Bowden v Bowden

A Short Additional Procedural History

1. Upon giving judgment on 10 April 2019, Pembroke J ordered the remaining quantification of issues in these proceedings to be referred out to a referee, Mr Schon Condon of Condon Associates pursuant to Uniform Civil Procedure Rules 2005 ("UCPR"), Part 20, Division 3, for a report to determine the expenditure of each of the plaintiffs and the defendants in the construction of a house on the Nowra property.
2. Pembroke J made the following orders on 11 June 2019 referring the matter out to Mr Schon Condon as referee: "His Honour Justice Pembroke makes the following orders: 1. Order that within 7 days, Julie Gaye Bowden and Kevin Alwyn Bowden complete and execute all such documents and do all such things as may be necessary to effect a transfer of a half interest in Lot 4 DP1060106 known as 60 Worrigee Road, Worrigee from Julie Gaye Bowden to Kevin Alwyn Bowden. 2. In the event that the transfer of a half interest in the property has not been effected in favour of Kevin Alwyn Bowden by 18 June 2019, order that the Prothonotary of this Court or any Registrar be authorised on behalf of the parties to complete and execute all such documents and do all things as may be necessary to effect the transfer.

Vacate the directions hearing on 18 July 2019 before Pembroke J and list for directions on Wednesday, 14 August 2019 at 9.45am before Pembroke J.

Pursuant to Uniform Civil Procedure Rules 2005 (UCPR) rule 20.14 Schon Gregory Condon, chartered accountant, of Condon Associates be appointed referee (referee) to produce a report to the Court (reference).

Direct the parties deliver to the referee a copy of this order together with a copy of Division 3 of Part 20 of the UCPR.

Direct that UCPR rule 20.20 will apply to the conduct of the proceedings under this reference.

That the referee make such directions so as to facilitate the inquiry and report to the Court in respect of the following questions: a) the amount of financial contribution made by the first plaintiff to the improvements to the property; b) a reasonable monetary quantification reflecting any non-financial contribution made by the first plaintiff to the improvements to the property; c) a reasonable monetary quantification reflecting any financial contribution made by the first defendant and the second defendant to the improvements to the property; d) the amount of non-financial contribution made by the first defendant and the second defendant to the improvements to the property; and e) to opine on a percentage basis or such other basis as may be applicable the respective contribution to the improvements to the property by the plaintiffs on the one hand and the defendants on the other hand. 8. That within 5 business days of the making of these orders the solicitor for the defendants is to prepare and send to the plaintiffs a letter of instruction in accordance with order 4 and the subjoined paragraphs thereto for agreement. On agreement between the parties the solicitor for the defendant is to send this letter to the referee within 3 business days.

9. That within 14 days the defendants and the plaintiffs pay into the trust account of the referee the amount of $15,000 in total (being $7,500 for each of the plaintiffs and $7,500 for the defendants) prior to the referee commencing the inquiry and report as set out in order 2 above. 10. That the costs of and associated with the referee be paid for in equal shares between the first plaintiff and the first and second defendant (that is on a 50%-50% basis) and subject to any order the Court may make following the receipt of the report. 11. That the referee is to furnish a report to the Court by no later than 31 July 2019 addressed to the Registrar of the Supreme Court of New South Wales pursuant to rule 20.23. 12. Liberty to the referee or any of the parties to relist the matter on 3 days' notice."
10. The referee's report was submitted to the Court on 25 May 2020. The report made findings about the relative financial and non-financial contributions of the parties and adjusted their original 50:50 ownership of the Nowra property as was determined by Pembroke J. The referee's report found that Mr Kevin Bowden held a 52.2% interest in the Nowra property and that Mrs Julie Bowden held a 47.8% interest in the Nowra property.
11. By their Notice of Motion dated 19 June 2020 ("the defendants' Motion"), the defendants, Mrs Julie Bowden and Mr Ian Bowden now apply for orders for the adoption of Mr Condon's report pursuant to UCPR, r 20.24(1)(a), as well as the sale of the Nowra property by trustees for sale pursuant to Conveyancing Act 1919, s 66G.
12. At paragraphs [14] to [16] of the Court's 17 December 2020 judgment, the Court summarised what the plaintiff was then contending were its three main grounds for the referee's report not being adopted. But on 17 December 2020 the plaintiffs made an overarching criticism of the referee's report: that the referee did not have regard to material which the plaintiffs had attempted to put before the referee, material which the plaintiffs say proved their expenditure but did not find its way into the referee's report. This was in substance a contention that the referee had denied the plaintiffs procedural fairness.
13. In response to this contention the Court decided to take a course which is unusual on an application to adopt a referee's report: to allow the plaintiffs to advance further evidence, namely the evidence which they say that they had prepared and offered to the referee but which they had been denied an opportunity to use before the referee. As the plaintiffs were legally unrepresented and it was very difficult to understand their procedural fairness argument, the Court decided that it should allow this material to be adduced. It did so notwithstanding that this was not the common course followed upon contests about the adoption of the referee's reports. But in this case it was the course that would be the fairest in the circumstances, because the plaintiffs said that they had been denied the opportunity to put the material before the referee.
14. So, on 17 December the Court made directions for the plaintiffs to put on any evidence upon which they wish to rely in order to oppose the adoption of the referee's report by 12 February 2021 (Order 1). The defendants were directed to put on any evidence in reply by 26 February 2021 (Order 2). Each party was then directed to file and serve any supplementary submissions on the question of the adoption of the referee's report by 10 March 2021 (Order 3). And the proceedings were adjourned until 11 March 2021 (Order 4).
15. But this timetable was interrupted. On 4 February 2021, Mr Kevin Bowden sent an email to my Associate on behalf of Mr Phillip Bowden advising that Mr Phillip Bowden was "in ill health" and that he was seeking an adjournment of the proceedings based upon a medical report of a Dr John Thomson. In his accompanying medical report, Dr Thomson indicated that Mr Phillip Bowden was unable to attend Court appearances until his condition had improved. The medical report did not make clear how soon Mr Phillip Bowden's medical condition was expected to improve.
16. The Court rejected this application. The medical evidence did not suggest that Mr Kevin Bowden, assisted informally by Mr Phillip Bowden, was unable himself to continue to prepare the evidence upon which he proposed to rely, the preparation of which would not require Mr Phillip Bowden to undertake Court appearances in person. Mr Phillip Bowden's assistance would still be available to Mr Kevin Bowden in the background. But the Court's orders of 17 December 2020 were varied to accommodate the plaintiffs' difficult situation. The Court extended the time for compliance until 19 February 2021 for the filing of Kevin Bowden's evidence and 5 March 2021 for the filing of the defendant's evidence.
17. On 19 February 2021, the plaintiffs filed a number of lengthy affidavits addressing, amongst other things, the history of the 'Bowden Family Trust' ("the Trust") and the alleged respective financial and non-financial contributions of both the plaintiffs and defendants in constructing the house on the Nowra property with respect to bricklaying, plumbing, electrical installations and various other aspects of construction. On 5 March 2021, the defendants filed two further affidavits in reply.
18. But these affidavits did not clearly conform with the Court's orders of 17 December 2020, which allowed the plaintiffs to put on further evidence "upon which they wish to rely in order to oppose the adoption of the referee's report". Rather than deal expressly with what evidentiary material the plaintiffs had attempted to put before the referee and, for example, had been rejected, the lengthy affidavits that the plaintiffs filed sought to re-agitate the main issues in dispute, which Pembroke J already determined on 10 April 2019.
19. On 15 March 2021, the plaintiffs provided the Court with written submissions. These submissions opposed the defendants' Motion to adopt the referee's report on several grounds. These included: that the referee had failed to consider certain financial contributions the plaintiffs had made to the Nowra property; that the plaintiffs were denied procedural fairness by the referee; and that the referee's reasons for finding that Mr Kevin Bowden held a 52.2 per cent interest in the Nowra property were flawed. These grounds are considered below along with those which the plaintiffs articulated at the 17 December 2020 hearing.
20. Upon receipt of this material, the Court held further directions hearings on 16 March 2021, 27 April 2021 and 14 May 2021. The purpose of these directions hearings was to sharpen the contest between the parties. The submissions and evidence that the Court had received from the plaintiffs by 16 March 2021 had been vague and difficult to follow. The Court made these directions because it wished to have greater definition of the issues for decision.
21. A key direction that the Court made on 16 March 2021 to achieve that precision, directed the plaintiffs to provide a submission that clearly identified all the examples of denial of procedural fairness referred to in the 15 March 2021 submissions (Order 3) upon which the plaintiffs relied. Consequent upon this direction the plaintiffs filed additional submissions on 8 April 2021.
22. The Court's 16 March 2021 directions also sought to have the plaintiffs better organise the mass of material they were putting before the Court, so the Court could make more sense of that material. The Court's directions required the plaintiffs to provide the Court and the defendants with a clearly identifiable, cross-referenced bundle of the documents upon which the plaintiffs wished to rely. With the oversight of the Court, this order was largely complied with by the 14 May 2021 directions hearing.
23. There are thus two principal matters for determination: (A) whether the Court should adopt the referee's report and, (B) whether an order should be made under Conveyancing Act 1919, s 66G appointing trustees for sale of the Nowra property.

