Supreme Court of SA|1995-05-05|Before: Perry J

ERIC ROY CALLAGHAN v KERRI-ANN CALLAGHAN No. SCGRG 93/1892 Judgment No. 5064 Number of pages - 15 Equity - presumption of advancement (1995) 64 SASR 396 [1995] SASC 5064 (5 May 1995)

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS Equity - presumption of advancement - father and daughter - The plaintiff, an elderly widower sold his house and bought another house property in a different location in the name of his daughter, the whole of the purchase price being advanced by the plaintiff - held that the plaintiff's intention was that the daughter would have the full beneficial interest in the house property but that the plaintiff would be entitled to live in a detached flat at the rear of the house for the rest of his life - arrangements broke down and the plaintiff left the flat, remarried and took up residence elsewhere - held that there was no room for the application of the presumptions of advancement or of resulting trust where the actual intention was known - but in the circumstances it would be inequitable to permit the defendant to retain the property as her own without imposing a liability towards the plaintiff for the value of a life interest in the flat - held that the plaintiff should have judgment for the money value of the plaintiff's right of occupation for life as at the date of his departure from the flat - held further that the question whether there was an illegality associated with the purchase, having regard to the application by the defendant for a first home buyer's stamp duty concession, did not arise having regard to the finding made as to the plaintiff's intention. 571. Martin v Martin ; ; Nelson and Anor v Nelson and Ors ; Forrest v Forrest , Hann and Turner v Linton ; Baker v Baker and Azior (1993) 2 FLR 247, Nichols v Nichols (1986) 4 BPR (97,262) 9240; Pearce v Pearce and Riches v Hogben , considered.

HRNG ADELAIDE, 10-14 April 1995 #DATE 5:5:1995 #ADD 26:6:1995

Solicitors for plaintiff: Reilly Basheer Downs and Humphries

ORDER Plaintiff fails in his bid to prove an entitlement to the whole of the beneficial interest in the house property, but the Court recognises in his favour an equitable interest represented by the value of the plaintiff's right of occupation of the flat for the rest of his life. Precise form of order be a matter upon which counsel should be heard further.

JUDGE1 PERRY J The defendant is a daughter of the plaintiff. She is the sole registered proprietor of a house property situated at 14 Neill Street, Whyalla. A transfer to her by way of purchase from the previous registered proprietor was produced for registration on 30 April 1992. Her title to the property is unencumbered by any other registered interest apart from a caveat lodged by the plaintiff on 19 November 1992. In the caveat the plaintiff claims - "an estate in fee simple by virtue of having provided the monies used by the Caveatee to purchase the .... land and the Caveatee having agreed to hold the .... land in trust for the Caveator".

The parties do not dispute that the plaintiff provided the whole of the purchase monies for the property.

He claims that, having done so, the defendant holds the whole of the beneficial interest in the property in trust for him. Apart from seeking a declaration to that effect, he seeks as well an order that she execute a transfer of it to him.

The defendant maintains that the property was given to her as a gift. She counterclaims for a declaration that she is the sole legal and beneficial owner of the property.

In order to understand the parties' respective claims, it is necessary to have regard to some of the history of the matter.

In making the findings of fact which follow, I should say something as to my view as to the credit of the parties. Both gave evidence. The plaintiff was adamant to the point of being dogmatic about a number of matters as to which he was clearly mistaken. I exercise caution before accepting what he had to say about the critical issues. While the defendant was prone to argue her case from the witness box, and at times embellished the facts to suit her cause, I prefer her evidence on the critical issues, where it conflicts with that given by the plaintiff.

The plaintiff is aged 77 years. In 1958 he commenced living in Nimbin, a town in New South Wales, where he ran a business as a butcher. He had retired from that business by the time of the death of his wife on 4 October 1991. He succeeded to the former matrimonial home, a house property at Nimbin which, after the death of his wife, was registered in his name only.

