LAMERS -v- THE STATE OF WESTERN AUSTRALIA [2009] WASC 3 (16 January 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LAMERS -v- THE STATE OF WESTERN AUSTRALIA [2009] WASC 3

MATTER : Section 34 of the Criminal Property Confiscation Act 2000

Seizure of property of Robert James Lamers (CPCA 31/03)

Property - Confiscation of dwelling after drug trafficking declaration - Extent of co­ownership by innocent party - Pooling of resources - Difficulty in determining actual contribution - Whether pooling of resources for purposes of a joint endeavour

Criminal Property Confiscation Act 2000 (WA), s 82(3)

1 TEMPLEMAN J: On 10 August 2005, the first plaintiff, Robert James Lamers, was declared a drug trafficker under s 32A(1) of the Misuse of Drugs Act 1981 (WA). That declaration having been made, Mr Lamers' property was confiscated under s 8(1) of the Criminal Property Confiscation Act 2000 (WA) (CPCA).

2 Mr Lamers' property included a house at 3 Cambridge Crescent, Cooloongup, which he had purchased in 1998.

3 Between November 2001 and February 2005, Mr Lamers lived at the property with the second plaintiff, Nattasha Willis, with whom he was in a de facto relationship.

4 By originating summons dated 24 December 2003, Mr Lamers objected to the confiscation of his property. However, he has not pursued that objection.

5 The objection is now taken by Ms Willis. The State of Western Australia is named as the defendant, but the Director of Public Prosecutions for Western Australia has the conduct of the matter.

6 Ms Willis' primary claim is that, in the circumstances to which I shall refer below, she has acquired a substantial interest in the property under a constructive trust. Alternatively, Ms Willis claims relief under the hardship provisions of the CPCA to which I shall refer also in these reasons.

7 Ms Willis swore three affidavits in support of her claim: on 21 October 2004, 28 June 2006 and 18 June 2007. She was cross-examined on her affidavits at the hearing. Before considering Ms Willis' claim to be the beneficiary of a constructive trust, I set out my findings of fact, made on the balance of probabilities as required by s 102(2)(d) of the CPCA.

• Mr Lamers purchased the Cambridge Crescent property (the property) in 1998 for the sum of $84,000.
• Mr Lamers paid $20,000 from a workers' compensation payment. The balance of $64,000 was paid from a loan he obtained from the Commonwealth Bank, secured by a mortgage over the property.
• Ms Willis commenced a de facto relationship with Mr Lamers in about June 2000 when she was his next-door neighbour in Cambridge Crescent.
• Ms Willis moved into the property in about November 2001, together with her daughter from a previous relationship.
• A child, Paris Rose Lamers, was born on 6 June 2002 out of the relationship between Ms Willis and Mr Lamers.
• Ms Willis and Mr Lamers separated in about February 2004, although they continued a casual relationship.
• Mr Lamers was imprisoned in February 2005 and was released in early June 2006.
• When Ms Willis moved into the property, it was without electricity and water. These services had been disconnected for non-payment of the relevant charges.
• Ms Willis paid approximately $600 in outstanding electricity charges and $1,000 in outstanding water charges to have the services restored.

8 In her first affidavit, sworn on 21 October 2004, Ms Willis said:

1. Throughout the period since I moved into the [property], I have had two scources [sic] of income, one from social security payments and another from casual employment as a barmaid at the Waikiki Hotel, where I have been, and remain, employed on a casual basis as a barmaid for about six years. All of the general living expenses were paid from my income. By 'general living expenses' I mean all utilities (gas, electricity and water), shire rates, groceries, clothing and any other expenses incidental to normal living.
2. As far as I am aware, the only source of income Lamers had, and continues to have, is from social security payments. The mortgage repayment for the [property], a sum of $110.00 per week, was made by Lamers from his bank account. The remainder of his social security payment was used by Lamers to contribute to general living expenses, entertainment and for his personal use.

1. Monies deposited into this Bank Account were, including his social security payment, the joint property of Lamers and I. The money was collected over a period of time by both of us putting our spare coinage in bedside vase. I also put the tips I received from my work in the vase.

