Lucas v Lucas

Plaintiff's account

1. The Plaintiff's account of the relevant events was primarily given in an affidavit sworn on 3 April 2017 and a second affidavit of 20 October 2017 made in response to the Defendant's affidavit. The Plaintiff annexed additional documents to affidavits sworn on 15 and 23 March 2018. The following account is based mainly on the contents of the Plaintiff's affidavits.
2. The Plaintiff was born in March 1940 in Greece. He left school in Greece aged 16 and migrated to Australia.
3. The Plaintiff married in 1962 and had four children with his then wife. The Defendant is the second of the four and was born in 1966. The Plaintiff and his wife divorced in 1986. The Plaintiff married Ms Houssos in 2010. He and his wife, Ms Houssos commenced living together on the Property prior to their marriage in about 2005, although there were periods when Ms Houssos lived interstate or overseas for family reasons. The Plaintiff was diagnosed with Parkinson's Disease in 2013.
4. In 2002, the year the Property was acquired, the Plaintiff worked part time as a shop assistant at a Chinese takeaway food store. He had worked there since 1996, apparently being paid in cash. The Plaintiff continued to work at the store until 2015 when he retired at age 75 because of his illness.
5. In 2002, the Plaintiff was living in rental accommodation at Pennant Hills Road, Carlingford. While driving to work one day he noticed that the Property was for sale. The Plaintiff made an offer through the estate agent, Raine & Horne Penrith, to purchase the Property for $174,950. The Plaintiff paid a holding deposit of $3,000 in cash drawn from his account at the National Australia Bank (NAB).
6. The Plaintiff then made inquiries at the Carlingford branch of the NAB about obtaining finance for the purchase. At that stage the Plaintiff had savings amounting to about $39,000. The bank officer told the Plaintiff that at the age of 62 he was too old to obtain finance. The Plaintiff was not aware of such facilities as reverse mortgages or what he described as "seniors' loans".
7. After being refused a loan by NAB, the Plaintiff discussed the matter with the Defendant, with whom he was then on good terms. The following conversation took place: "[Plaintiff]: Glen, I want to buy the house to live in but I can't get a loan. There is a tenant in the property. The banks says I am too old. It won't cost you anything out of your pocket. I will pay for everything. Can you do me a favour and get the loan in your name? [Defendant]: Ok, I can do that but then the title will have to be in my name. Later on down the line, I can transfer it to you in your name. I will change the house over to your name when you can take over the loan, when you can afford it and when the bank accepts you. There won't be any problems changing title into your name. You will just have to pay stamp duty again. Any time you want that, just let me know. It won't cost you any money except for the stamp duty". [Plaintiff]: No problems. I have got savings. I've got about forty thousand that I can pay. If you can get the loan, I will pay for everything. It won't cost you anything. I will pay the rates and the mortgage. I will pay for everything for the house. [Defendant]: I will borrow the rest. I will transfer the title to you when you are in a position to refinance the loan."
8. Thereafter the Plaintiff frequently spoke with the Defendant who confirmed that he would be purchasing the property for the Plaintiff. The Plaintiff's savings were available to pay for the deposit of 10 per cent, the stamp duty, legal expenses and the balance of the purchase price, taking account of moneys to be borrowed by the Defendant.