There were four children of his marriage. The defendant is aged 38 years, married but separated, with one child, a daughter named Tracey aged about 12 years. The plaintiff has two other daughters, one older than the defendant, and a son. The plaintiff's son has the same names as the plaintiff, Eric Roy Callaghan. I will refer to him as Roy, which is the name by which he is commonly known. He is an insurance agent and investment adviser living in Whyalla.

1991 was a bad year for the plaintiff. Not only did his wife die on the date to which I have referred, but he also lost his brother. Furthermore, he had operations to his knees in July 1991, and on 24 December of the same year he suffered a stroke which required treatment at a hospital in Nimbin and subsequently at another hospital in Lismore.

The defendant, who had nursing qualifications but has not in recent times been employed as such, had lived at Lismore with Tracey in a Housing Commission home since 1989.

The plaintiff's son came to Nimbin on the occasion of his mother's death. He had some discussions with his father as to where the latter might like to live thereafter. The plaintiff indicated a desire to live at Whyalla where he would be near his son and his son's family. The defendant was brought into the discussions. I accept her evidence (156): "He approached me and said how would I feel about moving to Whyalla and I was just saying 'I don't really know, I suppose' and he said he was going to move there and I said, 'Well, I don't want to stay here on my own'."

I accept her further evidence that at the same time he said that he would "set Tracey and I up and we wouldn't have to worry about anything".

I reject the plaintiff's evidence that the defendant pressured the plaintiff to move to Whyalla. It was the plaintiff who mooted the idea first with his son and then with the defendant.

The three of them settled on a plan of action. It was left to Roy on his return to Whyalla to find temporary rental accommodation for the plaintiff, the defendant and Tracey. Subject to that, the plaintiff and the defendant planned to make the move before Christmas. Once there, they would look for a house to buy.

About a fortnight after the discussions following the death of the plaintiff's wife, Roy found a house to rent. The plaintiff and the defendant then decided to move on 26 December. But their plans to do so were interrupted by the stroke suffered by the plaintiff on Christmas Eve.

After he had recovered from that, it was not until the end of January 1992 that the plaintiff, the defendant and her daughter moved to Whyalla. The plaintiff paid for the move, that is, the transport not only of his possessions but those of the defendant. The plaintiff put his house at Nimbin up for sale. The three of them took up residence in the rented accommodation at Whyalla which Roy had found. They immediately began to look for a house to purchase.

They found the premises at 14 Neill Street. The vendors were seeking a price in excess of $95,000. There was discussion between the plaintiff, the defendant and Roy. The plaintiff considered the house too expensive at that stage as it was substantially in excess of what he expected to receive from the sale of the Nimbin property, which was still on the market. He did, however, have some savings and eventually he decided to supplement what he expected to receive from the Nimbin property in order to purchase the Neill Street property.

The Neill Street property had advantages in that it had a separate "granny flat" at the rear in which the plaintiff could live more or less independently from the defendant.

On 20 February 1992 a contract note was signed for the purchase of the Neill Street property at a price of $85,000. The contract note was tendered to the vendors as an offer. It was accepted, and the sale proceeded on the basis of the contract note. For the reasons which I come to, the contract note was signed by the defendant as purchaser.

The agent handling the sale was a man named Brian Wood. A suggestion was made to the plaintiff that he might save stamp duty if the house was put into the defendant's name and if she applied for an exemption from stamp duty under the scheme known as the First Home Owners scheme. Despite his denial in evidence that he had done so, I find that the suggestion was first made by Mr Wood and that he passed on the idea to Roy as well. It was Roy who then suggested to his father and sister that his father should put a caveat on the title to protect his "interest".

I have referred to his "interest". Having regard to the evidence, I am satisfied that it was always contemplated that the plaintiff would be entitled to live in the flat at the rear of the house for the rest of his life if he wished.

The evidence of Roy Callaghan was that he explained to his father that a caveat was "a clause that says that the property can't be sold without your permission so that you protect your long term interest there". While I am satisfied that the question of a caveat was mentioned, I am not satisfied that the precise nature of a caveat, or for that matter, the interest which it might in this case have served to protect, was ever spelt out to the plaintiff, or for that matter, to the defendant.