9 In the course of cross-examination, Ms Willis was asked whether the money that went into the account referred to in par 12 above was Mr Lamers' social security payments. Ms Willis said that it was 'mostly': and that the balance was her and Mr Lamers' spare change (ts 13).

10 Ms Willis went on to say that she contributed half the funds to the account. She said she put 'cash money' into the vase referred to in par 12 above, as well as tips.

11 When asked about the statement in par 10 above that the mortgage payments of $110 per week had been paid by Mr Lamers from his bank account, Ms Willis said the statement was intended only to mean that the payments came from the account: not that Mr Lamers had provided the funds (ts 14). Ms Willis said she put the money, or a good part of it, into the account.

12 In re-examination, Ms Willis produced a schedule (exhibit 4) which I accept she prepared from the statements of her Westpac account number 70-6964. It showed withdrawals and fund transfers from that account, from 6 November 2002 to 5 July 2005, a period of approximately 138 weeks.

13 By my calculation, the total amount of withdrawals and transfers during that period was $15,150. This is an average of almost exactly $110 per week, which was the amount then due in respect of mortgage payments.

14 This evidence suggests that in the period to which the schedule relates, Ms Willis provided the funds for all the mortgage payments. However, that is inconsistent with her evidence that she contributed half of the funds which (as I understand it) found their way into Mr Lamers' account.

15 There is no documentary evidence about the source of the funds used to pay the mortgage instalments in the period November 2001 to November 2002, when the schedule commenced.

16 In these circumstances, while I accept Ms Willis' evidence that there was a pooling of her and Mr Lamers' resources from November 2001 until July 2005, I am unable to make a finding as to the amount actually contributed by Ms Willis towards the mortgage payments.

17 The circumstances changed in July 2005. I accept Ms Willis' evidence that she then entered into an arrangement with the Commonwealth Bank whereby mortgage payments were made by direct deduction from a new account in her name. This arrangement has continued and remains current.

18 Ms Willis relies principally on the decision of the Full Court in Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360. There, Murray J, with whom Hasluck J agreed, analysed and applied the principles established by the High Court in Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 and Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137.

19 In Muschinski, a couple in a de facto relationship bought land on which they proposed to build a pre-fabricated house and renovate an existing cottage. The land was conveyed to the parties as tenants in common, although the woman paid the whole of the purchase price. She agreed to the man's name being included on the title because he agreed to pay for the pre-fabricated building and to restore the cottage.

20 The parties separated before putting their proposal into effect. As at the separation, the woman had contributed some $25,000 and the man some $2,500 to the purchase and improvement of the property. However, the woman claimed sole beneficial ownership.

21 The court held that the parties held their respective legal interests upon trust to repay each other the amounts of their respective contributions. The residue was to be held for them both in equal shares. The basis for the decision was that both parties had made their respective contributions for the purposes of a joint endeavour. Neither had intended to provide a benefit to the other. It would therefore have been unconscionable for the woman to retain the benefit of the man's contribution.

22 Baumgartner was also a case involving a de facto relationship. The parties pooled their incomes for the purpose of paying their living expenses and fixed commitments. Initially, the parties lived in a unit owned by the man. This was sold. The proceeds of sale were used to purchase a house. The balance of the price was obtained from a loan secured over the property by a mortgage in the man's name.

23 The parties' joint incomes were provided as to about 55% by the man and 45% by the woman.

24 The parties separated and the man claimed that the house was his sole property.

25 Applying the principles stated in Muschinski, the High Court held that the man held the house on trust for the parties in the proportions in which they had contributed their earnings to its acquisition, subject to a charge in the man's favour for the net proceeds of the sale of his unit.

26 In both of these cases, the court held that a constructive trust had come into existence. It was an essential element in each case that the parties had not only pooled their resources (which were not necessarily financial resources), and further, that they had done so for the purpose of a joint endeavour, typically, to create a permanent home or provide other benefits.

27 That element was lacking in Lloyd v Tedesco. There, the parties had been in a de facto relationship for a period of nearly 10 years, although they separated from time to time during that period.

28 The man carried on a market garden business. The woman received an inheritance which she used to purchase an adjacent property. It was registered in her name and became their principal residence. Later, the parties lived in a residence purchased by the man and registered in his name only.