Applicable Legal Principles

1. Referee's Reports. The legal principles that apply when the Court considers whether to adopt or reject a referee's report in whole or in part may be shortly stated. The Court has a broad discretion as to how a referee's report is dealt with under UCPR, Part 20, Division 3. Once a report is received by the Court under UCPR, r 20.23, the Court's powers to deal with it are provided for under UCPR, r 20.24, which relevantly states: "20.24 Proceedings on the report (1) If a report is made under rule 20.23, the court may on a matter of fact or law, or both, do any of the following - (a) it may adopt, vary or reject the report in whole or in part, (b) it may require an explanation by way of report from the referee, (c) it may, on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report, (d) it may decide any matter on the evidence taken before the referee, with or without additional evidence, and must, in any event, give such judgment or make such order as the court thinks fit. (2) Evidence additional to the evidence taken before the referee may not be adduced before the court except by leave of the court."
2. The principles the Court will consider when exercising this discretion were comprehensively set out by Einstein J in Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd [2003] NSWSC 547.
3. In limited circumstances the Court may also consider whether it is appropriate to review the evidence which was before the referee. But this should only be considered in the three circumstances set out in Franks v Berem Constructions Pty Ltd [1998] NSWCA 87 ('Franks') at 8 (Priestley JA, Fitzgerald AJA and Hodgson CJ in Eq) and cited with approval in Tryhaz Pty Ltd v Fielders Engineers Pty Ltd [2005] NSWSC 906 (Macready AJ) at [14]: "If there were a real question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come. This was not required "by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it". The application was far more limited: 'to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence.' A second circumstance in which it could be necessary or appropriate for a court considering the adoption of a referee's report to go the evidence is where the referee's reasons on the face of them appear adequate, but the party challenging the report contends that the reasons are not adequate because there was very significant evidence against the referee's finding which the referee did not deal with at all. Such a contention may concede that the referee's conclusion was one which a reasonable referee could have reached on the whole of the evidence, and also that the referee's reasons on the face of them appear sufficient; and yet claim that examination of evidence would show that the reasons were in fact quite inadequate because some very significant evidence was not referred to at all. Thirdly, if a court considering the adoption of a referee's report decided that the referee's reasons were flawed, either on the face of them or because they did not deal at all with an important matter appearing in the evidence, the court could, if it thought appropriate, rather than automatically declining to adopt the report, itself look at the detail of the evidence in order to decide whether or not the expense of further proceedings before the referee was really justified."
4. Rejection or variation of a referee's report pursuant to UCPR, r 20.24 requires proper justification. Neither party has an automatic right to have the evidence leading to the referee's report re-heard by the Court; and the nature and purpose of the exercise of discretion under UCPR, r 20.24 is such that rejection of the report is not justified by mere disagreement with a referee's factual findings: Bermria Pty Ltd v Homebush Abattoir Corporation (1991) 22 NSWLR 600 ("Bermria"); Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; and Ryde City Council v Tourtouras [2007] NSWCA 218.
5. The Pleaded Issues. The present contest concerning the quantum of expenditure cannot be properly understood without revisiting the pleaded issues and Pembroke J's findings to appreciate the relevance of the quantum issues and the legal standards of proof applicable to them.
6. The plaintiffs claim declarations that Ms Julie Bowden held her title in the Nowra property on constructive trust for either herself or for the Trust. Kevin Bowden bases this claim principally on what is in substance a Baumgartner-type (Baumgartner v Baumgartner (1987) 164 CLR 137; (1987) 76 ALR 75; (1987) 11 Fam LR 915; [1987] HCA 59 ("Baumgartner")) constructive trust, or alternatively upon the basis of an equitable estoppel.
7. Kevin Bowden pleaded that he and the Trust on the one hand and Julie and Ian Bowden on the other hand agreed that the Nowra property would be acquired in the name of Ian Bowden but would be held by him for the benefit of the Trust. Kevin further pleads that he provided all the funds for the acquisition, construction, fit out and improvement of the Nowra property. He pleads that Julie became the registered proprietor without his knowledge and it would be unconscionable for Julie and Ian to deny that either Kevin or the Trust hold the beneficial interest in the Nowra property. The plaintiffs claimed an equity in the whole of the Nowra property on the basis that they had supplied all the funds and contributions to the acquisition and development of the Nowra property and that it would now be unconscionable for the defendants to deny their ownership of the whole property.
8. Alternatively, Kevin pleaded an equitable estoppel claim to the effect that he assumed that the Nowra property would be acquired in the joint names of Kevin and Ian (or possibly the Trust) in equal shares and that he advanced money to acquire the Nowra property and to build a house upon it based on that assumption. This alternative claim only sought a 50% interest in the Nowra property on behalf of Kevin and the Trust.
9. Pembroke J's findings were to the effect that the original arrangement was that Kevin and Julie were intended as 50% joint owners in the Nowra property, although his Honour found that since then Kevin has acted as though the property were his. Pembroke J was unable to determine how much the plaintiffs and the defendants had spent respectively on the property but he effectively found that 50:50 division was the starting point for analysis because he ordered the execution of documents for the transfer of a 50% interest in the Nowra property to Kevin.
10. Pembroke J made orders in favour of Kevin and did not distinguish between Kevin and the Trust and to the extent that Kevin and the Trust would be treated separately his Honour appears to have made orders in favour of Kevin, rather than the Trust. His Honour seems to have contemplated that once the transfer of a 50% interest had taken place that: (1) if Julie was able to prove that she had made financial or personal contributions to the value of the land in excess of 50% she should have an equitable charge for those contributions over the plaintiffs' 50% interest; and (2) if Kevin was able to prove that he had made financial or personal contributions to the value of the land in excess of 50% then he should have an equitable charge for those contributions over Julie's 50% interest. His Honour's reasons contemplated that there would be some adjustment of these interests as a result of a process of proof, the forum for which ultimately was determined to be before the referee.
11. In reaching this conclusion his Honour applied statements of law by McClelland J (as his Honour then was) in Morris v Morris [1982] 1 NSWLR 61 ("Morris"). In Morris, McClelland J rejected the application of a common intention constructive trust based on inferred actual intention that the property be held in a particular manner, such as was explained in Allen v Schneider (1977) 2 NSWLR 685. Instead, in Morris McClelland J based the declaration of a constructive trust on the general equitable principle that it would be against conscience for an owner of land to retain the benefit of expenditure on part of the land by another upon the face of an assurance that part of the land would be made over to the person expending money: cf Chalmers v Pardoe [1963] 3 All ER 552; [1963] 1 WLR 677, at 681-682 and Plimmer v Wellington Corporation (1884) 53 LJPC 105; (1884) 9 App Cas 699, 714.
12. Since Morris, the High Court in Muschinski v Dodds (1984) 160 CLR 583; (1985) 62 ALR 429; [1985] HCA 78 ("Muschinski") and Baumgartner has developed a broader principle to prevent windfalls that would also encompass and apply in cases such as Morris: namely, there is a general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails if the contributions have been made in circumstances in which it was not intended that the other party should enjoy them.
13. It is useful to analyse this case by reference to the applicable broader principle, in part because it gives access to judicial statements about what proof of expenditure is required to establish a constructive trust of this kind. All that generally needs to be proved is shared expenditure for a common benefit: West v Mead (2003) 13 BPR 24,431; [2003] NSWSC 161 ("Mead"). The Court endeavours to make whatever orders are required in the interests of justice: Baumgartner at 150. Untangling the respective contributions, whether financial or non-financial, can be extremely difficult: Anson v Anson (2004) 12 BPR 22,303; [2004] NSWSC 766 at [44]-[49]. The Court's approach is to avoid complicated factual inquiries, which will result in relatively insignificant differences in contributions and consequential beneficial interest. The starting point is that equity favours equality: Baumgartner at 149. But this may be displaced by the party claiming that unequal interests should be declared: Mead at [59]. And in practice adjustments are frequently required: Brennan v Duncan [2006] NSWSC 674. See also Young, Croft and Smith, On Equity (Thomson Reuters, Law Book Co, 2009) at [6.800].
14. The plaintiffs also plead equitable estoppel. It was pleaded as a proprietary estoppel based upon expenditure on the Nowra property. Whilst it is not entirely clear from Pembroke J's reasons the extent to which he deployed doctrines of equitable estoppel to reach the conclusions that he did, they were clearly available to his Honour. That doctrine assumes flexibility in the assessment of the financial detriment necessary to enliven the remedy, as relevant detriment is not to be understood narrowly: RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) at [17-125]. It may involve forgoing opportunities to pursue other courses of action: Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at [5] and Walsh v Walsh [2012] NSWCA 57 at [14] - [16]. And in moulding the grant of relief the authorities accept that where representations are uncertain that relief may be granted within the "grey area" of uncertainty: Sullivan v Sullivan (2006) 13 BPR 24,755; [2006] NSWCA 312 at [85] and Milling v Hardie [2014] NSWCA 163 at [52] - [55].
15. The Court will shortly deal with each of Kevin Bowden's grounds for seeking the rejection of the referee's report. But first these reasons survey the methodology adopted by the referee in his report and its main features. This is an important starting point for analysis because some of the criticisms of the report seem to overlook its essential reasoning.
16. The Referee's Report. The referee reported on 25 May 2020 in response to orders made by Pembroke J on 11 June 2019. The referee, Mr Schon Condon is a forensic accountant and describes himself as having expertise in insolvency and "turnaround" practice. Neither side took issue with his expertise. It will be seen his report generally takes a logical and businesslike approach to the unusual situation with which he was presented: he was very poorly assisted by the parties, a matter upon which he commented on several occasions when he was attempting to struggle with the quality of the evidence presented to him.
17. Report Sections A & B - Executive Summary and Background. The referee's approach may be shortly described. He summarised it in his Executive Summary, being part A of his report. In accordance with Pembroke J's orders of 11 June 2019 he identified his duty as being to undertake the following tasks: to assess the amount of the financial contribution, and a reasonable money quantification reflecting any non-financial contribution made by the first plaintiff to the improvements to the property; to undertake a similar exercise with respect to financial contributions and non-financial contributions made by the first and second defendants; and then to "opine on a percentage basis, or such other basis as may be applicable, the respective contribution to the improvements to the property by the plaintiffs on the one hand and the defendants on the other hand".
18. The instructions to the referee were to accept Pembroke J's findings as to the parties' 50-50 contributions to the acquisition of the Nowra property and then to attempt to assess the value of their respective contributions to the improvements to the land.
19. The referee accepted as common ground that the parties had contributed $70,000 each to the acquisition of the land. It was not in contest that Julie had contributed the land to the venture and that Kevin had paid $70,000 for what was agreed to be a half share in the land. This meant that the starting point for analysis was that each had a $70,000 half share interest in the Nowra property. What had to be assessed on top of that was the value of improvements by each of Kevin on the one hand and Julie and Ian on the other hand.
20. The referee chose to determine the parties' respective contributions on a percentage basis. This is certainly convenient to the Court in making orders for the division of proceeds of sale upon sale of the Nowra property. The referee's method was to add the value of the improvements to the value of the land and by that process to calculate how the respective findings as to the contributions to the improvements altered the overall contribution of each party to the enterprise. This was a logical way of proceeding to ensure that the full capital and non-financial contributions of each party were taken into account. He found that the plaintiff had contributed (including the $70,000 contribution to the acquisition of a half share in the land) $149,573 in other financial and non-financial contributions. He found that the defendant had contributed (including the $70,000 contribution to the acquisition of a half share in the land) $137,060 in other financial and non-financial contributions. Adding these two amounts gave Kevin 52.2% of the improved property and Ian and Julie 47.8% of the improved property. The defendants, Ian and Julie, asked the Court to make orders for sale of the Nowra property and for the division of the proceeds in accordance with these percentages.