The Nimbin property was unsold at the time when settlement was due on the purchase of the Neill Street property. The plaintiff approached Westpac Banking Corporation ("Westpac") for bridging finance, taking the form of a housing loan of $75,000. His application was approved.

The manager of the Whyalla branch of Westpac at the time, Mr Michael Williams, was called to give evidence on behalf of the defendant. I accept his evidence that at an initial interview with the plaintiff, which took place on 11 March 1992, he was told by the plaintiff that the reason why he was purchasing the property in the name of his daughter was (169): "... to reduce stamp duty on the transaction and the second reason was for a benefit to her for assistance she had provided Mr Callaghan in the recent passing of his wife."

I accept further his evidence that he had, separately from the defendant, a discussion with Mr Callaghan as appears in the following passage in the transcript (171): "A. I talked to him, at that time, about the risks that if Kerri wanted to sell the property, as far as we are concerned, she had the right to do so.

HIS HONOUR: Q. You can't say what he understood. Do you remember what he said or the effect of what he said.

A. He led me to believe that he understood and that I think if I can recall, that his daughter would not let him down on this transaction, the type of thing blood was thicker than water. A family matter, would be okay.

Q. You're quoting him there, are you, when you say blood is thicker than water.

I also accept his evidence that the plaintiff told him that Roy would take steps to protect his interest in the property. Furthermore, I accept Mr Williams' evidence (178): "I understood he had the right to live there and that was the arrangement, he was to live in the granny flat."

I accept Mr Wood's evidence that when the contract note was signed by the defendant on 26 February 1992, he had a further discussion with the plaintiff to this effect (279): "Then he sort of said at least one thing, if something happens to him, because he mentioned he had had a stroke and a heart attack and he just sort of said one thing, if anything happens to me, at least Kerri and the little girl will have a roof over their head, somewhere to live ..."

Settlement of the sale of the Neill Street property took place on 30 April
The total amount due on settlement was $86,154.96 as to which Westpac Banking corporation advanced $75,000. The balance, that is to say, an amount of $11,154.96, was made up by the plaintiff from his own monies. Repayment of the loan from Westpac was secured by a mortgage given by the defendant. Despite the earlier mention of a caveat, no-one thought to take any steps to put a caveat on the title at that stage.

The defendant, her daughter and the plaintiff moved into possession of the premises on the day of settlement, that is 30 April 1992. The plaintiff took up residence in the flat at the rear of the premises and the defendant and Tracey had virtual sole use of the house.

From the start the plaintiff was more or less self-sufficient and cooked his own meals in the flat, coming only rarely into the house. However, the defendant continued to do his washing.

It was not until 10 July 1992 that settlement took place on sale of the property at Nimbin. The sale price was $75,000, and following settlement the plaintiff discharged the amount due to Westpac. It follows that as at that stage the plaintiff had paid all of the monies for the purchase of the Neill Street property.

Unfortunately, matters did not work out as the parties had hoped. About six weeks after the plaintiff and the defendant moved into occupation of the Neill Street property, the plaintiff met, at a senior citizen's club, the lady who is now his wife, then Jean Gillisen. He spent increasing amounts of time with her, and she was often at the flat.

The defendant resented the presence of a person she regarded as an intruder and did not get on with her. The plaintiff and Jean Gillisen began to plan a life of their own. In the meantime, the defendant became restless and started to speak of selling up and buying a property at a sub-division near Whyalla known as Eight Mile Creek, where she perceived that she would be able to keep her horse which she had left in New South Wales.

The plaintiff admits that the defendant at one stage took him to visit a property she was interested in purchasing at Eight Mile Creek. I accept the defendant's evidence and reject the plaintiff's evidence to the contrary that the plaintiff indicated to the defendant that as far as he was concerned, she could go ahead with the purchase of the property at Eight Mile Creek if that was what she wished.

