(2014) 88 NSWLR 281
Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044
Baumgartner v Baumgartner [1987] HCA 59
(2011) 285 ALR 311
Evans v Evans [2011] NSWCA 92
Gissing v Gissing [1971] AC 886
Giumelli v Giumelli [1999] HCA 10
Shepherd v Doolan & Anor
Est. Doolan [2005] NSWSC 42
Sidhu v Van Dyke [2014] HCA 19
Source
Original judgment source is linked above.
Catchwords
(2014) 88 NSWLR 281
Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044
Baumgartner v Baumgartner [1987] HCA 59(2011) 285 ALR 311
Evans v Evans [2011] NSWCA 92
Gissing v Gissing [1971] AC 886
Giumelli v Giumelli [1999] HCA 10Shepherd v Doolan & AnorEst. Doolan [2005] NSWSC 42
Sidhu v Van Dyke [2014] HCA 19(2014) 251 CLR 505
Sullivan v Sullivan [2006] NSWCA 312
Judgment (5 paragraphs)
[1]
JUDGMENT
The plaintiff, Daniel Terry Behman ("Daniel") who is 26 years of age, sues his father Tarek Behman ("Terry") in relation to a property at 46 Oliver Street, Bexley North ("the property") in which Terry still resides together with two brothers of Daniel, Andrew Behman ("Andrew") and Mark Behman ("Mark"). Daniel's twin brother, Matthew Behman ("Matthew") moved out of the property in June 2009 and went to live with his mother Hydi Ayad ("Hydi") in Melbourne. Hydi and Terry were divorced in 2002 with Terry obtaining custody of all four sons. The property was, at the time of the divorce, registered in Terry's name and he was permitted to retain ownership of the property as part of the divorce settlement. Mr J Darams of counsel appears for Daniel and Mr P Walsh of counsel appears for Terry.
The property is, it is agreed, worth approximately $1.5 million and is subject to a mortgage to the National Australia Bank ("the Bank") of approximately $900,000 producing a current net equity of $600,000. When Hydi left the property in 2002 the mortgage debt was approximately $250,000 and Terry has since then made numerous drawdowns against the property.
Daniel asserts that Terry holds one fifth of the property for him on a constructive trust. He asserts that he and Terry agreed, or it is to be inferred that it was their common intention, that Daniel should have a one fifth interest in the property and that he has acted to his detriment on the basis of that agreement or intention, making it unconscionable for Terry to depart from the assumption that Terry induced.
Alternatively, Daniel asserts that he has a one fifth share of the property on the basis of proprietary estoppel by encouragement.
Daniel relies on:
1. what he claims was said by Terry in 2002- 2003 and for a number of years after that, amounting to representations
2. the fact that in reliance on the representations all of his earnings were, from the time he turned 14 years and 9 months until he left the home in December 2012, paid into an account controlled by Terry the great bulk of which Daniel did not receive
3. the fact that Terry told him that his earnings would be utilised to make the mortgage repayments for the property to the Bank
Daniel, Matthew, Andrew, Mark and Terry all gave evidence concerning conversations held in or about 2002 after Hydi had left the property and thereafter.
Daniel's version of the conversations is set out in paras 53, 54, 55, 56, 57, 58, 59 and 63 of his affidavit dated 29 May 2014:
"53. After my parent's separation, from on or around 2001 until approximately 2003, I had conversations with Dad almost every fortnight in which Dad would share information with me about the financial circumstances that the family was in at that time. I believe that he did this because I was the eldest child. There were a large number of these conversations and a recurrent theme of the conversations and the kinds of things Dad said to me were words to the effect of:
"we couldn't pay all the bills this month";
"we are struggling to pay the mortgage";
"we are very tight on money";
"we are in a lot of debt";
"we might have to sell the house"; and "hurry up and start working".
54. In addition to the above Dad told me from time to time that we may have to move to a public school because he couldn't afford to pay our school fees and the mortgage. In doing so Dad said to me that we had to choose whether to stay in the Family House or stay at our current school, but that we couldn't afford both.
55. During the period 2001 to 2003, Dad regularly said that we needed to sell the Family House and move into an apartment because he couldn't afford the mortgage
56. Throughout 2001 to 2003, Dad also constantly pushed Matthew and I to find a job. Dad would say words to the effect of:
"Hurry up and start working"
"Hurry up and start working so you can help pay for the mortgage I can't do it by myself"
"If you don t want to work we might as well sell the house because I can't afford it by myself"
"This isn't only my house, it's yours and your brothers so everyone needs to help"
57. From 2003 to December 2012, Dad referred to the Family House and all our assets as "everyone's" and the 'family's". Dad would make these references in front of me to family and family-friends at gatherings. The kinds of things Dad said were, including but not limited to, words to the effect of:
"I've told the boys that this is everyone's house. I'm not keeping it for me";
"This is everyone's house. I've told them that as long as we stick together, they'll also have 2 or 3 units by the time they're 30";
"It's the family s house";
"We all own everything, we're a family".
