Falloon v Madden; Madden v Madden

Supreme Court of NSW|2012-06-13|Before: Stevenson J

Judgment Introduction 1These proceedings concern the estate of the late Margaret Rose Falloon ("Margaret") and, in particular the principal asset of that estate, the property in Woolooware ("the Woolooware Property"). 2For convenience and without intending any disrespect, I shall refer to the individuals who are involved in the proceedings by their given names. 3The deceased was married to Russell James Falloon ("Russell"). 4Margaret and Russell had two children, Eve Karen Falloon ("Eve") and Chad Russell Falloon ("Chad"). Eve and Chad are now aged 34 and 31 respectively. 5Russell died on 6 November 1988. 6By his will dated 5 October 1988 Russell made the following bequest: - "I give to my first wife Margaret Rose Falloon all my interest in the property known as [xxx], Kareela. I trust and know that Margaret Rose Falloon will always use that house or the proceeds of the sale of that house to provide a home for my two children of that marriage namely Eve Karen Falloon and Chad Russell Falloon." 7From approximately 1990 Margaret lived in a de facto relationship with Alexander William Madden ("Bill"). For some years, Margaret and Bill lived at the property in Kareela ("the Kareela Property"). By reason of Russell's bequest, Margaret was then the sole proprietor of the Kareela Property. 8On 4 November 1994 Margaret contracted to purchase the Woolooware Property for $810,000. Settlement of that purchase took place on 3 January 1995 and Margaret became the registered proprietor of the Woolooware Property. 9Bill claims that he provided the entire purchase price of the Woolooware Property and that Margaret held, and her estate now holds, the Woolooware Property on a resulting trust for him. 10On 2 December 1994 Margaret contracted to sell the Kareela Property for $400,000. 11Completion of that sale took place on 13 January 1995 (10 days after completion of the purchase of the Woolooware Property). 12Prior to completion, the purchaser of the Kareela Property paid Margaret $129,000 on account of the purchase price. The balance due on settlement, $200,355.50, was paid into Margaret's bank account on 13 January 1995. 13Nearly five years later, on 29 December 1999 Margaret and Bill married. By this time Margaret was gravely ill. 14On or about the same date, Margaret made a will. Margaret appointed Bill's son, Michael Madden ("Michael") as her executor. Relevantly, that will provided: - "4. I give the whole of my estate both real and personal of whatsoever nature and wheresoever situate to my Trustees to hold upon the following trusts: - 5. The whole of my estate is to be administered by the Woolooware Family Trust until the death of my Husband, Alexander William Madden. 6. Upon the death of my husband the estate is to be divided equally between Eve Karen Falloon, Chad Russell Falloon and Michael Patrick Madden. 7. I direct, in respect of Chad Russell Falloon only, that his share be held on trust by my trustees until his 30th birthday. I make this direction because Chad needs to mature before he has access to his inheritance." 15Margaret died on 31 July 2000.

The proceedings 16There are two proceedings before the Court.

The first proceedings 17The first proceedings were commenced by Eve and Chad against Michael, in his capacity as executor of Margaret's estate. In the proceedings, Eve and Chad seek a declaration that Michael, as executor, holds the Woolooware Property on trust for Eve and Chad as tenants in common in equal shares. 18In the alternative, Eve and Chad seek an order for provision under the Family Provision Act 1982. 19On 18 November 2011 an order was made that the claim by Eve and Chad for family provision be heard separately and after their claim for a declaration concerning the Woolooware Property. Accordingly, that matter is not presently before me for determination. 20The bases of Eve and Chad's claim to an equitable interest in the Woolooware Property were statements that they both attribute to Margaret to the effect that their father, Russell, had left Margaret his interest in the Kareela Property and that "whatever happens to me, this is my home and your home". 21However, neither Eve nor Chad gave evidence of any detrimental reliance on such statements by Margaret. 22For that reason, as was in effect conceded by their counsel, Mr O'Neill, in final submissions, their claim was bound to fail: Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at [42] per Handley AJA. 23Eve and Chad's claim was not pursued in final submissions and was, as I understand it, not pressed.

The second proceedings 24The second proceedings were commenced by Bill against Michael, as executor of Margaret's estate, and against Eve and Chad. There was also a fourth defendant, Burraneer Investments Pty Limited. That company played no role in the proceedings. During the course of the hearing, Mr Evans, who appeared for Bill, sought and was granted leave to discontinue the proceedings against that company. 25Bill seeks a declaration that Michael, as executor of Margaret's estate, holds the Woolooware Property on a resulting trust for his sole benefit. Bill seeks consequential orders that Michael transfer the Woolooware Property to him. The basis of Bill's claim is his contention, referred to above, that he provided the entire purchase price of the Woolooware Property. 26Bill also seeks a declaration that certain amounts were paid by him on behalf of or for the benefit of Margaret's estate. 27Bill claims he effected improvements and paid expenses (including rates) in respect of the Woolooware Property. 28He claims he discharged a liability of Margaret's to the Australian Taxation Office ("the ATO"). 29He also claims he discharged a debt owed by Woolooware Investments Pty Limited ("Woolooware Investments") to Radcliffe & Company Pty Limited ("Radcliffe"). The debt was secured by registered mortgage over the title of the Woolooware Property. 30Bill seeks a declaration that those amounts are debts payable to him from the funds, if any, of the estate and that, in respect of some payments, he is entitled to a charge over the Woolooware Property to secure repayment to him of the amounts he has paid. 31Bill also seeks other declarations and orders (including a declaration that the trusts purported to be created in Margaret's will are void for uncertainty). 32On 18 November 2011 the Court ordered that the matters referred to in the immediately preceding paragraph be heard separately and after the claims made by Bill in respect of the Woolooware Property and the debts allegedly paid by him on behalf of the estate.

The issues in the proceedings 33Accordingly, the following issues arise at this stage of the proceedings:- (a)what contribution did Bill provide towards the purchase price of the Woolooware Property - both in terms of the deposit and the final price; (b)does Margaret's estate hold an interest in the Woolooware Property on a resulting trust for Bill; (c)if there is an equitable interest in the Woolooware Property, is that interest vested in the Official Trustee rather than Bill; (d)if Margaret's estate holds an interest in the Woolooware Property on trust for Bill, is it as joint tenants or as tenants in common; and (e)can Bill claim reimbursement for amounts expended by him in relation to the Radcliffe debt, the Woolooware Property and Margaret's tax liabilities.