I accept her evidence that a conversation took place in the presence of the plaintiff, the defendant and Jean Gillisen (196): "A. .... there was a day ... when we were doing some cleaning up in the yard and Jean was helping as well and dad, and dad actually said something then to that effect, about that we could put the house on the market for 98 and a half, just put it on a silent market, and just see what happens and see if we can get the money. Then I discussed about if that was the case, and he had been spending a lot of time with Jean and more or less looking at - it appeared that he was having a future planned with her and I said, 'What about if I planned to buy a property at Eight Mile Creek and bring my horses down?' and he said that would probably be okay. So I got Brian Wood and we had a look at a couple of properties, and one in particular Brian arranged to have a look at the next day ....

A. (197) ... Jean said something to the effect of 'how are you going to afford a house when you're only on a pension? and I said to dad, 'Well, isn't the money from this house going into a house out there if I decided to buy?' and he said, 'Yes, that was the arrangement, that is okay", and then Jean just looked and never said any more after that."

I am satisfied also that at about that stage, which was in about June or July of 1992, the plaintiff started to remove some of his belongings from the flat and began to spend periods living with his wife to be at another address.

It is not quite clear on the evidence just when the plaintiff actually broke off living in the flat. At some time he gave the keys to the defendant. Although that would normally indicate that the defendant no longer wanted to occupy the flat, he was not questioned about that when he gave his evidence. I do not think that it would be right to find that he had relinquished his right of occupation until early November 1992 when the relationship between the parties was completely ruptured in the circumstances which I will come to.

In about August 1992, the plaintiff went for a holiday to Sydney, taking Jean Gillisen with him. The defendant's evidence was that in about September 1992 she took a holiday in Lismore. It was while she was there that she decided she would rather move back to Lismore and start up life again there. It was then that she decided to proceed to sell the Neill Street property. On her return from holiday, she signed an agency agreement appointing Mr Wood's firm, Myles Pearce, agents to effect a sale. That agreement was dated 31 August 1992. This date suggests that the defendant is wrong in her estimate of when it was that she took a holiday. I find that she is wrong about the date but that the substance of her evidence is otherwise correct. At all events, a for sale sign went up at the front of the property.

It was on 1 or 2 November 1992 that the plaintiff returned from his holiday. When he saw the for sale sign, he challenged the defendant. I accept her account of the exchange which then took place between them: "A. When he came in, he said, 'What's going on?' and he said something about was I selling the house and I said 'Yes'. He said, 'What are you going to do?'. I said 'I'm going to move to Lismore and use the money from the house to buy one in Lismore', and he said, 'Are you cutting me out, are

you?'. I said, 'No, what do you mean?'. He said, 'You've turned into a real beaut, haven't you?'. Then he started to

move. There may have been more said. This is all I can remember. He started walking out the back and he said, 'I'll have a truck in to get my gear' and I said 'Well, just let me know when because I keep everything locked', and he just sort of went. He was very upset and agitated and we really couldn't get the conversation any further."

It was soon after that, as I have already indicated, on 19 November 1992 that the plaintiff lodged the caveat on the title. On 24 November 1992, the plaintiff wrote to the defendant. He prepared the letter with the assistance of his son. The terms of the letter are as follows (D13):

Due to the chain of events that have occurred over the last few months, I have placed a Caveat on the property situated at 14 Neill Street, Whyalla Playford.

This Caveat prevents you from selling the house and dealing with the proceeds, without my agreement.

The terms that I will agree to the sale of the house are as follows:- 1. The proceeds, less selling costs, to be paid to my account at the Westpac Bank in Whyalla. 2. The payment, by me, of your reasonable removal costs back to Lismore, at a time suitable to you, following signing of a sale contract and the expiration of the 'cooling-off' period. 3. Following the sale settlement date, I am prepared to deposit the sum of $3,000 into a bank account to assist your re-settlement back in Lismore. 4. The return to me of all my personal effects from 14 Neill Street, Whyalla Playford.

