Little v Saunders

1976/04 TIMOTHY ROSS LITTLE AS EXECUTOR OF THE ESTATE OF THE LATE SUSAN KATHLEEN BENSON & ANOR v SHANE EDWARD SAUNDERS JUDGMENT - Ex Tempore (Revised 21 July 2004) 1 HIS HONOUR: This is a claim which is brought by the executors of the estate of the late Susan Kathleen Benson. Ms Benson was the registered proprietor as joint tenant with Shane Saunders, the defendant in this case, of a property located at 3 McAllisters Road, Bilambil Heights, which is on the north coast. The plaintiffs' claim is that the property is held on trust for the plaintiffs as executors, for a proportion equal to the proportion of the purchase price which Ms Benson provided. 2 Ms Benson and Mr Saunders first met in around May of 2001. By August of 2001 they were discussing living together and purchasing a house together. They inspected various properties, including the property at Bilambil Heights which they ultimately bought. In September of 2001, they travelled to the United States together, and this trip marked the beginning of them living together. 3 Upon their return, they continued arrangements for buying a house together. Mr Saunders delegated to Ms Benson most of the work related to both finding a property, and also carrying through the conveyancing formalities. 4 Mr Paul Sande of Realty Conveyancing Services, is a licensed conveyancer. Ms Benson and Mr Saunders decided to deal with him in connection with their purchase. Ms Benson had dealt with Mr Sande concerning the purchase of a home unit at Currumbin, some years before, and had also dealt with Mr Sande concerning the subsequent sale of that home unit. 5 On 12 October 2001 Mr Sande's firm sent to Ms Benson and Mr Saunders a document which was a pro-forma set of instructions for Mr Sande's firm to act for them in connection with the conveyance, and a fees agreement. The documentation sent also included a separate page, headed "Joint Tenants - Tenants in Common". That page said: "When land is transferred to more than one person, they can be registered on the title as either Joint Tenants or Tenants in Common. JOINT TENANTS If you register as Joint Tenants, then upon the death of one Joint Tenant, the survivor (or survivors) must register the death upon the title. Upon registration of the death, the ownership vests in the surviving Joint Tenant(s). Where no reason exists to the contrary, husband and wife for example, would ordinarily register in this way. Each Joint tenant owns an equal share in the whole of the land. TENANTS IN COMMON Where the above is not desirable, registration can be effected as Tenants in Common. On the death of a Tenant in Common, their executor would apply to the Court for probate of the Will. When this is granted, the estate in the land is transmitted to the executor who then transfers it to the beneficiaries named in the Will. The use of Tenants in Common is most likely to occur between unrelated parties who wish for their interest in the property to pass onto their beneficiaries and not their co-land owner or, in the case of persons contributing different proportions for the purchase of the land, they may wish to hold shares in the same ratio as the amounts contributed to the purchase. We hereby acknowledge that we have read and understood the nature of the above and hereby direct that the Transfer reflect our holding as · JOINT TENANTS · TENANTS IN COMMON IN THE FOLLOWING SHARES · Delete one of the above and specify shares if not equal." 6 On 22 October 2001, Ms Benson and Mr Saunders attended the office of Mr Sande, and spoke to him. They brought with them the documents which they had been sent on 12 October 2001. The letter of instructions to act was signed by both Ms Benson and Mr Saunders, and it was dated 21 October 2001. The document relating to joint tenants or tenants in common bears the signatures of Ms Benson and Mr Saunders. Also, the alternative in it relating to "Tenants in common in the following shares" is crossed out. The document was signed by Ms Benson and Mr Saunders either before they came to see Mr Sande on 22 October, or in the course of their meeting with him. It was handed over to Mr Sande, in its signed form, in the course of that meeting. 7 In the course of that meeting Mr Sande then asked them: "Do you understand the difference between the holdings of joint tenancy or tenancy in common? You have indicated joint tenants which means that on the death of either party the property is automatically transferred to the survivor".