58. I also had conversations with Dad in which Dad would reaffirm to me that the Family House was "everyone's" and "the family's". These conversations usually occurred when we were discussing our financial position, household bills, and when I wanted to handle my own funds. There were a large number of these conversations and a recurrent theme of the conversations and the kinds of things Dad said to me were including but not limited to, words to the effect of:
"This is everyone's house and as long as we stick together, we'll be ok'
"This isn't only my house, it's yours and your brothers so everyone needs to help"
'It's not just my money or your money…. we all own the house so we all pay for it as a family"
"It's not my house, it yours and your brothers"
"As long as you all have this house, you'II always be ok financially"
'Whatever you do. always keep this house and you'll be ok."
And the things that I say Dad said in paragraphs 103 and 112.
59. From 2003 and up to approximately November 2012, Dad also commented about "our" tight financial position at least once every few months. In these conversations, Dad would say to me words, including but not limited to, those noted in paragraphs 61, 62, 64, 71, 72, 76, 78, 79, 80, 82, 122, 123, 125.
…..
63. Dad would say words to the effect of "Why didn't you go to work!?", "Why am I working to keep the house if you're not going to help?", "I can't do it by myself. If you don't want to help then I'll sell it and we can move into a unit and you and your brothers can go to a public school" and "This is your house. I'm only keeping the house for you boys so if you don't want to help then we might as well just sell it.""
Daniel commenced university studies in 2007 with a view to becoming an accountant and obtained employment with Lawler Partners, a firm of accountants. He worked part time for Lawler Partners during the academic year but full time when he was on holiday from university. On graduation he commenced working for Lawler Partners full time.
There was some dispute about the degree of access that Daniel had to the bank account opened in his name but there was little dispute about the fact that the amount that he received out of the wages earnt was quite modest- an amount in total, on his calculation, of $29,000 out of $204,000 net earnings and after tax refunds.
There is no dispute that in December 2012 Daniel left the property and from that time Terry had no access to Daniel's earnings. Daniel sought to take items which he claimed were his (see para 103 of his affidavit) which he says Terry refused to let him take but all disputes concerning any personal property of Daniel were resolved by the time of the hearing: T2.21- T3.1.
Daniel gave evidence of a conversation he had with Terry in or around January 2013 after Daniel had left the property. Daniel asserts that he asked Terry to put his name on the title of the property which request Terry refused. Daniel says that he then had the following conversation:
"111. In response, I said to Dad words to the effect of "then repay me the value of my wages since I started working since you told me that you needed it to keep the house, and you said that the house was all of ours and the Family's".
112. However, Dad refused and said words to the effect of "that's right, the house is the family's and since you're no longer part of the family, you don't own it anymore".
113. An argument followed where I repeatedly told Dad that I wanted him to either repay me the value of my wages or put my name on the title for the house, however Dad refused to do this."
Daniel subsequently (18 July 2013) lodged a caveat on the property supported by a statutory declaration claiming that he had loaned money to Terry to enable Terry to make the monthly mortgage repayments. That caveat lapsed. Daniel did not assert in this Court that he had loaned his father money. On 12 March 2014 Daniel lodged another caveat also supported by a statutory declaration claiming that he had an equitable interest in the land because Terry "holds on trust…. a 1/5th interest in respect of the land pursuant to a common intention or agreement" between himself and Terry.
There clearly has been acrimony between Daniel and Terry which acrimony has enveloped the family since Matthew has sided with Daniel and gave evidence in support of Daniel's case and Andrew and Mark gave evidence in support of Terry's case.
Daniel claims that he worked on weekends in a business known as Nationwide Pest Control established by Terry. He claims he worked some thirty weekends and was never paid for that work. An estimate of what the hours worked by him would have yielded him he had been paid was given of $13,000. Terry, supported by Mark (and to a lesser extent Andrew), denied that Daniel ever worked in that business. Those denials were in my view shown to be false and the responses of Terry and Mark were damaging to their credit.