29 During the relationship, the woman performed home duties including caring for their children, cooking and cleaning. Also, she lent money to the man to assist him in his business.

30 After the relationship ended, the woman claimed a share in the increase in the value of the property of which the man was the registered proprietor.

31 The trial judge rejected the woman's claim. He held that the parties had never intended to pool their resources for the purpose of any joint endeavour. The woman could not, therefore, claim on the basis that she had made non-financial contributions to the relationship, as the de facto wife and as a mother and homemaker.

32 The woman's appeal to the Full Court was dismissed.

33 There, Murray J referred to the following passage in the judgment of the trial judge, which, his Honour said, contained a correct statement of the legal principles.

Consistent with the authorities to which I have referred, the plaintiff in this case is therefore required to prove the following:

(1) The existence of a joint endeavour between herself and the defendant for the object or purpose of providing permanent financial security and benefits.

(2) Valuable contributions by the plaintiff to the joint endeavour.

(3) An increment in wealth having accrued to the defendant as a result of the joint endeavour.

(4) The unconscionability of the retention of that wealth by the defendant to the exclusion of the plaintiff.

I stress that proof of the joint endeavour requires proof of an actual intention to pool resources for the purpose of that endeavour. Such intention need not, of course, be proven by direct evidence of the declaration by both parties of such an intention. It can, in an appropriate case, be inferred from all the facts and circumstances of the case. That is the situation urged by the plaintiff in this case (368).

34 Applying those principles in the present case, the crucial issue is whether Ms Willis has proved:

... an actual intention to pool resources for the purpose of [a joint] endeavour.

35 In my view, she has not. There is, I think, a significant distinction between this case and those referred to above. Here, Mr Lamers purchased the property some two years before he and Ms Willis commenced their relationship; and some three years before she moved into the property with him. Until then, there could be no doubt that Mr Lamers was both the legal and beneficial owner of the property.

36 Ms Willis moved in with Mr Lamers in or about November 2001. Their child was born on 6 June 2002. I think it reasonable to draw the inference that the purpose of their co-habitation was to provide the security of a home for them and the expected child. However, that arrangement would not give rise to an implied agreement that Mr Lamers would either make a gift to Ms Willis of some interest in his property or to permit her to acquire an interest by making mortgage payments (which were largely payments of interest in any event).

37 As was said in Green v Green (1989) 17 NSWLR 343 by Gleeson CJ (with whom Priestley JA agreed) :

In a legal system which does not include concepts of family or community property, and where an obligation on the part of a husband to house and provide for his wife is commonly regarded as an incident of the matrimonial relationship, an undertaking [to provide support and accommodation] cannot of itself confer upon a wife a legal or equitable interest in the matrimonial home ... The acceptance of an obligation on the part of the husband to house his wife would not normally be regarded as an undertaking to give her a proprietary interest in the home in which they live, and wives usually have reasons for living with their husbands other than an expectation that they will increase their assets (353).

38 This passage was quoted by Murray J in Lloyd v Tedesco at [16], where his Honour said that the same observations would apply to de facto spouses.

39 In Baumgartner, Mason CJ, Wilson and Deane JJ referred to the fact that the parties had pooled their earnings and used the pool to pay outgoings including mortgage instalments and other living expenses. Their Honours said:

There was no suggestion that the [woman's] contributions were paid and received by way of rent or a charge for use and occupation and for living expenses. Such a suggestion would be inconsistent with the relationship that came into existence between the [parties], a family relationship which was for the most part ... a long-term stable relationship in which marriage was under continuous contemplation (148 - 149).

40 By contrast, in the present case, as Ms Willis admitted in cross-examination, she had received rental assistance from Centrelink. It was put to her that she had received rental assistance during '2003 through to 2006'. Ms Willis said she had received some rental assistance 'but not for that long' (ts 16).

COUNSEL: May I ask why you received rental assistance?

MS WILLIS: Because we went into a de facto relationship and Centrelink did know about that.

COUNSEL: But Mr Lamers owned the property, didn't he? He was on the title?

MS WILLIS: Yes.

COUNSEL: And there was a mortgage?

MS WILLIS: Yes.

COUNSEL: Why were you claiming rent?