9. In conversations from time to time, the Plaintiff said to the Defendant words to the following effect: "(a) 'I will attend to payment of all mortgage repayments required to be made to the ANZ Bank in respect of the mortgage taken out by you in your name;' (b) I will attend to payment of all mortgage repayments required to be made to Westpac when the ANZ Bank mortgage is refinanced by you;' (c) 'I am solely responsible to pay council rates and water rates for the property'; (d) 'I will insure the property at my expense'; and (e) 'I will be solely responsible for all expenses for improvements and repairs to the property.'" According to the Plaintiff, the Defendant agreed with these proposals.
10. Shortly after reaching the agreement with the Defendant, the Plaintiff obtained a refund of the holding deposit from the estate agent. The purchase price for the Property was reduced to $172,000, although the Plaintiff did not explain how the reduction came about. The Plaintiff then attended the office of his solicitor, Mr Ewart, who had acted on his behalf since 1979. Mr Ewart organised a pest report and a survey report for which the Plaintiff paid.
11. The Defendant told the Plaintiff that he (the Defendant) had applied to the ANZ Bank at Eastlakes for a loan to cover most of the balance of the purchase price. The Plaintiff made arrangements for the Defendant to sign the contract of sale of the Property. The Plaintiff then took the signed contract and a bank cheque for the deposit of $17,200 to Mr Ewart. The cheque was obtained using funds from the Plaintiff's NAB account.
12. The contracts were exchanged on or about 6 March 2002. The purchase price recorded on the contract was $172,000. The Plaintiff provided to Mr Ewart a cheque for $4,514 from his own moneys to enable stamp duty to be paid.
13. Settlement of the purchase took place on 7 May 2002. At settlement the ANZ provided $136,323 out of the sum of $137,600 borrowed by the Defendant. The Plaintiff paid the balance of the purchase price amounting to $21,723.40 and Mr Ewart's costs of $2,309. Thus the total amount paid by the Plaintiff, including the deposit and stamp duty, was $45,774.40 being 25.59 per cent of the total acquisition costs of $178,821 (inclusive of stamp duty and legal fees).
14. Following settlement of the purchase, the tenants of the Property remained in possession paying $180 per week. The Plaintiff's understanding was that the rent was paid directly to the mortgagee.
15. The Plaintiff occupied the Property from about June 2004. [1] He took up occupation because he could no longer afford his rental accommodation and wanted to live in his own house. Thereafter the Plaintiff made regular monthly payments of between $800 and $1,000 to cover the repayments under the mortgage loan from ANZ. As from 2012, when the Defendant refinanced the loan, the Plaintiff's monthly payments covered the payments due under the Westpac loan. In addition, he paid all outgoings in respect of the Property including council and water rates, insurance premiums and repairs.
16. At various times the Plaintiff caused improvements to be made to the Property. Although he did not retain any receipts for the costs of the works he estimated that he expended $27,550 in total on improvements.
17. In 2010 the Plaintiff and Mrs Houssos attended upon Mr Ewart on a number of occasions for advice concerning the transfer of title to the Property into the Plaintiff's name.
18. In 2013 the Plaintiff asked the Defendant to transfer the title to the Property into the Plaintiff's name and the Defendant said that he would do so. The Plaintiff did not press the matter at the time as he trusted his son, but when the Defendant failed to transfer the title the Plaintiff renewed his request in 2015. The Defendant replied that he would only transfer the title if the Plaintiff paid $100,000, a demand that he later increased to $150,000 and, later still, to $300,000.