21. The referee referred to the commercial relationship between Kevin on the one hand, and Julie on the other, as a "partnership". And he described the partnership in terms consistent with Pembroke J's judgment: Julie would contribute the land to the partnership; Kevin would acquire 50% of it by payment to Julie; Kevin would provide funding to undertake building works; and Julie and Ian Bowden would provide materials and labour to complete the building works.
22. Report Section C - Presumptions. The referee presumed, based on what he had been told, that the development had been completed in about September 2009. It was not in contest that Kevin had occupied the property since completion at about that time notwithstanding that the Shoalhaven Council did not appear to have issued an occupation certificate. It was reasonable for the referee to conclude on the available uncontested evidence that the Nowra property had reached the stage of being occupiable, as Kevin had indeed occupied it for many years.
23. But the lack of an occupation certificate in relation to the completion of these works is unsatisfactory. The Court cannot condone what may be a continuing breach of development law with respect to the completion and occupation of the Nowra property. The Court has made orders below for the sale of the property by trustees for sale. The Court will include in its direction to those trustees for sale that they ascertain from the Shoalhaven Council whether the Nowra property has approval for occupation, a matter which one would expect responsible vendors to ascertain and state clearly before sale in any event.
24. Report Section D - Documentary Evidence. The parties did not adequately assist the referee by the provision of materials to him. In a section of his report devoted to the provision of information, Section D - Documentary Evidence, the referee described the problems he faced in dealing with these parties: "Information has been received from the Parties involved in this matter and it is fair to say that much of that information was lacking in quality and completeness and included some material which was simply irrelevant to the performance of the task alotted to me. It was disappointing that steps had not been taken by the Parties to ensure that the information provided to me was complete and relevant. Regrettably this situation contributed to the delay in producing my final Report."
25. The referee went on to describe his attempts to obtain supporting documentary information from the parties as "extremely difficult". This can readily be accepted. In Annexure A to his report, he detailed between October 2019 and February 2020 his various requests for further information which went unanswered. He complained about the lack of a proper letter of instruction in accordance with Pembroke J's orders of 11 June 2019. He requested extensive documentary evidence because of the minimal evidence supporting the plaintiffs' claims. He particularly identified a USB storage device which had been received from Phillip on 11 September 2019 containing copies of invoices in the order of $110,000, which he commented represented "a small percentage of the claimed $466,000" claimed by Kevin. He alerted the plaintiffs to the fact that their claim for $466,000 "is not accurate" in its "preparation or presentation". He alerted them to his preliminary analysis that the claim for $466,000 that the plaintiffs were making "attempted a cumulative total [which] is problematic with either total is not displayed or amounts not included".
26. These were serious problems. The referee's detailed requests, first made on 1 October 2019, are presented methodically and invited a response. The correspondence annexed to his report shows that neither party replied for months. This correspondence history counsels a degree of caution on the part of the Court in assessing Kevin's claims of denial of procedural fairness. Some of the material received is analysed below. But looking at the lack of response to the referee's requests overall, it is difficult to disagree with his conclusion in section H of his report: "One must reasonably assume that had complete or even better information been available it would have been provided to me in order to complete this report. Because I did not receive same, I have formed the opinion that better quality information does not exist. To reconstruct this information from what appears to be available will be both time-consuming and costly."
27. The referee was faced with parties who despite it being in their self-interest to do so, were not providing him with better information. Referees reports must be concluded within a reasonable time for the efficient operation of the court system. The referee was generally justified in taking the approach that he did based upon the parties' poor communications with him.
28. In section D the referee was methodical in identifying the material that the parties had provided to him. He listed the material he had received from the plaintiff and from the defendants in annexure C; and the material is identified in more detail in the Court's reasons below. This provides the core material to which he had regard and it is to be contrasted with the extensive range of material that the parties sought to adduce in evidence on the present application.
29. The referee separated out into annexure B the irrelevant material the parties had provided him and stated that he would ignore it. He was right to do this. The parties, but principally the plaintiff, had shown no discipline in the provision of information to the referee. The irrelevant material related all manner of issues outside the reference, including for example the constitution of the Trust, the conduct of a dairy farm, stock agistment, the sale and purchase of livestock, and the alleged theft or disappearance of livestock.
30. The referee concluded that there were gaps in the limited material the parties had provided to him. In order to provide a meaningful report to the Court the referee sought to fill those gaps by making independent enquiries with respect to two trades, plumbing and plastering. He obtained very basic estimates based on the plans for the building that were somewhat informal in character: namely $10,500 with respect to plastering and plumbing and $23,000 - $28,000 (being $12,000 to $15,000 for external drainage including sewer and stormwater, $6,000 to $7000 for internal drainage and water/gas pipe rough in, and $5,000 to $6000 for the installation of tap ware, toilets, connection of basins laundry and kitchen). It is unclear from the report one way or the other whether these quotations were given to the parties for comment and if there was a denial of procedural fairness resulting from that omission. But the referee only had limited regard to the material, describing it as "simply estimates", although he said they "do assist in determining what is a reasonable indicator of the likely costs incurred". Yet he does not explicitly refer to material elsewhere in his reasoning process. The amounts concerned are relatively minor and the parties have not raised this as an issue. installation of tapware, toilets connection of basins, laundry and kitchen
31. In section D the referee then raised his concerns with individual classes of information provided to him. First, he was not satisfied with the quality of information proving that the plaintiff had purchased a 50% interest in the Nowra property for $70,000. Pembroke J had found that the plaintiff had acquired a 50% interest but had not found for what consideration that interest was acquired. The referee was ultimately satisfied that Kevin had paid the $70,000 to Julie.
32. The referee also found other classes of documents supplied to him to be problematic. The schedules that the parties supplied to the referee as evidencing the construction costs that they each claimed were not mathematically correct and he needed to rework them. And as evidence of expenditure the parties in many cases provided supplier quotations, which the referee rightly identified as merely "a potential quote from a potential supplier for likely costs", rather than evidence of goods or services supplied at a definite price. And finally, the referee observed that both parties claim in their affidavits to have paid council and water rates but neither side had provided supporting documentary evidence of payment. These reasons return to this issue later.
33. Report Section E - Methodology. The referee adopted a methodology structured around the necessary expenditure and effort required to move the development from the start to practical completion, then permitting occupation. Based on the construction costs and effort that the parties each claimed to have incurred the referee prepared what he described as "an indicative list of construction processes that needed to be attended to during construction of a residence". The referee annexed this list to his report and it will be described in these reasons as "the indicative list of construction processes" or the "indicative list". The referee made clear that the indicative list was not "minutely exhaustive" but as its name described indicative of the overall construction process. This was a reasonable method for attempting to corral the disordered material provided by the parties into order for analysis. The list set out in annexure E - 1 was as follows: ""Construction Processes Plans/Council Site Costs 1st plumb Footings/Piers Bearers/Joists Flooring Frame 2nd plumb 1st Electricals Cladding Roofing Windows Lockup Interior walls 2nd Electricals Tiling Cabinetry Kitchen Bathroom Spa Painting/carpet/whitegoods Fencing Garden - turfing/landscaping Driveway"
34. The referee's methodology was then to do the following: to review the parties' documentation, to allocate the parties' financial contributions in accordance with the construction stages in the indicative list, to consider the non-financial contributions made by the parties - based on the information provided, to allocate the non-financial contributions in accordance with the construction stages in the indicative list, and then finally to calculate the financial and non-financial amounts relevant to each of the plaintiff and the defendants respectively.
35. Report Section F - Analysis. The referee took a strict approach to proof of financial and non-financial contributions on both sides, although there is an issue as to whether he did so consistently. He required documentary evidence to vouch or substantiate what each party claims to have done on the project. Provided that was done equally between the parties, it was a legitimate way of approaching his task. Given the history of the parties' poor communications with him that approach is reasonable. Although Kevin particularly complains about this now, any other approach was likely to result in interminable delay. He dealt with the parties' respective contributions as follows.
36. Section F - The First Plaintiff's Financial Contributions. The referee attempted to reconcile all invoices supplied by the plaintiff allocating them to the relevant steps in the indicative list. Applying his strict evidentiary analysis, he said "I have chosen to discount to zero the value of all the items claimed by the plaintiff that I could not reconcile/vouch to the information provided by him to me". The referee gave examples of the plaintiff's unsubstantiated evidence as including the construction of a granny flat and a spa and the claimed amount of $50,000 described as "other" but without evidentiary support. Based on this analysis, he determined the plaintiff's financial contribution to be $78,523. His determination appears to accord with the materials supplied.
37. Section F - The First Plaintiff's Non-Financial Contributions. The referee observed that the plaintiff's evidence of his non-financial contribution had only been evidenced in affidavit form with limited independent substantiation. He removed all items without independent substantiation and as a result determined the plaintiff's non-financial contribution to be $1,050.
38. The parties made strongly conflicting claims in the affidavits that they gave to the referee. They both claimed on many occasions to have done what amounted to the same work. In the result the referee had a choice of conducting a full hearing with sworn evidence and cross-examination to try and choose between this conflicting evidence or to adopt a less expansive method that would nevertheless produce a clear result consistent with the underlying materials. He chose the latter. And the choice of methodology was his and it was not a choice that was unfair provided he was even-handed and the parties were given notice that substantiation was required. Both these conditions were satisfied.
39. Section F - The Defendants' Financial Contributions. The referee attempted to ascertain a monetary quantification reflecting financial contributions made by Julie and Ian to improvements to the property. But all he had was their affidavit evidence and responses to his direct inquiries about that evidence. He was apparently not satisfied with those enquiries and the resulting lack of substantiation and as result, on his analysis, he determined "the financial contribution of the defendants to be nil".
40. Section F - The Defendants' Non-Financial Contributions. The referee was equally unimpressed with the defendants' claims to have made non-financial contributions to improvements to the Nowra property. Again, he reviewed the defendant's affidavit evidence and the responses to direct inquiries made to them. Based on his analysis he "determined the non-financial contribution of the defendants to be $67,060." His reasoning in Section F does not make clear whether he reached this figure of $67,060 based upon substantiated vouchers or not, a matter which was taken up in Kevin's submissions.
41. Based upon this analysis, in his conclusion the referee summarised the following table, setting out his findings: Contribution Plaintiff Defendant

