Pty Limited, respectively. 6 The second and third sets of proceedings (proceedings 1648/08 and 4017/08) were instituted by ABTS and Boral, respectively, against John Boumelhem before he became bankrupt. In those proceedings the relief originally claimed included orders to enforce contracts entered into by John Boumelhem to execute mortgages in favour of ABTS and Boral, respectively. Given the bankruptcy of John Boumelhem, orders for specific performance are no longer sought. As between themselves, the priority of ABTS and Boral's respective claimed equitable interests has been agreed. Each properly concedes that the interest it claims under its unregistered equitable charge or charges, ranks in priority after that of Perpetual. Facts 7 The Boumelhems live in a property at Concord ("the Concord property"), which is, and has been for over 30 years, their family home. 8 The Boumelhems have seven children. They are pensioners. 9 In about December 1997, the fourth of their children, John Boumelhem, sought assistance from the Boumelhems to obtain a loan in order to acquire or carry on a café business. At that stage, the Concord property was subject to a mortgage of approximately $16,000. The Boumelhems agreed to assist their son by increasing the mortgage over their Concord property. Michael Boumelhem, in cross-examination, said he agreed so to assist his son because his son was 17 and he did not want his son to be on the street (T 26). 10 To satisfy the lender's requirements, the Boumelhems transferred a 1% interest in the Concord property to John Boumelhem and, together with their son, they granted a mortgage over the Concord property to St George Bank securing a loan of $55,000 which John Boumelhem used for the purpose of the café business. It is said that no consideration for the transfer of the 1% interest was in fact paid by John Boumelhem, although the transfer (Ex A to Michael Boumelhem's affidavit of 25 August 2008) nominated the consideration for the transfer as being $5,500. 11 John Boumelhem's café business was not a success and in about 2002 the Boumelhems consented to an increased mortgage over the Concord property presumably to cover his losses. In her affidavit, Elane Boumelhem said that the family all helped to pay off the increased mortgage. As at 2004, it appears that the St George Bank mortgage over the Concord property secured an outstanding loan of approximately $153,359.00. 12 In April 2004, John Boumelhem commenced a plaster boarding business. He incorporated both Jayvue Pty Limited and Jayvue (Qld) Pty Limited for the purposes of carrying on that business in both New South Wales and Queensland. He says that this business was successful in the first few years (and certainly it would seem that the business was regarded by ABTS/Boral as sufficiently creditworthy as at 2005/2006 for them to allow considerable trading debts to accrue). John Boumelhem said in cross-examination that he had been ordering supplies from Boral since 2000. 13 On 11 October 2004, John Boumelhem entered into a Contract for the Sale of Land pursuant to which he purchased in his name, as sole registered proprietor, the Dundas property for the sum of $425,000. 14 The circumstances in which John Boumelhem acquired the Dundas property are critical to the Boumelhems' claim. 15 John Boumelhem says that in 2004 he entered into an arrangement or agreement with his parents pursuant to which they would refinance the existing St George Bank loan over the Concord property; he would borrow the funds necessary to acquire the Dundas property (to be secured over the Dundas property); and his parents would assist him in the development of two duplexes on the Dundas property, on completion of which the land would be subdivided and title to one of the properties would be transferred into his parents' name, so that they would then be in a position to move into one duplex as their family home and sell the Concord property (and in so doing discharge the refinanced St George Bank loan over that property) and he would move into the other. In the meantime, John Boumelhem was to have the responsibility of meeting the repayments due on both loans. 16 Michael Boumelhem swore an affidavit (on 25 August 2008) in which he gave a similar account to that of his son (affidavit sworn 11 March 2009) of the conversation said to have given rise to the alleged arrangement. He was adamant in the witness box that the agreement was that he (and his wife) would give his son money and his son was to build two houses and transfer one to the Boumelhems. However, it was apparent from his evidence in cross-examination that Michael Boumelhem has little, if any, present recollection of the actual conversations he had with his son at the time; all he now being able do was to assert what he understood was the outcome of those conversations. 17 Elane Boumelhem deposed to a conversation with her husband in late 2004 in which he spoke of giving their son the money to build two houses at a property in Dundas and said that their son would give one of the houses to them (para 15, affidavit 17 December 2008). Mrs Boumelhem seemed to feel she had no real choice but to accede to her husband's and son's wishes in this regard. Reliance is placed by the defendants on Mrs Boumelhem's description of events. She said, "I agreed to lend John some money" (paragraph 17 of her affidavit). I doubt that much (if any) weight can be placed on Mrs Boumelhem's description of the basis on which she agreed to provide money to her son, as there is nothing to suggest she had an understanding of its legal characterisation. Her description of the relevant events is consistent with an understanding that money would be advanced or provided to her son and that she and her husband would in due course move into a duplex to be built on the land (and that her son would take care of any interest payments on the money so provided) as opposed to an arrangement whereby the Boumelhems would make a loan to their son or make an outright gift of the money. 18 It is not disputed that, in connection with the purchase of the Dundas property, John Boumelhem borrowed the sum of $340,000 from Perpetual, which loan was secured by a mortgage registered on the title of the Dundas property. John Boumelhem says that he paid the deposit on the Contract for Sale of Land (that being, not 10%, as stated on the cover page of the contract, but 5% of the purchase price - $21,250) (but that he later reimbursed himself for that amount out of a loan redraw facility made available to him by his parents) and that he advanced the sum of $319,359.77 out of the moneys obtained from Perpetual in order to complete the purchase. Stamp duty and conveyancing costs associated with the purchase (totalling $18,495.23) were also apparently paid by John Boumelhem from the moneys advanced by Perpetual. Settlement occurred on 6 December 2004. 19 The balance of the purchase moneys due on the settlement of the Dundas property ($84,140.23) appears to have been paid from moneys obtained from the refinancing of the St George Bank loan. Prior to completion of the purchase of the Dundas property, the sum of $450,000 was borrowed from Adelaide Bank Limited and, as security for those moneys, a mortgage was given to Adelaide Bank Limited (by the Boumelhem and their son) over the Concord property. Of that $450,000, the sum of $153,359 was applied to discharge the indebtedness to St George Bank (which held the then existing mortgage over the Concord property); the sum of $84,140.23 was paid (as would appear from the purchase settlement sheet) to or at the direction of the vendors of the Dundas property (by way of a direction to pay "Mobius 01"); and the remainder of approximately $209,090 was held in a loan redraw facility account with the Adelaide Bank to which John Boumelhem had access. 20 The loan agreement with Adelaide Bank was not in evidence but there were in evidence various Australia First Mortgage loan account statements addressed to John Boumelhem and Michael Boumelhem, at a different Dundas address at which John Boumelhem was then living (Ex A pp 52-56). The accounts at pp 54-56 of Exhibit A, include under the heading "Loan Details" the notation "Account Title Mr John Boumelhem, Michael and Elane Boumelhem", the Mortgage Property Address as the Concord property, and the statement "Credit and administration provided by Adelaide Bank Limited". From this, I infer that the $450,000 loan was one made jointly to the Boumelhems and their son. It was secured by a mortgage over the Concord property, title to which was held as to 99% by the Boumelhems as between themselves by way of joint tenancy and as to 1% by John Boumelhem, as tenant in common in unequal shares with his parents. This becomes relevant when determining (if that be necessary) the precise monetary contribution made by the Boumelhems to the purchase price for the Dundas property. 21 As noted earlier, the Dundas property was acquired by John Boumelhem as sole registered proprietor. His evidence in the witness box was that it was done this way to protect his father's pension entitlements and because this was better when seeking finance for the loans (T 41). Michael Boumelhem's evidence was that he did not put the property in his name "because we thought after we build the two duplexes we will get [sic] go to the council to get them approved and then I will take one under my name" (T 24). When pressed as to why he did not take one in his name straight away (leaving aside the difficulty inherent in such a suggestion given that the land at that time, as now, was not subdivided), his response was: "Because that's what, I didn't know this would happen. That is what we talked about. Just after it's finished we will just take one each" (T 25). 22 No caveat was lodged by the Boumelhems in respect of any claimed equitable interest of the kind now asserted (and, when asked, Michael Boumelhem's evidence was that he did not know what a caveat was - although he said he knew through his son that "they", presumably the defendants, had a caveat on the properties (T 25)). 23 John Boumelhem obtained development approval from Parramatta City Council on 20 May 2005 to demolish the existing dwelling on the Dundas property and to construct two duplexes. This is one of two critical facts relied upon by Senior Counsel for the Boumelhems (Mr Willmott SC) as evidencing the arrangements which were in place with their son at the time of acquisition of the Dundas property; the other being the source of the funds for the acquisition and construction of the works. 24 Michael Boumelhem is a retired builder. In his affidavit he deposed to the supervision by him, on an almost daily basis, of the construction work on the Dundas property which commenced in April 2006. There was no challenge to this evidence on cross-examination. John Boumelhem (and his family) moved into one of the duplexes in February 2007, though the building work had not been completed at that time. 25 John Boumelhem deposes to the payment by him of construction costs for the duplexes in the order of $360,000 out of sums provided by him both by way credit card finance and by way of withdrawal from his parents' loan redraw facility (the latter withdrawals totalling $129,000 as identified by John Boumelhem by reference to the bank statements). Exhibit JB-6 to John Boumelhem's affidavit was tendered as an aide memoire of the drawdowns he asserts were made from the Adelaide Bank loan. As to the drawdowns from January 2005 totalling $129,000, these seem consistent with the steps likely to have been required to be taken in early 2005 for the commencement of preparation of the development application (lodged in early 2005 and approved in May 2005)) (being drawdowns of $10,000 on 21 January 2005, $15,000 on 8 February 2005 and $24,000 on 30 March 2005) and later towards the costs of commencement of construction in June 2006 (being the drawdowns of $50,000 in April 2006 and $30,000 in May 2006). 26 There was some cross-examination of John Boumelhem as to a payment or payments made by him in late 2006 to discharge a debt then owing to Boral (as a consequence of which an earlier Boral caveat was said to have been withdrawn). However, none of the drawdowns on the loan redraw facility claimed to have been by way of contribution to the costs of construction appears to have been made at the time of repayment of the Boral debt as at late 2006 and there is nothing to suggest any of these drawdowns were otherwise referable to John Boumelhem's plasterboard business or a payment to either of the defendants. 27 The actual construction costs to date are estimated by John Boumelhem as being $360,000, some $150,000 more than he says had originally been anticipated. 28 I did not understand there to be any sustained challenge to the assertion by John Boumelhem that the $129,000 in redrawn loan funds represented contributions to the development/construction costs for the Dundas property. 29 John Boumelhem also says that he reimbursed himself for the payment of the deposit out of the redraw facility, although there is no direct evidence of this. There was a loan redraw under the facility of $29,000 on 22 December 2004. It is this drawdown which John Boumelhem says related to reimbursement of the lesser deposit. 30 The evidence of both John Boumelhem and his father was that the arrangement between them was that each would contribute $450,000 to the joint endeavour or project, that being comprised of the acquisition and subsequent development of the Dundas property. However, the balancing exercise only comes to a 50:50 contribution if the sum of approximately $153,000 initially paid to discharge the St George Bank loan (which largely, if not wholly, represented John Boumelhem's indebtedness in respect of the unsuccessful café venture) is treated as part of the overall Dundas property project costs. If this sum were to be excluded, then on the figures as calculated by Counsel for ABTS (Mr Loughnan) the respective contributions of the parties to the project or venture (at their highest) would be in the ratio of about 70:30 (John:his parents). 31 In September 2007, John Boumelhem procured the refinancing of the Adelaide Bank loan by AMP Bank Limited. At the same time he increased the indebtedness secured by the mortgage over the Concord property by some $350,000 to $800,000. The money so obtained was, according to John Boumelhem, put into his companies (which by then were in some financial difficulty) (paragraph 32 of affidavit of 11 March 2009 and Ex B p 22). John Boumelhem admits that he arranged the increase in the Concord mortgage by the fraudulent application of his father's signature on the AMP documentation. (On the application of John Boumelhem, I gave a certificate under s 128 of the Evidence Act 1995 in relation to his evidence in this regard.) 32 The AMP loan documentation was admittedly signed by Elane Boumelhem. However, it is not disputed that Mrs Boumelhem does not read or speak English. By her affidavit she has sworn that she did not understand at the time that she was doing anything more than signing documents for there to be a change of lender in respect of the loan. Mrs Boumelhem was not cross-examined and I accept her evidence in this regard. Michael Boumelhem also does not read English. He says he speaks broken English. He required the assistance of an interpreter throughout the course of his cross-examination. On the face of the AMP mortgage documentation his purported signature bears no resemblance to the signature appearing on the documents which he admittedly did sign. I accept Michael Boumelhem's evidence that he did not know anything at all about the increase in the mortgage documentation (or that his son had actually changed lenders, although he was aware of his son's proposal to do the latter), until some time about six months after this had occurred. 33 By March 2008, it was apparent to John Boumelhem that he was in serious financial difficulty. His evidence is that at this stage he told his parents that they should take steps to make sure that they protected the money they had put into the Dundas property (or, as Michael Boumelhem says he said, "to confirm" they had put money into the Dundas property). However, at this stage it appears that neither Mr nor Mrs Boumelhem was aware of the additional sum of about $350,000 which John Boumelhem had (admittedly fraudulently) procured under the AMP mortgage. 34 On 27 March 2008, a Deed of Charge was executed by the Boumelhems and others (including John Boumelhem and his brother-in-law, Mr John Touma). It appears that John Boumelhem arranged the meeting with solicitors (Consolidated Lawyers) at which the Deed was signed. At the same time, one or more caveats was signed by members of the Boumelhem family and relations. 35 The Deed of Charge recites the assistance of the "Lenders" (including the Boumelhems) in the business of the "Borrower" (John Boumelhem) by the provision of a loan in the sum of $400,000 collectively. It recites specific loans made by Michael Boumelhem of $200,000 and by Elane Boumelhem of $100,000. It records an intention by the Borrower to grant a charge over the Dundas property to secure those loans. The "business" of the Borrower is not defined. 36 Mr and Mrs Boumelhem say that they did not understand the documents they had signed and that the Deed was not translated or explained to them, although in cross-examination Michael Boumelhem accepted that he had been told something about the documents (he could not remember what) in Arabic by a woman who was present on that occasion. According to John Boumelhem this woman was a solicitor, but Michael Boumelhem says he does not know whether she was a solicitor. It was Michael Boumelhem's understanding that the document was to protect his and his wife's "interest in Dundas". As noted earlier, the Boumelhems say, and I accept, that at the time they signed the Deed they were unaware of the increase in the mortgage over the Concord property. 37 The Deed of Charge is a curious document in a number of respects. It is inconsistent with the initial financial arrangements (even assuming for the moment that they were by way of a loan) since there is no suggestion on the evidence before me that there was any separate division in respect of the overall amount provided by the parents. Nor is it easy to see where the figure of $300,000 comes from if it relates to those initial finance arrangements (given that the Adelaide Bank loan was for $450,000) unless the $300,000 is a rounding up of the sum of $84,000 plus the redraw facility of $209,000. It seems to be John Boumelhem's evidence (I say "seems" because it was somewhat confusing) that the $300,000 referred to in the Deed of Charge related to the amount by which the mortgage had (unbeknownst to his parents) been increased in 2007 (though even then the sum of $300,000 does not accord with the actual additional borrowing of $350,000 and in any event there is no suggestion that this additional money was in any way put "into" the Dundas property). If the Deed was intended to confirm the basis on which the original $450,000 loan was applied, it failed dismally. 38 I consider later the submissions made in relation to the significance I should draw from the fact that the parties were willing to sign the Deed of Charge. 39 As to the position of ABTS and Boral, each had entered into credit supply agreements with companies associated with John Boumelhem. In each case, John Boumelhem signed a personal guarantee (with ABTS on 19 June 2006 and with Boral on 10 August 2008) pursuant to which he agreed to create an equitable charge in respect of any obligations arising under the guarantee. Both ABTS and Boral lodged caveats over the Dundas property: AD 635197 (Ex JB10 to John Boumelhem's affidavit of 11 March 2009) and AD 604 044k (Ex JB16 to John Boumelhem's affidavit of 11 March 2009)) the caveats were lodged by ABTS on or about 19 April 2007 and by Boral on or about 29 November 2007. (I understand it is now agreed between ABTS and Boral that, in fact, Boral had earlier lodged a caveat in respect of a prior charge in respect of which it now also claims an equitable interest.) 40 Mr Willmott submits that on a true construction of the respective Application for Credit and the Guarantee and Indemnity agreements, these operate to charge only that part of John Boumelhem's equitable interest in the Dundas property and not any part of the property that he holds on a constructive or resulting trust for his parents. 41 On 25 August 2008, four days before the proceedings brought by ABTS and Boral were respectively listed for hearing (on their application to perfect their respective securities), John Boumelhem voluntarily entered into bankruptcy. 42 The building of the duplexes remains unfinished and no subdivision has been effected of the Dundas property. John Boumelhem has estimated another $80,000 to $100,000 would be necessary to complete construction. As noted earlier, Perpetual has obtained judgment as mortgagee and I was informed it proposes shortly to exercise its power of sale as first mortgagee in respect of the Dundas property. 43 It is submitted for the Boumelhems that their equity prevails over the unregistered equitable interests of ABTS and Boral, respectively. 44 The defendants accept that there is some evidence that the registered proprietors of the Concord property (including John Boumelhem as a 1% holder of an interest in the property) advanced moneys towards the purchase price of the Dundas property. However, they submit that the highest the evidence rises is that 99% of the sum of $84,140.23 was advanced by the Boumelhems for the acquisition of the Dundas property (being, on my calculations, approximately 18.78% of the purchase price including stamp duty and conveyancing costs), or if the court accepts that John Boumelhem reimbursed himself for the deposit and that that sum should stand to the credit of the Boumelhems as a contribution to the acquisition, rather than as a loan advanced to John Boumelhem or something else, that the Boumelhems' actual contribution to the purchase price, at its highest, was $105,390.23.

