Field v Loh & Anor

[1] Douglas J: In July 2005 the plaintiff, Mrs Field, paid $184,000 to assist the defendants to buy a house. Mrs Field had been living with Mr and Mrs Loh and their children since some time in May 2005. She continued living with the Lohs, who are the defendants to these proceedings, until mid October 2005 when she was asked to leave the property by Mr Loh and move back with her own children. One reason why she had commenced living with the defendants was because her daughter, with whom she had previously lived, had asked her to leave her house.

[2] Mrs Field's claim is that a declaration should be made that a resulting or a constructive trust exists in her favour in respect of the land owned by the defendants reflecting the amount of her contributions to the purchase of that land, said to be $184,000 plus interest over two and one quarter years at 10% per annum. She also asks for the appointment of statutory trustees for sale. Alternatively, in lieu of the declaration of such a trust, she also seeks the payment of a similar sum as equitable damages.

[3] The main factual issue colouring the nature of the transaction between the parties is whether the payment was made by her as a "non-refundable gift" made in appreciation of the fact that the defendants had taken her into their house or whether she gave the money in the expectation that she would continue to live with the defendants indefinitely and receive their support and the "comfort of living in a family environment" with them as she aged and approached death; see Swettenham v Wilde [2005] QCA 264 at [42]. At the time she paid the money Mrs Field was 76 years old. She is now 78.

[4] Mrs Field is a widow, raised in Hong Kong. Her native language was Cantonese but she speaks English reasonably well, having married an Englishman who died in 2003 with whom she had three children. She appeared to have some difficulties in understanding the language completely fluently. Her eyesight was impaired to the extent that she was described by a specialist as legally blind. She can read with real difficulty with the aid of a magnifying glass combined with a lamp. She attended the "Italian Convent School" in Hong Kong and obtained a high school level of education, undertook a period of training as a nurse but did not complete that training because of her fear of the dark, a fear which continues to the present.

[5] She and her husband moved to Australia in about 1972. They had moved in to live with their daughter just before Mr Field's death and she continued to live with the daughter after his death until early 2005. She met the defendants probably in early 2005 about February or March through their common attendance at a church called the World Harvest Church at Bald Hills. Mr Loh was a member of that church. He had recently arrived in Australia from Singapore, was also of Chinese descent and a devout Christian member of that church. Mrs Loh also came from Singapore but was of Indonesian decent and had become a convert to Christianity. Mrs Field was raised as a Catholic in her youth at school but had not practised that faith during her adult life. She had begun attending the World Harvest Church as well as another church in Fortitude Valley with her husband before his death.

[6] When Mrs Field had to leave her daughter's home, in circumstances that were not explained in any detail in the evidence, she went to stay with friends from the World Harvest Church on a temporary basis. A lady known as Lilly Chong seems to have introduced her to the defendants. They had moved to Australia in about August 2003. Mr Loh had been in a restaurant business in Singapore and went bankrupt there as a result of a downturn in business caused by the SARS virus. Their evidence was that they commenced attending the World Harvest Church in Bald Hills in 2004.

[7] After Mrs Field left her daughter's house, when she was staying with other friends, she was due to leave for Perth to have an operation and stay with a granddaughter while convalescing. Before she left for Perth she had dinner with the defendants at a restaurant at Bracken Ridge. During that dinner she became emotional about the fact that she had been "kicked out" of her daughter's house, was crying and speaking about the operation she needed to undergo. The defendants took pity on her and told her that their door was open for her on her return. They stayed in touch whilst she was in Perth and when she returned to Brisbane in May 2005 they had a further meeting with her when it was resolved that she would move in with them and their children. The possibility of her going to a nursing home was raised by Lilly Chong but Mrs Field did not want to do that, clearly preferring to live in a family and to maintain contact with the church where she worshipped, something she felt would be difficult if she were living in a nursing home.