Financial $78,523 $0 Non-Financial $1,050 $67,060

1. In section H of his report, the referee referred to one matter that he could not determine which he remitted back to the Court. It was the payment of council rates, water rates and other associated taxes. He did not receive clear evidence as to whether Kevin or Julie and Ian had paid these outgoings. But he not unreasonably concluded that they had actually been paid as no enforcement action had been taken against the registered proprietors by any local government authority or utility. He concluded the amount in question was approximately $15,200 and that if it were determined Kevin had paid the amount the percentage split in the parties' respective interests in the land would change to Kevin - 54.6% and Julie and Ian - 45.4%. But if these amounts have been paid by Ian and Julie then the split would be Kevin - 50.4% and Julie and Ian - 49.6 %. The referee did not determine this issue.
2. Two observations may be made about this issue. First, a dispute in this relatively small amount should not hold up the sale of the Nowra property if the referee's report is otherwise ultimately to be accepted in some form. Second, it is uneconomic for the Court to permit the litigation of a lengthy dispute about the payment of these rates, which only amount to $15,200. The Court will provide a short opportunity to each party to try and establish that he or she has paid the whole or part of this amount and if that evidence is inconclusive then the Court is minded to split it evenly between the plaintiff and the defendants.

The Plaintiffs' Grounds

1. In a combination of oral and written submissions, the plaintiffs advanced four main grounds for contending that the referee's report should not be adopted: 1. The report ignored the Trust; 2. The report wrongly assessed the parties' financial and non-financial contributions; 3. The referee denied the plaintiffs procedural fairness; and 4. The referee's reasons expressed in the report were inadequate.
2. (1) The Second Plaintiff - the Trust. The first reason the plaintiffs advanced for not accepting the referee's report was that the report does not consider the various contributions towards the construction of the house on the Nowra property that were made by the Trust, the second plaintiff named in these proceedings. The financial interest of the Trust is not accounted for separately in the report and any contributions that the referee found were made by the Trust were not treated separately.
3. The referee's report refers to Mr Kevin Bowden and to the Trust jointly as "the plaintiff" and does not distinguish between contributions made by each named plaintiff. But this is not a reason to reject the report for two principal reasons, one legal and one evidentiary.
4. As to the legal reason, the plaintiffs' submission appears to be grounded in the widespread misunderstanding that a trust has a separate legal personality from the trustee. In ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; (2013) 110 ASCR 1; [2014] NSWCA 402 (at [16]), Leeming JA rectified this common misunderstanding in the following terms: "Subject to statute, a trust has no separate legal personality from the trustee. An obligation incurred by a trustee, whether or not it is properly incurred in accordance with the trustee's obligations as trustee, may ordinarily be enforced in the same way as an obligation incurred by a person who is not a trustee. Sir George Jessel MR long ago said that the creditor of a trustee or executor "has a personal right to sue him and to get judgment and make him a bankrupt": In re Johnson; Shearman v Robinson (1880) 15 Ch D 548 at 552."
5. Other recent cases have correctly restated this long-standing principle of the law of trusts: Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193; (1987) ATPR (Digest) 46-030, per Gummow J (at 253): Deancrest Nominees Pty Ltd v Nixon (2007) 25 ACLC 1681; [2007] WASC 304 (per Newnes J at [36] - [37]); ALYK (HK) Ltd v Caprock Commodities Trading Pty Ltd [2015] NSWSC 1006 (per Black J) at [26].
6. It was open to Mr Kevin Bowden to commence these proceedings as a single plaintiff, bringing the proceedings on behalf of the Trust and himself. But he or his legal advisors at the time chose to commence proceedings naming him twice as a plaintiff, no doubt so as better to identify the different capacities in which he was suing. These reasons have occasionally accepted this existing feature of the pleadings by referring to the plaintiffs in the plural but generally they do not. Neither Pembroke J or the referee was obliged to look for and identify a separate case advanced on behalf of the Trust. Pembroke J's reasons for decision on 10 April 2019 refer to the plaintiff in the singular. Given that it reflected the correct legal analysis of Mr Kevin Bowden's position, the fact that the referee referred to the plaintiff in the singular in his report is not without more a defect in his report.
7. As to the evidentiary reason, the plaintiffs complain that the financial interest of the Trust is not accounted for separately in the report. But the plaintiffs have not advanced clear evidence: (1) of any contributions that they allege were made solely on behalf of the Trust towards the building of the house on the Nowra property, as distinct from contributions by Mr Kevin Bowden, and (2) that such evidence was put before the referee and was not taken into account by the referee.
8. Any argument about whether the first or second plaintiff owns a 50% interest in the Nowra property foreclosed by Pembroke J's conclusion that a 50% interest in the property should be transferred to the first plaintiff within 21 days of 10 April 2019. Kevin Bowden attempted to propound a case that the whole of the property had been transferred to the Trust and that he had become a trustee of the Trust as a result of a meeting between the then trustees of the Trust, Kevin and Ian Bowden, in October 2012. The defendants say that these minutes were a fabrication and that Ian Bowden was still the trustee of the Trust, as he had been from when it was first constituted. Pembroke J's reasons did not resolve this question and the plaintiffs now assert that Kevin Bowden is the trustee of the Trust. But as Pembroke J did not decide the question of trusteeship and did not make any orders that anyone else should represent the Trust as between the two contesting parties, Ian and Kevin, making any orders in the Trust's favour would be a most uncertain exercise. Pembroke J's reasons certainly give no support to the idea that his Honour had made any findings in favour of the Trust as distinct from Kevin Bowden.
9. The affidavits that Kevin Bowden placed before the referee sought at length to re-agitate the Trust issue. The referee rightly ignored them, as it was no part of the reference to him to make such determinations.
10. (2) The Parties' Financial and Non-Financial Contributions. This ground of complaint evolved to a degree and involved several subparts. The plaintiffs first submitted that no credit should be given in the referee's report for any financial contributions by the defendants. But the referee's report does not give any credit for financial contributions by the defendants; it assesses them at nil.
11. The plaintiffs broadened their attack to also submit that the non-financial contributions alleged by the defendants were much lower than the referee's report found and did not come to the figure of approximately $67,000 that the referee had determined.
12. But the authorities are clear: a mere disagreement with a referee's factual findings is insufficient to enliven the Court's discretion to vary or reject a referee's report: Bermria. This is not a case where the plaintiffs can submit that there was no evidence grounding the referee's findings of substantial non-financial contributions to the project by the defendants. The evidence from Ian Bowden, the second defendant, before the referee was that he had played a significant role in the construction of the house on the Nowra property, including by contributing his own funds and labour. It was open to the referee to accept this evidence.
13. The plaintiffs also made the overarching argument that the referee did not consider material put before him which went to Kevin Bowden's physical efforts and expenditure on the Nowra property. This included what the plaintiffs say is construction-related expenditure in the provision of bearers and joists, doors, kitchen and tiles among other things incorporated into the building on the Nowra property. The plaintiffs say this material proves their expenditure but did not find its way into the referee's report.
14. This is, in effect, a contention that the referee failed to observe proper process. The plaintiff's 15 March 2021 written submissions elaborated further on this contention: "The referee adopted, at Section "E" para 3 of the report, the "schedule of construction costs ... the Parties provided me" which became the "Project Claimed Cost" of $445,989 (excluding 'Council Rates') in Addenda F-1(CB 232) & F-2 (CB 234). The parties' respective sums, as attributed by the referee, are challenged by the plaintiff on a number of grounds elsewhere in these submissions. The sums asserted for the plaintiffs ("$78,523 evidenced") and for the defendants ("$67,060 claimed") total $145,583." The report does not reject the Project Claimed Cost nor give reasons for omitting or failing to consider the remaining amount of $300,406 which is the balance for which there is no attribution. The plaintiffs' respectful submission is that that part of the Project Claimed Cost which is not reasonably attributed to the defendants' efforts is attributable to the plaintiffs'. On the reported attributions, the plaintiffs' proportion would be $378,929. The plaintiffs further submit that the referee failed to properly attribute the plaintiff's physical efforts in compliance with the referee's assertion in "E" para 6 of the report (CB 39): "Where references have been made to physical effort by either the plaintiff or the defendants that were not supported by either invoice, dollar qualification, or some form of detailed time cost records then no allowance had been made in my calculations because it is impossible for me to randomly defined the value properly attributable thereto." The plaintiffs respectfully submit that the completed house and other improvements meet the criteria for 'supporting' the plaintiffs' efforts."