Bill's claim for resulting trust 34I turn to the principles relevant to Bill's claim. 35It will be recalled that the Woolooware Property is registered in Margaret's name. On the face of it the property belonged to her and now belongs to her estate. However, Bill claims that he paid the full purchase price for the property. This raises two questions. Did he in fact do so? And what are the consequences if he did? 36In Calverley v Green (1984) 155 CLR 242, at 246, Gibbs CJ said that where: - " ... a person purchases property in the name of another ... unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement ... there arises a resulting trust in favour of the purchaser". 37There is no suggestion in this case of the existence of a presumption of advancement in Margaret's favour. 38The current state of the law is that the presumption of advancement does not apply to a purchase by a man in the name of his de facto spouse: Napier v The Public Trustee (1980) 55 ALJR 1 at 4 (cf Gibbs J at 2); Calverley v Green (1984) 155 CLR 242 at 260 (per Mason and Brennan JJ) and 268 (per Deane J) (Gibbs CJ contra at 250-251). 39Whether, in the modern age, it remains appropriate for that state of the law to subsist, is not a matter I was asked to consider. Mr Jamieson, who appeared for Margaret's estate, did not suggest the law was, or should be different from that set out in Napier.

Bill's evidence - the absence of a contradictor 40Bill's case against Margaret's estate is based on his assertions as to his contribution to the purchase of the Woolooware Property, as to the sums allegedly expended by him improving and maintaining that property and as to the sums allegedly paid by him in Margaret's interests. 41I must bear in mind that Margaret is unable to give evidence to contradict that given by Bill. 42As Brereton J said recently in Ashton v Pratt (No 2) [2012] NSWSC 3 at [18]: - "In the case of a claim against a deceased estate founded on the oral utterances of the deceased, which only the deceased could have denied, the court scrutinises the claimant's evidence closely [Plunkett v Ball (1915) 19 CLR 544, 548-549 (Isaacs J); Bovaird v Frost [2009] NSWSC 337, [45]; Varma v Varma [2010] NSWSC 786, [418] - [422]], and although there is no absolute legal requirement for it, ordinarily looks for some corroboration [Re Hodgson (1886) 31 Ch D 177; Weeks v Hrubala [2008] NSWSC 162, [20] (Young CJ in Eq)". 43I found Bill to be a pugnacious witness who was quick to make assertions that, the evidence revealed, could not be correct. 44For example, he repeatedly denied understanding, as at the end of 1994 and beginning of 1995, that he was a bankrupt. As I will explain below, I cannot accept that this was Bill's state of mind at the time. When confronted with objective evidence that showed the true position, Bill doggedly, and aggressively, maintained his denial. 45He also asserted, in relation to the purchase of the Woolooware Property, that he had available several hundred thousand dollars that he was able to contribute to the purchase. He later contradicted that evidence and asserted that, apart from the deposit, he had borrowed the entire purchase price from a "colleague". I will deal with this further below. 46In relation to the discharge of the Radcliffe debt, Bill asserted that he had utilised the proceeds of sale of a property at Bankstown. 47Bill asserted that he was the owner of the Bankstown property. This evidence was incorrect. Woolooware Investments owned the property. 48Bill also asserted that, at all relevant times, Margaret had no income and no assets on any significance. He said he gave Margaret a weekly allowance to meet household expenses. 49However, the evidence (which I will refer to below) shows that Margaret had substantial credit funds in her bank account and substantial income. 50I formed the impression that I should treat Bill's evidence with considerable caution and should hesitate to accept it, unless corroborated by objective evidence.

Was there a resulting trust? 51Bill claims that he paid the entire purchase price of the Woolooware Property in 1995. 52Between 10 April 1990 and 6 December 1998, Bill was a bankrupt. 53Bill's bankruptcy arose from an assessment made by the Commissioner of Taxation in relation to Bill's income tax for the year ended 30 June 1986. The Commissioner obtained judgment against Bill on 23 February 1990. A sequestration order was made against Bill's estate on 10 April 1990. 54Before me, Bill asserted that, at the end of 1994 and the beginning of 1995 (when the Kareela and Woolooware contracts were exchanged and completed), he did not know that he was bankrupt. Bill claimed that, by this time, he believed that he had come out of bankruptcy. He said: - "After '93 I thought I was discharged, right. Then when I found out it wasn't discharged, that's when I bought all these motions forward, right. I don't agree with that at all. Just agreeing with what transpired, what went on, what I went through. I thought my time was up in three years from when I first announced it, from '93, that date in, 93". 55The "motions" to which Bill referred were various applications he made to quash the income tax assessment that had led to the judgment of 23 February 1990 and the sequestration order of 10 April 1990. 56On 30 November 1993 Bill made an application to the Federal Court of Australia to quash the assessment. 57Whitlam J heard the application on 18 March 1994. Judgment was delivered on 9 May 1995 dismissing Bill's application. 58Bill appealed to the Full Court of the Federal Court. On 23 March 1996, the Full Court dismissed the appeal. 59Thereafter, Bill sought special leave to appeal to the High Court of Australia. Special leave was refused. 60The whole point of Bill's application, initially heard by Whitlam J, was to quash to income tax assessment that had led to Bill's bankruptcy. He must have known that pending the outcome of that application, he remained bankrupt. 61His evidence to the contrary was not credible and I do not accept it. I find that Bill was fully aware of his continuing bankruptcy at the time Margaret contracted to purchase the Woolooware Property and sell the Kareela Property. 62Bill was asked, in cross-examination, why the Woolooware Property was purchased in Margaret's name, rather than his own. He said: - "Well, I've done it with previous wives I've had. I bought the property in their names. At that particular time, I suffered with angina." 63I shall return to that evidence below. Source of funds for the purchase of the Woolooware Property 64Bill's affidavit evidence concerning the purchase of the Woolooware Property was as follows: - "Shortly before Kareela was sold I purchased [the Woolooware Property] with funds I obtained myself." 65Bill gave the following evidence of a conversation with Margaret: - Bill: "As far as I am concerned the Kareela house is yours. The next house will be mine, but it will be in your name. You can keep what you get for the sale of Kareela for yourself and your kids." Margaret: "I'm happy with that, but I want to have a say in where the next house is." 66Bill gave evidence that: - "We agreed to stay in the Sutherland Shire and we both looked for homes for about six months. We needed a larger house, especially one with plenty of parking, because of my association with the motor trade." 67In regard to the question of parking, Bill's evidence was that he was, at all relevant times, engaged in the wholesale motor vehicle business and that he needed a property with "access for vehicles". He said the Woolooware Property could park 10 to 12 motor vehicles off road. 68Bill's affidavit evidence continued: - "Margaret looked after the sale of Kareela. She set a price and sold the property to [a purchaser]. When she sold Kareela the proceeds of sale went directly to her. She did not make a financial contribution to the purchase of [the Woolooware Property]. The purchase of [the Woolooware Property] was settled prior to the sale of Kareela. Terry Hogan provided me with a Bank of Melbourne bank cheque for the balance of [the Woolooware Property]. I paid him back from time to time over the years." 69In cross-examination the following evidence was given: - "Q: Come the time to purchase [the Woolooware Property], you say you provided the whole of the purchase price? A: Correct. Q: And from where did you get that money? A: From a colleague of mine at the time. Q: From a colleague of yours? A: Yes. Q: So you didn't have it? A: Not all of it, no, I didn't, no. Q: Did you have some of it? A: I had some of it, yes. Q: How much did you have? A: Approximately two or three hundred, I don't recall." 70Later, Bill gave the following, inconsistent, evidence: - "Q: Other than the deposit money which you say came directly from you, the balance came from this other entity, this other business, is that right? A: That's correct. Q: That was from a colleague? A: That's right." 71And later, in re-examination: - "Q: Can you tell the court where apart from the deposit how the balance of the purchase money on [the Woolooware Property] was paid? A An associate of mine at the time, Terry Hogan Prestige drawn on the Bank of Melbourne for the balance of the funds. Q: Mr Hogan is man you had business dealings with prior? A: I have known him over a period of 25 years of so. Q: Did you subsequently repay that money? A: Repaid it back over a period of time." 72Bill thus gave inconsistent, and contradictory evidence about this critical matter. 73First he asserted that he had several hundred thousand dollars, in some unspecified location, available to contribute to the Woolooware Property purchase and that he borrowed the balance from his "colleague". Then, apparently without seeing any inconsistency, Bill asserted he had borrowed all but the deposit from this "colleague". 74Bill offered no documentary evidence in relation to any such loan (either as to the borrowing itself, or its repayment). On Bill's account, his colleague was prepared to advance the funds without security or, it seems, documentation.