Should you not accept my terms, I will be taking steps to have the legal title to the property transferred into my name. Should I have to do that then the $3,000 re-settlement amount will not be paid to you.

Kerrie, I am sorry that things have had to move the way that they are. I really believed that the move to Whyalla would be best for you and Tracie, in fact, I still believe that is the case. Your inability to accept my new life has been hard to take. However, while I appreciate what you have done for me and your mother, I do have my own life to lead. I also feel it is now time that you faced the real world and got on with your own life as well.

That letter did not do anything towards resolving the dispute between the parties. In February 1993, the plaintiff wrote another letter to the defendant, again with the assistance of his son. That letter reads (D25): "Dear Kerrie

Following our discussions, via Roy, over the last few weeks and the placement of a Caveat on the Neill Street property I have obtained legal advice.

That advice indicated that if you refused to sign the Title over to my name it may be necessary to obtain a Supreme Court order to have your name removed from the Title and mine installed on it. The advice also indicated that the Supreme Court order would most likely be successful and could result in costs being awarded against yourself.

The alternative to a Supreme Court order would be for me to approach the South Australian Stamp Duty Commissioner and confess my involvement in the arrangement to save Stamp Duty. This is something that I do not want to do as it could implicate you much more seriously than it would me.

In view of the above, I request that you agree to sign the Title over to me as soon as it is possible. I understand that, if you agree to do so, you require a period of time to make other arrangements. I have no objection to that time and would be agreeable that the date of transfer be anytime up to Friday 2 April 1993.

To enable some preliminary arrangements to be made could you please confirm your acceptance of my request, in writing, as soon as possible. In the meantime, I would like the opportunity to pick up some of my belongings from 14 Neill Street, could you please let me know when it would be suitable to do that.

Again, I must express my sorrow at the way things have turned out. I personally feel that you and Tracie's needs would be better catered for by remaining in Whyalla, but the choice to move back to Lismore is yours and I can only wish you all the best if that is your plans. I do hope the passing of time will repair the unnecessary rift that has occurred between us.

The present proceedings were instituted by a summons issued on 21 October

In January 1994 the plaintiff married Jean Gillisen, and at the time of trial was living with her in a rented house at Wallaroo.

I was informed by counsel that whatever the outcome of this case, both parties desire the Neill Street property to be sold.

The crucial factual issue to determine in order to decide the competing claims is as to the intention of the plaintiff at the time when the property was purchased.

As to that aspect of the matter, the plaintiff's evidence was that he only put the property into the name of the defendant in order to save stamp duty: that his intention throughout was that he was to own the house: and that he never had any intention to give it to the defendant. At one stage of his evidence he said (13): "I just naturally thought the house was going to be mine and that's all there was to it."

The defendant cannot speak of what her father's intention was, but she spoke of a number of things said by the plaintiff and done by him which gave her the clear impression that he was making a gift of the house to her.

I have already referred to a number of the things which she remembers the plaintiff to have said to her or in her presence. Her evidence was (193) that the plaintiff had never said or done anything up to the time she signed the contract to buy the house to suggest that the house would be other than hers. Until they finally fell out, which was after he had returned from the holiday in Sydney at the beginning of November 1992, his dealings with her and those dealings with others which took place when she was present justifiably left her with the clear impression that the house was hers.

This was subject, however, to the fact that she acknowledges that he was to have the right to live in the flat so long as he wished. Her understanding of the reference to a caveat was that this was something which would secure his right to live there.

As to the central question in the case, I have reached the firm conclusion that at the time when the house property was purchased the intention of the plaintiff was that it would be a gift for the defendant but that he would have the right to live in it for the rest of his life.

I would reach that conclusion on the evidence of the two parties standing alone, bearing in mind my preference for the evidence of the defendant over that of the plaintiff where they conflict. But the defendant's evidence is corroborated in significant ways by other evidence, all of which points to the same conclusion.