15. The Court understands this submission to mean that the referee's report not only failed to take into account crucial evidence that was before Mr Condon in respect of the valuation, but also that he placed too great an emphasis on the non-financial contributions of the defendants.
16. Issues of the relative weight of competing evidence is a matter for the referee and is not a matter that can be re-evaluated by the Court in the exercise of its UCPR, r 20.24 discretion to accept or reject the referee's report in whole or in part.
17. And the plaintiffs' submission that "the completed house and other improvements" are objective evidence "supporting the plaintiffs' efforts", merely begs the question as to who made the respective financial and non-financial contributions that allowed the house to be built on the Nowra property. The mere existence of a built house following the plaintiff's contention that he built part of it, neither supports nor proves that Mr Kevin Bowden's contentions are correct, no more than it would to support or prove that the defendants' contentions are correct.
18. This argument is not persuasive. It is true that in Section E of his reasons, the referee prepared the indicative list of construction processes. And it is true that the plaintiffs' "project claim costs" in respect of that indicative list of construction processes amounts to $445,989 (being $461,189 minus $15,200). But in the referee's report, the figure of $445,989 is the plaintiffs' claim as to the value of what he or others had contributed to improving the property. It does not represent the referee's finding that $445,989 of improvements (in materials and labour) were added to the property and is a baseline from which the market value of the parties' respective contributions can be calculated.
19. As the referee's report has not adopted Kevin Bowden's project claim costs as a valid estimate of the total costs of the project, there is no basis for suggesting as Kevin Bowden's submission does, that the referee needed to give reasons for omitting or failing to consider the remaining amount of $300,406 (being $445,989 minus $145,583). The latter sum of $145,583 is the total invoices accepted as evidence on behalf of the plaintiff of $78,523 plus the amount of $67,060 claimed by the defendants.
20. Kevin Bowden's further criticism of the referee for failing to make any allowances in his calculations for "physical effort by either the plaintiff or the defendants were not supported by invoice, dollar quantification or, some form of detailed time cost records" is also not a valid criticism. Short of allowing extensive cross-examination of the parties, the referee was entitled to take that strict approach and should not be criticised for ignoring the first plaintiff's claimed physical efforts. That approach of course risked the possibility that the plaintiff's physical efforts would be understated. But provided the same standard was also applied to the defendants, an issue considered below, there is no inherent or incidental unfairness in the methodology used.
21. Kevin Bowden can perhaps say that his physical effort was greater than Ian Bowden's and so he was treated unfairly by the referee's methodology. But the answer to that is that Ian Bowden claims that his physical effort in contributing to the improvement of the property was far more substantial than is conceded by Kevin Bowden. And if Ian Bowden is right, he potentially suffers disadvantage by the referee's methodology as well: it is therefore not inherently unfair to Kevin Bowden. As will be seen, a greater issue for the referee's choice of methodology is consistency in its application to each of the parties.
22. Moreover, Kevin Bowden's argument that the referee should have deducted from the project claimed costs of $445,989, the amount which is not attributable to the plaintiffs' efforts is invalid reasoning. If one deducts the amount determined by the defendants' efforts ($67,060) from the project claim costs of $445,989, one derives a net figure of $378,929, which Kevin Bowden submits should be attributable to him.
23. This argument is circular. The plaintiff here propounds a claim bolstered only by his own quantitative estimation, which has not been adopted by the referee. Then the plaintiff deducts from that estimation an amount which the referee has allowed to the defendants, to produce what the plaintiff says is an amount which must therefore be attributable to the plaintiffs financial and non-financial contributions to the project.
24. The invalidity of this argument is quickly exposed. Kevin Bowden could have expanded his "project claim costs" as high as he liked to increase his proportion of the net result. Merely because the referee did not determine that certain project costs should be attributed to the defendants, does not mean that the balance of the plaintiff's estimate of project costs must therefore be attributed to the plaintiff's financial and non-financial input. This argument simply declines to engage with the need to prove the plaintiff's case. The referee's report rightly attempts to apply some financial discipline to what should, or should not, be assessed as comprising the plaintiff's proven contribution to improving the Nowra property.
25. The next part of Mr Kevin Bowden's submissions of 1 April 2021 that the referee was in error in relation to the parties' financial and non-financial contributions related to the evidence of Mr Ganderton and others, filed on behalf of the Kevin Bowden early in 2021. Kevin Bowden elaborated his argument as follows: "Ray Ganderton (RG2) has provided further evidence of his involvement in the house construction, acknowledging (at para 7 on page 2) (CB 1120) the extent of the work, totalling 32 hours, of the second defendant in those several parts of the project that Ray undertook with the first plaintiff on a continuing basis. Other matters are clarified at paras 6, 8 and 9 on page 2. Kevin Bowden (KABl) confirms: a) at para 8 on page 2 (CB 1025) , the finalisation of a further payment of $70,000 for the remaining 50% of the land. The second defendant signed the receipt (CB 1060) at the first plaintiff's insistence in a receipt book kept by the first plaintiff for recording cash payments made; b) at para 10 on page 2, the regular payments (CB 106 1to 1066) to the second defendant for labour provided at the rate of $30 per hour (Tab 12); c) at para 23(a) to U) and (I) to (m) on pages 4, 5 & 6 (CB 1027 to 1029), rejects various claims, with substantiation from Ray Ganderton (RG2) and various records in the annexures (KAB1); d) at para 24 on page 6 (CB 1029), the absence of any supporting document, contemporaneous or otherwise, accompanying the initial present at ion of the claims in (c), on 30/ 01/ 20 (1B1 CB 1220); e) at para 25 on page 6 (CB 1029 and 1030), acceptance of an opinion, referenced to 'Rawlinsons' Australian Construction Handbook', that the likely cost of similar improvement s to the land, in 2005 & 2006, is $340,000 including GST (AHl)(CB 1087)."
26. These submissions are not persuasive. This argument is based on evidence that misunderstands the nature of the Court's task on an application such as this. That task is to decide whether to accept or reject the referee's report. The Court's direction to the plaintiff on 17 December 2020, extended in February 2021, to put on any evidence "in order to oppose the adoption of the referee's report" was not an invitation to the plaintiff to put on extensive evidence to remedy defects in the case that he had presented to the referee. A report adoption hearing does not serve that purpose. Were a report adoption hearing to be treated as a rerun of the hearing before the referee, then referees' determinations would soon be sidelined by report adoption hearings. In making its directions on 17 December 2020, the Court was expecting the plaintiff to advance evidence that the referee had refused to accept material that the plaintiff had presented to him.
27. Instead, the plaintiff advanced material that he created after the referee's hearing and should have put before the referee, when the referee invited him to do so. All the material the plaintiff relies upon to support this argument falls into this category. That material includes affidavits from Mr Ganderton of 15 February 2021, of Philip Bowden of 10 February 2021 (re-traversing issues concerning the constitution of the Trust which were not before the referee), of the electrician Mr Peter Herreman of 10 February 2021, and of Kevin Bowden of 18 and 19 February 2021. For example, before the referee the plaintiff only provided an unsigned copy of a more limited version of Mr Ganderton's sworn affidavit of 15 February 2021 and much of the other material was not supplied to the referee. The plaintiff will be limited to the witness material before the referee. That means that this argument of the plaintiff, based upon that additional late evidence, has no foundation and will be dismissed.
28. (3) Denial of Procedural Fairness. Mr Kevin Bowden alleges that the referee denied the plaintiffs procedural fairness. This contention was primarily directed to an alleged failure of the referee to properly consider the evidence of two witnesses, Mr Ray Ganderton and Mr Mark Whitnall. But the contention covered a broader range of other matters. Kevin Bowden sets out the procedural fairness argument in two parts of his submissions of 1 April 2021: the first part covers the contentions relating to Mr Ganderton and Mr Whitnall in the second part covers the broader range of other matters.
29. On 1 April 2021, Kevin Bowden put his written submissions in relation to a denial of procedural fairness concerning Mr Ganderton and Mr Whitnall (updated with court book references from identical submissions that he had made on 15 March 2021) in the following way: "The plaintiffs' submission: The referee denied the plaintiffs the measure of natural justice to which they were entitled in failing to consider or give reasons for such failure: (i) the statement of Ray Ganderton (RGl), Annexure C-3 of the report (CB 93) and (ii) the statement of Mark Whitnall (MW), Annexure C- 4 of the report (CB 96). Ray Ganderton's statement confirms (a) the payment for his labour on the house construction of "about $22,000" (RGl, para 2) and (b) the tasks undertaken together with Kevin Bowden (RGl, para 6). The tasks listed rebut the claims of the second defendant that he carried out certain works, namely, those claimed in IB1, Annexure C-6 (C) of the Report, at para 23, sub-paras (a) to (h) inclusive (CB 133)(CB 1220): 23(a) by implication, that there was no site preparation by Ray Ganderton and the second defendant; 23(b) setting-out the house; 23(e) installing bearers and joists; 23(f) laying floor sheeting; 23(g) erecting wall frames; 23(h) erecting roof trusses. The excluded claims of the second defendant, pursuant to Ray Ganderton's statement, total $13,700. This sum was included in Annexure F-2 for the defendant (CB 234). Mark Whitnall's statement confirms the payment for his labour on the installation of a prefabricated kitchen in the house of "about $8,000" (MW, para 3)(CB 96). The payments to Ray Ganderton and Mark Whitnall, which were not included in Annexure F-1, total $30,000 (CB 232)."