Did Bill pay the deposit for the Woolooware Property? 75The purchase price of the Woolooware Property was $810,000. The deposit was $81,000. 76Bill said that the deposit "came from me". 77There is in evidence a record from Burraneer Bay Real Estate (the agents acting on the sale of the Woolooware Property) showing that the deposit of $81,000 was lodged in that firm's trust account on 9 November 1994. 78Mr Charles Abraham ("Mr Abraham"), an accountant and tax agent, prepared a schedule on Bill's behalf setting out expenses said to have been paid by Bill in relation to the Woolooware Property. 79The schedule was received in evidence as a submission. That schedule states that the amount of $81,000 held by Burraneer Bay Real Estate comprised an "initial deposit" of $10,000 and "balance of deposit" of $71,000. 80It will be recalled that on 2 December 1994 Margaret contracted to sell the Kareela Property for $400,000. The deposit payable by the purchaser of the Kareela Property was $71,000, that is 17.75 per cent of the purchase price of the Kareela Property (rather than the usual 10 per cent deposit: the standard form contract used on the sale of the Kareela Property stated that the deposit would be "10% of the price, unless otherwise stated"). 81In the proceedings, the question arose as to whether the $71,000 Kareela deposit had been paid early and used by Margaret to partly fund the deposit for the Woolooware Property. 82That question arose because of the following statement made by Mr David Fox, a partner of Fox & Staniland (the solicitors acting for Margaret on the sale of the Kareela Property) in a letter to Margaret of 14 December 1994:- "We assume that the deposit $71,000.00 paid to you by [the purchaser of the Kareela Property] was used by you as part of the deposit of $81,000.00 paid on your purchase of [the Woolooware Property]. Please let us know immediately if this assumption is not correct." 83That statement suggested that Mr Fox believed, for some reason, that the deposit paid of $71,000 on the sale of the Kareela Property had been so used. There is no evidence of Margaret (or Bill) informing Mr Fox that his assumption was incorrect. 84In light of that suggestion, Bill gave the following evidence in re-examination: - "Q: The front page of the contract for the sale of the Kareela property which shows the date of 2 December [1994], do you have any recollection of the deposit of the Kareela property being paid in advance of the exchange of the contract? A: No, I don't. Two payments were made in reference to the property. What dates or times, I don't know." 85Thus Bill did not deny that the Kareela deposit was made prior to contract. Consistently with Mr Abraham's note, he confirmed it was paid in two instalments. 86In the normal course it would, I accept, be unusual for a purchaser to make available to a vendor a deposit prior to exchange of contracts. 87However, the evidence does suggest that an element of informality existed between Margaret and the purchaser of the Kareela Property. 88Thus, although completion of the Kareela Property did not take place until 13 January 1995, the purchaser released to Margaret $129,000 of the purchase price in advance of the settlement. I deal with this further below. 89It seems clear the deposit was paid in two instalments. Someone (I would infer Bill) told Mr Abraham that the "balance" of the deposit for the Woolooware Property was $71,000. That sum, together with the "initial deposit" of $10,000 became the total deposit of $81,000 held by Burraneer Bay Real Estate in its trust account. 90For some reason, the deposit on the sale of the Kareela Property was $71,000, rather than $40,000, which would be the normal 10 per cent deposit. The purchaser of the Kareela Property was, unusually in my opinion, prepared to advance funds under the contract in advance of his contractual obligations. And Mr Fox believed, for some reason, that Margaret had used that $71,000 as part of the deposit for the Woolooware Property. 91When all this evidence is taken together, it points to the conclusion, in my opinion, that the purchase of the Kareela Property did make the deposit of $71,000 available in advance of the exchange of contracts on 2 December 1994. 92I accept that the evidence does not compel this conclusion, beyond any reasonable doubt. But a striking feature of this case is the inexact nature of the evidence as to critical matters. As Mr Evans, who appeared for Bill, said (admittedly in a different context) "we are dealing with matters of coincidence and symmetry". I agree. 93On the one hand, there is in evidence Bill's uncorroborated assertion that he paid the deposit. As I have said, I am cautious about accepting Bill's evidence unless objectively corroborated. 94There is also the fact that contracts for the purchase of the Woolooware Property were exchanged approximately a month before those for the sale of the Kareela Property. 95Then there are the facts I set out above. 96In final written submissions, Mr Evans accepted that "there is evidence to suggest that the deposit for Kareela could have been or was paid in advance of exchange of contracts for that sale on 2 December 1994". 97When all these matters are taken into account, my conclusion is that, as a matter of probability, $71,000 of the $81,000 deposit for the Woolooware Property came from the deposit of the sale of the Kareela Property, and was thus provided by Margaret, not Bill. 98In those circumstances, I do not accept Bill's evidence that he provided this part of the deposit.