Boumelhem Proceedings - 4401/08 Constructive Trust 45 The primary relief claimed is a constructive trust either on an application of the so-called "pooling" principles in Baumgartner v Baumgartner or alternatively a "common intention" constructive trust arising on the basis of an estoppel by encouragement (to use the terminology adopted by Handley JA in Estoppel by Conduct and Election). There is an alternative claim (expressed by Mr Willmott as the fall-back claim) on the basis of the principles relating to the resulting trusts. · Baumgartner Constructive Trust 46 In Baumgartner, the majority (Mason CJ, Wilson and Deane JJ) referred to the result reached by Deane J in Muschinski v Dodds (1985) 160 CLR 583 as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. Their Honours cited what Deane J had said in Muschinski (at 620): … 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 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 : cf Atwood v Maude [1858] LR 3 Ch App 369 at pp 374-375 and per Jessel MR, Lyon v Tweddell (1881) 17 Ch D 529 at 531). (my emphasis) 47 Although followed in a number of cases since then, the reasoning in Baumgartner has not been free from academic criticism or debate. 48 In Jacob's Law of Trusts in Australia 7th ed, J D Heydon and M Leeming, the authors note that: … the reasoning in Baumgartner v Baumgartner , while purporting to be rooted in basic equity, gives no more predicability or consistency in result than that which follows from the English decisions espousing the 'new model' constructive trust. It remains unclear as to when and why the interposition of equity to prevent unconscientious reliance on legal rights in the Australian cases will give rise in equity to a proprietary rather than a personal right, and a proprietary right which is a constructive trust 'fashioned' by the court. (para 1353) 49 (See also the caution advocated by Gummow J during the special leave application in relation to Friend v Brooker [2009] HCA 21 - [2008] HCATrans 344.) 50 In West v Mead, [2003] NSWSC 161 Campbell J (as his Honour then was) considered what was to be established before such a trust could be imposed. 51 First, it is necessary that there be both a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired. The scope of the joint venture in which the parties were engaging may be of relevance and as Deane J in Muschinski considered, may change from time to time. 52 Secondly, the substratum of that joint relationship or endeavour, must have been removed or the joint endeavour prematurely terminated "without attributable blame". 53 Thirdly, there must be the requisite element of unconscionability - it would be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.