30. Kevin Bowden's submission that the referee denied the plaintiff procedural fairness (natural justice) by either failing to consider the statements of Mr Ganderton or Mr Whitnall, or to give reasons for not doing so, is not persuasive. The inference that the referee did not consider Mr Ganderton's unsigned statement must confront the obvious fact that the referee annexed the statement to his report at Annexure C3, identified the fact that he had annexed the statement in Section D "documentary evidence" of his report, and referred to it in Section D under the heading, "third party documentation" in the following terms: "An affidavit received was dated and unsigned by one supplier used in the construction process as evidenced in 'Annexure C3'. No other evidence of payment has been provided, other than by the unsworn affidavit."
31. These references clearly show that the referee was well aware of the existence of Mr Ganderton's statement and what it said, but those reasons, along with other material, also satisfy the requirement to give reasons for not relying upon Mr Ganderton's statement in an evidentiary sense. The referee's statement "no evidence of payment has been provided other than by the unsworn affidavit" shows the referee was applying the same test to Mr Ganderton's evidence as he had stated in numerous other places, and specifically under the heading, "E. Methodology" that he would only make allowance in his calculations if claimed physical effort by the plaintiff or the defendant was "supported by either invoice, dollar quantification or some form of detailed time cost records".
32. Kevin Bowden complains that the failure of the referee to weigh Mr Ganderton's report in the balance in his favour prejudiced Kevin Bowden's conduct of his case by preventing him from rebutting Ian Bowden's evidence in his affidavit of 30 January 2020. But that is just the consequence of the methodology that the referee applied, which was not unreasonable. And that methodology was fair provided the referee applied it equally to both sides.
33. Kevin Bowden says that the prejudice to him can be quantified at $13,700 by reference to Annexure F2. But it is unclear to the Court where that figure comes from from Annexure F2, or how it is derived. The referee was essentially saying that he was not prepared to accept bare statements, such as Mr Ganderton's, that his labour on the house construction was "about $22,000" without some form of documentary substantiation.
34. The position with Mr Mark Whitnall's statement was similar. Mr Whitnall deposes to having been paid $8,000 by Kevin Bowden for installing a kitchen at the Nowra property. But he does not annex any invoices or other receipts showing this sum was actually paid. This is not a case of the type dealt with by the Court of Appeal in Franks at [8], where there was "very significant evidence against the referee's finding which the referee did not deal with at all". The referee did deal with this material, and explained why he discounted it, because there was insufficient substantiation of the payment.
35. On 1 April 2021, Kevin Bowden put his written submissions in relation to the broader range of other matters (updated with court book references from identical submissions that he had made on 15 March 2021) in the following way: "The referee denied the plaintiffs the procedural fairness to which they were entitled in the following non­-exhaustive examples in the Report: Firstly, at Section E, para 2 on page 6 of the report (CB 39), of the 57 documents (recording costs) sent to the referee by the plaintiff as attachments to the plaintiff s "Schedule of Construct ion Cost" (Annexure E-1(sic) E-2)( CB 165 to 171), only 29 were " vouched'' (CB 232) . The referee did not inform the plaintiffs of any perceived defect in the remaining 28 documents which the plaintiffs could have remedied. The Report did not contain an itemised (or any reasonable) explanation or reason for each of the exclusions. The excluded documents are evidence of expense exceeding $41,500. Secondly, in Section F "Analysis of the Report", with reference to "Non-financial contributions", the referee states, at 2. on page 7 of the Report (CB 40), inter alia, that "(b)ased on my analysis, and removing all items that have no independent substantiation I have determined the non-financial contribution of the plaintiff to be $1,050". At 4. on page 7 (CB 40), in relation to the defendants, the referee states " .. I reviewed the several affidavits received as evidence.... and from the responses from the defendants to my direct inquiries of them. Any claims by the defendants are evidenced only in affidavit form." The referee has failed to apply the same forensic lens to the defendants' submissions, incuriously accepting the unsubstantiated claims made by affidavit, email and in response to "my direct inquiries of them". Thirdly, further to 'defendants claims', the report does not contain any copies of email responses (other than in relation to payments for 50% of the land), nor does it contain any details of a claim for "Plumbing - non-financial" in the sum of $8,000. (Annexure F-2, CB 234)."
36. But the Court was dissatisfied with the plaintiff's 15 March 2021 submissions. On issues of procedural fairness, the plaintiff's 15 March 2021 submissions were open-ended, referring to "non-exhaustive examples" in the referee's report. So the Court directed the plaintiff to provide a submission identifying all examples of an alleged denial of procedural fairness upon which the plaintiffs relied.
37. This resulted in the plaintiffs providing a further written submission on 8 April 2021, which sought to elaborate on this claim of denial of procedural fairness with the following: "The plaintiffs further submit that the referee denied the plaintiffs the procedural fairness to which they were entitled in the following examples, which are additional to - and distinct from - the three examples referred to in the submissions of 15 March 2021: 4. The referee failed to refer to the 'signed copy of Ray Ganderton's statement' provided for the plaintiff on or about 5 September 2019 in response to the referee's email request of 4 September (Annexure A). In the alternative, the referee failed to issue further requests to the plaintiff in a manner equal to the referee's repeated contacts - written and otherwise - concerning, inter alia requests to the defendants for provision of information, including 5 occasions prior to and including 1 October 2019, 10 October, 7 November, 20 December, 14 January 2020 and 24 January (CB 44). 5. The referee failed to share preliminary results of his acceptance or rejection of 'evidence' with the plaintiffs. The plaintiffs would have been able to assist the referee by drawing his attention to certain misallocations of 'Project Claimed Cost' in the 'Construction Processes' sub-totals of Annexure F-1 (CB 232). A. In the case of the 'Driveway - $16,531', the referee erred in combining (i) seven identified Concrete-related Driveway costs totalling $7,356 with (ii) the clearly-labelled 'Concrete Paths' costs of $9,175 (CB 169 & 170). The sum of these two disparate items is $16,531 - which yields a clearly-excessive unit cost of approximately $184 for each of the 90 square metres of the driveway (CB 1087). The actual Driveway costs conform to a relatively elevated rate of $82 per sqm. The second defendant coincidently made a late claim in IB1, at para 23(i): 'I levelled the front yard and paid for the concrete and laid the driveway. It's a very big area. The costs of materials and labour was $17,500' (CB 1224). The second defendant's claim is accepted in Annexure F-2 (CB 234). The first plaintiff responds in KABI, at para 23(i) (CB 1028): 'Reject the Second Defendant's claim. I paid for the concrete and other materials, The Second Defendant's labour was paid by invoice.' B. In the case of 'Footings/Piers - $18,200' a further anomalous situation arose: the referee 'vouched' plaintiffs' invoices totalling only $3,034 in Annexure F-1 (CB 232). The unvouched balance is $15,166. The second defendant submits three late claims, at para 23(b), (c) & (d) of IB1 (CB 1224), totalling $15,100. The second defendant's claims are accepted in Annexure F-2 (CB 234). The plaintiffs reject each of the claims, at KAb1, para 23(b), (c) & (d) (CB 1027). 6. The referee failed to consider independent support provided to the value of existing "materials at hand" supplied for $50,000 [timber kitchen $30,000 & Doors, door fittings & tiles $20,000] in G Richards quote dated 22 May 2005 (CB 89). The provision of these items was referred to in Phillip Bowden's affidavit dated 14/03/18, para 7 (CB 51). The referee recognised these materials as 'Other' and ascribed the sum to 'Affidavit evidence' in Annexure F-1 (CB 232). So characterised, the item was not included in the plaintiffs' Total 'evidenced' in F-1. However, the second defendant's affidavit claims are accept, without any independent support, in Annexure F-2 (CB 234). 7. The referee failed to have regard to the second defendant's affidavit evidence in 181 at para 23('n') (CB 1225), affirmed on 30 January 2020, including the assertion that "(t)he electrical work was carried by a licenced electrician as was the plumbing", when considering the undocumented inclusion of $8,000 'plumbing cost' for the second defendant in Annexure F-2 (CB 234). The referee's email of 30 March 2020 provided advance disclosure of certain 'findings' including details in relation to the Plumbing trade costs (Annexure B). 8. The referee erred in failing to resolve the conflict between (i) the plaintiffs documented supply of 5,520 of the claimed 5,500 bricks so provided and (ii) the second defendant's various unsupported claims in 181 (at para 23) inter alia to have supplied 7,500 bricks plus all the bricks required for the footings and piers (CB 1224 & 1225). The second defendant's claims are accepted in Annexure F-2 (CB 234). The plaintiffs' records were 'vouched' by the referee in Annexure F-1 (CB 232) as items 71, 73, 75, 77 & 79 (CB 190 to 194). The referee also failed to address the second defendant's claim (at para 23(1), CB 1225) that the bricks cost $900 per thousand, whereas the plaintiffs cost of bricks is documented as $455 per thousand. 9. The referee failed to acknowledge the second defendant, the Bowden Family Trust. 10. The house plan supplied by the defendants to the referee is not a true representation of the dwelling constructed on the block at [the Nowra property]."