Did Bill pay the balance of the purchase price? 99As I have stated, the purchaser advanced $129,000 of the purchase price of the Kareela Property to Margaret prior to the settlement of the sale of the Kareela Property on 13 January 1995. 100There is in evidence a hand written note from Fox & Staniland's file which is dated 11 January 1995 and reads: - "Attending Petra of Purchaser's solicitor on phone when she informed us that she had been told that her client had paid to our client $129,000.00, she thought last Friday and request that I get instructions and let her know if this was correct". 10111 January 1995 was a Wednesday. Hence "last Friday" was 6 January 1995. 102The note continued: - 'Wally phoned Mrs Falloon above correct". 103There is also in evidence a note, which I would infer was made by "Wally", and reads: - "Margaret Falloon MF confirms $129,000 was paid last week. $200,000 Balance before adjustments". 104As at 11 January 1995, "last week" ran from Monday 2 January 1995 to Friday 6 January 1995. 105Settlement of the purchase of the Woolooware Property took place on Tuesday 4 January 1995. 106In a letter reporting on the settlement, Mr Fox wrote to Margaret: - "As [you] are aware settlement of the above matter took place on 4th inst, being postponed from 3rd, when it was paid out on your behalf from funds supplied by you the sum of $730,026.73..." 107In these circumstances, it appears to me to be probable that the reason Margaret obtained part payment of the purchase price of the Kareela Property, sometime during the week commencing 2 January 1995, was so that such funds could be utilised as part payment of the purchase price of the Woolooware Property. This is consistent with Mr Fox reporting that the settlement of the sale of the Woolooware Property was from "funds supplied by you". 108Furthermore, a statement from Margaret's cheque account with the Jannali branch of the ANZ Bank ("the Bank Statement") shows that on 3 January 1995 (the day of settlement of the purchase of the Woolooware Property) an amount of $201,046.73 was debited to Margaret's account. The transaction was described as: - "Card entry at Jannali branch". 109It would be an extraordinary coincidence if that withdrawal were not related to the settlement of the purchase of the Woolooware Property on the same day. 110That the withdrawal did relate to the Woolooware purchase is confirmed by a document produced by ANZ which showed that the $201,046.73 withdrawal was used to purchase four bank cheques which match several of the figures needed for settlement, as evidenced by a letter sent to Mr Fox by the vendor's solicitors. 111In light of that evidence, Mr Evans accepted that the $201,046.73 withdrawal was used partly to fund the purchase of the Woolooware Property. 112Mr Evans submitted that the reference to "last Friday" in the 11 January 1995 file note referred to above, may not have been a reference to the preceding Friday (6 January 1995) but to the one before, and that accordingly, the $129,000 may be included in the balance standing to the credit of Margaret's account at the Jannali branch of the ANZ Bank as indicated in the Bank Statement. 113The Bank Statement showed that, as at 28 December 1994 (the first entry) there was a credit balance of $318,208.08 in Margaret's account. But the Friday before 6 January 1995 was 30 December 1994. There is no entry in the Bank Statement between 28 December 1994 and 3 January 1995 (when the $201,04.73 was withdrawn). Thus it is clear that the $129,000 does not form part of the $318,208.08 in the account on 28 December 1994. It is an extra amount. 114Mr Evans also submitted that it is to be inferred that the $71,000 Kareela deposit formed part of the $318,208.08 in Margaret's account on 28 December 1994. I accept that that is a theoretical possibility. However, for the reasons I have set out above, I think it more likely that the $71,000 was paid early and used as part of the deposit for the Woolooware Property. 115On 13 January 1995 (the day of settlement of the sale of the Kareela Property) there is a credit entry in the same account in sum of $200,353.33, which the evidence reveals is the balance of the proceeds of sale of the Kareela Property (taking into account the $129,000 paid to Margaret in the circumstances I have described). 116There is no evidence as to what became of these funds. However, the fact of the withdrawal on 3 January 1995 remains. 117In my opinion, these circumstances point to the conclusion that, in addition to contributing $71,000 of the deposit for the purchase of the Woolooware Property, Margaret also contributed the sums $129,000 and $201,046.73 referred to above: that is, the balance of the proceeds of sale of the Kareela Property. 118Thus, Margaret contributed a total of $401,046.72 ($71,000 + $129,000 + $200,353.33) of the funds used to acquire the Woolooware Property. This amounts to very nearly 50 per cent of the purchase price. 119I accept that, again, the evidence does not, in terms, compel this conclusion. However, this analysis is consistent with the scanty documentation available and appears to me to accord with the probabilities. 120The competing scenario is that advanced by Bill, namely that, whilst he was a bankrupt, he funded the $81,000 deposit from an unspecified source of his own, and borrowed part, or all of the balance from his "colleague", Mr Terry Hogan ("Mr Hogan"). 121As I have mentioned, Bill has not adduced any documentary evidence to support the existence of any such arrangement between he and Mr Hogan. According to Bill's account, Mr Hogan was prepared to advance either something in the order $500,000 or (if Bill's evidence that he borrowed from Mr Hogan all but the deposit) something in the order of $720,000 without security (or, it seems, documentation). 122There is an air of improbability about this. 123Mr Fox's file indicates that, so far as concerns the purchase of the Woolooware Property, there was to be no incoming mortgagee. Thus, the entire purchase price was to be provided at the settlement on 3 January 1995. 124Apart from Bill's evidence that he borrowed what was needed from his "colleague", Mr Hogan, there is no evidence as to how this could have taken place. 125As at 28 December 1994, Margaret had $318,208.08 in her ANZ account. Following the debit on 3 January 1995 of $201,046.73 and the credit on 13 January 1995 of $200,353.30 (from the proceeds of sale from the Kareela Property) the balance in Margaret's account as at 13 January 1995 was $317,512.85. As I have said, the evidence does not reveal what Margaret did with this money. 126Doing the best I can with the evidence in this unsatisfactory state, my conclusion is that the probabilities are that Margaret contributed the above amounts (that is, in effect, the proceeds of sale of the Kareela Property) to the purchase of the Woolooware Property. 127This conclusion is consistent with, and may explain, the anxiety Margaret expressed in paragraph 7 of her will (see [14] above) concerning Chad's "access to his inheritance". Michael's evidence, as executor of Margaret's will, was that the Woolooware Property was her only asset. If, as Bill contends, he paid the entire purchase price for the Woolooware Property, it is hard to see to what "inheritance" Margaret was referring. 128The only evidence as to how the balance of the purchase of the Woolooware Property was funded is that given by Bill concerning the loan from his "colleague", Mr Hogan. 129In the absence of any other evidence, and despite my misgivings about Bill's evidence concerning his "colleague", I conclude, with some diffidence, that Bill thereby contributed the balance of the Woolooware Property purchase price. 130It follows that my conclusion is that both Margaret and Bill contributed to the purchase of the Woolooware Property. 131This, combined with Bill's bankruptcy at the time, and his probable (I would infer) anxiety to avoid acquiring real estate in his own name during the pendency of his litigation in the Federal Court, provides a more likely explanation for Bill's agreement that the Woolooware Property be purchased in Margaret's name, than that offered by Bill (see above: "I've done it with the previous wives I've had"). 132For the purposes of the presumption of a resulting trust, the acquisition costs of the property are included: for example Buffrey v Buffrey [2006] NSWSC 1349; (2006) 12 BPR 23,619 per Palmer J at [14]. 133Mr Abraham's schedule estimates the stamp duty and legal costs payable in respect of the purchase of the Woolooware Property as $31,900 and $3,000 respectively. 134However, there is no evidence as to who paid the legal expenses or stamp duty associated with the sale of the Kareela Property or the purchase of the Woolooware Property. I see no reason why I should infer that Bill paid these amounts. The evidence reveals that Margaret had ample funds in her ANZ account from which these amounts could have been paid. In the absence of any such evidence, I have no choice but to assess Bill and Margaret's contribution without regard to those costs. 135My conclusion is that Bill and Margaret contributed very nearly, but not quite equally to the purchase price. I find that Margaret contributed $401,046.72 and that Bill contributed the balance, $408,953.28. 136That is, Bill contributed 50.5 per cent, and Margaret 49.5 per cent. 137It follows from these conclusions that a presumption arises that Margaret held, and her estate now holds, a 50.5 per cent interest in the Woolooware Property on a resulting trust for Bill. 138There is no evidence to rebut that presumption, and I am not able to infer, in all the circumstances, that Bill intended to make a gift to Margaret of that part of the Woolooware Property to which he contributed. 139A more likely explanation may be that Bill wanted to "park" his interest in the Woolooware Property in Margaret's name because of his bankruptcy and to avoid "after acquired" property becoming divisible amongst his creditors.