(i) Was there a joint endeavour? 54 The first question to be addressed is whether there was a joint endeavour between the Boumelhems and their son, pursuant to which the Boumelhems made monetary or non-monetary contributions in connection with the acquisition of the Dundas property. 55 The defendants contend that the proper characterisation of the relationship between the Boumelhems and their son, in relation to the Dundas property, is that of debtor/creditor. 56 First, it is said that the evidence demonstrates that there was a history of lending by the Boumelhems to their son and of increasing indebtedness by him, pointing to the initial loan in about 1998 for his café business, followed by their willingness in 2002 to take an increased mortgage (almost triple the original amount) to cover their son's increasing indebtedness on the failure of his café business. 57 Secondly, reliance is placed on Mrs Boumelhem's statement (relied on as an admission) in her affidavit that she "agreed to lend" her son the money in 2004 and on Michael Boumelhem's acceptance that it was John Boumelhem who was to have the responsibility of meeting the minimum repayments due on the Adelaide Bank loan until the Dundas property was complete (para 3, affidavit 11 March 2009). 58 Thirdly, the defendants point to the fact that both the Boumelhems and their son signed the Deed of Charge, which in its terms acknowledged certain loans to have been made to assist John Boumelhem in his business (though not, I note, to assist him in the acquisition/development of the Dundas property). Although no estoppel by deed is or could be invoked by the defendants, it is said that the execution of this Deed is a matter which has evidentiary weight and that I should not readily infer that solicitors of this Court (or third parties not before this Court during the hearing) would improperly or dishonestly have participated in the documentation of a transaction which did not have some factual basis. 59 Finally, it is submitted that I should put no weight on John Boumelhem's evidence and should heavily discount the evidence of his parents given their clear self-interest in the outcome of the proceedings and in the case of Mr Boumelhem, his poor recollection in the witness box of the relevant conversations. 60 As to the first, I do not infer from the fact that the Boumelhems agreed to make a relatively small loan in 1997 or 1998 to assist their son in the setting up of his café business, and then later agreed to a more substantial mortgage when that business failed, that two years later again (by which time their son was older and had set up an independent business that was apparently doing well) they would have been likely to have agreed to triple yet again the size of their mortgage, had there not been an expectation that they would share in the benefit from the development of the Dundas property. 61 The Boumelhems are pensioners. A $450,000 loan would have been impossible for them to repay over the term of their lives without assistance from the family. Michael Boumelhem, who gave the rest of his evidence quietly and unemotionally through the interpreter, was visibly taken aback by the suggestion that he might have agreed to make a loan of such an amount to one only of his seven children. His response seemed to me to be genuine in that regard. 62 Mr Boumelhem was adamant that he did not lend his son the money made available by means of the refinanced mortgage over the Concord property: How would I give him such a big amount when I have seven other [sic] children. How would I give him a loan of $400,000 (T 26).

Rather, Mr Boumelhem consistently said that "I gave him money to build the properties for him and for myself" (T 25). In other words, that he gave his son the money towards the purchase of the Dundas property, with a view to his son then building two duplexes on the land (one for himself and one for his parents) and that "we paid for it half half, 50/50" (T 24). Although, as I discuss later, I do not accept the way in which it is put that each in fact paid a half share of the overall costs, I do accept that broadly Mr Boumelhem understood that he was putting up his home as security for a loan the proceeds of which were to be used by his son in the acquisition and development of the Dundas property and which was to result, in due course, in him obtaining one of the two duplexes to be built on the Dundas land. 63 As to the particular wording of Mrs Boumelhem's affidavit, it seems to me unlikely that Mrs Boumelhem, in saying she "agreed to lend" the money, was intending to convey any particular legal meaning as to the basis on which the money was provided. She was not cross-examined and hence I do not know her understanding of what was meant by this. Given Mrs Boumelhem's inability to speak and read English, I cannot place great significance on the use of one particular verb in a general account of what occurred some five years ago. 64 As for John Boumelhem being responsible for the loan repayments to Adelaide Bank, this is hardly surprising since Mr and Mrs Boumelhem were both pensioners and presumably not in a position to service such a loan. 65 Accordingly, I place no weight on the last two factors considered above. 66 As to the third matter, it is conceded by all parties that the Deed of Charge was inaccurate on its face to a greater or lesser extent. It is said by the defendants that it is inconceivable that there would have been no explanation given to the Boumelhems of the documents they were signing (which, in broad terms, I accept) and that, if so, then (since it is accepted that the parents at that stage did not know of the additional borrowings obtained by their son) they must have understood any acknowledgement of a loan to their son to relate back to the initial borrowing from Adelaide Bank of $450,000. The difficulty I have with this submission is that it assumes not only that a fairly careful explanation was given of the details of the loans referred to in the Deed but also that the Boumelhems would have readily understood the implications of such explanation (the likelihood of which is seriously diminished if, as it is said to have been, this took place in the presence of about nine or ten people, with more than one conversation between different members of the group occurring at the one time and more than one document being signed at the time). 67 It is clear that a detailed explanation cannot have been given to (or understood by) the Boumelhems of all aspects of the Deed, since that would presumably have required an explanation of why it was that the loans so recorded as having been made by the Boumelhems were for the sums of $200,000 and $100,000 respectively, when the initial Adelaide Bank loan was for $450,000, and as to why each of the parents was acknowledging an individual or separate loan of particular amounts. A discussion of the figures in the Deed would potentially have led to inquiries which should have alerted the Boumelhems to the misconduct of their son, which does not seem to have been understood by them at the time. Michael Boumelhem's evidence was simply that his purpose in being at the solicitors was "to save my house … I signed it [the Deed] with the understanding that I have the property in Dundas that I paid $450,000 for and I want to save myself" (T 31). 68 Further, if what the Boumelhems were told was that they needed to sign legal documents to protect or confirm their interest in or the money they had put into the Dundas property (as Michael Boumelhem says) then even if they were told by the solicitor who attended on execution of the Deed that it was to document a loan arrangement by which they would be entitled to a charge or proprietary interest over the property, they may well have understood this as a document intended to put in place arrangements going forward, rather than as an acknowledgement of whatever arrangements had earlier been in place. 69 I should note, since this was put to me in submissions, that insofar as I have commented on the circumstances of execution of the Deed of Charge I make no comment as to the conduct of the solicitors who prepared or assisted in its execution and I note for the record that the solicitors who apparently drafted the Deed of Charge (Consolidated Lawyers) are not the Boumelhems' solicitors in these proceedings. Other than John Boumelhem's assertion that he told the solicitors "everything", and that he told them he took the additional money, there is no evidence as to what precisely they were told by way of instructions leading up to execution of the Deed of Charge - something which at the very least it would be necessary to know in order to form any view as to the propriety of the solicitors' conduct. John Boumelhem's evidence in this regard was no more than a generalised assertion: "I'm telling you, I told him the whole time that my parents have got the money, they got the half share, that's what we had agreed and he goes I cannot do nothing" (T 47). 70 It was noted that no evidence was called from the solicitors responsible for drafting the Deed of Charge or from any others (such as Mr John Touma) who were present when it was executed. However, it is not clear to me that any Jones v Dunkel (1969) 101 CLR 298 inference should be drawn in this regard. 71 As noted in Cross on Evidence the unexplained failure by a party to call witnesses "may, not must" in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party's case, whether or not that party bears the burden of proof of the particular issue to which the evidence would have relevant [para 1215]. 72 What is it, here, to which the rule might apply? In other words, what is it that the Boumelhems are required to explain or contradict, as to which evidence from Mr Bechara (the principal lawyer from Consolidated Lawyers) or Mr Touma might be relevant? The answer can only be that evidence from those persons might have explained the circumstances in which the Deed of Charge was executed and shed light on the understanding of the Boumelhems at the time they signed the Deed of Charge. 73 Insofar as Mr Bechara is concerned (even apart from the fact that apparently it was not he who gave any explanation to the Boumelhems, rather the only explanation apparently being given by an unidentified young female solicitor), the rule in Jones v Dunkel is said not to apply where the uncalled witness is the party's solicitor and the evidence would be privileged (Cross para 1215, Wentworth v Lloyd (1864) 33 LJ (Eq) NS 688 (HL)). 74 Evidence of what advice was given at the time the Deed was executed would surely be privileged (unless the evidence would disclose, for example, an intention to commit a fraud on creditors - which itself is something Counsel for the defendant submitted I should not infer in the absence of evidence of the solicitors). While it might perhaps be suggested that, by asserting an understanding or intention contrary to the terms of the Deed, there has been an implied waiver by the Boumelhems of any privilege in advice given as to the terms or effect of the Deed, this would be inconsistent with cases such Ampolex Limited v Perpetual Trustee Company (Canberra) Limited (1995) 37 NSWLR 405 where a statement of belief (or understanding), even proffered immediately following a statement that legal advice had been obtained, did not waive privilege in that advice, provided the substance of that advice was not disclosed. 75 In that vein, although John Boumelhem might be said to have waived privilege in respect of the advice given to him by Mr Bechara at the meeting as to certain matters (as to there being nothing that could be done to "protect" the money initially advanced by his parents but that "This [presumably the Deed and/or the caveats] will just keep it there and I'm going to negotiate on the caveatable interest. That's what he said to me" (T 47) and "He goes I will fight them on the caveatable interest on the property and that was security of your parents' 50 percent" (T 50)) and there was no objection on behalf of the Boumelhems to the giving of that evidence, in itself this does not waive any privilege reposed in the Boumelhems in any advice Mr Bechara or a solicitor working with him may have given to them as to the terms and effect of the Deed. Therefore, I think no inference can be drawn from the failure of the Boumelhems to call anyone from Consolidated Lawyers to give evidence. 76 As to Mr Touma, I note that the editors of Cross describe the failure to call non-party witnesses as the sixth and most difficult aspect of the rule in Jones v Dunkel. They refer to the explanation given by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-2, that this condition: … is also described as existing where it would be natural for one party to produce the witness, or the witness would be expected to be available to one party rather than the other, or where the circumstances excuse one party from calling the witness, but require the other party to call him, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him, or where the witness' knowledge may be regarded as the knowledge of one party rather than the other, or where his absence should be regarded as adverse to the case of one party rather than the other: ibid. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary . 77 While it might well be expected that John Boumelhem's brother-in-law might be more "available" to the Boumelhems as a witness than to ABTS/Boral, that may not necessarily be so and, in any event, it seems to me that there remains some doubt as to whether the would have been in a position to elucidate the matter. The evidence (which I accept) is that there were nine or ten people in the solicitor's office and that there were a number of documents (Deed of Charge and two or three caveats) signed by a number of people at or around the same time, with one or more conversations happening at the same time. I do not know whether Mr Touma was privy to any particular conversation in which the Deed was explained to the Boumelhems (nor, for that matter, is there any evidence before me that Mr Touma would have understood an explanation given in what has been described as "broken Arabic"). Glass JA in Payne said: Under other formulations, the condition is made out when the witness is presumably able to put a true complexion on the facts, might have proved the contrary would have a close knowledge of the facts, or where it appears that he had knowledge. I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him. 78 Accordingly, I do not accept that any Jones v Dunkel inference should be drawn, in relation to the circumstances in which the Deed of Charge was executed, as to the advice given at the time. (And any such inference would have to have been considered in the light of any other evidence, which of itself could justify a finding in relation to the joint venture - the availability of a Jones v Dunkel inference not precluding the making of a favourable finding based on other available evidence or inferences to be drawn therefrom - Flack v Chairperson, National Crime Authority (1997) 80 FCR 137 at 148-0; 150 ALR 153 at 164). 79 Nor do I consider that the Deed of Charge assists in determining whether there was a "joint endeavour" for the purposes of the Baumgartner principles, though I do consider that the circumstance of the execution of the Deed is a factor to consider in weighing the credibility or reliability of John Boumelhem's evidence. 80 In general, I must say that I could not have any confidence in accepting the evidence given by John Boumelhem. Apart from the fact that he has a clear interest in protecting his parents from the no doubt distressing situation (caused directly, it would seem, by his own wrongdoing) in which they now stand to lose their family home, the evidence he gave as to the Deed of Charge made almost no sense. His evidence was that he took his parents to a solicitor to protect the money they had put into the Dundas property, yet he says he knew at the time that the Deed of Charge was a waste of time because it was incorrect and related only to money which had been put into his companies (ie not the Dundas property). If so, then it makes no sense that he nevertheless proceeded to allow his parents to execute a document which he now says was both false and futile. The only rational explanation is that he was prepared to sign, and to allow his parents to sign, anything that might assist his parents' ability to resist claims by his creditors, whether that be on a true or false basis. In that circumstance, how can I then have any confidence that his evidence in this Court would not have been similarly affected? 81 Further, the manner in which the alleged equality of contribution was said to arise seems to me to be, at best, artificial. It requires the $153,000 existing indebtedness of John Boumelhem to be factored in as a contribution by his parents to the project (which seems to me contrived) and it assumes that at the outset of the project, John Boumelhem could predict with a surprising degree of accuracy that the project construction costs would end up being $150,000 more than had initially been expected (which is implausible or, at best, highly coincidental). The explanation of the loan redraw withdrawals (or at least of the $29,000 withdrawal) seems to me to be susceptible to the same criticism. This suggests to me that the arrangement at the outset was by no means as precise as that which is now asserted by the Boumelhems and their son. 82 In assessing the parents' evidence, I was taken to the caution expressed by McLelland J in Watson v Foxman & Ors (2000) 49 NSWLR 315, albeit in the context of a claim of misleading and deceptive conduct, as to the ordinary human process of reconstruction of memory. Emphasis was placed by Counsel for Boral, Mr Walsh, on what his Honour there said as to the need for proof with a degree of precision of words alleged to have been spoken in circumstances where there was no objectively independent evidence. In that case, his Honour went on to say: Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not … attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. 83 Here, proof of the precise words spoken between the parties at the time they embarked upon the transactions leading to the acquisition of the Dundas property is not essential for a finding on the balance of probabilities that there was a joint endeavour or as to what it comprised. Indeed (albeit there considering a common intention constructive trust) in Shepherd v Doolan [2005] NSWSC 42 White J accepted (at [42]) that the evidence might not permit a finding as to the precise size, nature or extent of the beneficial interest the parties there intended the claimant to have. Hence, imprecision in the terms of what was discussed is not necessarily determinative against the Boumelhems' claim. 84 Nor is the lack of an objective record to corroborate the arrangements necessarily fatal in such cases (as noted by White J in Shepherd v Doolan in the context of the lack of a document recording a £100 payment, where there had been a significant lapse of time since the oral arrangements in question; although there the lapse of time was significantly greater than in this case). 85 The two critical facts to which Mr Willmott points in support of the claim that there is a joint endeavour are the manner in which funds were disbursed and the fact that John Boumelhem proceeded with the application for approval to build the duplexes. 86 As to the first of the critical facts relied upon, the evidence does support a finding that the Boumelhems contributed to the acquisition and development of the Dundas property (at least by the contribution of somewhere in the order of $84,000 to the purchase price and by making available to their son funds on which he could draw for the purposes of construction - although I accept there may be some doubt as to precisely how much was drawn down for that purpose). 87 As to the second, the development of the duplexes is consistent with an intention that the Boumelhems should ultimately take a half-share in the Dundas property and, taking into account their personal circumstances, it is less likely that that they were instead entering into a debtor/creditor relationship or some kind of business venture. In this regard it seems to me highly unlikely that, as pensioners, the Boumelhems would have entered into (and risked the security of their family home on) a project development otherwise than for ultimate family use (such as a project intended to be for on-sale to third parties) when they were both retired and there is no suggestion that they had previously been involved in, or were looking at this stage of their lives to enter into, the business of property development. 88 The incredulity expressed by Michael Boumelhem in the witness box at the suggestion that he would have made a loan of this size ($400,000 or $450,000) to one only of his several children in my view weights the balance firmly in favour of this arrangement being more likely to have been a joint endeavour for the purpose of obtaining for himself and his wife title to one of the proposed duplexes in which to live in their old age next door to their son and his family. This is reinforced by the evidence of Michael Boumelhem, not challenged on cross-examination, that his son had taken him to inspect two or thee prospective properties which he did not like before he agreed to the purchase of the Dundas property and the evidence of Elane Boumelhem to like effect that she had been shown the property and told this would be where they would live. This only makes sense if the intention was for the Boumelhems ultimately to live in a duplex on the Dundas property. If this were simply a debtor/creditor relationship, it might be thought that the physical characteristics of the property (unless those characteristics precluded some form of development) would be immaterial to the Boumelhems. 89 Here, there is direct evidence as to the contribution of funds to the purchase of the Dundas property and of assistance by Michael Boumelhem in the supervision of construction of the duplexes on the property. I place no weight on John Boumelhem's evidence, but that is not where the evidence rests. Both Mr and Mrs Boumelhem have deposed to an intention that they obtain an interest in the property (in the form of title to one of the duplexes) on completion of construction. Accepting that their evidence should be viewed with some caution given that they have a clear self interest in now asserting such an intention (and the assertion of such an intention comes for the first time after they became aware of their son's financial difficulties and had sought legal advice as to how to protect their position) and given that Mr Boumelhem's present independent recollection of what was said at the time in order to convey that intention is virtually non-existent, nevertheless I am persuaded on the balance of probabilities that this was not a simple debtor/creditor relationship but rather was one in which the financial assistance rendered by the Boumelhems to their son was part of a joint endeavour (or predicated on a common expectation or intention), that the Boumelhems would obtain a beneficial interest in part of the Dundas property in due course. Of the various scenarios (and having regard, as McLelland J considered appropriate, to the likelihood or unlikelihood of an occurrence of a given description), this seems to me to be by far the most likely. 90 I am therefore satisfied that there was a joint endeavour between the Boumelhems and their son, pursuant to which the parents would advance or make available to their son funds for the acquisition and development of the Dundas property with the intention that on completion of that development the property would be subdivided and the parents would be entitled to one of the duplexes which would become their family home.