In particular I accept and have regard to the evidence as to the following matters: (a) The evidence of an application made to the South Australian Housing Trust by the plaintiff on 26 August 1992. That application was on a printed form bearing that date, and was signed by him. One of the questions which he answered in the form was "Do you own or have you ever partly owned land or housing of any type" to which he answered "No". The plaintiff disowned any knowledge of the application form (D22) and I regard his answers in evidence as to its contents and his explanation for the answer to which I have referred to be most unconvincing. It would be

one thing if he said that he had deliberately misled the Housing Trust in order to enhance his ability to obtain rental housing. But he did not offer any such explanation. 26 August 1992 was presumably before he went on the holiday to Sydney, and I am satisfied that at that stage he had not fallen out with the defendant, although tensions were developing between them.

(b) The very fact that the plaintiff made an application for rental housing as opposed to an application to purchase a

house is an indication that he was intending to leave the defendant in possession of the Neill Street property.

(c) The discussion with Mr Williams, the bank manager, and in particular the plaintiff's assertion that he did not think that the defendant would "let him down". That statement is more consistent with the plaintiff realising that the defendant was to be registered as the owner of the property than his assertion in the witness box that he had a firm conviction from the outset that the property was his.

(d) His discussion with Mr Wood that if anything happened to him, the defendant and his granddaughter would "have a roof over their head".

A further item of evidence, to which I have not so far referred but which I accept, is the evidence of the defendant that on the occasion of the plaintiff's admission to Nimbin hospital on 24 December 1991, the defendant saw a note amongst the plaintiff's papers, written on a scrap of paper, which read, according to her recollection (the note not being produced at the trial): "Roy, if anything happens to me before the house in Nimbin is sold, can you please buy a house for Kerrie in Whyalla and if there is any money left over divide it between the others".

I should note that the evidence was that Roy was named in the plaintiff's last will as executor of the estate of the plaintiff, although the last will was not tendered in evidence at the trial.

The saving in stamp duty effected by putting the defendant in the position of being able to claim a first home owner's concession was no doubt a matter which the plaintiff took into account. But equally I have no doubt that he wanted the defendant ultimately to have the house. To accelerate her acquisition of it and at the same time achieve the saving in stamp duty was a course he was happy to take, trusting in the defendant to allow him the indefinite use and occupation of the flat.

It is against the finding which I have made as to the intention of the plaintiff at the relevant time that it is necessary to consider the legal consequences of that conclusion.

The case was argued largely on the basis of the presumption of advancement.

In transactions between strangers the provision by A of the whole of the purchase price of a property placed in the name of B would have the consequence that in equity there would be a presumption that B held the property in trust for A. On the other hand, if the transfer of property is from a parent to a child, or from a husband to a wife, there comes into the play the principle sometimes described as the presumption of advancement. More accurately, such circumstances mean that there is "the absence of any reason for assuming that a trust arose": see Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 per Dixon CJ and McTiernan, Fullagher and Windeyer JJ at 303: "It was, of course, for Martin to make out positively that

his wife did not take the land beneficially but as a trustee for him. As she was his wife the fact that he found the purchase money for the land raises no presumption in his favour of a resulting trust as it would or might have done had she been a stranger. The presumption is in her case that the beneficial ownership went with the legal title. It is called a presumption of advancement but it is rather the absence of any reason for assuming that a trust arose or in other words that the equitable right is not at home with the legal title."

Mr Hoile argued only faintly that the presumption of advancement did not apply in the case of an adult child. Certainly that circumstance was not taken by the Court of Appeal of New South Wales to have the effect of displacing the application of the presumption: see Nelson and Anor v Nelson and Ors (1994) 33 NSWLR 740. Although the main point decided in that case was that the presumption of advancement should be regarded as applying to the relationship of mother and child as well as to the relationship of father and child, the children in that case were adult. The Court held that the presumption of advancement nonetheless was raised, and indeed, on the evidence the attempt by the children's mother to rebut the presumption failed.