Bill's Bankruptcy 140The resulting trust arose on settlement of the purchase of the Woolooware Property: that is 3 January 1995. 141On that date, Bill was a bankrupt. 142In my opinion, the equitable interest in the Woolooware Property arising by reason of the resulting trust to which I have referred was "after-acquired property" for the purposes of the Bankruptcy Act 1966 (Cth). 143Section 58(1)(b) of the Bankruptcy Act provides that "after-acquired property" vests in the Official Trustee as soon as it is acquired. Subsection 58(6) provides that "after-acquired property" means property "that is divisible amongst the creditors of the bankrupt". In s 5 "property" is defined to mean real or personal property and "includes any estate [or] interest...to any such real or personal property". Section 116(1) of that Act provides that property "divisible amongst creditors" includes property acquired by the bankrupt "after the commencement of the bankruptcy and before his or her discharge". 144It follows that the equitable interest in the Woolooware Property arising from Bill's contribution to the purchase price vested in the Official Trustee. 145Mr Evans accepts that Bill's interest in the Woolooware Property remains vested in the Official Trustee, notwithstanding his subsequent discharge from bankruptcy: Official Receiver v Schultz (1990) 170 CLR 306; Daemar v Industrial Commission of NSW (No 2) (1990) 22 NSWLR 178; Gosden v Dixon (1992) 107 ALR 329; Metherell v Public Trustee [2010] WASC 205 at [4]. 146Bill asserts that all the creditors of his bankrupt estate (including the Commissioner of Taxation) have been paid. If that is so, it may be that, taking into account his equitable interest in the Woolooware Property, there is now a surplus in his bankruptcy, which should revert to him. 147In these circumstances the parties agree that it may be necessary to join the Official Trustee to these proceedings to deal with this aspect of the matter. 148The parties have invited me to publish a judgment giving reasons in respect of all other aspects of the matter, with a view to join the Official Trustee once those matters are decided. 149I have agreed to this proposal. Accordingly, this aspect of the matter will be revisited once the views of the Official Trustee are known. 150However, as I explain below, the fact that what would otherwise be Bill's equitable interest in the Woolooware Property has vested in the Official Trustee has an impact on his claim for reimbursement for various amounts he claims to have expended in relation to the property.

Resulting trust - joint tenants or tenants in common? 151The question arises as to whether, in equity, Bill and Margaret held their interests in the Woolooware Property as joint tenants or as tenants in common. 152As Margaret has died, the question is important because if she and Bill held their equitable interests in the Woolooware Property as joint tenants, Margaret's interest has now passed to Bill by operation of survivorship. 153A case very similar to the present was considered the High Court in Delehunt v Carmody (1986) 161 CLR 464. 154In that case a man, living in a de facto relationship with a woman, purchased a property in his own name in circumstances where he and the woman contributed equally to the cost of acquisition of the property. 155Gibbs CJ (with whom the other members of the Court agreed) said: - "Of course in the present case the property was not conveyed to the two persons who had contributed to the purchase price, but to only one of them. When a purchase is made in the name of one of two or more persons who contributed to the purchase price, and the relationship between the parties does not give rise to a presumption of advancement, the property will be held on a resulting trust for the persons who paid the price. Quite clearly, where the contributions to the purchase price have been in unequal shares the property will be held on a resulting trust for the contributors as tenants in common in proportion to the amounts which each contributed; Calverley v Green (1984) 155 CLR 242 at 246-7, 258; 56 ALR 483. There seems to be no authority which decides the precise question whether, when a resulting trust was raised in favour of purchasers who had contributed to the price in equal shares, the beneficial interest of the purchasers would have been that of joint tenants or tenants in common. However, it would seem to follow, by analogy with the case where conveyance is made to all contributors, that (apart from the effect of section 26 of the Conveyancing Act) they would be equitable joint tenants, and this conclusion is accepted as correct in Hanbury and Maudsley, Modern Equity, 12th ed (1985) at 254 and Ford and Lee, Principles of the Law of Trusts (1986), at 966". 156Section 26 of the Conveyancing Act 1919, to which Gibbs CJ referred provides: - "(1) In the construction of any instrument coming into operation after the commencement of this Act a disposition of the beneficial interest in any property whether with or without the legal estate to or for two or more persons together beneficially shall be deemed to be made to or for them as tenants in common, and not as joint tenants. " 157The enactment of s 26 of the Conveyancing Act removed the presumption, formerly made in equity, that if two people advanced purchase money in equal shares they intended to be joint tenants of the land purchased. 158Section 26 did not, in terms, apply to the facts in Delehunt v Carmody (and is not, in terms, engaged by the facts in this case) for the reason that there is no "instrument" disposing of the beneficial interest in the relevant property. 159However, in Delehunt v Carmody Gibbs CJ concluded that the enactment of s 26 affected the relevant equitable presumption in circumstances of equal contribution. 160Thus Gibbs CJ said: - "If equity follows the law, it will follow the rules of law in their current state. Where, as a result of following the law, a beneficial joint tenancy would formerly have been created, now a beneficial tenancy in common will (in New South Wales) come into existence. In other words, although s 26 of the Conveyancing Act has no direct application to the present case, its indirect effect is to require it to be held that there was a resulting trust for the purchasers in an interest of the same kind as that which would have resulted if the land had been conveyed to them at law, ie as tenants in common." 161It follows, in my opinion, that whether the contributions made by Margaret and Bill are to be regarded as equal or not equal, the result is that, in equity, they held the Woolooware Property as tenants in common. 162It follows that, although Margaret has now died, Bill has not acquired her interest in the Woolooware Property by survivorship.