(ii) Failure of joint endeavour without attributable blame 91 The next question is whether the joint endeavour failed or was prematurely terminated "without attributable blame". 92 In Cetojevic v Cetojevic [2006] NSWSC 432, Campbell J applied the principles relevant to what he had explained as the principles relating to the imposition of a Baumgartner constructive trust in West v Mead to the joint relationship there between the parties. His Honour noted (at [43]): In accordance with the principles set out at paragraph [59] in West v Mead [2003] NSWSC 161 where there is a joint relationship or endeavour, and an asset is acquired for the purpose and in the course of, and the joint endeavour comes to an end without attributable fault on anyone's part (as clearly happened here ), a starting point for ownership of the asset is that the beneficial interest ought be shared equally. That application of the maxim equity is equality places an onus of attributing any other conclusion on a person who asserts that the title should be held unequally. (my emphasis) 93 The reason that the joint endeavour had come to an end in Cetojevic was the untimely death of the plaintiffs' son. 94 The defendants submit, however, that here there was no "failure" of the joint endeavour; rather, John Boumelhem simply chose voluntarily to enter bankruptcy. I consider that, voluntary or not, the bankruptcy of John Boumelhem brought the joint endeavour prematurely to an end (just as the sudden death of the defendants' son in Cetojevic v Cetojevic prematurely brought that joint endeavour to an end). It cannot be disputed that, in the circumstances, any joint endeavour for the development of the Dundas property is no longer capable of completion and has therefore been brought to a premature end. 95 However, was it without attributable blame? Is the voluntary entry into bankruptcy relevant in this regard? I have found little to shed light on what is understood by that expression in this context. 96 In Henderson v Miles (No 2) (2005) 12 BPR 23,579, Young CJ in Eq, as his Honour then was, said at [18]: As can be seen from its roots in cases such as Lyon v Tweddell, the expression "without attributable blame" in the standard formula does not mean that the court must try and work out which of the parties in a domestic relationship was of the greater fault; see Callaghan v Callaghan (1995) 64 SASR 396 at 407, where Perry J said that the question as to whether equity gives relief does not turn on the nice question as to where the blame lies [in the breakdown in the relationship between the parties in that case]. 97 The meaning (and potential uncertainty) of that requirement was apparently considered to be of sufficient import by the High Court to warrant a grant of special leave, insofar as in Gazzola v Gazzola (1990) 92 ALR 45, Brennan, Deane, Dawson, Toohey and Gaudron JJ said that their "main consideration" in granting special leave was that the issues would include "questions about the nature and effect of 'attributable blame'". However, as it transpired, their Honours did not have the opportunity to consider what was meant by attributable blame because "those questions only arise in the present case if the appellants succeed in showing either that there was a common intention among the parties to create a trust or that the facts of the case are such that, subject to any question of the existence or effect of any 'blame' or 'unconscionable conduct' on the part of one or both of the appellants, a constructive trust arose or should be imposed" and, the court having found that the facts precluded a finding of a common intention to create a trust and did "not give rise to, or warrant the imposition of, a constructive trust upon any of the grounds for which the appellants contend". Their Honours accordingly revoked the grant of special leave. 98 It is perhaps not surprising, therefore, that in "Doing Equity between de facto spouses: From Calverley v Green to Baumgartner" (1988) 11 Adelaide Law Review 370, Patrick Parkinson suggested that it was likely that the notion of blame would quietly disappear as a meaningful statement in this kind of case, though expressing his opinion that: Presumably the relevant fault here is that of the claimant who will be denied a remedy if he or she is held responsible for the breakdown of the relationship. 99 While it seems to me that such a presumption is inconsistent with the notion that relief in equity does not turn on the "nice question" of where blame lies in the breakdown of relationships or joint endeavours of this kind (per Perry J in Callaghan), perhaps the answer is that if the joint endeavour comes to an end due to some wrongful conduct of the party seeking the imposition of a constructive trust this might impact on whether it is unconscionable for the other party in those circumstances to retain the benefits of the joint endeavour. In other words, a lack of focus on the "without attributable blame" part of the Muschinski formulation of the test may be explicable if it is bound up in the question of unconscionability. 100 In any event, here it is not suggested (nor would I have found) that there was any "attributable blame" on the part of the Boumelhems; it is simply suggested that the joint endeavour had not "failed" by reason of the bankruptcy. I do not accept that submission.