[8] At that time, the defendants were renting a house at Kippa Ring where they lived with their three children. They then did not realise that Mrs Field possessed any property of her own and assumed that she was not well off financially. Mrs Field gave evidence that Mr Loh offered to pray for her and teach her about the scriptures and to try to cure her of her fear of the dark when she went to live with the defendants. Mr Loh had also told her that he prayed that God would give him a house and there were discussions about that issue and the fact that he was unable to borrow to buy a house because he had no assets or savings history. He was in employment, however, as a chef.

[9] In early June 2005 Mrs Field told the defendants that she had sold some vacant land and offered to contribute $180,000 to assist them to purchase a home. Mr Loh did not want to take the money, at least at first. He was concerned about what people would think if he took money from her and what effect it might have on her children who might otherwise have anticipated that the money would go to them. It also seems clear that, at that time, before the payment was made by Mrs Field and while she was living with the Lohs, there was no suggested time limit on the period during which she should stay with them. There were also discussions about what might occur in the event of her death, such as where she would be buried. She also agreed to pay $200 per fortnight from her pension of $400 per fortnight as a contribution to household expenses.

[10] In his examination in chief Mr Loh was asked whether he had any discussions with Mrs Field about living arrangements when she said she wanted to give him the money. His answer, at p. 167 ll. 23-27, was not well expressed because of his poor English but led me to conclude, in conjunction with his later evidence about his intention to repay after the relationship became difficult, that, if they went their separate ways, then what Mrs Field had paid should come back to her:

"Yes, I recall her this money they give it to me. I say you know if we stay together, if we can stay together because I did told her like I mean if anything that is not right when we go separate ways we should go separate ways and whatever is I suggest we come back to you."

[11] A little later in his evidence, at p. 168 ll. 3-11, after he said that he had expressed his dissatisfaction with Mrs Field for leading him to believe she was poor he also said:

"... and then one day she does say that God told me to bless you this money. I really want to give it to you. I just - I - she say - it was nice of her really at that time because she say all I want is that you trust I give you this money so that we - I can be stay in this house permanently and I say look whether you give me the money or not I really say I really willing to house you even before I knew we get the money. The best thing is whatever you - is to go back when you can reconcile with Sue and that's the best thing."

[12] That evidence may have been intended to convey to me that it was truly an unfettered gift and that the defendants were willing to house Mrs Field without the payment from her but the context also suggests that it was said by Mrs Field in anticipation that she would stay permanently with them in the house. That was also the understanding of Mrs Field's solicitor, Mr Leonard, when he was told by Mr Loh, "We will look after her", in the context of her having accommodation for life; p. 105 ll. 35-49. Mr Leonard was criticised for not having a diary note of that conversation but it made sense in the context of his conversation with Mr Loh and I believed his evidence that it had been said.

[13] Mrs Field's evidence about her reasons for providing the money included the following, at pp. 37-38:

"Yes, but once you got that money, did you talk to them about what you were going to do with the money, what you wanted to do with the money?-- They wanted to buy a house. They told me they can't get the loan, and I said, "I got this money. I can put the money in for deposit, then you can get the house. We can live in the house without worrying about paying rent. We live together."

[14] That evidence suggests strongly that the arrangement between the parties originally contemplated that the money was given on the understanding that Mrs Field would live with the defendants for her life and that she should be reimbursed if that arrangement ceased. Even if the defendants had been willing to look after her without that payment it seems to me that that was the understanding affecting the making of the payment.

[15] In a meeting with the pastor of their church after their arrangement began to sour, Mr Loh said he would give the money back to her in the event that she left; see pp. 180-181. Later he also said that he would do so after a year for tax reasons but then appears to have changed his mind because a caveat was lodged on the title.

[16] The conclusion that the money was repayable is buttressed by a statement made by Mr Loh to Mrs Hutchinson and Mr Ruwoldt, friends of Mrs Field, on 12 October 2005, that he would pay her back the money she had put into the property.