MS WILLIS: Because we could.

COUNSEL: Because you could? Weren't you claiming rent because he was in fact charging you rent to live in the house?

MS WILLIS: No. He never charged me rent for the house.

42 Ms Willis went on to say that the rental assistance amounted to approximately $122 per fortnight.

43 There is no evidence, other than the above, as to the circumstances in which Ms Willis came to receive rental assistance. However, I cannot think that she would have qualified for such assistance unless she informed the relevant authority that she was paying rent (whether actually charged or not): and the only person to whom she could have been making such payments was Mr Lamers, as the registered proprietor of the property.

44 Ms Willis' receipt of rental assistance is, of course, inconsistent with her claim to be a beneficial owner of the property.

45 Further, I note Ms Willis' evidence in par 11 of her affidavit sworn 18 June 2007 that:

From the commencement of my relationship with Robert Lamers he had no regular employment. He frequently asked me for money to make his mortgage payments. He often told me of phone calls he received from the bank demanding his outstanding mortgage payments. It was only when I set up the Commonwealth Bank account that the mortgage payments were regularly made.

46 This, together with Ms Willis' evidence about her initial payments for the restoration of electricity and water services to the property, leads me to the conclusion that the pooling of her resources with those of Mr Lamers was more probably a matter of practical convenience for the purpose of ensuring that essential household bills were met, rather than for the purpose of some joint endeavour.

47 For these reasons, I am not persuaded that Ms Willis has made out her claim to an interest in the property.

48 I have reached this conclusion without placing any weight on the evidence contained in par 11 of Ms Willis' affidavit of 21 October 2004, which is in the following terms:

It was, and remains, an agreement between myself and Lamers, that because of our de facto relationship and that I am the mother of, and primary care-giver to, our child, I am joint owner of the [property]. Nothing Lamers has said or done has given me reason to believe that this agreement is not still valid.

49 During the course of the hearing, there was some argument as to whether this evidence was admissible, and if so, what weight should be attached to it. Counsel for the DPP submitted that the passage was inadmissible, being hearsay evidence as to Mr Lamers' intention; and hearsay is rendered inadmissible by s 109 of the CPCA.

50 Counsel for Ms Willis submitted that because the DPP's objection had not been taken within the time limited by earlier directions, it was now too late to do so. Counsel submitted further that because the DPP was effectively standing in Mr Lamers' shoes, Ms Willis' evidence as to the agreement between herself and Mr Lamers was not hearsay because it should be regarded, in substance, as evidence of a statement made by an opposing party. Further, counsel submitted, Ms Willis' evidence (which I accept) as to the total breakdown of her relationship with Mr Lamers and his abusive conduct towards her since his release from prison, explained and justified the absence of any evidence from him to support Ms Willis' evidence about their alleged agreement.

51 In my view, it is not necessary to resolve these issues because, on reflection, it seems to me that even if there was some such agreement as that to which Ms Willis refers, it would be of no effect, having regard to s 34(1)(a) of the Property Law Act 1969 (WA). This provision prohibits the creation of an interest in land 'except by writing signed by the person creating or conveying the interest ...'

52 Section 34(2) provides that the section does not affect the creation or operation of resulting, implied or constructive trusts. However, for the reasons given above, I am not persuaded that a constructive trust has been or should be created.

53 An informal agreement such as that to which Ms Willis refers is capable of grounding an estoppel. That is not Ms Willis' case: but for completeness, I should note that on the view I take, I do not think Ms Willis could be said to have relied on the alleged agreement. As I have noted above, I think it more probable that she made mortgage payments out of necessity.

54 In any event, I do not think it could be said that Ms Willis acted to her detriment in making the mortgage payments. It was clearly to her advantage to do so, in order to secure permanent accommodation for herself and her children.

55 Mortgage payments made after Mr Lamers was convicted in August 2005 are, I think, in a different category. As at that date, Ms Willis knew or ought to have known that Mr Lamers' property would be confiscated under the CPCA and was therefore, effectively, the property of the State. And as against the State, there is no basis on which Ms Willis could claim to have acquired an equitable interest in the property.

56 Ms Willis' claim to relief under the hardship provisions of the CPCA requires a consideration of pt 6, entitled 'Objections to confiscation'.