The Radcliffe loan to Woolooware Investments 163Woolooware Investments was incorporated on 25 November 1997. Its shareholders, and original directors, were Eve and Michael. 164For some time Woolooware Investments carried on a business as a motor dealer. 165On 23 December 1999 Woolooware Investments borrowed $500,000 from Radcliffe. 166Margaret, as guarantor, gave Radcliffe a mortgage over the Woolooware Property to secure the indebtedness of Woolooware Investments to Radcliffe. 167That loan went into default in June 2001. 168In November 2001 (over a year after Margaret died) Radcliffe commenced proceedings against Margaret for possession of the Woolooware Property. Judgment for possession was entered. On 18 March 2002 the Office of the Sheriff issued a Notice to Vacate addressed to Margaret "or occupier". 169On 8 August 2002 Radcliffe served on Messrs Willis and Bowring, (the solicitors then retained to act on behalf of the estate) a notice pursuant to s 57(2)(b) of the Real Property Act 1900. 170In the meantime, on 11 December 2001, a liquidator was appointed to Woolooware Investments. 171On 26 February 2002 a payment was made to Radcliffe of $25,256.56 to bring the account back into order. Bill claims that he made that payment. Thereafter interest payments were made to Radcliffe, almost on a monthly basis. Bill claims he also made these payments. 172On 13 May 2004 Sid Hawach & Associates, solicitors, who were acting for Bill, wrote to Radcliffe's solicitors: - "We advise that our client has been making monthly payments, even to the present day, in the sum of $3,500...Mr Madden will also bring the arrears up to date so as to show goodwill in this matter." 173On or about 23 December 2004 a settlement took place at which the debt owing by Woolooware Investments to Radcliffe was repaid. The amount paid on settlement was $542,212.96. At that settlement the mortgage over the Woolooware Property in favour of Radcliffe was discharged. 174Bill claims that the payments he made in respect of the Radcliffe loan should be reimbursed to him from Margaret's estate and that he should have a charge over Margaret's beneficial interest in the Woolooware Property to secure to him repayment of these monies. 175In relation to the sum of $542,212.96 paid to Radcliffe on 23 December 2004 to discharge the debt, Bill gave evidence that the source of funds for that payment was the proceeds of sale of property owned by Woolooware Investments at Exceller Avenue, Bankstown, being the property contained in Folio Identifier 197/13506 ("Exceller Avenue"). 176Initially, Bill described Exceller Avenue as a property "that I had in Bankstown". 177He was asked: - Q: "Was that a property you had in your name? A: Yes, it was". However, Bill then agreed that Exceller Avenue was registered in the name of Woolooware Investments. 178Documents obtained from the Land and Property Information department show that Woolooware Investments and Kyle Bay Investments Pty Limited ("Kyle Bay Investments") purchased Exceller Avenue as tenants in common in equal shares on 14 October 1998 for $200,000. Kyle Bay Investments transferred its interest in Exceller Avenue to Woolooware Investments a little over a year later, on 11 November 1999, for $125,000. This last transfer occurred approximately six weeks before the advance by Radcliffe to Woolooware Investments of $500,000 secured by way of mortgage over the Woolooware Property. 179A letter from John Orford and Associates, solicitors, to Woolooware Investments dated 21 November 2003 suggests that a company called Robvic Nominees Pty Limited loaned $100,000 to Woolooware Investments secured by way of mortgage over Exceller Avenue. A title search of Exceller Avenue shows that a mortgage was registered on the title on 16 October 1998. That suggests that Robvic Nominees Pty Limited may have loaned to Woolooware Investments and Kyle Bay Investments $100,000 of the $200,000 used by those companies to purchase Exceller Avenue. 180However that evidence casts no light on how Woolooware Investments funded the purchase from Kyle Bay Investments of its interest in Exceller Avenue. 181In cross-examination, Bill asserted that: - "[Exceller Avenue] probably was always mine. It was purchased with my funds, right, in the name of Woolooware, right. Anything that came from Woolooware came from me in the first place. ...It was purchased with Woolooware Investments and Kyle Bay Investments, right, which I bought Kyle Bay Investments out. ...[Kyle Bay Investments was] another company a friend of mine had. We purchased it together and I bought his share out". 182Bill was appointed a director of Woolooware Investments on 25 June 2001, some six months before the company went into liquidation. In cross-examination he was asked whether, upon his appointment, he looked through the records of Woolooware Investments "to see whether those contributions you have just referred to were recorded". Bill answered: - "There was not a record, a bank statement, cheque butts, or anything could be found anywhere relating to the company". 183Bill's evidence in cross-examination is consistent with that contained in the transfers referred to above. However, I am not prepared to accept Bill's uncorroborated assertion that the purchase by Woolooware Investments of Kyle Bay Investments' interest in the Exceller Avenue property "came from me" or his assertion that "I bought Kyle Bay Investments out". 184I am not able to come to any conclusion as to the source of funds used by Woolooware Investments to purchase Kyle Bay Investments' interest in Exceller Avenue. 185So far as concerns the repayment of the Radcliffe debt, Bill gave the following evidence: - "Q: At that stage, was the Exceller Avenue, Bankstown property still in the name of Woolooware Investments Pty Limited? A: Yes, it was, it was. Q: So, you used the proceeds from the sale of Exceller Avenue to payout the Radcliffe mortgage, is that correct or not correct? A: Correct. Q: And was there any funds left over after the sale? A: One was 550, the other was 542, so - Q: It was around about line ball? A: Yes." 186There is in evidence a transfer of the Exceller Avenue property from Woolooware Investments to a purchaser for $555,000. The transfer is undated. It was stamped on 2 February 2006 and registered on 20 March 2006; that is some 15 months after the date on which the Radcliffe loan was discharged. 187I have considered whether, in these circumstances, Bill's evidence that the Radcliffe loan was discharged from the proceeds of sale of the Exceller Avenue property was correct. 188However, on reflection I accept the evidence. The amounts nominated by Bill as being the sale price of Exceller Avenue ("550") and the amount required to discharge the Radcliffe loan ("542") are almost exactly correct. Bill gave that evidence before a copy of the Exceller Avenue transfer was tendered (indeed, as I understand it, before it was available to his Counsel, Mr Evans). 189I infer that, for some reason, although the transfer of the Exceller Avenue property took place in or around December 2004, and the proceeds of the resultant sale then used to discharge the Radcliffe mortgage, the transfer was not stamped or registered until early 2006. 190However, it follows from this finding that the funds used to discharge the Radcliffe mortgage over the Woolooware Property were the proceeds of the property of which Woolooware Investments was the registered proprietor, Exceller Avenue. 191As I can come to no conclusion as to whether Bill made any financial contribution to the purchase of that property, it follows that Bill has no basis upon which to claim that this amount constitutes a debt to him from Margaret's estate or that a charge should arise in his favour in respect of this amount over the Woolooware Property. 192I have concluded that the position is different in relation to the monies expended by Bill during the life of the Radcliffe loan to keep it in order. 193It was necessary for these funds to be expended to avoid Radcliffe taking action to exercise its power of sale and sell the Woolooware Property. 194Margaret was the guarantor of the obligations of Woolooware Investments to Radcliffe. The payments made to Radcliffe to keep the Woolooware Investments loan in order exonerated Margaret's liability as guarantor to Radcliffe to the extent of those payments. Accordingly, prima facie, whoever made the payments is entitled to reimbursement from Margaret's estate for those amounts. 195The statements in respect of the Radcliffe mortgage show that, after the liquidator was appointed on 11 December 2001, interest payments of $156,034.06 were made (over and above the amount used to pay out the loan on or about 23 December 2004). 196The only evidence concerning the source of payments made to Radcliffe after Woolooware Investments went into liquidation (on 14 December 2001) is indirect evidence that Bill made the payments. 197Bill gave the following evidence: - "There was nothing left and we had to meet obligations and meet the liquidation and the company and get the liquidator pay Radcliffe, so I could pay the mortgage out". 198In the absence of any other evidence, I am prepared to infer that, after 23 December 2001, Bill caused the payments to be made to Radcliffe. There is no evidence of any other party making the payments. Woolooware Investments was then in liquidation. Neither Michael nor Eve suggest they made the payments. 199There is no evidence that Bill made these payments from funds in is own name. The evidence suggests Bill made the payments from the funds of a company with which he was associated, Belmore Prestige Pty Limited ("Belmore Prestige"). 200In relation to such payments, Bill said: - "I would write a cheque or cash out of the business and reduce the capital of the business and pay it with the capital out of the business... I was reducing the principal I invested in the business in the first place, quite substantially over the last couple of years" 201Once again, the material is by no means clear. However, I would infer from this evidence that, in making payments this way, Bill was in effect borrowing the funds from Belmore Prestige and thereby incurring a liability to repay the funds so withdrawn. I therefore conclude that, at the moment of payment to Radcliffe, the funds were that of Bill. 202The total amount expended was $156,034.06. I accept Mr Evans' submission that, if that amount is recoverable by Bill from Margaret's estate, there should be added interest at court rates. Mr Evans calculates such interest as $105,933.97 as at 20 April 2012. 203I will consider this aspect further below in the context of assessing Bill's claim for "improvements" he claims he has effected to the Woolooware Property (as there is authority for the proposition that expenditure by a co-owner reducing a charge on a property through mortgage repayments should be treated in the same way as expenditure on improvements to the property).