Mr Sande has sworn two affidavits in the proceedings. The first of them on 6 April 2004, and the second on 5 May 2004. In his first affidavit, after giving evidence of this statement which he had made, he went on to say: "I recall that it may have been Susan Kathleen Benson who said words to the effect 'We are happy with that' as Susan Kathleen Benson was the person who was liaising with this office in regards to the conveyance of the property." 8 In his affidavit of 5 May 2004 he said that "To the best of my recollection Susan Kathleen Benson was the person who said the words 'We are happy with that'" in response to the statement he had made. 9 Mr Sande was pressed with the difference between the certainty with which he could give evidence of the response of Ms Benson in his two affidavits. He said that he had put it the way he had in his first affidavit because there was some urgency about signing the affidavit, and at the time of signing the first affidavit he had not gone through the entire file, but by the time of swearing the second affidavit, he had gone through the entire file. In his cross-examination, he said he was now sure that it was Ms Benson who said it. 10 I accept the evidence that Mr Sande gives on this topic. Mr Sande was someone who is completely independent of the parties, he gave his evidence frankly, and he struck me as the sort of man who takes care about what he says. As well, the inherent probabilities are in favour of the evidence he gave. After all, it was Ms Benson who was his prime contact, and it was she who had been given, or had undertaken, the task of being primarily responsible for seeing the conveyance through. Even if he were wrong in his recollection that it was her who said it, it is apparent that the conveyance thereafter proceeded on the basis that the title would be taken as joint tenants. Even if it had been Mr Saunders who had said that they were happy with that arrangement, Ms Benson by her silence would be also giving assent to that proposition. 11 On 30 October 2001 contracts were exchanged for the purchase of the property. The front page of the counterpart signed by the purchasers contains a statement that the property is to be taken as joint tenants. 12 In late October or early November 2001 there was a conversation between Ms Benson and her friend Ms Clark. It was put to me that I should not accept Ms Clark's evidence, and that she was not really an independent witness, because she was in a de facto relationship with a man who was an acquaintance of the defendant, and who had once been the solicitor of the defendant. It was also submitted that I should not accept Ms Clark's evidence because it was improbable - that there had only been a comparatively short period of acquaintance between Ms Clark and Ms Benson, a matter of two and-a-half years or so, and that it was unlikely that the two woman would have the type of full and deep conversations of which Ms Clark gave evidence. I do not regard the fairly tenuous connection that she has, through her partner, with the defendant as anything which causes concern about her independence. Neither do I find it in the slightest improbable that these women should have had full and deep conversations about the matters that were important in their lives. 13 Ms Clark gives evidence of a conversation, at a time before Ms Benson and Mr Saunders had purchased the property, when they were still looking at properties, where Ms Benson said: "Shane and I have decided to buy the property in Bilambil in joint names and I'll put in the cash from the sale of my home unit at Currumbin while Shane will be responsible for meeting the mortgage finance repayments from his own resources."

Ms Benson also said "Yes, Shane will be responsible to meet all other expenses with respect to the Bilambil property". 14 Ms Clark gives evidence of another conversation, which she cannot place precisely in time, to the following effect: "I say in regards to paragraph 64 of my affidavit sworn on 8 June 2004 that Susie [Benson] said to me words to the effect of, BENSON: 'I want the property to be in joint names as I can trust Shane to meet all of the payments for the property'. CLARK: 'Joint names?' BENSON: 'Yes, Shane has a dangerous job and he might die before I do, given that he is a fireman.' CLARK: 'Yes, I suppose that is a possibility.' BENSON: 'If Shane dies I don't want to have to take up full time employment in order to meet repayments on a mortgage. I'd much rather stay part time.' CLARK: 'Ok'. BENSON: 'If Shane should suddenly die then the property will be transferred automatically to me and if I did, then the property will go automatically to Shane.' CLARK 'Yes, sounds like you've thought it through.' BENSON: 'Yes, I'm more than happy with that arrangement of joint names because I know if anything happens to Shane then his superannuation which is fairly substantial will pay out the mortgage and I'll be able to continue working part time and not have to worry about mortgage repayments. This gives me the financial security that I really want and that's why joint tenancy is the best way to go.' " 15 There is a further conversation, again not well placed in time, to which Ms Clark deposes as follows: "I refer to paragraph 65 of my affidavit and recall Susie saying words to the effect of- BENSON: 'I'm happy to put Bilambil in joint names with Shane and I know that means the property will go automatically to Shane if I die because I've done enough for Donna and all her financial problems.' CLARK: 'That makes sense.' BENSON: 'I've always been there for Donna, now I want to be there for Shane. This house is for Shane and I, anything I've got left I want to spend on Shane and I enjoying ourselves. Donna will be alright.' " 16 I see no reason not to accept this evidence. It provides evidence, which I regard as independent, that it was the intention of Ms Benson that if she died the property would go automatically to the defendant. 17 There is also evidence from the defendant of conversations with Ms Benson on the topic of the beneficial interests in the house. He gives evidence of a conversation, at the time they attended the offices of Realty Conveyancing Services to sign documents, where Ms Benson said to him, "I have made this as a joint tenancy because if I die I want you to have this house." 