While it is sometimes suggested that the underlying rationale behind the presumption of advancement is recognition of the obligation on the part of the donor to support the donee, in my opinion, it is sufficient if the relationship of parent and child is established, and it would be nothing to the point, for example, that the child had independent means or was otherwise self supporting.

Evidence of actual intention is always relevant and admissible whether or not the case is one of an alleged resulting trust or a presumption of advancement. Evidence of intention is admissible to rebut either presumption: see Nelson v Nelson (supra) per Sheller JA at 748: "In both cases rebuttal involves demonstrating that in fact the transaction is not what it is presumed to be; an implied trust in one case, a gift in the other." citing Charles Marshall Pty Ltd and Ors v Grimsley and Anor [1956] HCA 28; (1956) 95 CLR 353.

In many cases, the evidence of intention necessarily involves a confession that the transaction was implemented for an ulterior purpose, often giving rise to the question of illegality. Nelson v Nelson is an example of such a case, and there are many others.

Here, the plaintiff asserted that he was prompted to allow the transfer to be effected into the name of the defendant in order to avoid stamp duty which otherwise would have been payable had he taken the transfer in his own name. This gave rise to the plea by the defendant, which was pursued in argument at the trial, that evidence of the plaintiff's actual intention in that respect could not be acted on by a court of equity in that to do so would be to put the Court in the position of condoning an illegality.

Reference was made to the various provisions in the Stamp Duties Act 1923 dealing with the concessional rates of duty in respect of the purchase of a first home (s.71C). The manager of the Stamp Duty assessing branch of the Stamp Duties Office, Mr Barnes, was called to explain the way in which the legislation was applied.

Much of the argument of counsel was taken up with advancing submissions as to the circumstances in which equity would or would not treat the presence of an illegality as putting the donor out of court in asserting what is alleged to be the true position in an endeavour to rebut the presumption of advancement, and the question whether, in any event, there was in fact an illegality having regard to the manner in which this transaction was carried into effect.

However, my finding as to the plaintiff's intention makes it unnecessary for me to consider and rule upon that line of argument. The argument that there was an illegality proceeded on the basis that the transaction was a sham and that the plaintiff was the real purchaser, but as I have indicated, I am not prepared to find that he had, as he asserts, no intention of giving the property to the defendant or that he intended that the beneficial interest in the property would remain his. Given that finding, no question of illegality remains. It was not suggested by counsel that in those circumstances the reservation by the plaintiff of a right to reside in the flat gave rise to any question of illegality.

It follows that if the case was to be decided by reference to the presumption of advancement, the plaintiff would fail in his endeavour to rebut the presumption.

There is a conflict of authority with respect to the question whether or not the presumption of advancement can be partially rebutted, that is to say, in cases where the donor, for example, intends to retain a life interest. In such circumstances the presumption may not apply and the presumption of a resulting trust arises instead: see Forrest v Forrest (1865) 11 Jur NS 317. A different conclusion was reached by Bray CJ in Hann and Turner v Linton (1967) LSJS 231, and see the note prompted by the decision in that case in (1968) 42 ALJ 317.

But as the learned author of the note suggests, I think that the better view is that the Court - "... should not declare the beneficial interests in the property according to the presumed intention of the parties when their actual intention is established by the evidence. .... But once the intention of the parties at the date of the relevant transaction is known, there is no room for presumptions as to their intention to operate."

Be that as it may, in cases where there has been a gift with a reservation of an interest in the donor, it has sometimes been held that a species of estoppel will arise in recognition of the fact that it would be inequitable to allow the donee to take the benefit of a gift without acknowledging the reserved interest.

An illustration of that approach is to be found in the decision of the English Court of Appeal in Baker v Baker and Anor (1993) 2 FLR 247. In that case, the plaintiff left the security of the tenancy of a council house to assist the defendants who were his son and daughter-in-law by providing the money towards the purchase by them of a house for them to live in on the footing that he would live there, rent free, for the rest of his life. The arrangement came to what was described as an abrupt and acrimonious end in less than a year after the plaintiff had moved into a room in the house.