Mr Darams outlined a number of matters relevant to Terry's credit, namely:
1. The defendant's failure to answer the Court's question regarding the inquiries made by the Police Integrity Commission truthfully: Tr 83:30-34. The defendant's answer to the Court's question was false. The falsity of that answer is borne out by the defendant's evidence at Tr 84:10-16. The plaintiff submits that the Court should not and will not accept that defendant "misunderstood" the Court's question (which he says he had Tr 84:25). The defendant's understanding of the question is evident in the way that he answered the Court's question - by quoting back the Court's own words. It is also implausible that the defendant has forgotten what he was being questioned about before the PIC when he lied to it. They were set out in the Court of Criminal Appeal's decision in Behman v R [2014] NSWCCA 239.
2. The defendant's repeated denials in paragraphs [29], [33] and [34] of his affidavit dated 30/10/14 (CB at pages 956 - 957), and his denial under cross-examination (Tr 95:22-34), that the plaintiff's income/money was used to pay the mortgage over the Property. That evidence is patently wrong. The defendant must have known the plaintiff's income/money was being used that way because he was the one who was making the payments. Moreover, it is wrong in the circumstances where the defendant himself accepted that the plaintiff's income/money was being used to pay for the mortgage because it was going into the "pool" of funds from which the mortgage was paid: Tr 95:38-96:26.
3. The defendant's answers under cross examination as to what he meant by "work": Tr 110:44-111:33. Those responses are simply not plausible.
4. The defendant's denials (in paragraph 58 of his affidavit dated 30/10/14) that the plaintiff worked in the pest control business, given his evidence under cross-examination that the plaintiff on at least one occasion worked in the business (Tr 108:24-41) which the Court had reason to question the defendant on later in his evidence (Tr 113:19-26).
5. The defendant's denials again that the plaintiff worked in the pest control business in light of the objective and contemporaneous documents. For instance, the email he sent the plaintiff on 29 November 2010 whereby the defendant said "You need to climb to the top of this building to remove a birds (sic) nest for $400.00" (CB at page 807). The email is self evidently an instruction or direction for the plaintiff to do some work. However, the defendant would not accept that and gave some fanciful responses to questions when he was tested about this: Tr 114:02-115:16. It is manifest that the defendant was denying the undeniable. The only reason why he would do that now is because he perceived that it was of some benefit to his case.
6. The defendant's conflicting evidence in paragraphs [56] and [57]of his affidavit dated 30/10/14. On the one hand the defendantdeposed that the plaintiff did no work for business, and on theother (in paragraph [57]) he said that he was not paid for thework that he did. The defendant's attempts to correct theevidence were unconvincing and the inconsistency remained: Tr126:46-127:40. There is only one reasonable way in which toread paragraphs [56] and [57]. And they cannot be readconsistently. The defendant's failure to accept that they wereinconsistent just serves to demonstrate his lack of credibility.
7. The defendant's denial under cross-examination of what he infact says in paragraph [29] of his affidavit of 30/10/14. Undercross-examination, at Tr 129:41-43, the understanding herecords in paragraph [29] was put to him and he denied that hehad that understanding. When confronted with his evidence inhis affidavit, his evidence was confusing and evasive: Tr 130:09-45.
Mr Walsh did not seek to answer the attack on Terry's credit, other than to say that there was not much factual dispute in the case and I accept Mr Darams' submissions.
Mr Darams outlined a number of aspects of Mark's evidence:
1. Mark Behman's evidence in paragraphs [19] and [20] of hisaffidavit of 3/11/14 in respect of the emails which the plaintiffsent to him and his evidence under cross-examination about hisevidence and those emails: Tr 156:19-160:11. At Tr 157:20-24Mark Behman accepted that there was nothing in the email thatis annexure B to his affidavit whereby the plaintiff tried to"induce" him to helping the plaintiff. However, he did not want tochange what he said in paragraph [20], and then, inconsistentlyagain, maintained that the email did amount to inducement: Tr157:25-40. No reasonable person, or person acting reasonably,could interpret those emails in the manner in which MarkBehman describes in paragraphs [19] and [20].
2. Mark Behman's evidence about when he was first employed byNationwide Pest Control. In paragraph [4] of his affidavit of3/11/14 he says that he was first employed by Nationwide PestControl on or about September 2010. When that evidence wasput to him under cross-examination, his response was that "Iwouldn't say I was employed": Tr 161:27-29. He then tried toexplain or make some distinction between being "employed": Tr161:31-162:10. He then wasn't "too sure or not" when he wasfirst employed: Tr 162:44-48. Ultimately, he accepted that hewas first employed in September 2010: Tr 163:50-164:03.
3. Mark Behman's denial (Tr 164:36) that the plaintiff did work forthe pest control business in light of the text correspondencebetween he and the plaintiff which appears at pages 809 - 818of the Court Book. That correspondence only permits one finding, and that is that they demonstrate that the plaintiff was working with Mark Behman in the pest control business.