(iii) Unconscionability 101 The third issue is whether there is the necessary degree of unconscionability to warrant the imposition of a constructive trust. 102 In Baumgartner the majority noted (at 148) that Deane J in Muschinski had "pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention 'to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle'" but had rejected the notion that it should be imposed in accordance with the idiosyncratic notions of what was just and fair. 103 In West v Mead, Campbell J said (at [62]) that: The Baumgartner type of constructive trust is imposed to prevent an unconscionable assertion of legal title, in circumstances where the parties had no explicit intention about how the legal title would be held in the circumstances which have arisen. … Part of the justification for imposing a Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available to the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the common pool and assets acquired from it, would be used for the ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up. 104 On appeal, in Cetojevic v Cetojevic [2007] NSWCA 33, Hodgson JA, with whom Tobias and McColl JJA agreed, said (at [34]): I accept that it is insufficient for the establishment of a constructive trust that it be considered inconvenient or unfair that legal rights be relied on. I accept that in the circumstances of this case, it was necessary for the respondent to show both that circumstances had arisen which were so outside the contemplation or intentions of the parties at the time of entry into the joint endeavour that it can fairly be said that the joint endeavour had broken down, and also that in those circumstances it was unconscionable for the appellants to rely on their legal rights. 105 However, there the Court of Appeal considered that if it be necessary for the appeal court itself to consider the question of unconscionability, it had been established (in circumstances where the deceased's parents were denying an entitlement on the part of their daughter-in-law). 106 In this case, it was submitted by Mr Walsh, whose submissions in this regard were adopted by Mr Loughnan, that there was no relevant unconscionability because the son was not denying any entitlement on the part of his parents to a beneficial interest in the property; rather, John Boumelhem was positively supporting the creation of such an interest. In response to this, Mr Willmott says that it is no longer a matter for the son to take any position in relation to the property, the Trustee in Bankruptcy having been appointed to his estate and that, here, the Trustee in Bankruptcy having filed a submitting appearance is not accepting the interest of the parents in the Dundas property - hence the unconscionability. 107 The test of unconscionability must, at least in circumstances such as this, be framed by reference not simply to whether it is unconscionable for the other party to the relationship to deny the claimed benefits but by reference to whether, had that party been in a position to do so, it would have been unconscionable for it to deny the benefits. Otherwise, in cases where the relationship was prematurely terminated by death (such as in Parianos v Melluish [2003] FCA 190) it is difficult to see how the test could apply. In Parianos, for example, Jacobson J considered it appropriate (at [48]): to impose a constructive trust to avoid the unconscionable denial of an inferred common intention created by [the deceased] and acted upon by [his widow] to her detriment.

even though by then the deceased was clearly not in a position to assert or deny anything and the denial of an interest was being made by his parents in whom the whole of the legal title had vested on the operation of the principles of survivorship. 108 The fact that it is now the trustee in bankruptcy who (instead of John Boumelhem) is in a position to affirm or deny the claimed equitable interest surely cannot make an assertion of legal title (without acknowledgement of the Boumelhems' claimed beneficial interest) any the less unconscionable than if John Boumelhem himself were to have done so. The question must be whether it would have been unconscionable for John Boumelhem at the relevant time to deny his parents a beneficial interest in the property. If the intention of the parties was that the Boumelhems were to contribute their money and their efforts in relation to the acquisition and development of the Dundas property and to obtain a share in the property once so developed, then on any view it would have been unconscionable for John Boumelhem to deny them an interest in the property. It would be an arbitrary result if, simply because he is not in fact denying such an interest, equitable relief should be unavailable in circumstances where (absent such relief) the effect of his bankruptcy would be to deny his parents any such benefit. I therefore do not accept the defendants' submissions on that point. 109 I consider that the Boumelhems have established that there is a basis, on the application of the Baumgartner principles, for relief. In West v Mead Campbell J noted that, unlike the resulting trust principle (in accordance with which it is only in an unusual situation that a payment of mortgage instalments would be regarded as contribution), the law of resulting trusts had been transmuted in the Baumgartner type of constructive trust insofar as what may count as a contribution to the purchase price. His Honour there noted that it was the proportions in which contributions to the purchase price were made which mattered in determining beneficial ownership (not the amount of such contributions). This would suggest somewhere in the order of an 18% or 30% interest, depending on whether I accept that the redraw contributions were put towards the Dundas property. 110 However, there still remains a question as to whether a constructive trust should be recognised and on what terms. I consider that later in these reasons. · Proprietary estoppel 111 The alternative claim put by Mr Willmott for the Boumelhems was what was described as a proprietary estoppel by encouragement. Mr Willmott submits that the Boumelhems have acted to their detriment in reliance upon assumptions induced in them by John Boumelhem. The minimum equity to avoid this detriment is said to be the imposition of a constructive trust (citing Giumelli v Giumelli (1999) 196 CLR 101 in this regard). 112 In the present case, the particular proprietary estoppel is akin to those cases in which a constructive trust has been recognised on the basis of the common intention of the parties, upon which a party has acted to his or her detriment (eg Green v Green (1989) 17 NSWLR 343). Such constructive trusts have occasionally, though not without criticism (see G E Dal Pont, "Equity's Chameleon - Unmasking the Constructive Trust" (1997) 16 Aust Bar Review 46), been described as "common intention constructive trusts". Whatever language be used, the reasoning in such cases has been said by Browne-Wilkinson VC (Grant v Edwards [1986] Ch 638 at 657) to be guided by, or, alternatively, described by Lord Oliver of Alymerton (Austin v Keele (1987) 10 NSWLR 283 at 290) as essentially an application of, the broader doctrine of proprietary estoppel. As K R Handley notes in Chapter 11 of Estoppel by Conduct and Election (to which I was referred by Mr Willmott in relation to the proprietary estoppel claim) there has been a convergence between the lines of authority dealing with proprietary estoppel by encouragement and the law of constructive trusts in domestic relationships (that chapter going on to address, under the rubric of estoppel, cases such as Gissing v Gissing [1971] AC 886 and Grant v Edwards which were applied in Austin v Keele and Green v Green). 113 In Shepherd v Doolan, White J considered an alternative claim based on a "common intention" constructive trust and said (at [33]): 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. ( Pettitt v Pettitt [1970] AC 777 at 804, 810, 816-817; Gissing v Gissing [1971] AC 886 at 900, 902, 905-909; Allen v Snyder [1977] 2 NSWLR 685 at 690, 698, 701). 114 His Honour noted that this class of trust has been classified as a constructive trust even though it is based on the parties' actual intention rather than imposed despite their intentions. The intention need not be that there be a specific share of the property but it may be sufficient that it be intended that the claimant should have a beneficial interest or some form of a proprietary interest. His Honour noted that the intention may be inferred from direct or indirect financial contributions to the acquisition of property "or the payment of expenses which free up the funds for the purpose", this being a wider enquiry than whether a contribution was made to the purchase moneys such as to give rise to a presumption of a resulting trust: Whilst both enquiries address the inferences to be drawn as to the parties' actual intentions, a contribution to the purchase price creates a presumption of beneficial ownership in the proportion which the amount contributed bears to the price. For a "common intention" constructive trust, a contribution, direct or indirect, to the costs of acquisition of the property is a matter from which an intention that the claimant have a beneficial interest in the property might be inferred. There is a difference between a fact from which an inference can be drawn, and a fact from which a rebuttable presumption arises. The significance of the difference will depend upon the strength of the presumption. In the case of the "common intention" constructive trust, there is no presumption that the beneficial interest is in proportion with the contribution to the purchase price. 115 For a "common intention" constructive trust the plaintiff must show that the plaintiff acted to his or her detriment in a way referable to the agreement that he or she have an interest in the property. White J noted that in Green v Green Gleeson CJ (at 357), (with whom Priestley JA agreed), had approved the test taken from the judgment of Sir Nicholas Browne-Wilkinson VC in Grant v Edwards (at 657) that: Once it has been shown that there was a common intention that the claimant should have an interest in the house, any act done by her to her detriment relating to the joint lives of the parties is, in my judgment, sufficient detriment to qualify. The acts do not have to be inherently referable to the house. … The holding out to the claimant that she had a beneficial interest in the house is an act of such a nature as to be part of the inducement to her to do the acts relied on. Accordingly in the absence of evidence to the contrary, the right inference is that the claimant acted in reliance on such holding out and the burden lies on the legal owner to show that she did not do so …

116 The quantum of the claimant's beneficial interest is that which the parties agreed or intended. However, it seems that where the parties did not turn their minds to the particular form of the title that they intended to have the court can impose a constructive trust which best gives effect to the intentions of the parties (White J noting Green v Green and Parianos v Melluish in this regard). 117 In view of the findings I have already made, I can dispose of this alternative claim relatively quickly. Here, the intention was, I think, clear, that the Boumelhems were to acquire an interest in one of the duplexes to be built on the Dundas property (upon its completion and after subdivision of the land). The expectation of the Boumelhems, encouraged by their son, was that if the Boumelhems provided financial assistance for the acquisition and development of the Dundas property they would, on the successful completion of the joint endeavour, obtain title to one of the duplexes. 118 It was put in effect to me that, as so framed, the intended fulfilment of the project was not to occur until a point in time which has not yet taken place. However, in light of the expenditure of funds or contributions by the Boumelhems in the expectation that they would obtain an interest in the Dundas property once subdivided, they have made out the proprietary estoppel or (if there be any sensible difference) a prima facie entitlement to a "common intention" constructive trust. Again, whether the satisfaction of the equity arising in the Boumelhem's favour requires the imposition of a constructive trust is a matter for consideration in light of the full circumstances of the case. Those circumstances include whether there is an appropriate equitable remedy falling short of the imposition of a trust. Various other factors, including the impact on relevant third parties, must also be taken into account (the consideration of such factors being at the heart of the judgment in Giumelli (see at 113-114)).

Resulting Trust 119 The initial presumption arising from sole registered ownership is that the registered owner has full ownership and there is no beneficial interest in favour of someone else (Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 at [128]). Where, as here, the purchase money for a property is provided jointly but the legal title does not reflect the proportionate contributions of the parties, then absent a presumption of advancement it will be presumed that the beneficial ownership of the property is held in the proportions in which they contributed the purchase money. The relevant time for a finding of a resulting trust is the time of acquisition of the property: Calverley v Green. 120 In Shepherd v Doolan, White J noted (at [23]) that ordinarily the presumption of a resulting trust arises at the time the property is acquired and that, if not displaced, then unless there is a later agreement to alter the equitable interest in the property acquired, or the beneficial interests arising under the resulting trust is displaced by an interest arising under the constructive trust, the interest is not changed by later contributions to the conservation or improvement of the property: If the evidence establishes that it was the intention of the parties that their respective interests should be in accordance with something other than their contributions to the purchase price, such as their contributions to the purchase of the land and discharge of a mortgage, effect will be given to that intention so that although the trust will arise at the time of purchase, the quantum of their interests will fluctuate in accordance with that intention. ( Bloch v Bloch (1981) 55 ALJR 701 at 704; Currie v Hamilton at 692; Calverley v Green at 262-263). 121 His Honour further noted that the concept of what constitutes the purchase price for the purposes of calculating beneficial interests under a resulting trust includes the incidental costs of the purchase, such as legal expenses, stamp duty and registration fees (citing Ryan v Dries [2002] NSWCA 3 at [52]-[53]). 122 As there is no presumption of a resulting trust from the making of capital contributions to the improvement of the property, the fact that John Boumelhem may have drawn down from the redraw facility for the purpose of meeting costs of construction in relation to the duplexes on the land would not give rise to a resulting trust or to a presumption that the beneficial interest obtained by the parents by reason of their contribution to the purchase price should be thereby increased. 123 In Buffrey v Buffrey, Palmer J summarised the principles on which the court proceeds in relation to matters involving presumptions of resulting trust and advancement. There, his Honour noted (at [14]) that for the purposes of both such presumptions: a) the acquisition cost of property includes the costs, fees and disbursements incidental to its acquisition;

b) a party contributes to acquisition cost by borrowing funds necessary to make up the acquisition cost, whether or not that party subsequently contributes to payment of principal and interest due on the borrowing;

c) parties borrowing jointly in order to make up the acquisition cost are treated as having contributed the borrowed capital in equal shares;

d) a party who does not borrow funds to make up the acquisition cost but who subsequently pays, or contributes to payment of, principal and interest on such a borrowing does not, by that fact alone, make a contribution to acquisition cost.