The trial Judge ordered the defendants to repay the whole of the money which the plaintiff had put into the house, a sum of some pounds 33,950. An appeal was allowed on the footing that this did not reflect the application of the principle that in equity the court grants relief on the basis of "the minimum equity to do justice to the plaintiff": see per Dillon LJ at 251, citing Crabb v Arun District Council (1976) 1 Ch 179 per Scarman LJ at 198.

The Court went on to hold that the plaintiff's entitlement was limited to an entitlement for compensation to be fixed at the value of the plaintiff's right to occupy rent free for the remainder of his life the room which had been set aside for his use in the house.

The importance of the case for present purposes is that the Court based the decision squarely upon the principle of equitable estoppel, reasoning that it would be inequitable to allow the defendants to retain the benefit of the expenditure made by the plaintiff without recognising the benefit which the plaintiff was to obtain.

He had altered his position to his detriment on the clear understanding that he was to have the use of the room in the house, and on the failure of that expectation was entitled to compensation in equity based on the value of his right to do so.

Other cases which illustrate the application of the same approach are Nichols v Nichols (1986) 4 BPR (97,262) 9240, Pearce v Pearce (1977) 1 NSWLR 170 and Riches v Hogben (1985) 2 Qd R 292.

Although the matter was not presented before me by the plaintiff on the footing of equitable estoppel, it seems to me that that is the appropriate basis upon which the plaintiff's equity should be recognised.

In this case, it seems to me that although the plaintiff fails in his bid to prove an entitlement to the whole of the beneficial interest in the house property, the Court should recognise in his favour an equitable interest represented by the value of the plaintiff's right of occupation of the flat for the rest of his life.

Mr Brohier for the defendant contended that if the plaintiff voluntarily left the flat to live elsewhere, equity should not come to his aid. In the first place, I do not think it right to say that the plaintiff "voluntarily" left the flat. Furthermore, in my opinion, even if that was the case, it would be inequitable to refuse to compensate the plaintiff at all when there has been a breakdown in the mutual intention that he have possession of the flat indefinitely.

Likewise, I do not think that the question whether equity will give relief to the plaintiff in such circumstances turns on any nice question as to where the blame lies in the breakdown in the relationship between the plaintiff and the defendant.

I do not consider, however, that it would be right to accede to Mr Hoile's suggestion that if consideration was to be given to compensation for the plaintiff with respect to his loss of an interest in the property, it should reflect a right of occupation of the whole of the property rather than of the flat.

I do not think that the plaintiff ever intended to make any use of the house as opposed to the flat. Indeed, the evidence leads to the view that during the time he was on the property his occupation was almost entirely confined to the flat.

In all the circumstances, in my opinion, the proper course to take is to assess the value as at November 1992 of the plaintiff's right of occupation of the flat for the rest of his life. The simplest method of approaching that exercise would be to take the then rental value of the flat, considered separately from the house, and to capitalise that value at an appropriate discount to reflect its value as at that date.

A question arises whether interest should be allowed on that capitalised value as between November 1992 and the date of judgment. There may be other adjustments, for example, if the plaintiff has paid any outgoings associated with the property referable to the period following his departure from it.

In the circumstances, I think it best that the precise form of order be a matter upon which I should hear counsel further in the light of these reasons.

I will hear counsel also as to the question of costs.

ERIC ROY CALLAGHAN v KERRI-ANN CALLAGHAN No. SCGRG 93/1892 Judgment No. 5064 Number of pages - 15 Equity - presumption of advancement

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Judgment (115 paragraphs)

ERIC ROY CALLAGHAN v KERRI-ANN CALLAGHAN No. SCGRG 93/1892 Judgment No. 5064 Number of pages - 15 Equity - presumption of advancement (1995) 64 SASR 396 [1995] SASC 5064 (5 May 1995)

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Legislation Cited (2)

Cases Cited (11)