[17] By then, because of difficulties partly created by the extent of Mrs Field's possessions and her treatment and expectations of the defendants and their children, the defendant had decided that Mrs Field could no longer live with him and should go back to her family. She moved out on about 19 October 2005, about three months after she moved into the house with the defendants and their children.

[18] That evidence suggests a very strong case in favour of repayment of the money to the plaintiff.

[19] The defendants' case, that what they were given was an absolute gift, apart from their argument that they were willing to house Mrs Field in any event and that the money was not given in reliance on any understanding that they would continue to house her, relies on other evidence relevant to their purchase of the house. They had no means of raising the necessary money themselves. Money provided by Mrs Field was enough to allow them to seek a loan for the balance of the purchase price themselves but a financier would have been concerned if the money from Mrs Field was reimbursable to her.

[20] Her solicitor, Mr Leonard, had acted for her and her husband over a period of about 20 years in several transactions. He had become aware that Mr Loh was an undischarged bankrupt and believed that he was obliged to disclose that information and the fact that funds had been contributed towards the purchase to any potential financier of the purchase. Mrs Field told him that she intended to proceed with the transaction nonetheless and he withdrew from acting for the parties. He was firm in his advice to her not to get involved in the transaction. The parties had also seen another solicitor, Mr Klar, who recommended to Mrs Field that she seek independent legal advice and consult a doctor to confirm that she had the capacity to enter into the transaction. She obtained medical advice as to her capacity but did not seek further legal advice.

[21] She executed a document purporting to be a statutory declaration, but not in the proper form, which a finance broker had advised the defendants they should have to evidence the fact that the money being provided by the defendant to the plaintiff was a "non-refundable gift". Her ability to read it was very limited because of her poor eyesight. Mrs Field signed the document on 21 June 2005 stating that she was giving Mr Loh: "$180,000 as a non-refundable gift to purchase property as down payment". The document was prepared by the second defendant. Mrs Field's evidence is that she was told that it was necessary to sign the document to stop her children claiming the money if she died.

[22] The first loan application to the ANZ Bank was unsuccessful. That bank had been told of Mr Loh's position as an undischarged bankrupt. The loan application to it did not describe the payment by Mrs Field as a gift on p. 6 but did say that on p. 13 when the money was described as a non-refundable gift from Mrs Field which would be backed up by a statutory declaration. The Commonwealth Bank eventually provided finance to the defendants. It, unlike the ANZ Bank, was not told by the defendants of Mr Loh's status as an undischarged bankrupt nor of the status of the money provided by Mrs Field; see p. 265 ll. 25-40.

[23] In my view, the document executed by Mrs Field does not accurately reflect the real nature of the transaction entered into between the parties. To hold her to the description that her payment was a non-refundable gift would be unconscionable in these circumstances. It was actually made in the expectation that the parties would live together as a family until her death, and to assist the defendants to obtain a loan.

[24] It seems to me that the plaintiff's case can be viewed in several ways. Having regard to the nature of the transaction evidenced orally in the passages to which I have referred, it can be seen as unconscientious for the defendants to ask her to describe the transaction as an unconditional gift when it was really a gift made in the expectation that she would continue to live with the defendants. Although she was independently advised by a strong minded solicitor not to give the money to the defendants, she did not have the benefit of his advice about this document. She was in a disadvantageous situation because of her age, the fact that her daughter had ceased to allow her to live with her so she needed accommodation and because of her defective vision.

[25] In the circumstances where the transaction was described misleadingly to assist the defendants to obtain a benefit for them it can properly be regarded as an exploitation by them of the plaintiff towards their own ends, particularly in the case where they have refused to reimburse her in spite of the understanding both before they entered into the transaction and after it fell apart that they would do so; see generally Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621, 632 where Brennan J speaks of the circumstances where one may infer that a gift is the product of exploitation.