57 In that part, s 79 to s 84 provide for objections to be made to the confiscation of property which has been frozen on the various grounds there referred to. Section 85 provides that a person may apply to the court for the release of property which has been confiscated under s 6 or s 7. A distinction is therefore drawn between objections to confiscation (which, if successful, would result in the relevant property being unfrozen) and the release of property which has actually been confiscated.

58 It will be recalled that Mr Lamers' property was confiscated under s 8 of the CPCA, when he was declared to be a drug trafficker under s 32A(1) of the Misuse of Drugs Act. However, there is no reference in s 85 to the release of property that has been confiscated under s 8 of the CPCA.

59 Although the point has not been argued, two conclusions appear to flow from these provisions:

1. once property has been confiscated, the court has no jurisdiction to set aside a freezing notice or a freezing order; and
2. the court has no jurisdiction in any event to release property confiscated under s 8 of the CPCA.

60 Proposition (1) above reflects the conclusion I reached in Director of Public Prosecutions (WA) v Centurion Trust Co Ltd [No 5] [2008] WASC 107. It follows, that because Ms Willis seeks to rely on the hardship provisions of s 82, which fall within the provisions dealing with the release of frozen property, her claim must fail.

61 However, if I am wrong in that view, I accept the submissions made by counsel for the DPP that s 82 has no application in the present case in any event.

(1) The court may set aside a freezing notice or freezing order for property that was frozen on the ground that it is crime-used if the objector establishes that it is more likely than not that the property is not crime-used.

(2) If the court finds that the property is crime-used, or is not required to decide whether the property is crime-used, the court may make an order under subsection (3) or (4).

(3) The court may set aside the freezing notice or freezing order for the property if the objector establishes that it is more likely than not that -

(a) the objector is the spouse, a de facto partner or a dependant of an owner of the property;

(b) the objector is an innocent party, or is less than 18 years old;

(c) the objector was usually resident on the property at the time the relevant confiscation offence was committed, or is most likely to have been committed;

(d) the objector was usually resident on the property at the time the objection was filed;

(e) the objector has no other residence at the time of hearing the objection;

(f) the objector would suffer undue hardship if the property is confiscated; and

(g) it is not practicable to make adequate provision for the objector by some other means.

(4) The court may set aside the freezing notice or freezing order if the objector establishes that it is more likely than not that -

(a) the objector is the owner of the property, or is one of 2 or more owners of the property;

(b) the property is not effectively controlled by a person who made criminal use of the property;

(c) the objector is an innocent party in relation to the property; and

(d) each other owner (if there are more than one) is an innocent party in relation to the property.

(5) If the objector establishes the matters set out in subsection (4)(a), (b) and (c), but fails to establish the matter set out in subsection (4)(d), the court may order that, when the property is sold after confiscation, the objector is to be paid an amount equal to the amount that bears to the value of the property the same proportion as the objector's share of the property bears to the whole property.

(6) In an order under subsection (5), the court is to specify the proportion that it finds to be the objector's share of the property.

(7) On the application of the DPP or an owner of the property, the court may set aside the freezing notice or freezing order for the property if it also orders the objector to pay to the State an amount equal to the value of the property.

(8) Sections 22(6), 22(7), 23, 24, 25 and 26 apply in relation to making an order under subsection (7) and to the objector as if the order was a crime used property substitution declaration and the objector was the respondent in relation to the declaration.

63 It appears from s 82(1) that the section applies to property 'that was frozen on the ground that it is crime-used'. In my view, the reference to 'the property' in subsections (2), (3) and (4) must all be taken to refer to property that has been frozen on the crime-used basis.

64 Counsel for Ms Willis submits that because s 82(2) applies when the court is not required to decide whether the property is crime-used, the subsection must be of more general application. Counsel relies on the decision of Hasluck J in Director of Public Prosecutions (WA) v A [2008] WASC 258.

65 In that case, a property had been frozen on the basis that an application was likely to be made against an alleged offender for a crime-used property substitution declaration. The property was owned by an accused person and was occupied by his partner and her child.