Margaret's tax liabilities 204On 15 June 1999 the ATO assessed Margaret as having undisclosed taxable income for the years ended 30 June 1994 to 30 June 1998 in the sum of $1,617,510.50 and claimed that the amount payable was $1,286,204.94. 205Following negotiations, on 19 November 1999, the ATO accepted Margaret's offer (made through a firm of accountants, Smiles Poulos and Associates) to pay $287,740.78. 206In a letter dated 19 November 1999 the ATO said that payment of 10 per cent of that amount (that is $28,774) was to be made by 22 November 1999 and that the balance was to be paid by 6 December 1999. 207There is no direct evidence of payment of those amounts. 208However, on 11 January 2000 the ATO wrote to Smiles Poulos and Associates enclosing a receipt (a copy of which is not in evidence) and stating that the amount of tax outstanding was then $3,037.06. 209Any payment made at this time was made during Margaret's life, at around the time she and Bill were married. If Bill made the payment, in the absence of any evidence to the contrary, I would presume Bill intended to give Margaret the money she needed to pay her income tax liabilities. 210Over seven years later, on 1 March 2007 the Deputy Commissioner of Taxation filed a Creditor's Petition in the Federal Magistrates Court against Margaret's estate petitioning for the sequestration of the estate on the basis that: - "The estate of the deceased respondent debtor owes the applicant creditor the amount of $456,901.76 for unpaid Company or Provisional Tax, General Interest Charge, Late Payment Penalty and Incorrect Return Penalty." 211The evidence does not reveal what "Company or Provisional Tax" was referred to or why Margaret's estate would be liable for such tax. 212On 19 June 2007 Bill caused Belmore Prestige to pay $50,000 to the ATO on account of Margaret's estate's liability. 213On 7 August 2007 Bill caused his accountant, Mr Abraham, to send to the ATO a bank cheque for a further sum of $119,877.26. 214So far as concerns the payment of $50,000, I have set out above the evidence Bill gave about payments he caused Belmore Prestige to make. 215I conclude that Bill borrowed this sum from Belmore Prestige, and remains liable to repay it. 216Bill said that the $119,877.26 "came out of my present wife's account". Bill's present wife is Brenda Lillian Madden ("Mrs Madden"). In re-examination, Bill was asked whether he thought he would have to repay that amount to Mrs Madden and he said: - "I should expect she wants it back, yes." 217Again, although the evidence is by no means clear, I would conclude from this that Bill has, in effect, borrowed this money from Mrs Madden and is liable to repay it to her. 218It follows that Bill is entitled to recover these two sums from Margaret's estate.

Expenditure in relation to the Woolooware Property 219Bill claims reimbursement of amounts expended by him in relation to the Woolooware Property. The basis of his claim is that he is, in equity, a co-owner of the property. 220In effect, Bill, as a co-owner, seeks equitable accounting from Margaret's estate, as the other co-owner. 221It is by no means clear to me that, at the moment, Bill is a co-owner of the Woolooware Property. As I have explained above, the equitable interest in the property arising on 3 January 1995 by reason of the resulting trust vested in the Official Trustee. Bill has remained in occupation of the property since Margaret's death, probably as a licensee of Margaret's estate (rather than as a co-owner). 222If, as Bill contends, all the creditors of his bankrupt estate have been paid, it may be that the Official Trustee will renounce such interest as it now has in the Woolooware Property. That remains to be seen. 223In the meantime, the course I propose to adopt is to consider Bill's claims on the assumption that he is a co-owner of the Woolooware Property. 224Bill's claims fall into three categories. 225First, Bill claims contribution from Margaret's estate for council rates (totalling $29,267.34) and water rates ($12,793.05) he has paid in respect of the property. 226Second, Bill claims that he has effected improvements to the property. 227Third, as I have found, Bill has made payments to Radcliffe in respect of its mortgage over the property.

Category 1 - Rates 228As to council and water rates, I am satisfied Bill has made these payments. 229So far as concerns water rates, I accept the submission of Mr O'Neill, who appeared for Eve and Chad, that the payment of such rates in effect amounts to payment by Bill of a "consumable" of which he had the benefit, namely water supply to the property. In my opinion Bill is not entitled to recover this amount from Margaret's estate. 230So far as concerns council rates, I accept that, subject to the question of an occupation fee (as to which see below), Bill is entitled to recover from Margaret's estate 49.5 per cent of the amount expended: Forgeard v Shanahan (1994) 35 NSWLR 206; Silvester v Sands [2004] WASC 266 per Heenan J at [141].