Defendant's account

1. The Defendant's first account of events was given in an affidavit sworn on 25 May 2017. At that time the Defendant was not legally represented. Much of the affidavit was rejected because the material was irrelevant to any issues in the proceedings or was otherwise inadmissible. The affidavit did not address directly the Plaintiff's claims as to the conversations that preceded the purchase of the Property.
2. The Defendant supplemented the first affidavit with two relatively short further affidavits sworn, respectively, on 23 and 26 March 2018. Both of these affidavits were sworn after the Defendant obtained legal representation. At the trial Mr Wallis was given leave to adduce additional oral evidence from the Defendant. The following account is based on the Defendant's affidavit evidence, his brief evidence in chief and his responses in cross-examination.
3. In about 2001 the Defendant was looking at properties in the Penrith area with a view to acquiring an investment property. At the time he was on good terms with the Plaintiff who did not show any interest in purchasing a property for himself.
4. The Defendant inspected the Property in early 2002. He accepted that he may have asked the Plaintiff to inspect the Property because he wanted the Plaintiff's feedback. But the Plaintiff never said he wished to acquire an interest in the Property and never asked the Defendant to arrange a mortgage loan in his (the Defendant's) name.
5. The Defendant also accepted that the Plaintiff paid the deposit of $17,200. However this came about because the Defendant asked the Plaintiff to lend him the money. The Plaintiff agreed to do so and the Defendant promised to repay the loan.
6. The Defendant borrowed the funds from ANZ to enable him to complete the purchase of the Property. He never told the Plaintiff that he was applying for a loan. The Defendant said that the Plaintiff could only have obtained information about the loan from documentation that the Defendant stored at the Property.
7. The Defendant paid the balance of the purchase price of $21,723.40 required for settlement. The Defendant said that he had "a vivid recollection of going into [Mr Ewart's] office and actually delivering [the bank cheque]". The Defendant also paid the stamp duty on the contract of sale.
8. The purchase was duly completed with Mr Ewart acting on the Defendant's behalf. At the time of completion the Property was occupied by tenants who were holding over after their lease had expired.
9. The Defendant entered into a new lease with the tenants who occupied the Property until mid-2004. The rent of $800 per month during this period was paid to the agent who met all outgoings and remitted the balance to an account in the name of Ms Calaunan.
10. In about May or June 2004, the Plaintiff told the Defendant that he would have to find somewhere else to live because his place was being redeveloped. The Defendant suggested that the Plaintiff move into the Property which he could do in conjunction with the Defendant's plans to use the Property as a depot for mini-buses required for his business. The Defendant offered to ask the tenants to leave so the Plaintiff could move in.
11. At about this time the following conversation took place: "[Plaintiff]: 'I will take you up on your offer to move into Kingswood if we can agree on the rent'. … [Plaintiff]: 'I prefer to pay a month's rent at a time'. [Defendant]: 'That's fine if it suits you'." The Defendant and the Plaintiff ultimately agreed on a rental of $1,000 per month.
12. The Defendant repeated to the Plaintiff from time to time his promise to repay the loan for the deposit even though the Plaintiff was "never pushing for [the Defendant] to give him the money back". At some stage after the Plaintiff moved into the Property he told the Defendant that the loan did not have to be repaid.