124 In Cetojevic when considering whether there was a resulting trust, Campbell J said (at [36]): In coming to that conclusion, I bear in mind that in an exercise such as this precise accounting is often not to be expected, and that sometimes a broad brush estimate needs to be made to ensure that the onus of proof does not itself become an instrument of injustice. However, it is still necessary for the tribunal of fact to be in a position of being persuaded that, at the least, a certain amount of contributions were made by one particular party, and to be satisfied as to how those contributions relate to the contributions made by the other party. 125 On the evidence, there seems to be no dispute that the Boumelhems contributed at least 99% of the sum ($84,140.23) which made up the balance (after the contribution by John Boumelhem of the amounts obtained under his mortgage from Perpetual) of the purchase price. (Even if, as John Boumelhem claims, he reimbursed himself in late December 2004 out of the loan redraw facility for the deposit, the fact that this occurred post acquisition of the property would take this payment outside the scope of the resulting trust. In any event, I do not accept John Boumelhem's evidence in this regard. Hence, I do not accept that the contribution of the Boumelhems to the purchase price was as high as $100,000.) 126 On the principles outlined in Calverley v Green, there would thus be a presumption of a resulting trust for somewhere in the order of 19%. 127 The question is whether the presumption of a resulting trust is displaced by a presumption of advancement (or whether the presumption of a resulting trust is otherwise displaced by evidence that the actual intention of the parties was that the beneficial interest be vested in John Boumelhem notwithstanding the contribution of his parents to the purchase price). 128 The interrelationship between the presumptions of resulting trust and of advancement was considered by the High Court in Charles Marshall Pty Limited v Grimsley (1956) 95 CLR 353, quoting Viscount Simonds in Shephard v Cartwright [1955] AC 431: I think that the law is clear that on the one hand where a man purchases shares and they are registered in the name of a stranger there is a resulting trust in favour of the purchaser; on the other hand, if they are registered in the name of a child or one to whom the purchaser then stood in loco parentis, there is no such resulting trust but a presumption of advancement. Equally it is clear that the presumption may be rebutted but should not, as Lord Eldon said, give way to slight circumstances: Finch v Finch (1808) 15 Ves Jun 43 (33 ER 671) " [1955] AC, at p 445. 129 The legal burden of rebutting the presumption of advancement falls upon the Boumelhems. Once they have adduced sufficient admissible evidence (considered in light of any evidence going the other way) to rebut the presumption on the balance of probabilities, the presumption has "no inherent superadded weight" (to adopt the words used in Cross). Insofar as it has been suggested that certain presumptions are not lightly rebutted, those statements ought not to be seen as altering the standard of proof, for the reasons outlined by Heydon JA (as his Honour then was) in Damberg v Damberg [2001] NSWCA 87. 130 In Damberg, Heydon JA (having noted the presumption that where one or more parents convey property to a child, the parent or parents intended to give the child the beneficial interest in the property, not merely the legal title), went on to consider how that presumption could be rebutted: [the presumption of advancement can be rebutted] by showing, on the balance of probabilities, that the parent or parents did not have that intention. In the present circumstances, where the husband alone transferred the property, it is his actual intention alone which is to be ascertained: Calverley v Green (1984) 155 CLR 242 at 246-251 per Gibbs CJ. It has been said that although the presumption is rebuttable, it does "not … give way to slight circumstances": Shephard v Cartwright [1955] AC 431 at 445 per Viscount Simonds, quoted in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365 by Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ. According to Viscount Simonds, the quoted words were uttered by Lord Eldon LC in Finch v Finch (1808) 15 Ves Jun 43; 33 ER 671; in fact they were not, though they appear in the headnote, though the expression "slight circumstances" was used by the losing counsel, Sir Samuel Romilly, in argument (at 48 and 673), and though Lord Eldon LC said that the "presumption is not to be frittered away by nice refinements" (at 50 and 674). 131 Heydon JA noted that while there were authorities suggesting that the standard of proof is higher than the normal civil standard (Grey v Grey (1677) 2 Swans 594 at 598; 36 ER 742 at 743,per Lord Nottingham LC; In Re Kerrigan; ex p Jones (1946) 47 SR (NSW) 76 at 87 per Davidson J), the view quoted in A W Scott and W L Fratcher, The Law of Trusts (4th ed) vol V para 443 pp 194-196 was to be preferred: It is the intention of the parties in such cases that must control, and what that intention was may be proved by the same quantum or degree of evidence required to establish any other fact upon which a judicial tribunal is authorised to act. Hartley v Hartley 117 NE 69 at 73 (1917, SC Ill). 132 Heydon JA said: Hence the standard of proof to be met in order to rebut the presumption does not call for application of the principles discussed in Briginshaw v Briginshaw (1938) 60 CLR 336, or rest on any analogy with the high standard of proof in rectification. But it does call for proof of a "definite intention" to retain beneficial title, not a "nebulous intention to rely upon the … relationship as a source of control over the property": Drever v Drever [1936] ALR 446 at 450 per Dixon J (dissenting, but not on this point). 133 Evidence of the acts or statements of the Boumelhems prior to or at the time of the transaction may be used to rebut the presumption. There is some authority to suggest that evidence of subsequent acts or statements may only be used to support the presumption (essentially as admissions) (eg La Housse v Counsel [2008] WASCA 207). However, it is clear from the authorities extracted below that testimonial evidence by the party of his or her intention at the time of the transaction is admissible, though generally viewed with caution. Given that there are no especial rules governing admissibility in matters of the present kind (Damberg at [45]) (and though there is no question of such evidence in the present case) there appears no compelling reason why other evidence of subsequent acts or statements will necessarily be inadmissible unless against interest, though such evidence also would likely be viewed with caution. 134 In Calverley v Green, Deane J explained (at 269) a passage from Charles Marshall v Grimsley, in which the High Court had stated that, aside from admissions, only evidence of the acts and declarations of the parties prior to or at the time of the transaction will be relevant and admissible: This passage constitutes a guide to the evidence which will ordinarily be relevant and admissible to confirm or rebut a presumption of resulting trust or a "presumption" of advancement, namely, acts and declarations of the parties before or at the time of the vesting of the legal estate and admissions against interest. The passage should not, however, be accepted as good law to the extent that it purports to lay down that no evidence other than that mentioned will ever be admissible. 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. More importantly, the subsequent judgment of Dixon CJ, McTiernan, Fullagar and Windeyer JJ in Martin (at 303-5) accepted, as correct, statements of Stuart VC and Cussen J to the effect that, in a case where the subjective intention of a person is relevant, the evidence of that person of his intention at the time of the purchase is admissible notwithstanding that "it must in every case be liable to observations which tend to diminish its weight" (see also Devoy v Devoy (1857) 3 Sm & G 403 at 406; 65 ER 713 at 714; Fowkes v Pascoe (1875) 10 Ch App 343 at 349). It is unnecessary to pursue here the question, which was not argued on the appeal, of the relevance of evidence of subjective intention of either party in a case such as the present where the purchase price was provided by two different active parties to the transaction (cf Gissing v Gissing [1971] AC 886 at 906; [1970] 2 All ER 780).