[26] It may also be regarded as the passive acceptance of a benefit by the defendants in unconscionable circumstances; see O'Connor v Hart [1985] UKPC 1; [1985] AC 1000, ;[1985] 1 NZLR 159, 171 per Lord Brightman delivering the advice of the Privy Counsel where his Lordship said:

"'Fraud' in its equitable context does not mean, or is not confined to, deceit; 'it means an unconscientious use of the power arising out of the circumstances and conditions of the contracting parties'; Earl of Aylesford v Morris (1873) 8 Ch App 484, 490. It is victimisation, which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances."

[27] One way of analysing the evidence which seems to me to be accurate is that the defendants asked the plaintiff to misstate the nature of the transaction to assist them in circumstances where they knew that the true nature of the transaction was one where the monies paid by her were paid on the understanding that she would continue to live with them and/or should be refundable if she were no longer to live with them. To allow them to hold her to the misstatement sought by them seems to me to be unconscionable.

[28] There are also some similarities with the situation in Swettenham at [42]-[43] where Atkinson J said (omitting the footnotes):

"[42] In this case, Mr Swettenham intended that Ms Wild would take the legal title to the property. However in return he was to retain not only a right to reside in the granny flat but also receive the support and comfort of living in a family environment with his daughter and her family as he aged. That was the joint endeavour between them and not, as the learned trial judge held, the conferral by Ms Wild on Mr Swettenham of the right to reside in the granny flat for the rest of his life. That joint endeavour between the parties was to be for their mutual benefit but failed through no attributable fault of either party. Mr Swettenham contributed a large proportion of the purchase price. In these circumstances it would be unconscionable for Ms Wild to retain the beneficial interest in the whole of the property subject only to Mr Swettenham's right to reside in the granny flat.

[43] In determining what constitutes unconscionability, one is not left "at large to indulge random notions of what is fair and just as a matter of abstract morality". In this case, as in Muschinski v Dodds, the conduct which has an unconscionable character is the respondent's conduct in seeking to assert and retain the benefit of a legal interest in the property without making any allowance for the fact that the appellant contributed a disproportionate amount of the cost of its purchase, where, as here, no arrangement had been made between the parties as to what should happen in the unforeseen circumstances of the collapse of the relationship. There is a need to call in aid the principle of equity applicable to preclude the unconscionable assertion of legal rights in this class of case, just as in Muschinski v Dodds it was held that "equity requires that the rights and obligations of the parties be adjusted to compensate for the disproportion between their contributions to the purchase and improvement of the ... property."

[44] It follows that a constructive trust should be imposed so that, irrespective of their intentions, the parties should be proportionately repaid their respective contributions to the property acquired during the relationship."

[29] In the circumstances it is also my view that it would be unconscionable for the defendants to retain the money, given Mr Loh's promises to repay after the relationship broke down, a factual matter covered by the pleading in para 9 of the statement of claim.

[30] As Deane J said in Commercial Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447, 474-475 (omitting the footnotes):

"The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O'Rorke v. Bolingbroke). The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: "the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract" (see per Lord Hatherley, O'Rorke v. Bolingbroke; Fry v. Lane; Blomley v. Ryan).

The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (see Union Bank of Australia Ltd. v. Whitelaw; Watkins v. Combes; Morrison v. Coast Finance Ltd.). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogues (sic). In Blomley v. Ryan, Fullagar J. listed some examples of such disability: 'poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary'. As Fullagar J. remarked, the common characteristic of such adverse circumstances 'seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other'." (My emphasis.)

[31] Here, the plaintiff's need for accommodation, her age and her poor sight, at least, put her into a relevant position of disability, as did the misleading explanation given to her that the need for the statement was to protect the defendants from her children's potential demands on the money when the true reason was to assist them to obtain a loan. Although she had been independently advised against making the payment, she was not so advised when she signed the document.

