[2018] VCAT 40
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2018-01-12
Original judgment source is linked above.
The Competing Claims for Adjustment of Interests
Balance of purchase price of $152,800 (based on an equal legal interest and paid through Home Loan)
Mr Felkel submitted that because of the unequal contributions to the purchase price and other acquisition costs there was a presumption of a resulting trust so that the parties held their respective beneficial interests in the land in the proportions which equated to the proportions of their respective contributions.[1] He correctly submitted that a calculation made on that basis must regard the parties' equal liability under the mortgage as being an equality of contribution by them for the mortgage debt and that payments of instalments in reduction of the mortgage debt are not to be regarded as direct contributions to the purchase price.[2] He also correctly submitted that for the purposes of such a calculation one may include not only the contributions to the purchase money but also incidental costs such as stamp duty and disbursements.[3]
In that calculation, Mr Ternes has included in Mr Gates' favour only "an amount for loss of rental income proportionate to his share of the mortgage repayments over the years", submitting that that was the fairest method of calculation.[4] Except for the way in which "loss of rent" has been treated, there is authority that the method of calculation set out in the table is a legally permissible approach to adjustments of interests in land by an order made under Part IV of the Act.[5]
(1) In any proceeding under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs.
(2) Without limiting VCAT's powers, it may order -
- (a) the sale of the land or goods and the division of the proceeds of sale among the co-owners; or
- (b) the physical division of the land or goods among the co-owners; or
- (c) that a combination of the matters specified in paragraphs (a) and (b) occurs.
229 Sale and division of proceeds to be preferred
(1) If VCAT determines that an order should be made for the sale and division of land which is, or goods which are, the subject of an application under this Division, VCAT must make an order under section 228(2)(a) unless VCAT considers that it would be more just and fair to make an order under section 228(2)(b) or (c).
(1) In any proceeding under this Division, VCAT may order -
(a) that compensation or reimbursement be paid or made by a coowner to another coowner or other coowners;
(c) that an adjustment be made to a coowner's interest in the land or goods to take account of amounts payable by coowners to each other during the period of the co-ownership.
(2) In determining whether to make an order under subsection (1), VCAT must take into account the following -
(a) any amount that a co-owner has reasonably spent in improving the land or goods;
(b) any costs reasonably incurred by a coowner in the maintenance or insurance of the land or goods;
(c) the payment by a co-owner of more than that co-owner's proportionate share of rates (in the case of land), mortgage repayments, purchase money, instalments or other outgoings in respect of that land or goods for which all the co-owners are liable;
(e) in the case of land, whether or not a coowner who has occupied the land should pay an amount equivalent to rent to a coowner who did not occupy the land;
(3) VCAT must not make an order requiring a coowner who has occupied the land to pay an amount equivalent to rent to a co-owner who did not occupy the land unless -
(a) the co-owner who has occupied the land is seeking compensation, reimbursement or an accounting for money expended by the coowner who has occupied the land in relation to the land; or
(b) the co-owner claiming an amount equivalent to rent has been excluded from occupation of the land; or
(c) the co-owner claiming an amount equivalent to rent has suffered a detriment because it was not practicable for that co-owner to occupy the land with the other co-owner.
(5) This section applies despite any law or rule to the contrary.
It is therefore necessary to examine the principles which apply to claims for an account or an allowance in respect of improvements, mortgage repayments, repairs and other like expenditure on property as between beneficial co-owners.
In an instance where the beneficial ownership of the property is shared between two people, either husband or wife, co-habitees or others, and one leaves, with the remaining co-owner continuing or taking over mortgage repayments and the responsibility for repairs and improvements, there can be an account taken in equity between those parties. For the paying party to recover an allowance for any appreciation in the value of the capital asset because of these outgoings it is necessary to prove that the expenditure has, in fact, produced an ascertainable increase in the capital value as, for example, in the case of renovation which has enhanced the market value of the house or, in relation to the repayments of mortgage whether repayments have affected an ascertainable reduction in the principle previously owing under the mortgage. In the absence of proof of an increase in capital value so caused, no recovery because of unrelated appreciation in value will be possible and the parties are left to hold the property, or share the proceeds of any sale, on the basis of their established beneficial interests, usually, but not always, arising from the extent of the contributions towards the cost of its acquisition
Often there will be a situation where one of the co-beneficial owners vacates the premises and leaves the other in occupation who, staying on, through choice of necessity continues to meet the mortgage repayments, rates, taxes and like expenditure but, in such cases, the person claiming a contribution or an account will be chargeable with occupation rent in respect of the period in which he or she continued to enjoy sole possession of the premises.
[1] Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at pp 246-247.
[2] Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at p 257.
[3] Murtagh v Murtagh [2013] NSWSC 926; Halsbury's Laws of Australia, volume 27, para [430-545], footnote 12.
[4] Respondent's written submissions, paras 14-16.
[5] Tien v Pho [2014] VSC 391 at [12] and [13].
[6] Sherwood v Sherwood [2013] VCAT 1746 at [27]- [34], following Edelsten v Burkinshaw [2011] VSC 362 at [27].
[7] See footnote 1. Mr Felkel correctly submitted that there was no countervailing presumption of advancement, because the relationship of two cousins does not give rise to a presumption that one is intending to advance the other.
[8] Halsbury's Laws of Australia, volume 27, para [430-550].
[9] Ibid, especially footnote 5 to para [430-550].
[10] Halsbury's Laws of Australia, volume 27, para [430-620].
[11] Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 at p 148, approving Deane J. in Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at p 614.
[12] See footnote 10 and the authorities cited in footnote 11.
[13] TB p 342. The figures were agreed.
[14] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583.
[16] Silvester v Sands [2004] WASC 266 at [139]- [141] (Heenan J.)
[17] Sherwood v Sherwood [2013] VCAT 1746 at [87]- [89].
[18] Rosselli v Rosselli [2007] VSC 14 at [156] (J. Forrest J.)
Gates
Robinson
(1984) 155 CLR 242
(1985) 160 CLR 583
(1987) 164 CLR 137