66 It was said that if the property was confiscated, the child would suffer undue hardship. An objection to confiscation of the property had been brought by the accused's partner. The issue before Hasluck J was whether the child should be joined as a party to the proceedings as a further objector.

67 The DPP took objection to the joinder on the basis that it would serve no useful purpose because, it was submitted, s 82 applied only to property frozen on the crime-used ground.

68 Hasluck J ordered that the child (by her next friend) be joined as an objector to the proceedings. In reaching that conclusion, Hasluck J had regard to the State of Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291 in which McHugh J (at 316) held, in effect, that substantive rights should not be determined on a joinder application.

First, in my view although s 82 of the Act is ostensibly concerned with and possibly confined to the release of crime-used property only, the scheme of the Act arguably suggests that it might have a wider application. In reviewing the scheme of the Act, I give particular weight to the point mentioned earlier, that the synopsis provision in s 4(c) appears to contemplate that crime-used property may involve property of equal value or some category of property beyond the property where the offence was actually committed.

Second, the terms of s 82 might arguably be said to extend to categories of property beyond crime-used property. That is because weight may arguably be given to s 82(2), being the provision I mentioned earlier, which allows for a finding if the Court finds the property is crime-used or is not required to decide whether the property is crime-used.

I note also in passing that in s 82(8) there is reference back to s 22(6), being a provision forming part of the powers and considerations concerning crime-used property substitution declaration.

It follows from all of this that in certain respects s 82 appears to be contemplating that there may be a relationship between the provisions in s 82 and other categories of property. To my mind, the matters I have mentioned to this point arguably give rise to a degree of ambiguity as to whether the ameliorating provisions can be drawn upon by a party such as the applicant H. I am of the view that where there is an ambiguity of that kind, the principles of statutory construction I referred to earlier, which allow for a purposive reading of the provisions, weigh in favour of the application for joinder.

It might be said that the purpose of the ameliorating provisions is to allow a facility for relief to occupants of a property affected by a freezing notice or order. I therefore consider that it is arguable that the ambiguities I have referred to should be resolved by adopting a broad interpretation of the relevant provisions which would support a form of relief of the kind contended for by the proposed objector, that is, the applicant H [51] - [55].

70 It is clear from this extract from Hasluck J's reasons that his Honour did not form a concluded view about the true construction of s 82, it being inappropriate to do so.

71 In the present case, having heard the substantive application, it is necessary for me to decide the issue.

72 In considering the observations of Hasluck J set out above, I note that s 4(c) has no relevance to the present case: nor do the references in s 82(8) to s 22(6). Thus, the only point which appears to be of any assistance to Ms Willis is that s 82(2) applies where (as here) the court is not required to decide whether the property in question is crime-used.

73 However, in my view, the answer to that point is that even if the court is not required to make that decision, the section nevertheless applies only to property that was frozen on the ground that it was crime-used. The section therefore envisages circumstances in which property is frozen on the ground that it is crime-used even though, in considering an objection to the freezing of that property, the court is not required to decide whether the property was actually crime-used.

74 As there is no suggestion in the present case that the property was crime-used, I consider that Ms Willis' reliance on s 82(3) is misplaced.

75 If I am wrong in my conclusions thus far, I think Ms Willis would be unable to satisfy the criteria set out in s 82(3)(f) and (g).

76 Counsel for Ms Willis submits that the evidence establishes that the property is the only residence of herself and her two daughters: that she has limited financial means, comprising social security payments and casual employment as a barmaid. I accept that to be so.

77 I accept also the further submission that if the property was to be sold, Ms Willis and her daughters would be displaced from their home of seven years. However, there is no evidence that Ms Willis and her children would not be able to obtain alternative rental accommodation.

78 I accept the submission made by counsel for the DPP based on the judgment of Kirby J in R v Lake (1989) 44 A Crim R 63, 66 - 67, that if the confiscation legislation is to achieve its objective, it will necessarily cause a measure of hardship in the deprivation of property. However, if dispossession was sufficient to constitute undue hardship, the operation of the Act would effectively be frustrated.

79 I therefore conclude that the sale of the property and the dispossession of Ms Willis and her children would not constitute undue hardship within the meaning of s 82(3) of the CPCA.

80 For all these reasons, I conclude that Ms Willis' application must be dismissed.