4. Mark Behman's evidence surrounding the purported loan between he, the plaintiff and Andrew Behman on the one hand and the defendant on the other. In paragraph [10] of his affidavit of 3/11/14 he deposed that it was a loan for various payments. Under cross-examination, he gave evidence that when he was preparing his evidence he asked his brother Andrew Behman about the "loan": Tr 173:35-42. He repeated that: Tr 173:44-48. But then said he "did not recall": Tr 173:50-174:04. And then he denied it: Tr 174:09-10. And then again under questioning by the Court, he was unsure whether he spoke to his brother Andrew: Tr 164:14-27. In the end, after having been shown the document which appears at page 853 of the Court Book, Mark Behman accepted that it was a gift and not a loan: Tr 175:26-176:25.
Mr Walsh did not seek to answer the attack on Mark's credit other than again to say that there was not much factual dispute in the case. I accept Mr Daram's submissions in relation to Mark's credit and I formed the view that Mark was prepared to say whatever he thought would assist his father's case.
In relation to Terry, although he did make some admissions, for the reason identified by Mr Darams I have little confidence in his veracity as a witness.
Both Daniel and Mark gave evidence concerning the conversations they were part of or heard from the time they were eleven years of age. There was (as with the evidence of their brothers Andrew and Mark) an air of unreality and artificiality about the details and their understanding of what was said a very long time ago. Daniel insisted that his father had never used the word 'home' (see T15.14- 37, T23.43- T24.2, T48.7- 21) and that there is a difference between "my place" and "my home" (see T21.49). This same theme was reflected in Andrew's evidence: T51.30- 43. There were the following exchanges in cross examination:
1. At T20.5- 23 in the cross examination of Daniel:
Q. That is the last line of the conversation of your account, "This isn't only my house, it is yours, and your brothers, so everyone needs to help." Those are the words you say you took as a promise to formally transfer properties here at some stage?
A. Contrary to that, yes, there are a number of conversations that I referred to. So I think everything in that paragraph. Would you like me to keep going?
Q. I would like you to keep going in a moment, but just on that paragraph, you would agree with me that there is no suggestion as to when this formal transfer of interest in the house would happen? You agree with that, don't you?
A. No.
Q. You don't?
A. No.
Q. Are you aware that if you want to transfer title to a house, or any real estate, the way in which it is done, at least with registered titles, to act formally execute a transfer and lodges it the registrar generals or Land Titles office?
A. I did know that at the age of 11.
1. At T58.9- 41 in the cross examination of Matthew:
Q. So is this the gist of your evidence, you only agreed to contribute your earnings to the household on the strict condition that you would get some property interest in the Bexley property?
A. To have a financial interest, yes.
Q. You worked that out all by yourself at the age of 14?
A. Yeah, of course. Like I said, age doesn't determine how smart you are.
Q. You were satisfied that the words you recounted, that your father used, and your contribution, was enough to entitle you to a share in the house?
A. Yes.
Q. At the time at the age of 14, how much of the house did you think you had become entitled to when you handed over your first McDonald's pay cheque?
A. One fifth.
Q. That was on the first pay cheque going over, was it?
A. Yes, that was our agreement.
Q. There you go. I don't suppose it occurred to you to stop paying money after you had got your fifth? No?
A. Say again?
Q. No, withdraw that. So your understanding was that immediately you and Daniel paid, started paying your monies in from McDonalds, you say this seriously, you had a fifth of the property, Daniel had a fifth of the property, your dad only had a fifth of the property and each of your two other brothers got a fifth of the property.
A. Yes, we were all equal.
Q. So far as your two other brothers were concerned, that was so even though they weren't paying any money. Is that what you say?
A. Yes, that's correct.
1. At T65.40- 67.6
Q. So when did you become first aware that there existed such a thing as a certificate of title for a house?
A. It's common sense. When you go through school you talk about it, business in school, just learn about it in school and then you've got the Internet. You do research.
Q. Do they teach about the joys of the Torrens registered title system in school these days?
A. Can you repeat that?
Q. Do they teach about Torrens title registration of title of properties in schools these days and you learn about it in high school?
A. Yeah, we, yeah, we all talk about it.
HIS HONOUR
Q. No, you were asked do you get taught about, not you talk about it?
A. Taught, no.
Q. Not, no.
A. No.
WALSH
Q. So this is your understanding of title registration doesn't come from some legal studies course that you might have done at school?
A. No.
Q. It comes from general conversation with your mates?
A. Yeah, and research.
Q. Did you seriously spend your spare time researching registered title property law--
A. Of course, yes.
Q. --in your teens?
A. Yes, of course.
Q. And what did you understand when you say you were having these conversations with your father about getting a name on the house? What did you understand the significance of having your name as one of the registered proprietors of property would be?