Course of events

1. Before assessing the reliability of the competing accounts given by the Plaintiff and the Defendant, it is convenient to record events about which there is either no dispute or findings that can readily be made in the light of the documentary evidence. A good deal of what follows is derived from the documents in Mr Ewart's file.
2. On 6 February 2002, Raine & Horne Penrith wrote to the Defendant confirming his "intention to purchase the [Property] for $174,950". The letter informed the Defendant that his solicitor, Mr Ewart, had been advised of "the sale". On the same day the agent forwarded to Mr Ewart a sales advice showing the Defendant as the purchaser of the Property for a price of $174,950.
3. On 7 February 2002, Mr Ewart wrote to the Defendant at his Pagewood address thanking him for his instructions. At about the same time Mr Ewart received a draft contract of sale from the vendor's solicitors.
4. On 11 February 2002, Mr Ewart wrote to the Defendant enclosing a copy of the special conditions in the contract. The letter asked for a cheque for $679 to cover the cost of post and building and survey reports. On that day Mr Ewart's firm issued a trust account receipt for $500 for "disbursements". The receipt was issued to "Mr Glen Lucas".
5. On 15 February 2002, Ms Wahhab of The Winner Partnership, an accounting firm, wrote to the Defendant advising him that the firm had applied to ANZ for "your loan". Ms Wahhab had been given an indication that a loan of $140,000 would be approved.
6. Between 19 February 2002 and 1 March 2002, Mr Ewart arranged to obtain survey and building and pest reports in respect of the Property.
7. On 1 March 2002, the agent advised the vendor's solicitors and Mr Ewart by fax that the vendor had agreed to a new sale price of $172,000 subject to exchange occurring on or before 5 March 2002. (The fax actually specified 5 February 2002 as the date for exchange but that was plainly an error.)
8. On 5 March 2002, Mr Ewart forwarded the contract of sale signed by the Defendant to the vendor's solicitors by way of exchange. The letter enclosed a cheque payable to the agent in the sum of $17,200 as the deposit. The vendor's solicitors duly provided the signed counterpart but dated the contract 6 March 2002. The contract misspelt the Defendant's name as "Lucus". The same misspelling occurs in Mr Ewart's correspondence with the Defendant.
9. On 7 March 2002, Raine & Horne Penrith issued a receipt for the deposit of $17,200. The receipt was issued to the Defendant and recorded that the deposit had been paid by cheque. It did not identify the drawer of the cheque.
10. On 13 March 2002, Mr Ewart wrote to The Winner Partnership confirming the exchange of contracts and advising that settlement was to take place on 17 April 2002. The letter requested The Winner Partnership to "prepare the necessary documentation for our client [the Defendant] to complete the purchase".
11. On 14 March 2002, Mr Ewart wrote to the Defendant confirming the exchange of contracts. The letter advised that the cost of the various reports and statutory inquiries was $1,095. The amount required from the Defendant was $595 taking account of the "amount paid by you" of $500.
12. On 20 March 2002, Mr Ewart wrote to the Defendant asking for a cheque in the sum of $4,514 to pay stamp duty. The letter noted that no advice had yet been received as to approval of the bank's finance, which was being arranged through The Winner Partnership.
13. On 25 March 2002, the firm issued a trust account receipt to "Mr G Lucus [sic]" for $4,514 in respect of stamp duty. The Office of State Revenue issued a receipt for the stamp duty on 2 April 2002.
14. On 5 April 2002, Mr Ewart wrote to the Defendant as follows: "we refer to the writer's discussion with your father yesterday and have spoken with your accountant, who has confirmed the circumstance involving the bank approval, yet we have not received the same at this point of time … [We] suggest that you give this matter your urgent attention".
15. On 15 April 2002, Mr Ewart advised the Defendant that settlement had been delayed until 23 April 2002. Settlement did not take place on 23 April 2002 apparently because ANZ had not confirmed that it was ready to proceed. On that day, the vendor's solicitors issued a notice to complete.
16. On 24 April 2002, ANZ offered a "Residential Investment Loan" to the Defendant. The loan was to be for the sum of $137,600 at an initial interest rate of 6.07 per cent per annum. The term of the loan was 25 years. For the first 12 months there was to be monthly payments of interest only. Thereafter there were to be 625 fortnightly payments of principal and interest of $417.53 with a final payment of $255.17. These amounts could change if interest rates changed. On the same day, ANZ advised Mr Ewart that it had approved the loan and would be preparing the mortgage documentation to enable settlement to take place.
17. On 3 May 2002, Mr Ewart wrote to the Defendant confirming that settlement was to be effected on 7 May 2002. The letter advised that the amount payable on settlement was $155,737 of which ANZ was to provide $136,323. The letter requested a bank cheque payable to the vendor in the sum of $21,723.40 being the balance of the amount required on settlement inclusive of the solicitor's costs. The letter enclosed a memorandum of costs indicating a balance due of $2,309.40.
18. Settlement took place on 7 May 2002. The settlement sheet shows that the solicitor's costs were deducted from the amounts provided for settlement of the transaction.
19. It appears that the Defendant was not registered as proprietor of the Property until some months after settlement because of delays on the part of ANZ. However, registration of the Defendant as proprietor subject to the ANZ mortgage finally took place on 1 October 2002.