38. The plaintiffs' examples both in their 15 March/1 April submissions are not matters in which the Court would ordinarily intervene to reject the conclusions of the referee's report. But the following more detailed comments can be made about this submission of the plaintiff.
39. These passages from the plaintiffs' 15 March/1 April submissions may be condensed into two main arguments. The first argument is that the referee did not inform the plaintiffs of any defect in the 28 rejected documents which the plaintiffs could have remedied. The plaintiff argues that he only found out about the 28 rejected documents when the 29 of the 57 documents sent to the referee were "vouched" by the referee and the others rejected. But the referee did signal to the parties in the correspondence from his office, for example on 1 October 2019 that his methodology would require documentary proof and it was up to the parties to comply with those requests. On both sides they patently failed to do so after multiple requests. This is not property the subject of complaint now.
40. The second argument is that the referee applied inconsistent standards of substantiation to Kevin Bowden's evidence and the defendants' evidence of non-financial contributions to the improvement of the property. The referee reduced the plaintiffs valid claims of non-financial contributions to only $1,050, as only this amount was said by the referee to be supported by independent substantiation. But the inconsistency to which the plaintiff points is that the referee accepted claims made by the defendants by affidavit which appear to have been unsubstantiated. The only form of substantiation upon which the plaintiff relied, which is not documented, was said to be in response to "my [the referee's] direct inquiries of them".
41. This complaint has substance. The referee's reasons for decision do not show that he sought the same strict substantiation of non-financial contributions from the defendants that he sought from the plaintiff. Instead, he said the following: "4. Non-Financial Contributions by Defendants With respect to the amount of non-financial contribution made by the first Defendant and the second Defendant to the improvement of the property, I reviewed the several affidavits (Annexures C-2 (A and B) and C-3 (A to D') received as evidence from both Defendants and from the responses from the 1st and 2nd Defendants to my direct inquiries of them. Any claims by the 1st & 2nd Defendants are evidenced only in affidavit and email form. Based on my analysis, I have determined the non-financial of the Defendants contribution to be $67,060."
42. Annexure C-2, (A and B) and Annexure C-3 (A to D) are somewhat hard to follow in the annexes to the referee's report but they appear to be the affidavits filed by both the defendants. The "direct inquiries" that the referee made to the defendants are not evidenced in any way and did not result so far as the Court can see in the production of written vouchers or other substantiation of the defendants' statements in their affidavits, equivalent to those that were required of the plaintiff.
43. On the available materials, it is difficult to escape the conclusion that the referee simply accepted the word of the defendants without documentary or voucher substantiation in order to produce the figure of $67,060. This was the application of an inconsistent standard of proof between the defendants and the plaintiff, and not the application of the standard that the referee said he was going to apply equally to both parties. The conclusion that the defendants are entitled to the benefit of non-financial contributions of $67,060 has resulted from defective reasoning and therefore cannot stand.
44. After a case which has had the lengthy procedural history of this one and in respect of transactions which originally occurred approximately 15 years ago, this is a most unfortunate outcome. The court wishes to reduce the adverse effect of this decision as much as possible for the benefit of the parties. This raises the question of what is to be done.
45. Three options are legally available to reduce the unfairness that arises from the situation. First, the referee's report could at the defendants' option be accepted but denying the defendants the benefit of the $67,060 with their express consent. If the defendants want to get on with selling the Nowra property and obtaining proceeds of sale they could agree to this course. But that could not be done without their express consent to forego the $67,060. On the Court's calculations they would still derive approximately one third of the proceeds of sale of the Nowra property. The property would still be jointly held and the court would still appoint trustees for sale and it would probably still be sold by auction, unless Kevin Bowden could prove by direct evidence that he had the funds available to buy out the defendants' approximately one third interest in the property.
46. Second, the matter could be returned to the referee to ask him to redo the report applying to the defendants the same test that was applied to the plaintiffs, alternatively it could be done by the Court on the available materials. That would involve asking the defendants whether they can put forward vouchers to substantiate the $67,060 which the referee had awarded to them for non-financial improvements to the property. But if this exercise is going to be undertaken it raises the question whether a wider enquiry should take place. The Court is very reluctant to this matter to go back to the referee. The Court has become acquainted with it. This leads to the third option.
47. Third, if the defendants are going to be allowed to substantiate the $67,060 the question arises as to whether Kevin Bowden should be allowed to resubmit documents/invoices to substantiate his various claims to have made non-financial improvements to the property.
48. If the defendants elect for the first option there is no unfairness to the plaintiff. But the defendants want to reopen their claim to $67,060 then some further hearing will be required before the Court. The question is how wide that that supplementary hearing would be. The Court has decided to set aside some time for such a hearing in February, if it be required. At the least it will be required to deal with issues of costs.
49. But it seems almost inevitable that any such further hearing would still be likely to leave the defendants with a substantial interest in the property. Therefore, there seems to be every reason for the Court to make orders for the sale of the Nowra property, and the Court will do so, but temporarily staying those orders to permit the plaintiff to demonstrate that he has presently available funds to buy out the defendants' interest in the property, which at the minimum seems to be an approximately one third interest. It is important that the parties get on with this process so they can separate out the existing unpleasant conflict in their lives.
50. That leaves the further matters of alleged procedural unfairness dealt with in the defendant's submissions of 8 April 2021. These can be dealt with briefly by reference to their numbered paragraphs. (4) Kevin Bowden has not clearly demonstrated he provided a signed copy of Ray Ganderton's statement to the referee. (5) The referee was not obliged to share preliminary results of his factual findings with the parties, particularly in the light of their gross failure to cooperate with him. (6) the so-called "independent" material of referee supposed to have had regard to was itself unsubstantiated. (7) There may have been concessions on both sides which could be taken into account if the Court is to look at this matter itself. (8) Court adopted a methodological resolution which was which is court explained was permissible. And (9) and (10) have been covered.
51. The Court's previous judgment (at [18]) recorded that the referee's report stated repeatedly the great difficulty the referee had in obtaining information from both sides in the case. The exercise of the Court's jurisdiction under UCPR, r 20.24 is not an opportunity to put before the Court material that the referee requested but which was not given to him during the report. The parties must accept the consequences of their decisions not to put material before the referee. Moreover, on the present application Mr Kevin Bowden has been given ample opportunity to provide the Court with evidence of why he failed to assist the referee when requested.
52. Despite putting on numerous lengthy affidavits and four different sets of submissions, Mr Kevin Bowden's evidence does not make out a case that the referee did not allow him to adduce relevant evidence. Rather the true situation appears to be that he did not provide relevant evidence when requested.
53. (4) The Referee's Reasons. Finally, as an alternative to earlier submissions, the plaintiff submits that various parts of the referee's reasons for finding that Mr Kevin Bowden held a 52.2 per cent interest in the Nowra property were flawed. Those alternative submissions based on alleged inadequate reasons have already been considered.
54. The Court will not yet order that the referee's report be adopted until the parties have had an opportunity to respond to the options outlined above. But whatever the outcome of that further consideration the plaintiff and the defendant's will still have a joint interest in the Nowra property, which will need to be sold, subject to the final determination of the quantum of the parties' respective interests. So the Court will make declarations that the Nowra property is jointly owned in Equity in the proportions to be determined finally by the Court.