[32] Where the parties had been operating on the basis, as it seems to me, both before and after the transaction, that the money was paid in contemplation of the plaintiff continuing to live with the defendants, and on the most probable view of Mr Loh's evidence, would be refundable if the arrangement that the plaintiff continue to live with the defendants ceased, the appropriate conclusion is that the defendants' attempt to retract that promise and retain the benefit of that payment is not consistent with equity or good conscience. See also Avondale Printers and Stationers Ltd v Haggie [1979] 2 NZLR 124, 163-164 adopted by Connolly J in Re Bulankoff [1986] 1 Qd R 366, 371 where his Honour said:

"The language of Mahon J. in Avondale Printers and Stationers Limited v. Haggie [1979] 2 N.Z.L.R. 124 at p. 163, to which I was referred by Mr. Daly, is close to this case:

'Where property is conveyed or proprietary rights released in consideration of an oral promise by the transferee that the transferor will retain or later acquire a beneficial interest in the property in question, and where retraction of the promise amounts to a fraud upon the transferor, then the transferee will be held a constructive trustee for the benefit of the transferor of either the whole property or of the relevant interest therein. The key to this type of enquiry in my opinion lies in the question whether the tranferor would have parted with his property but for the oral undertaking of the transferee. If the question is answered in the negative, then renunciation of the promise or disavowal of the common intention will operate in equity as a fraud on the transferor and entitle him to the appropriate remedy.'"

[33] I am not satisfied on the evidence that Mr Loh exerted undue influence over Mrs Field. He was not a spiritual advisor, merely a co-religionist who was serious about his faith. Mrs Field did not strike me as the sort of person who might have been overborne by Mr Loh's religious discussions with her.

[34] The primary relief sought is a declaration that a resulting trust exists in respect of the payment of $184,000 by the plaintiff towards the purchase of the property plus interest at 10% per annum over 2.25 years. The components of the payment commenced with a sum of $1,000 and a further $11,000 both paid in respect of a deposit on the house. The $11,000 was paid by a cheque dated 11 July 2005. A further $170,000 was then paid towards the purchase monies by a cheque dated 19 July 2005 and $3,000 was paid by Mrs Field to Mr Loh and his wife to be held as emergency money. Of the $3,000 emergency money, $2,000 was put into the bank. The balance of the emergency money, $1,000, appears to have been used to pay expenses. On Mrs Field's evidence the sum of $2,000 from the emergency money was also used to allow the defendants to show the bank that they had some money in an account.

[35] The claim for $184,000, therefore, is established on the evidence. It can be described properly as the direct financial contribution she has made to the purchase price as a proportion of the total purchase price of the property; Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, 246. It seems to me to be an appropriate case in which to declare that a resulting trust exists. As occurred in Swettenham and other similar decisions, a declaration that a constructive trust existed would be equally available.

[36] If such a declaration were to be made, Mr Fisher for the defendants submitted that it should be offset by a sum of $1,600 in respect of the accommodation costs of the plaintiff with the defendants. The parties had negotiated a weekly contribution of $100 payable by her for her accommodation with them which extended over a period of 16 weeks. It seems appropriate to me to make such an allowance.

[37] Accordingly I shall make the following orders:

1. Declare that the plaintiff has an equitable interest in the real property described as Lot 150 on registered plan 142337 and having title reference 50363926 ("the property") to the extent of $223,800 ("the plaintiff's interest");

2. Declare that the defendants hold the plaintiff's interest in the property as trustees.

Order, pursuant to s. 38 of the Property Law Act 1974 that:

(i) Morgan Lane and Rajendra Khatri of Worrells Forensic Accountants be appointed trustees for the sale of the property;

(ii) That the property vest in the trustees, subject to encumbrances affecting the entirety but free from encumbrances affecting any undivided shares to be held by them on statutory trust for sale;

(iii) That the said trustees be at liberty to sell the property by auction or by private sale and that the plaintiff or defendants be at liberty to purchase the property privately or by auction subject to such terms as to this honourable Court may seem meet;

(iv) That the net proceeds of the sale of the property after deduction of the costs of the trustees be held to the account of the plaintiff and the defendants in proportions equal to their interests in the property.

[38] I shall hear the parties in respect of any further orders sought and costs.