A. It was just reassurance for me and my brothers.
HIS HONOUR
Q. Did you understand that it would involve you probably in having to pay part of the mortgage, be liable for mortgage repayments to the bank?
A. Yes.
Q. You knew that, did you?
A. Yes.
Q. And had you investigated back at this stage this conversation? How you would go about getting the title into your name?
A. No.
Q. Had your Internet inquiries gone as far as stamp duty, refinancing of the mortgage, those sort of things?
A. Yes.
Q. So you'd done that?
A. Yep.
Q. And you were prepared to enter into a new mortgage with the present mortgagee--
A. Yep.
(I should note that although the transcript does not show it Mr Walsh resumed questioning at T66.43)
I found the suggestion that Daniel and Matthew would, at eleven years of age and fourteen to fifteen years of age, hold any understanding of the matters of which they claimed to have knowledge and understanding as fanciful. I think that by the time of the proceedings they had come to believe that they were entitled to a one fifth share in the property and were projecting that belief back in time in a most artificial manner.
There was evidence that Terry had provided the four boys with benefits that were available because they were contributing or had contributed to the household expenses:
1. private school education
2. extensive range of motor bikes
3. family use of a motor boat
4. family holidays
5. the ability to continue to live in a five bedroom home
6. other activities set out at para 21 of Terry's affidavit pp 952- 955 Exh A2 and para 42 p 958
Matthew gave evidence of his having contributed to school fees but that evidence was shown to be unreliable: see T71.37- T73.43 and see T104.15 of Terry's evidence which explains why money was being paid by Matthew.
The records of Terry's loan account are incomplete notwithstanding efforts of Daniel's solicitors to obtain all of Terry's bank records (Terry accepted in cross examination that he had many bank accounts and credit cards: T89- T90) but what has been found (see Exh 2) coupled with copies of the account in Daniel's name controlled by Terry does establish that on occasions all of Daniel's earnings were used to make mortgage repayments (and see T97.20- T98.30). Terry was not willing to accept that Daniel's income had made a direct contribution to the mortgage even when it was obvious it had: T98.1- 40 and he had all but admitted it at T98.6. I am satisfied on the balance of probabilities that Daniel's earnings have either been used directly to pay the mortgage or have significantly assisted Terry in being able to make the mortgage repayments and associated costs of the property.
The total income earnt by Daniel paid into the account operated by Terry was $184,913.86. The plaintiff endorsed over to the defendant tax refunds of $19,843.87. Daniel received, on his evidence, $29,101.72 of what had been paid by him. Excluding the earnings prior to his turning 18, the total net benefit to Terry (subject to what I say below) was $164,829.51 (see MFI 1) about which there was no dispute, and including the earlier period the net benefit to Terry was $175,656.01.
Terry admitted that he said to the plaintiff and his brothers in the period of 2003- 2012:
1. "This is everyone's house and as long as we stick together we will be okay" (T137.35)
2. "This isn't only my home, it is yours and your brother's, so everyone needs to help" (T137.39)
3. "It is not just my money and your money. We all own the house so we all pay for it as a family" (T137.44)
4. "It's not my house it is yours and your brothers" (T137.50)
5. "As long as you all have this house, you'll always be okay financially" (T138.4)
6. "Whatever you do, always keep the house and you'll be okay" (T138.10)
All of the above quotations were put to (and accepted by) Terry in cross examination. Terry did not accept that he had told Daniel that he would use the plaintiff's earnings to pay the mortgage: see T95.22- 34 but my lack of confidence in Terry's veracity leads me to accept Daniel's evidence that at times after he had commenced working for Lawler Partners Terry did tell him that, and such of the bank documentation as has been obtained by Daniel tends to show that Terry did use it for that purpose.
It was not put to Terry that his evidence (see para 32 of his main affidavit) that he did not have an understanding that by using the Daniel's earnings to pay for expenses that related to family expenses and his own benefit he would owe money to Daniel or that Daniel "would have a vested interest in the property" was untrue. However it should be noted that there is no dispute that when Daniel demanded return of his money Terry said "the house is the family's and since you're no longer part of the family you don't own it anymore": see para 112 of Daniel's affidavit and T35.8-10. That statement by Terry contains a recognition by Terry that Daniel did hold an interest, although on Terry's view of matters Daniel had lost that interest.
I think it is clear that Daniel was willing to provide his earnings for the common good of the family including to help ensure that the property was being kept as an asset of the family.