(B) Sale of the Nowra Property - Conveyancing Act, s 66G

1. The remaining issue for determination is whether the Court should make an order to appoint statutory trustees for the sale of the Nowra property: Conveyancing Act 1919, s 66G. The effect of this provision is that, where any real property is held in co-ownership, the Court may on application by any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees to be held by them on the statutory trust for sale.
2. "Co-ownership" in s 66G means ownership whether at law or in Equity in possession by two or more persons as joint tenants or as tenants in common: s 66F(1). Although the first defendant is the registered proprietor of the Nowra property, it is jointly owned in Equity and the section applies.
3. Section 66G relevantly provides: "(1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition … (3) (a) Where the entirety of the property is vested at law in co-owners the court may appoint a trust corporation either alone or with one or two individuals (whether or not being co-owners), or two or more individuals, not exceeding four (whether or not including one or more of the co-owners), to be trustees of the property on either of such statutory trusts. (b) On such appointment the property shall, subject to the provisions of section 78 of the Trustee Act 1925, vest in the trustees. … (7) Where the property becomes subject to such statutory trust for sale: (a) in the case of joint tenancy, a sale under the trust shall not of itself effect a severance of that tenancy; (b) in any case land shall be deemed to be converted upon the appointment of trustees for sale unless the court otherwise directs …"
4. Under s 66F(2), property held upon the statutory trust for sale is to be held upon trust to sell the same and for the trustees for sale to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses and outgoings, upon such trusts and subject to such powers and provisions as may be required to give effect to the rights of the co-owners.
5. The Court's power to make orders under s 66G is discretionary and there are some circumstances in which an application may be refused by the Court: see for example Re Jackson and the Conveyancing Act (1951) 52 SR; (1951) (NSW) 42; (1951) 69 WN (NSW) 29; Stephens v Debney (1959) 60 SR (NSW) 468; (1959) 77 WN (NSW) 223; Ngatoa v Ford (1990) 19 NSWLR 72; Forgeard v Shanahan (1994) 35 NSWLR 206; (1994) 18 Fam LR 281; [1995] ANZ ConvR 282; (1994) NSW ConvR 55-723.
6. However, this is not an unlimited discretion: Re Permanent Trustee Nominees (Canberra) Ltd [1989] 1 Qd R 314; see also James v James [2017] NSWSC 1309 per Emmett AJA at [9]. As co-ownership has been established, the first defendant, Mrs Julie Bowden, has an immediate case for a s 66G order. Her case is compelling in that she is a co-owner of property wholly occupied by the other co-owner and consequently she is unable to enjoy the benefit of her interest in the property. This situation cannot continue in fairness to her. Mr Kevin Bowden has not advanced any reason why s 66G orders should not be made in this case.
7. Though Mrs Julie Bowden's precise share of the Nowra property has been the subject of debate in these proceedings, the fact of her co-ownership itself has not been disputed. Thus as the fact of co-ownership is not in dispute there is every reason to proceed with making s 66G orders without further delay.
8. In their Motion, the defendants have nominated two solicitors, Paul Gordon Falzon and Stefan Peter Psaltis, as their proposed trustees for the sale of the Nowra property. Both Mr Falzon and Mr Psaltis have consented to accept the office of trustee for sale.
9. Further, UCPR, r 55.7 stipulates that, where an application before the Court involves a new trustee, that trustee's fitness for the role must be considered. At least one affidavit of a new trustee must be deposed, unless otherwise ordered by the Court, canvassing such issues as whether the trustee is of "good credit" and "good character, repute and business habits": UCPR, r 55.7(2)(a)-(d).
10. The defendants have complied with all the formalities for the appointment of both Mr Falzon and Mr Psaltis as trustees for sale. Their affidavits and those of their referees establish them each to be of good character and repute.
11. The Court will order pursuant to Conveyancing Act, s 66G that Mr Falzon and Mr Psaltis be appointed as trustees for sale of the Nowra property.

Conclusion and Orders

1. The Court will reserve the question of costs and will order the the parties to put on submissions about the appropriate course to be followed to deal with the issues that the Court has raised in relation to the referee's report. This should be done by 31 January 2022.
2. Accordingly, the Court makes the following orders: 1. Pursuant to the inherent jurisdiction of the Court and Uniform Civil Procedure Rules 2005, r 20.24(1)(a), the Court will finally determine the adoption or variation of the referee's report of Mr Schon Condon of Condon Associates dated 25 May 2020 and filed on 16 June 2020 after hearing from the parties further as follows after their consideration of these reasons: 1. by written submissions to be filed by 31 January 2022; and 2. supplemented by oral submissions at a supplementary hearing on 23 February 2022, or on such other date as should be arranged with my Associate. 1. Declare that the land described in prayer for relief (2) of the defendants' Motion filed on 19 June 2020 ("the Nowra property") is jointly owned as between the first plaintiff and the first defendant in the percentages to be determined by the Court as a result of the supplementary hearing to be held on 23 February 2022. 2. Direct the plaintiffs to file evidence by 27 January 2022 as to their financial capacity to purchase in what may be at least a one third interest in the Nowra property held by the defendants. 3. Order that in light of the joint ownership in equity of the Nowra property Paul Gordon Falzon, Solicitor of Falzon Legal, and Stefan Psaltis, Solicitor of Praxis Lawyers, be appointed trustees ("the trustees") of the land described in prayer for relief (2) of the defendants' Motion filed on 19 June 2020 ("the Nowra property"). 4. Order that the Nowra property be vested in the trustees subject to any encumbrances, if any, affecting the entirety of the said land but free from encumbrances effecting any undivided share or shares therein to be held by the trustees upon the statutory trust for sale under the Conveyancing Act 1919, Part IV, Division 6. 5. Order that the trustees cause the Nowra property to be sold either by private treaty or by auction, but before any such sale the trustees shall ascertain with the Shoalhaven Council whether the Nowra property has approval for occupation and if it is not so approved the trustees are authorised to take all steps necessary to obtain approval for its occupation. 6. Order that the trustees may at their discretion appoint a real estate agent for the sale of the Nowra property. 7. Order that any party to these proceedings is entitled to purchase the Nowra property, whether at auction or otherwise without the payment of a deposit. 8. Order that Paul Gordon Falzon is authorised to charge at a rate not exceeding $400 per hour, and in the total sum not exceeding $2,000, exclusive of Goods and Services Tax, for professional fees and disbursements and that the trustees are authorised to deduct all such expenses from the proceeds of sale. 9. An order that the trustees may retain as required independent legal representation in their capacity as trustees for the sale of the land as may arise and that such costs be paid out of the proceeds of sale of the Nowra property. 10. An order that the trustees pay out the following from the proceeds of sale of the Nowra property: 1. The trustees' professional fees and disbursements; 2. Council rates, water rates, vendor's duty, land tax and any other statutory duties or charges if any; 3. The real estate agent's commission and charges; 4. Legal fees; 5. The amounts owing to any person having a secured interest; 6. Any other fees, charges, expenses or disbursements of or incidental to the sale of the Nowra property; and 7. Account to the parties for their portion of the balance as directed by the Court. 1. Stay Orders (4) to (11) hereof until the determination of questions in Orders (1) and (2). 2. Reserve questions of costs. 3. Grant liberty to apply.

Annexure A (104803, pdf)

Amendments 17 December 2021 - Annexure A added 04 February 2022 - authorities listed - typographical errors corrected [112] third last line, "it done it raises" amended to "it raises" additional spacing and typographical errors in quotations amended 15 February 2022 - [37] sixth last line, "parts" to "courses" [61] fourth last line, "result is consistent" to "result consistent" [62] second last line, commas added to "result, on his analysis" [86] - second line, "calculators" to "calculations" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 February 2022