20. On 10 May 2002, the Defendant signed an Agency Agreement with Raine & Horne Penrith for the management of the Property. Thereafter the tenants paid the rental of $180 per week to the agent who paid outgoings such as rates and repairs from the moneys received. Any surplus was paid at the Defendant's direction to an account in Ms Calaunan's name. The mortgage payments were made from that account.
21. On 19 June 2004, Ms Wahhab of The Winner Partnership prepared a statement to which she added a handwritten note (Winner Statement). The Winner Statement recorded "Rent Received" as $200 per week, amounting to $10,400 per annum. Expenses were said to be $11,480 per annum of which $9,600 was "Interest on Loan". This produced a net loss of $1,080 which was reduced to $810 after allowing for a "tax benefit" of $270. The statement included the following calculation: "about $28/week extra dad needs to pay on top of the $200/week i.e. dad pays Glen $228/week to cover all expenses and interest + repayments on loan" Ms Wahhab's handwritten note was as follows: "I attach my calculations of what your dad needs to pay you to break even. It's $228/wk & you pay the Rates, interest & bldg. Insurance. Call me if need further explanation. Susan" Ms Wahhab presumably chose the figure of $200 per week as the rent received because (as the evidence shows) at some stage prior to March 2004 the rent payable by the tenants was increased from $180 per week to $200 per week. It is not entirely clear why Ms Wahhab calculated interest at $9,600 per annum. In mid-2004 the Defendant had to make fortnightly payments under the mortgage of $417.53 in reduction of both principal and interest. The figure of $9,600 may have represented Ms Wahhab's calculation of the interest component of the mortgage instalments which totalled about $10,840 per annum.
22. On 18 October 2007, the Defendant and Ms Calaunan filed an application in the Local Court at Katoomba for consent orders under the Family Law Act 1975 (Cth). The material filed with the application included a statement of assets for each party. The Defendant's statement disclosed assets amounting to $847,546 but made no reference to the Property.
23. The Plaintiff consulted Mr Ewart on three occasions in March, June and August 2010 concerning the Property. Mr Ewart sent an account for these three attendances on 4 May 2011. In a covering letter Mr Ewart referred to the Plaintiff's "proposal to transfer the Property or [obtain] any valuation in relation to the same".
24. The ANZ mortgage was discharged on 23 December 2011 and at or about the same time a mortgage to Westpac was registered on the title to the Property. The Plaintiff was directed to make the monthly payments into the Westpac account relating to its mortgage (account XXX-XXX-XX-1060).
25. On 19 September 2013 Mr Ewart wrote to the Plaintiff as follows: "We refer to our letter of 4th May 2011 and confirm that we have had a recent discussion with your son Glen in relation to the transfer of the property. We assume that you are not prepared to do anything at this point of time to register the title of the property."
26. On or about February 2016, the Defendant apparently discharged the mortgage to Westpac reducing the debit balance of $87,326.91 in account XXX-XXX-XX-1060 to nil. A little earlier the Defendant had obtained a separate loan from Westpac (account XXX-XXX-XX-9586) but the relationship between that loan and the Property, if any, is not clear. The Plaintiff was directed to make payments into account XXX-XXX-XX-9586 and did so.
27. The Plaintiff sought and received further advice from Mr Ewart on 20 and 22 July 2016 and on 9 August 2016. Despite having acted for the Defendant on the purchase of the Property Mr Ewart drafted an affidavit for the Plaintiff in the expectation of legal proceedings being instituted. Mr Ewart also drafted a caveat for lodgement on the Plaintiff's behalf asserting a beneficial interest in the Property.
28. Mr Ewart belatedly recognised that by acting on the Plaintiff's behalf in relation to his claim to an interest in the Property he was in a position of conflict. On 10 August 2016, Mr Ewart referred the Plaintiff to Wilsons, another firm of solicitors. On the same day Mr Ewart rendered an account to the Plaintiff charging for his attendances including preparation of the draft affidavit and caveat.
29. On 18 August 2016 the Plaintiff's new solicitors lodged a caveat on the title to the Property. The caveat claimed on the Plaintiff's behalf: "sole beneficial entitlement to the land pursuant to verbal agreement between the Caveator and Registered Proprietor in or around 2002 that the Caveator provide the totality of purchase monies and make all manner of mortgage and other repayments in respect of the land on condition that the Registered Proprietor would reconvey title to the Caveator on demand. Caveator has fulfilled all terms of the verbal agreement. Caveator also claims entitlement to declaration of constructive or resulting trust in his favour."
30. The present proceedings were commenced by a statement of claim filed on 5 December 2016.
31. On 29 December 2016, the Defendant requested Mr Ewart to inform him of the dates the Plaintiff contacted Mr Ewart and drew to his attention that there was a dispute in relation to the Property. In his reply of 17 January 2017, Mr Ewart advised of the dates he had seen the Plaintiff and: "confirmed through your father by reason of the perceived conflict [that Mr Ewart] was not able to act in relation to the matter on [the Plaintiff's] behalf".
32. On 1 February 2017, the Plaintiff's new solicitors, Wilsons, wrote to Mr Ewart asking him to preserve his file as it could be required in the proceedings instituted by the Plaintiff.