18 Mr Saunders gave evidence, in his affidavit, that he attended Realty Conveyancing Services on only one occasion to sign documents. In cross-examination, he accepted that he had attended Realty Conveyancing Services on two occasions, but said that only one of those occasions was one when he went there to sign documents. It was submitted to me that his admission of having attended Realty Conveyancing Services twice showed an inconsistency with his affidavit evidence. I do not accept that there is any inconsistency. His own explanation in cross-examination, about how he attended there twice but only once to sign documents, reconciles any apparent discrepancy there might be. 19 There was other evidence from Mr Saunders, to the effect that he and Ms Benson were planning a life together. There was discussion between them about how Mr Saunders' will ought be amended so that he used some of his superannuation to cover the debt on the house. 20 Ms Benson had two children, Donna and John, from a marriage which had ended with her husband's death. She had made a will in 1993 which left all her estate to one of those children, John. There was evidence of Donna having been bankrupt, which may account for her exclusion from the will. 21 Ms Benson's assets at the time of death included: realty in Victoria which was valued, for the purpose of a grant of probate in Victoria, at $229,000; personalty in Victoria which was valued for that purpose at a little over $10,000; and personalty outside Victoria valued at a little over $58,000. The most significant item of that personalty was, at the time of her death, a motor car, which had been purchased only very recently before her death. 22 There is evidence from Mr Saunders of a conversation which he had with Ms Benson in early January 2002 when she said to him, "The estate in Victoria is for them [meaning her children] and the majority of it is for Donna, but what is up here is for us." 23 Concerning both the evidence which Mr Saunders gives, and the evidence given by Mr Sande and Ms Clark, I am conscious of the fact that Ms Benson cannot give her side of the story. Always, when a claim is being propounded which involves dealings with deceased people, the Court needs to examine the evidence with particular care, precisely because the deceased cannot give their own side of the story. However, in the present case, I am satisfied that I should accept the evidence of Mr Saunders, Mr Sande and Ms Clark which I have mentioned. 24 There is some evidence which was brought by the plaintiffs, bearing on the topic of Ms Benson's intentions. Mr Little, one of the executors, gave affidavit evidence that the deceased did not discuss with him any of her intentions about ownership of the property at Bilambil Heights. Mr Little also gave evidence that in March of 2002 Ms Benson said to him, "Remember whatever happens I want all my investments protected for Donna and John". In the context where the deceased had various investments apart from her home, and where Mr Little accepted that she had not discussed with him any of her intentions about ownership of the property at Bilambil Heights, this statement is not one which should be read as relating to her intentions concerning the home. 25 There was also evidence from Ms Keevers, a friend of Ms Benson. The nub of that evidence is that, on 11 January 2002, Ms Benson said to her, in response to a question about whether she had got everything sorted out legally, now that they had bought the house together: "I'm in the process of doing that now. I have to do a new will and it is a bit complicated. You see, I put $170,000 cash into the house and Shane borrowed about a hundred thousand dollars and he is going to pay that off. If anything happens to this relationship I know at least I will get my money back plus capital gain on the house."

That statement is one which does not deal with the topic of what is to happen if one or other of them dies. I do not regard it as providing evidence that the deceased had any intention other than that, if she died, the house was to pass to Mr Saunders by survivorship. 26 On 26 March 2002, the deceased died, quite unexpectedly. 27 I should also mention that there is in existence a transfer of the property to Ms Benson and Mr Saunders, which is signed by them, and which shows the property being transferred to them as joint tenants. 28 The pleading in the present case is one which, on any sensible reading of it, alleges an express trust. It alleges that on or about 30 October 2001 it was agreed between the deceased and the defendant that the purchase price would be provided in certain proportions, and that the property would be held by the deceased and the defendant upon trust as to a 220/270 share for the deceased. There is no skerrick of evidence of there being any such express trust. 29 Notwithstanding the way in which the case had been pleaded, counsel for the defendant came to Court expecting that an argument would be put based on resulting trusts, and the case proceeded accordingly. 30 In Black Uhlans Incorporated v New South Wales Crime Commission & Ors [2002] NSWSC 1060 at para [129] and following I set out the current state of the law concerning resulting trusts. No submissions were made to me that the law was any different to what I had there set out. Broadly, both parties proceeded on the basis, correctly, that there is a presumption of resulting trust arising whenever property is purchased as joint tenants, by people who provide the purchase price in unequal proportions. The presumption of resulting trust does not apply in circumstances where there is a presumption of advancement. However, there is no presumption of advancement between de facto spouses: Calverley v Green (1984) 155 CLR 242 at 269. The question therefore is one of whether the presumption of resulting trust has been rebutted. 31 I am satisfied that it has. The evidence which I have outlined shows clearly that the deceased had an intention that the property would, in the event of her death, pass "automatically" to the defendant. 