135 This accords with what was said by the High Court in Martin v Martin (1959) 110 CLR 297 and what was said (at [45]) by Heydon JA in Damberg: In general a person whose intention at an earlier time is in issue may give evidence of it, and the position is the same here, even though the weight of the evidence, coming as it does from an interested witness, must be scrutinised with care: Devoy v Devoy (1857) 3 Sim & Giff 403 at 406; 65 ER 713 at 714 per Stuart V-C; Dumper v Dumper (1862) 3 Giff 583 at 590; 66 ER 540 at 543 per Stuart V-C; Davies v The National Trustees Executors and Agency Co of Australasia Ltd [1912] VLR 397 at 403; Drever v Drever [1936] ALR 446; and Martin v Martin (1959) 110 CLR 297 at 304 per Dixon CJ, McTiernan, Fullagar and Windeyer JJ 136 The evidence of the parties as to how the interests in the property were to be held was that the interest in the property was to be placed in the son's name alone (apparently, according to John Boumelhem, by reference to the fact that his parents were pensioners). Michael Boumelhem gave no explanation for this other than to say that it was not intended that any part of the property be transferred into his and his wife's names until the duplexes were constructed and the property subdivided. 137 On the reasoning of the majority judgments in Nelson v Nelson (1995) 184 CLR 538, even if there had been an illegal purpose in placing the property in John Boumelhem's name, this would not necessarily prevent the Boumelhems from asserting that purpose in rebutting the presumption of advancement and relying upon the presumed resulting trust, though in that case the relief sought was conditioned upon Mrs Nelson doing equity by accounting to the Commonwealth for the benefit which she had obtained under the relevant legislation (the Defence Service Homes Act 1918 (Cth)). In any event, I have no evidence before me as to enable me to assess what impact (if any) ownership of the Dundas property might have had on either of the Boumelhems' pension arrangements 138 Michael Boumelhem's evidence (which I accept) was that he had no intention to make a loan of such an amount to his son, a fortiori it cannot seriously be suggested that he intended to make a gift in these circumstances. This is not a case where the Boumelhems were relying on a "nebulous intention" arising out of the relationship with their son to give them some kind of interest in the property or to support them in their old age. Rather, the Boumelhems appear to have had a definite intention, induced or encouraged by their son, as at the time the Dundas property was acquired that their son would hold the property for their joint benefit (and thus that they would obtain in due course a legal interest in the property). Does this establish a definite intention that they retain a beneficial interest in the Dundas property as that is explained by Dixon J in his dissenting judgment in Drever v Drever [1936] ALR 446 to which Heydon JA in Damberg refers: It is, I think, necessary for him to rebut the presumption of advancement. To do this he must establish satisfactorily that a definite intention existed in his mind at the time of the transfer that, during his life at any rate, the beneficial interest in the property should belong to him and not pass to her. More is necessary than a nebulous intention to rely upon the matrimonial relationship as a source of control over the property he was vesting in his wife. More, too, than the exaction of a promise that she would permit him to encumber or sell the property if his needs demanded that course. Such a promise from a donee assumes rather that a beneficial interest does pass. It by no means implies a resulting trust. They had a very clear understanding as to what the end result of the acquisition and development of the property was to be. 139 (There, however, unlike the position in Nelson, Dixon J, with whom Evatt J agreed, considered that an illegal purpose of placing property in another's name in order to defraud creditors or evade tax (where that illegal purpose was carried into fruition) would prevent that intention being asserted in order to rebut a presumption of advancement (Latham CJ, Starke and McTiernan JJ not needing to decide the question).) 140 The arguable artificiality which results from the situation where evidence of a specific intention to retain a beneficial interest is led to rebut the presumption of advancement (and, so, might be suggestive of an express trust), only to have the trust then characterised as a presumed resulting trust was recognised in the judgment of Deane and Gummow JJ in Nelson (at 547-548): The presumptions operate to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase. The first presumption is that where a person in the position of Mrs Nelson paid the purchase price for the Bent Street property and caused it to be transferred to other persons, they hold the property upon trust for the person who provided the purchase money. The other presumption, that of advancement, is perhaps not strictly a presumption at all. Rather, the position is that there are certain relationships from which equity infers that any benefit provided for one party at the cost of the other has been provided by way of "advancement". The consequence is that the equitable estate follows the legal estate and is at home with the legal title; there is an absence of any reason for assuming that a trust arose. The operation of the presumption of advancement may be rebutted by evidence of the actual intention, at the time of the purchase, of the parent or other person who provided the purchase money. Evidence also may be given to support the presumption of advancement. Where the presumption of advancement is rebutted, the trust which then is enforced is a resulting trust, not an express trust. The trust thus is outside the operation of the requirement for writing in s 7 of the Statute of Frauds 1677 (Eng) and its modern Australian equivalents. Accordingly, oral evidence is admissible to rebut the presumption of gift and thus to affirm the operation of the presumption of resulting trust. Professor Scott deals with the matter as follows: This reasoning is somewhat artificial; but trusts arising where the evidence shows an intention to create a trust when land is purchased in the name of a relative were considered to be resulting trusts before the enactment of the Statute of Frauds, and that statute expressly excepts resulting trusts from its operation. 141 Here, I am satisfied that the presumption of advancement is rebutted in that it was not the intention of the Boumelhems to make either a loan or a gift of the money to their son. 142 However, the only contribution by the Boumelhems to the purchase price that I am satisfied has been established is the amount paid at the direction of the vendor on settlement (99% of $84,140.23). (As noted above, I cannot accept that John Boumelhem's evidence is reliable. While there is evidence that a sum of $29,000 was withdrawn by him in December 2004 out of the redraw facility comprised by the balance of the $450,000 loan, I do not accept his characterisation of this being by way of reimbursement by his parents to him of the deposit he had earlier paid. It could equally have been a reimbursement of credit card debts for his businesses or other debts owed by his personally.) Therefore, any resulting trust would, I consider, be limited to approximately 19% of the Dundas property (based on the figures provided, on my calculation the precise percentage would be 18.78%). Relief 143 The High Court in both Bathurst City Council v PWC Properties Pty Limited (1998) 195 CLR 566 at 585 and in Giumelli v Giumelli at 113 has said that before a constructive trust is imposed the court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust. In Bathurst, their Honours noted that Gibbs CJ in Muschinski v Dodds had seen the imposition of an equitable charge to secure the appellant's entitlement to a contribution from the respondent as an adequate equitable remedy. 144 One of the reasons for the caution expressed in Bathurst and Giumelli appears from the judgment in Bathurst, where their Honours said that: … An equitable remedy which falls short of the imposition of a trust may assist in avoiding a result whereby the plaintiff gains a beneficial proprietary interest which gives an unfair priority over other equally deserving creditors of the defendant. 145 As a general statement of principle, a constructive trust will be treated as coming into existence at the time of the conduct which gives rise to the trust. In such a case, the doctrine of priorities would apply and, where the equities are equal, the beneficiary of the constructive trust would be entitled to priority over the holder of a later equitable interest or an unsecured creditor of the constructive trustee. 146 In Parsons v McBain (2001) 109 FCR 120, the Full Court of the Federal Court considered the time at which a constructive trust founded upon the common intention of the parties came into existence and, referring to Browne-Williamson J in Re Sharpe (a bankrupt); Ex parte Trustee of the Bankrupt's Property v The Bankrupt [1980] 1 WLR at 225 and to the joint judgment of Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli at [122], rejected the notion that a "common intention constructive trust" first comes into existence when so declared by the court. The Full Court of the Federal Court (comprised of Black CJ, Kiefel and Finkelstein JJ) referred to what had been said by Deane J in Muschinski, namely that: The old maxim that equity regards as done that which ought to be done is as applicable to enforce equitable obligations as it is to create them and, notwithstanding that the constructive trust is remedial in both origin and nature there does not need to have been a curial declaration or order before equity will recognize the prior existence of a constructive trust : … Where an equity court would retrospectively impose a constructive trust by way of equitable remedy, its availability as such a remedy provides the basis for, and governs the content of, its existence inter partes independently of any formal order declaring or enforcing it. (emphasis as added by their Honours in Parsons v McBain ). 147 This was followed by Jacobson J in Parianos v Melluish (at [59]). Though his Honour was there again considering a "common intention constructive trust" of the kind imposed in Parsons v McBain, Jacobson J said (at [60-61]): … It seems to me that the same approach to the question of when the constructive trust will take effect applies regardless of whether the trust is imposed by reason of an inferred intention or under the pooling principle stated in Baumgartner.

In either case, the facts which give rise to an eventual court order create a personal equity between the parties which may be defeated by competing claims. However, the equity will not be defeated merely because the legal title has passed to a trustee in bankruptcy who stands in the shoes of the bankrupt; see Parsons v McBain at 16; see also Sonenco (No 77) Pty Ltd v Silvia (1989) 24 FCR 105 at 112 (per Beaumont J).

148 In Parianos, Jacobson J did not accept the submission made by the Trustee in Bankruptcy that Mrs Parianos' claim must fail because she had not lodged a caveat or because she had failed to take any steps to assert her beneficial ownership prior to the bankruptcy. However, his Honour also noted that he accepted the submissions made by Mrs Parianos' counsel that the property had not been the subject of any dealings for value which would take priority over Mrs Parianos' equitable interest. 149 As the High Court in Bathurst was careful to note, the constructive trust declared in Muschinski (notwithstanding the comments of Deane J referred to in Parsons) operated only from the date of judgment. Their Honours said (at 584): Muschinski v Dodds and Baumgartner v Baumgartner , to which reference was made in the Court of Appeal, did not involve a constructive trust of the species considered above. The order made by this Court in Muschinski v Dodds allowed the appeal without itself spelling out the terms of any constructive trust which was to be imposed, as a remedy in the circumstances of the case and in accordance with the judgments of Mason J and Deane J. Brennan J and Dawson J dissented and Gibbs CJ had been of the view that the appropriate remedy would have been a charge. The constructive trust which Mason J and Deane J favoured was to be imposed only from the date of publication of the reasons for judgment in this Court and was to be imposed despite the common intention of the parties that each enjoy, from the time of purchase, an immediate and unconditional legal and beneficial one-half interest in the property in question. (footnotes omitted) 150 Deane J in Muschinski said (at 623): There remains the question whether there should be a declaration that the Picton property is held by the parties upon constructive trust. In my view, there should. That property was acquired, in pursuance of the consensual arrangement between the parties, to be held and developed in accordance with that arrangement. The contributions which each party is entitled to have repaid to her or him were made for, or in connexion with, its purchase or development. The collapse of the commercial venture and the failure of the personal relationship jointly combined to lead to a situation in which each party is entitled to insist upon realization of the asset, repayment of her or his contribution and distribution of any surplus. In these circumstances, the appropriate order to give effect to the rights and obligations of the parties is an order declaring that the Picton property is held by them upon constructive trust. Lest the legitimate claims of third parties be adversely affected, the constructive trust should be imposed only from the date of publication of reasons for judgment of this Court. (my emphasis) 151 What is not clear is in what circumstances the presence of third party interests will cause the court either not to impose a constructive trust at all or only to impose a constructive trust shaped to commence from the time of judicial determination (as was done in Muschinski) rather than at an earlier time. 152 In Re Osborn (1989) 25 FCR 547, Pincus J refused to hold that a constructive trust, arising in favour of a de facto spouse on the principles of Muschinski v Dodds and Baumgartner v Baumgartner, predated the other de facto spouse's bankruptcy. His Honour considered that it was in the interests of certainty in bankruptcy law that trustees should not have to engage in litigation to establish the uncertain entitlements of a domestic partner in property to which the bankrupt has an apparently absolute legal title. 153 While the Full Court in Parsons considered (at 125) that Re Osborn should not be followed, insofar as it was informed by the view the Full Court rejected: … that a "common intention constructive trust" first comes into existence when so declared by the court … it may well be that what Pincus J should be taken to have intended (in saying "that the property was not, and should not be declared to have been, subject to a constructive trust in favour of [Ms Osborn] at a date prior to the transfer"), was no more than that, in circumstances where the legitimate claims of third parties would necessarily be affected, the constructive trust should be recognised by the court only as operating from the time of curial declaration.

154 In Parsons, the Full Court quoted the following passage from Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 at 365: … the court has a discretion to modify the prima facie date on which the [constructive] trust takes effect. We would adopt the view of A J Oakley that "in the absence of any judicial order to the contrary, a constructive trust will take effect from the moment at which the conduct which has given rise to its imposition occurs": Oakley, Constructive Trusts, 3rd ed, 1997, p 5. See also Pawlowski, pp 12, 130-2. Compare Re Sabri; Ex parte Brien v Australia & New Zealand Banking Group Ltd (1996) 21 Fam LR 213 at 223-9. and explained this passage the following way (at 126): We think it clear from the context (including the cases to which the court had express reference) that the Full Court was doing no more than acknowledging that, in an appropriate case, an equitable interest arising under a constructive trust may be defeated by, or must defer to, competing claims. The equitable interest will not be defeated merely because the legal title has passed to a trustee in bankruptcy, for he stands in the shoes of the bankrupt: Aguilar v Aguilar (1820) 5 Madd 414; 56 ER 953. But the interest may be defeated by, or may be made to defer to, later claims "by conduct, by representations, by misstatements of a character which would operate and enure to forfeit and to take away the pre-existing equitable title": Shropshire Union Railways and Canal Co v R (1875) LR 7 HL 496 at 506 per Lord Cairns. What must be shown to take away a pre-existing equitable title is "something tangible and distinct having grave and strong effect to accomplish the purpose": Abigail v Lapin [1934] AC 491 at 504. 155 Of course, in Agnew, the Full Court had gone on to say: In the present case there is no reason, such as third parties in need of protection , to defer the inception of the trust, and accordingly it came into existence when the conduct which gave rise to its imposition occurred. [my emphasis]

156 It if is suggested that Agnew is simply an application of the doctrine of priorities (and particularly that element relating to postponing conduct, to which the quote from Abigail v Lapin refers), then it is not clear why the commencement of a constructive trust should be deferred to account for postponing conduct or to yield to a superior equity - the court could surely find and declare that a constructive trust existed from a certain point of time, but then find that it did not have priority over a later interest because of postponing conduct / a greater equity. The reference in Agnew to "third parties in need of protection", appears to contemplate something other than a question merely of postponing conduct.