Category 2 - Improvements 231So far as improvements are concerned, the evidence in respect of Bill's expenditure in relation to the property is sparse. 232There is a letter sent to Bill by "Just Carpets" dated 18 April 2012 which states: - "1) Supply and lay carpets as selected by you to full house with take up and disposal of old carpet. 2) Renovate 3 bathrooms and laundry plus fittings. 3) Tilling to the Kitchen and Family room. 4) Tiling to the down stairs gym, sewing and hobby areas. 5) Replace the kitchen at the above address as per the lay out. 6) Remove all wall paper on both levels and repaint all walls and ceilings on the same two levels. 7) Estimate price for the above work completed was approximately $110,000.00 8) This work was completed some time in early March 1995." 233There is some evidence that the further following amounts have been expended in respect of the Woolooware Property: - (a) $24,750 for house painting in April 2008; (b) $4,634 to Adept Building, said to be for "repairs" in 2010; (c) $3,100 for "tree lopping" in 2011; (d) $17,600 for replacement of a retaining wall in 2011; (e) $9,611.50 for swimming pool maintenance between 2003 and 2008; (f) $18,993.75 for home and contents insurance between 2003 and 2011; and (g) $9,229.25 for alarm monitoring between 2004 and 2011 (although this amounts seem to relate also to a property at 667 Canterbury Road, Belmore). 234The law in relation to an entitlement of a co-owner to recover from another co-owner capital expenditure on the co-owned property was summarised by Deane J in Squire v Rogers (1979) 39 FLR 106 at 125 as follows: - "As a general rule, capital expenditure upon permanent improvements to land by one joint owner without the authority of his co-owner creates a passive equity which attaches to the land. The joint owner making the improvements is not entitled to bring proceedings for contribution against his co-owner. In circumstances where his co-owner...would otherwise unfairly benefit under an order in equity (including partition or sale of the property) he is entitled to an allowance for his expenditure on such improvements to the extent to which they result in the present enhancement of the value (or the price on sale) of the land." 235Deane J cited the observations of Simpson CJ in Eq in Boulter v Boulter (1898) 19 LR (NSW) Eq 135 as follows: - "Where an owner of an undivided interest in land spends money in improving the property so that on sale under the Partition Act it fetches an enhanced price, a Court of Equity in dividing the proceeds of sale will not allow the other co-owners to take their shares of the increased price without making an allowance for what has expended to obtain that increased value...This course of action cannot inflict any injustice on the other co-owners, for it takes nothing out of their pockets, it only prevents them putting into their pockets monies obtained by the expenditure of another person, unless they recoup him such expenditure. In no case can the co-owner who has improved the property obtain more than his outlay, though such outlay may have trebled the value of the property. And, on the other hand, the increase in the price obtained is the limit of what he can receive, though his actual outlay may be far larger" (at [137]; citations omitted). 236But here, assuming Bill made the payments referred to above, there is no evidence that the expenditure caused an increase in the value of the Woolooware Property. 237Mr Evans submitted that I should infer that expenditure of the kind referred to would improve the value of the Woolooware Property by an amount at least equal to the amount expended. 238However, in the absence of any detailed evidence as to what was done, let alone evidence of increase in value, I am not able to reach any conclusions about this aspect of the matter. 239It is obvious that some of the expenditure (for example in relation to insurance premiums and alarm monitoring) would have had no effect on value. 240Accepting that repairs by a co-owner, as opposed to improvements, can be recovered by one co-owner against another, it is still necessary that the claimant show an increase in value to the property arising from the expenditure: per Hodgson JA in Ryan v Dries [2002] NSWCA 3; (2002) 10 BPR 97,947 at [66] - [67]. 241Thus, although it may be that some expenditure (for example swimming pool maintenance) has prevented deterioration in the value of the property that is not sufficient to give rise to an entitlement to contribution.

Category 3 - The Radcliffe payments 242I have found that Bill paid $156,034.06 in respect of the Radcliffe mortgage. 243According to Butt, Land Law, 6th ed (2010) at [14.29], "improvements" for which credit is given to a co-owner: - "...are not limited to physical improvements, but include payments of mortgage instalments, because the payments increase the parties' equity in the property and hence the amount of the proceeds distributable to them". 244See also Rolfe J in Forgeard v Shanahan (1991) 5 BPR 11, 797 at 11,802; approved by Hodgson JA in Ryan v Dries (Supra) at [70-1]; cf Meagher JA in Forgeard v Shanahan (1994) 35 NSWLR 206 at 225E. 245Prima facie, therefore, Bill is entitled to claim this amount (together with interest) as equivalent to an "improvement" to the property.

Occupation fee 246Bill has, since Margaret's death, occupied a property of which, in equity, Margaret's estate is the half owner. He has done so without payment of any rent or occupation fee. 247In Ryan v Dries (supra) Hodgson JA said at [61] and [70-71]: - "There seems little question about the broad principle applicable in this situation: a co-owner of property who has exercised the right to occupy the property is not liable to be charged with an occupation rent unless he or she: (1) has excluded the other co-owner from occupation; or (2) is claiming an allowance for expenditure in respect of the property: see Luke v Luke (1936) 36 SR (NSW) 310. If an allowance for expenditure is claimed, then, by reason of the maxim requiring the seeker of equity to do equity, the claimant can be charged with an occupation rent up to a limit of the amount allowed for the claim for expenditure: see Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476; Brickwood v. Young (1905) 2 CLR 387... ...If a co-owner makes a claim for contribution to mortgage payments in reliance purely on a legal right, with no reliance on equitable principles, then it would seem that the co-owner is not seeking equity and is not required to do equity. However, if the co-owner does rely on equitable principles in making such a claim, in my opinion the co-owner is seeking equity and is required to do equity, no less than if allowance for improvements was being sought. ...once an occupier is required to do equity because he or she is seeking equity, there is no reason to distinguish between improvements or repairs effected to the property on the one hand, and the reduction of a charge on the property through mortgage repayments on the other." 248In this case, Bill is relying on equitable principles in relation to each of his claims and, in particular, in relation to his claim for contribution to rates and to the Radcliffe mortgage payments. 249No doubt, had those payments not been made, the council and/or Radcliffe may have taken steps to sell the property. But, at most, Bill has an equitable interest (as to 50.5 per cent) in the property, yet has been occupying the whole of the property for almost twelve years without making any payment to Margaret's estate by way of occupation fee or otherwise. 250In those circumstances, it appears to me that he must "do equity" by paying Margaret's estate an occupation fee in respect of the period of his occupation. 251In the absence of any evidence as to what that occupation fee should be, let alone any offer to pay an occupation fee, I am not able to make any allowance to Bill in relation to such expenditure as he has made in respect of the property. 252However, in view of the large amount expended by Bill in respect of the Radcliffe mortgage, I am prepared to give Bill an opportunity to consider whether he wishes to adduce evidence of what an appropriate occupation fee would be, and to offer to pay the appropriate proportion of that fee to Margaret's estate.

The result 253I will stand the matter over to a date convenient to Counsel so that Short Minutes may be brought in to give effect to these reasons, and so that the position of the Official Trustee can be considered.

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: 14 June 2012

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