This is not a case in which a plaintiff has provided some of the funds to purchase a property. Nor is it a case where of two persons liable for a mortgage debt only one has paid the debt and seeks contribution from the other. This is a case in which substantial amounts have been contributed by a family member directly to the benefit of his father and indirectly his brothers.
Mr Walsh submitted that whilst there is no significant dispute that Terry did say to Daniel most of the words to the effect claimed by Daniel there are real reasons why the words should not be given the significance which Daniel contends should be ascribed to them. He also made reference to Watson v Foxman (1995) 49 NSWLR 315, contending that there was a need for caution of the type described in that case. McLelland CJ in Eq said in dealing with claims of misleading and deceptive conduct:
"Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not …attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712."
The wisdom of these oft-cited words is not limited to cases involving misleading and deceptive conduct but the need for caution in accepting a self serving remembrance of words spoken is reduced when there is no dispute as to what was actually said.
Given that Daniel did not contribute to the purchase price (or ancillary costs) he does not assert a resulting trust but rather a constructive trust based on an asserted agreement or common intention. Reference was made to White J's decision in Shepherd v Doolan & Ors; Shepherd v Doolan & Anor; Est. Doolan [2005] NSWSC 42 and I think that is a most helpful adumbration of the principles which need to be borne in mind in claims concerning constructive trusts. His Honour found in that case that the plaintiff, a de facto of the deceased, had paid £100 to help the deceased pay the costs associated with the acquisition and holding of the lease of the property (not the property itself) and or of the costs of building the house on the land and also the plaintiff assisted in building the house. His Honour found on the evidence that the common intention of the parties was that the plaintiff should have some proprietary interest but with no agreement or common intention as to the quantum. His Honour held that the deceased held the property on trust for the plaintiff to the extent of a 9% share (see [52]).
I derive the following principles from Doolan:
1. the inquiry for the purposes of determining whether there was a common intention is inquiry as to the actual intention of the parties. The law does not impute a presumed intention to the parties based upon what the Court considers fair and reasonable persons would have intended: see [34]
2. the intention need not be that the parties have a specific share of the property
3. intention may be established by:
1. agreement as to how the property should be held
2. express statements of intention
3. intentions inferred from conduct
1. a common intention that a party have a beneficial interest in a property owned by another will not be inferred merely from their joint occupation of property, nor the carrying out of household duties, nor the bringing up of children on the property, nor the doing of repairs, renovations, maintenance, decoration or improvement, nor the provision of furniture (Pettitt v Pettitt [1970] AC 777 at 805-6, 811, 818, 826; Gissing v Gissing [1971] AC 886 at 900, 910; Burns v Burns [1984] Ch 317 at 326, 328, 342)
2. the intentions may be inferred from financial contributions, direct or indirect, to the acquisition of property, including the paying of mortgage or the payment of expenses which free up funds for that purpose (see [38]). In the case of 'the common intention' constructive trust there is no presumption that the beneficial interest is in proportion with the contribution of the purchase price
3. declarations about intentions before or at the time of the transaction or so close in time after the transaction as to constitute a part of it can be relied on (see [39])
4. a plaintiff must show that he or she acted to his or her detriment in a way referable to the agreement or intention that she have an interest in the property
5. conduct which is insufficient to establish a common intention as to ownership of the property may be sufficient to constitute relevant actions to the plaintiff's detriment to establish a trust if the common intention is established otherwise
6. conduct may be both the evidence from which an intention that the plaintiff have a beneficial interest can be inferred and the act of detrimental reliance
7. equality is equity but that statement can be departed from when the parties make disproportionate contributions to the acquisition of the property
8. the constructive trust may arise after the acquisition of a property where the common intention is formed at a later time: Doolan at [45] and see Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044 at [55]
I am not satisfied that Terry did tell Daniel that he would use Daniel's earnings to pay the mortgage when Daniel commenced earning money as a teenager. I think it is unlikely that he would say any such thing to an eleven or fourteen year old boy or that if he did say such, it could be expected that Daniel (and Matthew) would understand that to mean that they would have a one fifth (or a one third) interest from the time that they commenced employment. The proposition that merely by commencing employment and the payment of wages into an account controlled by Terry, would confer such an interest is extraordinary, with no detail of how long it was to continue or what would occur if the sons stopped working and how Terry could possibly enforce the continuation of the arrangement after the sons had reached eighteen: see Ashton v Pratt [2015] NSWCA 281; (2014) 88 NSWLR 281 at [84] to [89].
I am unable to accept that merely by telling his children that the house or home was theirs and that any earning they obtained would be used for the family's benefit Terry is to be taken as having agreed that each of the sons would, when they commenced working and contributing to the household, have a one fifth share in the property. The plaintiff was no more than fourteen years of age when the conversation took place.