32 The relevant time for that intention to exist is the time of purchase of the property: Charles Marshall Proprietary Limited and Others v Grimsley and Another (1956) 95 CLR 353, at 365. Evidence of Ms Benson's intention at that time comes from her signature of the "Joint Tenants - Tenants in Common" document, her discussion with Mr Sande, her statement to the defendant at the time they attended the offices of Realty Conveyancing Services to sign documents, and her statement to Ms Clark at the time they were still looking at properties. The other statements which she made to Ms Clark, which are quite explicit about her intention, are not well placed in time. However, given that Ms Benson died only a matter of months after contracts were exchanged, they provide, it seems to me, retrospectant evidence of her intention at the time of acquiring the property, even if they are statements which were made after the contracts were signed. 33 There is no basis for the Court declaring that a resulting trust exists. 34 Counsel for the plaintiff also sought to put the case on the basis of a constructive trust. There had been nothing like a pleading of a constructive trust. I adopted the procedure of inviting counsel for the plaintiff to put submissions about what he would say concerning constructive trust, if the allegation of constructive trust were to be permitted. I did that with a view to counsel for the defendant then being in a position to say whether the raising of the particular argument which was put caused him any prejudice. 35 The way in which the argument was put was by referring me to the decisions of the High Court in Baumgartner v Baumgartner (1987) 164 CLR 137, and Muschinski v Dodds (1985) 160 CLR 583, together with certain other cases which are cited within those judgments. The nub of the submission was that, given the circumstances, which were common ground, that the deceased had provided $170,000 towards the purchase price, which was significantly more than had been provided by the defendant, it would be unconscionable for the defendant to take the benefit of her larger contribution. 36 I do not accept that that is the appropriate conclusion to come to in accordance with the principles laid down in those cases. 37 In Baumgartner, at 147-148, the majority (Mason CJ, Wilson and Deane JJ) explained the decision in Muschinski v Dodds saying: "Deane J (with whom Mason J agreed) reached this result by applying the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them". 38 They quoted, at 148, from the judgment of Deane J in Muschinski v Dodds: "… the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so." (citations omitted) 39 The findings which I have made concerning the resulting trust case demonstrate that it was the intention of the deceased that, in the event of her death, the defendant should have the benefit of the property. When what was to happen to the property if she died is something which she considered, and when she formed, and expressed, her intention on it, there is nothing unconscionable in her intention being carried out. 40 It should be borne in mind that the intention is one which she formed at a time when, though she had had some sickness in the past, she had no reason to believe that she would die soon. Mr Saunders' occupation, as a fire fighter, was one which caused her some concern about whether he would meet an early death, through the risks inherent in that job. When they were planning a relationship together, placing the property in joint tenancy amounted to each taking the risk of their own early death, and accepting that in such circumstance the other would inherit the totality of the property. There is nothing irrational, or unlikely, or unfair, in that. Indeed, it happens with great regularity with people who live together on close domestic terms. 41 However, the fundamental matter which guides equity in deciding whether there is a constructive trust in this area, is whether the property would come to be enjoyed by a party in circumstances in which it was not specifically intended or specifically provided that the other party should so enjoy it. That equity is simply missing in the present case. Thus, the case on constructive trust, had it been pleaded and fought, is one which would have been bound to fail, for the reasons which I have just given. 42 The result is that the action is dismissed. 43 An application is made by the defendant for indemnity costs. The first basis on which it is made is a document entitled "Offer of Compromise" dated 5 April 2004. It invited the defendant to settle by consenting to a verdict for the defendant, with the plaintiff paying the defendant's costs as agreed or assessed. 44 Since the decision of Rogers CJ Comm D in Tickell v Trefleska Pty Ltd and Another (1990) 25 NSWLR 353 it has been clear that an offer of compromise under the Supreme Court Rules 1970 must be something which really gives up an entitlement which the person making the offer might otherwise have. This so-called "Offer of Compromise" did no such thing. Consequently, it is not an offer of compromise within the meaning of the Supreme Court Rules 1970, and the consequences which flow under the Rules from the serving of an offer of compromise, do not arise concerning it. 45 Another basis on which an application for indemnity costs is made is a letter purporting to be a Calderbank letter dated 5 July 2004. It involved the making of an offer on terms that: "(1) your clients to provide a withdrawal of caveat in registrable form.

(4) our client to make no claim under the undertakings as to damages." 46 I regard this offer as one which, if accepted, would result in a contract which was void for uncertainty. There is no knowing what the deed of settlement which is referred to would involve, and that is a sufficient reason for reaching that conclusion. The application for indemnity costs is dismissed. 47 There is no reason why the defendant, having succeeded, should not have his costs on the ordinary basis. I order the plaintiffs to pay the costs of the defendant of the proceedings. 48 Pursuant to section 74MA Real Property Act 1900, I order the plaintiffs to withdraw caveat number 9157105. 49 The dismissal of this action is without prejudice to the right of the defendant to put on a motion, or such other process as it might be advised, to seek to enforce an undertaking as to damages given by the plaintiffs in connection with the grant of an interlocutory injunction. I grant liberty for any such application to be made. **********

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