157 In Muschinski, the constructive trust was imposed only from the date of publication of the court's reasons, yet there was no suggestion that the deferred inception of the trust was the product of any particular conduct, representation, or misstatement.

158 In his dissenting judgment in Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536, Gummow J, then sitting in the Full Federal Court, acknowledged (at 555) some of the concerns regarding the priority afforded to beneficiaries of constructive trusts against general creditors (or holders of later acquired interests): Reference was made by Gibbs CJ (in Daly's case (supra) at 379) to the effect of the constructive trust in withdrawing assets from the general body of creditors; this generally will be so unless the beneficiary of that trust himself holds his rights for the benefit of a fund he administers, for example, on insolvency (as would be the position of the Official Receiver in the present case). However, in general the result may be seen, as the Chief Justice observed, as unjust to the general creditors of the constructive trustee unless there is given further explanation of the raison d'etre of the trust. 159 There, however, his Honour did not come to a definitive conclusion as to when third party interests will render it inappropriate to impose a constructive trust.

160 The concerns of the High Court in Bathurst as to the circumstances in which imposition of a constructive trust might accord unfair priority have been acknowledged in at least two Victorian cases.

161 In Disctronics Ltd v Edmonds [2002] VSC 454, Warren J, as her Honour then was, after discussing Muschinski and Bathurst, said the following (at [212-213]): The plaintiffs sought the declaration of a constructive trust as their primary relief. They sought also, and alternatively, equitable compensation and an account of profits. Mindful of the clarification of the relief expressed by the High Court in Bathurst City Council I must consider whether there are other means available to resolve the controversy between the parties. If a constructive trust is imposed it must be capable of being moulded so as to be effective from the date of judgment subject to appropriate orders to protect third parties such as the Buxton interests and any mortgagee including the repayment of moneys owed. However, I could not be satisfied that in doing so the effect of such declaration and order would be devoid of the risk of giving the plaintiffs unfair priority over others such as any mortgagee. Unfortunately, the consequences of a declaration in the circumstances of this case were not the subject of sufficient evidence as to the risks to other parties such that I would be prepared to impose a constructive trust in this matter. I consider that in this case there are clear remedies available capable of resolving the matter without resort to the imposition of a constructive trust. I make one further observation. Most of the cases where the imposition of a constructive trust has been contemplated have generally fallen into two broad categories. First, the domestic property cases. Secondly, the insolvency cases where a party seeks priority over creditors. Here the circumstances do not fall easily into either category… (my emphasis)

162 Warren J concluded in that case that equity could be done by ordering equitable compensation.

163 In Victoria University of Technology v Wilson [2004] VSC 33, Nettle J referring to Distronics said the following (at [216]), to like effect: In Distronics Ltd v Edmonds [sic], Warren J (as her Honour then was) refused to impose a constructive trust over land the subject of a joint venture development, because she could not be satisfied that it would not unfairly advantage the plaintiffs over third party creditors of the defendant company. Likewise here, I do not think that I can be satisfied that the imposition of a constructive trust over the software would be devoid of the risk of giving the university unfair priority over third party investors. And as will be seen, I do not consider that it is necessary to make such an order in order to do equity to the university.

164 (See also Sui Mei Huen v Official Receiver (2008) 248 ALR 1 at 22 and Draper v Official Trustee in Bankruptcy (2006) 236 ALR 499 at 522.) 165 There appears to be no authoritative guidance as to what is meant by "unfair priority", in the context of equally deserving third parties or those having legitimate claims or needing protection. 166 Are there factors which call for ABTS/Boral to be protected in terms of priority viz-a-viz the Boumelhems? There was no evidence that either ABTS or Boral had conducted title searches prior to entering into their respective credit supply arrangements (though had they done so there would have been nothing to disclose the claim now brought by the Boumelhems). 167 It was suggested that it would be unfair for the Boumelhems to take priority over creditors who may have supplied goods which have been incorporated in the Dundas property development. While there is no evidence that they were, it might be thought that in the course of the building works in respect of the duplexes John Boumelhem would have made use of at least some of the building products supplied by ABTS/Boral to the companies carrying on his plasterboarding business. That, and the uncertainty as to the extent of the monetary contribution by the Boumelhems, calls for caution in the grant of any proprietary remedy to the Boumelhems. 168 While a number of cases have pointed to the need to have regard to the prejudice which might be done (by the imposition of a constructive trust) to the claims of third party creditors who could not have been aware of the circumstances giving rise to the constructive trust. On the other hand, there is a fairly clear (though not uncontradicted) line of authority from Re Jonton Pty Limited [1992] 2 Qd R 105 to Re: Sabri; Ex parte Brien v Sabri (1996) 137 FLR 165 to Parsons in which such prejudice does not appear to have prevented the imposition of a constructive trust. 169 With the above in mind, the question I must determine is whether there would in this case be an appropriate or available remedy "to quell the controversy" (adopting their Honours' terminology in Bathurst) before me, short of the imposition of a constructive trust and (if not) whether any constructive trust so imposed should be moulded to avoid or minimise prejudice to ABTS and Boral, each claiming an equitable interest later in time to any trust which might be imposed which takes effect from the commencement of the joint endeavour I have found. 170 In West v Mead, Campbell J did not consider that there was a suitable remedy short of imposition of a trust. In particular, his Honour noted that any presumption of resulting trust applied to the payments made by the plaintiff into the parties' joint account in that case would be rebutted by the intention that the joint account be used to pay the expenses of both the plaintiff and the defendant and hence it could not be said that any of the plaintiff's money could be traced into the property in question; and his Honour found there was no adequate basis for fixing the amount of a charge over the property. 171 Here it seems to me that there is available relief short of the imposition of a constructive trust, which, though it does not give to the Boumelhems the whole of what they expected or hoped to receive, will appropriately balance the competing claims of the Boumelhems against the claims of ABTS and Boral. 172 With that in mind, I consider the appropriate relief in all the circumstances is, first, to declare a resulting trust in favour of the Boumelhems in respect of the Dundas property to the extent of the monetary contribution made by them to the purchase price (which appears to be 18.78%) and, secondly, in relation to the further contributions to the construction costs (totalling $129,000) made out of the loan redraw facility (which facility was made available as part of a joint endeavour of the Baumgartner kind or pursuant to a common intention that the Boumelhems by so doing would be entitled on completion of the works to take title to one of the duplexes) to impose (with effect from the date of the respective contributions) a lien over the Dundas property securing repayment of each of the respective sums (see Cadorange Pty Limited (In Liq) v Tanga Holdings Pty Limited (1990) 20 NSWLR 26 and Morris v Morris [1982] 1 NSWLR 61). 173 I am not satisfied that the factual basis for similar treatment of the claimed reimbursement of the deposit has been established, nor am I satisfied that the payment applied to extinguish the prior indebtedness of John Boumelhem ($153,000) should be treated as referable to the acquisition and development of the Dundas property. 174 Had I not been satisfied as to the presuming resulting trust, I would have imposed an equitable lien both in respect of the sum of $129,000 and in respect of the Boumelhems' initial contribution to the purchase price (ie $83,298.83). ABTS/Boral proceedings 1648/08; 4017/08 175 The claims brought by ABTS/Boral are based on identically worded clauses. In each case, John Boumelhem signed a Personal Guarantee Indemnity Agreement containing the following clauses: 1. I will indemnify the Supplier against any losses, costs, charges and expenses of any nature, which it might incur as a result of any default by the Customer or arising under this Guarantee. I agree that I will pay any stamp duty assessed on this Guarantee.

2. I will also be responsible to the Supplier for all outstanding monies due now or at any time in the future for Goods supplied by the Supplier to the Customer from time to time. … 3. In this Guarantee: "Goods" includes services and "Supplier" means BORAL and each related body corporate of BORAL and its assigns from whom Goods are purchased. Singular words include the plural and vice versa. Where there is more than one Guarantor, they will be bound jointly and severally. "Related body corporate" has the same meaning as that given to that expression in the Corporations Act 2001. "Guarantee " means this Personal Guarantee and Indemnity Agreement. "Property" means all property owned by the Guarantor now or in the future, solely or jointly.

9. The Guarantor hereby agrees to charge all their equitable interest in freehold or leasehold property. The Guarantor agrees to deliver to the Supplier within seven (7) days of demand, a properly executed Memorandum of Mortgage in a form approved by the Supplier and which includes a covenant providing that interest may be charged on all outstanding monies at rates set from time to time by Section 94 of the Supreme Court Act 1970 (NSW), and otherwise in accordance with Memorandum Q860000, registered at the office of the Registrar General in Sydney. " 176 The agreements were expressed to be executed as deeds. There is no suggestion that goods were not supplied to Jayvue or Jayvue (Qld), as the case may be, or that an indebtedness has arisen falling within the terms of the respective guarantees. (In Boral's case the guarantee extends to indebtedness to a related body corporate.) 177 Clause 9 clearly gives rise to an equitable charge - an agreement to create a charge over identifiable property (Bridge Wholesale Acceptance Corporation (Australia) Limited v Burnard (1992) 27 NSWLR 415). What is relevant here, however, is that what is being charged is "all their equitable interest in freehold or leasehold property" (my emphasis). This clearly contemplates property in which the equitable interest was retained by John Boumelhem any property in which John Boumelhem did not hold an equitable interest at the relevant time does not fall within the charging clause. 178 Accordingly, the equitable charges held by ABTS/Boral do not operate in respect of the interest held by John Boumelhem in the Dundas property over which a resulting trust has been declared (approximately 18.78%) but will operate to charge in favour of ABTS/Boral, respectively, the balance of John Boumelhem's interest in the property (ie 81.22%), those equitable charges nevertheless ranking in priority according to their respective dates with the equitable lien I have declared in respect of the non-monetary contributions. In that regard I note that Boral sought leave to amend it summons to seek relief in relation to a charge granted by John Boumelhem on 17 February 2005. To the extent that Boral's 2005 equitable interest is prior in time to some of the contributions made by the Boumelhems to costs in respect of which I have imposed an equitable lien, this charge would rank in priority to any lien in respect of those later amounts. 179 I will hear submissions as to the precise form of orders to give effect to the above reasons, bearing in mind the suggestion by Counsel for the defendants that they may wish to seek orders as to the sale of the Dundas property. **********

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