The situation is, however, altered when Daniel is an adult and has commenced earning a substantial wage. By the time Daniel commenced working for Lawler Partners I think he was intended to and would have understood that by his contributions Terry would be able to pay the various liabilities in respect of the property that had been and were continuing including the mortgage repayments. There was in a sense a joint pooling of resources for the benefit of all family members much as a de facto might contribute their income to the needs of both themselves and their partner.
In Doolan to which I have earlier made reference, White J said at [30]:
"[30] The ultimate basis for the imposition of a constructive trust is that it would be unconscionable for the holder of the legal title to the property to assert that he holds it free of any beneficial interest in the claimant. However, although "unconscionability" is the underlying basis upon which equity will intervene, it is not itself a sufficient description of the principles upon which equity does so. Equitable rights do not arise merely because the Court considers it fair in all the proven circumstances that the legal owner of property should hold it, or a portion of it, for the benefit of another. (Muschinski v Dodds (1985) 160 CLR 583 at 615-616)."
The view of Deane J in Muschinski v Dodds (1985)1 60 CLR 583 with which Mason J (as his Honour than was) concurred was embraced in Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 in the principal judgment (Mason CJ, Wilson and Deane J) and with the concurrence of Toohey and Gaudron JJ in their separate judgments, described as an application of
"the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them"
a principle to which reference was made by the plurality in Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at p 113.
In Baumgartner the plurality said:
"In the present case the parties pooled their earnings with a view to meeting all the expenses and outgoings arising from their living together as a family. The individual contributions of each party were not allocated to a particular category or particular categories of expenses and outgoings. The pool of earnings was used to pay outgoings associated with accommodation - mortgage instalments on the unit at Cabramatta and the property at Leumeah - as well as other living expenses. There was no suggestion that the respondent's contributions were paid and received by way of rent or a charge for use and occupation and for living expenses. Such a suggestion would be inconsistent with the relationship that came into existence between the appellant and the respondent, a family relationship which was for the most part until 1982 a long-term stable relationship in which marriage was under continuous contemplation. The land at Leumeah was acquired and the house on it was built in the context and for the purposes of that relationship. Together they planned the building of the house. Together they inspected it in the course of its construction. Together they moved out into it and made it their home after it was built.
In this situation it is proper to regard the arrangement for the pooling of earnings as one which was designed to ensure that their earnings would be expended for the purposes of their joint relationship and for their mutual security and benefit. To the extent which the pooled funds were the source of payment of mortgage instalments by the appellant, the pooled funds contributed not only to present accommodation expenses but also to the security of the parties' accommodation in the future. In this context it would be unreal and artificial to say that the respondent intended to make a gift to the appellant of so much of her earnings as were applied in payment or mortgage instalments. There is no evidence which would sustain a finding that the respondent intended to make a gift to the appellant in this way.
The case is accordingly one in which the parties have pooled their earnings for the purposes of their joint relationship, one of the purposes of that relationship being to secure accommodation for themselves and their child. Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant's assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent."
See also the helpful analysis of Sackar J of Baumgartner in Lorretta Kistmah Craig and Ors v Kia Silverbrook and Ors [2013] NSWSC 1687.
Neither the language used by the Court in Baumgartner nor the cases identified by Deane J in Muschinski suggest any limitation of the principle to married persons or de facto partners.
Although the foundational relationship here is of father and son and not de facto, the element of sharing or pooling is very much at the fore in this case, the common enterprise being the maintenance of a home within which all family members could reside and the needs of family members such as food, private school fees, trips and in the case of this family, motor bikes, and other leisure activities, could be met.
The family relationship came to an end between Daniel and Terry because of mutual antipathy and I do not think it is necessary to ascribe blame to either or both of Daniel or Terry for that development.
In my view the evidence supports Daniel's contentions that his payment of wages from the accounting firm (and his not having sought wages from Nationwide Pest Control) enabled Terry to meet Terry's obligations to the Bank in respect of the mortgage either directly or indirectly by enabling other debts to be paid: see Exh 2, CB 351- 399, CB 96, 99, 105, 115, 119 and 120. Whilst it is clear that Daniel obtained some of the funds back to himself (ie $29,000) and obtained other benefits such as continued accommodation, food and entertainment, the extent of the benefits so obtained by him are well exceeded by the benefits which Terry, as well as other members of the household for whom Terry was at all relevant times responsible, have obtained. The significant size of the salary contributions by Daniel (less the uncontested amount of $29,000 and a further $25,000 to which I refer below) as well as Terry's statements concerning the family having an interest in the property (see T95- 96) leads me to view Terry's refusal to accept that Daniel has any interest in the property that Daniel's wages have helped Terry retain is unconscionable.
A more difficult question is what should that interest be? Daniel claims that he should be declared to have a one fifth interest in the property (on the basis that there are four brothers and Terry). Alternatively he seeks a charge on the property that reflects his interest. Daniel is not a joint mortgagor and has no liability to repay the current mortgage debt to the Bank.
Whilst I am inclined to regard the plaintiff's claim to a one fifth interest having regard to the size of the total net payments made by him to the pooled account and the fact that he has received no wages from Nationwide Pest Control as not unrealistic, a declaration of a one fifth interest may create problems in the future including as to whether Daniel must become jointly liable for the repayment of the mortgage debt and I think it preferable that the property be burdened with a charge for the repayment of the equivalent amount of $120,000 with a specification of the period within which what amount is to be repaid to Daniel. I will give counsel an opportunity to address on the precise form of orders to be made.
Terry did provide a sum of $80,000 by way of gift to Daniel and his brothers to enable them to buy an apartment at Wolli Creek. It seems likely that Daniel's earnings assisted in the provision of that benefit to all of the sons to some degree. Daniel later had his interest in the apartment bought out for $25,000 (see para 41 of Terry's affidavit) so that should be viewed as the return of a portion of the money he had contributed.
Without a full accounting of how the earnings have been used which is not possible due to the incomplete banking records produced in respect of Terry's many accounts, Daniel's solicitor having subpoenaed Terry's bank, it is difficult to arrive at any precise figure. Taking into account the net retention by Terry of the figure to which I have referred in [25] and even allowing for the return to Daniel of an additional amount through Wolli Creek, and for indirect benefit such as food and board, the claimed one fifth interest which equates to $120,000 of the net value of the property seems to me a reasonable reflection of what Daniel had contributed beyond what could be expected of a son living at home.
[2]
The estoppel claim
In the light of my conclusion in relation to the constructive trust it is not strictly necessary to consider the alternative claim but I shall deal with it briefly.
The plaintiff relies in the alternative on an equitable proprietary estoppel claim. Reference is made to Delaforce v Simpson-Cook [2010] NSWCA 84, Evans v Evans [2011] NSWCA 92, DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348; (2011) 285 ALR 311 and Sullivan v Sullivan [2006] NSWCA 312; (2006) 13 BPR 24,755.
The requirements were summarised by Handley AJA in Delaforce:
"Such an estoppel comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment."
Daniel relies on:
1. the statements made by Terry regarding ownership of the home
2. Terry's conduct in using Daniel's income to pay for the mortgage both directly and indirectly
In the submissions of the plaintiff at para 30 there is found the following:
"Here, the defendant has accepted that he made the representations the plaintiff says he repeatedly made during 2003 to 2012. Those representations included that the plaintiff owned the house and had to therefore pay for it. It was reasonable for the plaintiff to derive from those words an expectation or assumption that he owned part of the Property."
The plaintiff relies on Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505 at [71] for the proposition that it is not necessary that the conduct was the sole inducement. The plaintiff relies on the decision in Giumelli at 125 and Delaforce [63]- [64] for the proposition that if the estoppel is made out the plaintiff's expectation or assumption should be enforced.
Once again I am not persuaded that at the age of fourteen or fifteen Daniel had any expectation of obtaining a proprietary interest by contributing his small earnings towards the household. By the time he had become an adult and was contributing a significant level of pay, however, I think that it was relevant that Terry was telling Daniel that he and his brothers 'owned' the property, and that this was a factor in him continuing to provide most of his wages and permitting those wages to pay for the mortgage and related property expenses such as council rates.
Having regard to the undisputed fact that Terry told him at the time after Daniel had become an adult that "this is everyone's house", "I'm not keeping it for me", "we all own everything" and "it's yours and your brothers", I accept that Daniel understood that he would, by continuing to make his extensive contributions, have an interest in the property which reflected those contributions although the extent of that interest was somewhat vague. In a context where significant contributions had commenced to be made it is not surprising that Daniel should have so understood the words used by Terry and Terry's response when Daniel asked for return of his money was "the house is the family's and since you're no longer part of the family you don't own it anymore" effectively recognising the existence of the interest that Terry denies Daniel ever had.
[3]
Conclusion
It follows in my view that the property should stand charged with the repayment of an amount of $120,000 in favour of Daniel.
[4]
Costs
I will hear the parties on the question of costs.
[5]
Amendments
30 November 2015 - Typographical Amendment
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: 30 November 2015