Witnesses

1. As has been seen, the Plaintiff and the Defendant gave very different accounts of the events leading up to the Defendant's registration as proprietor of the Property and the Plaintiff's subsequent occupation of the Property. The most significant dealings between the parties occurred some fourteen to sixteen years prior to the trial. Many things happened during that period that I think have led to distorted memories or the reconstruction of events at variance with the facts.
2. There is a good deal of documentary evidence but there is no contemporaneous documentation clearly establishing that one version of events is to be preferred to the other. The documentary evidence assists, however, in assessing the reliability of the evidence given by the Plaintiff and the Defendant. There is a case where neither of the competing accounts can be regarded as entirely reliable, although for different reasons.

Mr Ewart

1. Mr Ewart's evidence is important because he acted for the Defendant on the purchase of the Property and his file was in evidence. I therefore start with his evidence.
2. Mr Ewart made serious errors of judgment in giving advice to the Plaintiff in 2010 and 2016 in relation to the Plaintiff's claim to an interest in the Property. As Mr Ewart acknowledged in his evidence, the Plaintiff may have introduced the Defendant to his firm but he acted on behalf of the Defendant in connection with the purchase of the Property.
3. Mr Ewart explained his conduct on the ground that the Plaintiff was not merely a longstanding client but someone with whom he had a personal relationship. Indeed, Mr Ewart was a witness at the Plaintiff's wedding in 2010. Mr Ewart said that he wanted to assist the Plaintiff who was not only ill but found it difficult to communicate. While Mr Ewart's desire to assist is perhaps understandable, he should have realised much earlier than he did that he could not properly advise the Plaintiff in relation to a dispute or possible dispute with the Defendant arising out of the very transaction in which Mr Ewart acted for the Defendant. Moreover, Mr Ewart gave evidence that he had acted for the Defendant in connection with two conveyancing matters after 2002.
4. There was no serious challenge to Mr Ewart's credibility but the matters to which I have referred caused me to scrutinise his evidence carefully. I detected a slight tendency to interpret the incomplete documentation in the file in a manner favourable to the Plaintiff, but I formed the clear view that Mr Ewart gave his evidence honestly and within the limits of his recollection. Although his recollection of events was far from complete I consider his evidence to be generally reliable.

The Plaintiff

1. The Plaintiff was at a disadvantage when giving his evidence. He has a significant illness and suffers from deafness. In addition English is not his first language. The Plaintiff had the assistance of a hearing loop and generally appeared to be able to follow the questions he was asked. At times he appeared to have some difficulty in understanding the questions although this may have been partly a function of the questions not always being as clear as they might have been.
2. I have borne in mind that despite the difficulties confronting the Plaintiff, he was not entirely unfamiliar with business matters or with obtaining legal advice in connection with them. Mr Ewart said that he had acted for the Plaintiff in 19 matters between 1973 and the date of the hearing a number of which involved the sale of take away food businesses.
3. There were some issues on which the Plaintiff's evidence appeared to be quite definite, while on other occasions his responses were uncertain and not easy to follow. I do not draw any unfavourable inference from the lack of clarity of some of the Plaintiff's responses having regard to the disadvantages under which he laboured when giving evidence.
4. Clearly, however, the Plaintiff's evidence was mistaken in certain respects. For example in his first affidavit he said that after settlement of the purchase the tenants stayed on for about six months. He also said that "since settlement" he paid "all manner of outgoings" in respect of the Property including rates, insurance, mortgage payments and repairs. The documentary evidence establishes that the tenants in fact remained in occupation for about two years and that during that period the agent paid all outgoings from the rental other than the mortgage instalments.
5. The Plaintiff also said in his first affidavit that he paid in full Mr Ewart's costs and disbursements for acting on the purchase of the Property. In fact, as the settlement sheet shows, the costs of $2,309.40 were deducted from the settlement moneys, most of which were provided by ANZ. It is possible that the Plaintiff meant only that since he had supplied the balance of funds required for settlement (as he claimed), he had effectively paid the solicitor's account. But on a fair reading his affidavit creates the impression that the Plaintiff paid the solicitor's account separately from his own funds.
6. I do not attribute particular significance to errors of this kind in relation to the Plaintiff's credit. His first affidavit annexed the settlement statement which correctly recorded that the solicitor's account had been paid out of the settlement moneys. And it is not surprising, given the lapse of time, that the Plaintiff did not accurately recall the year in which he took possession of the Property or the period during which the tenants remained in occupation. Nonetheless, the errors highlight the difficulty of accurately recalling events that occurred many years ago.
7. Other inconsistencies in the Plaintiff's evidence are more significant. The Plaintiff stated in his first affidavit that he asked the Defendant to do him a favour by obtaining a loan in the Defendant's own name to enable him (the Plaintiff) to acquire the Property for his home. The Plaintiff's account was that he attended Mr Ewart's office after the critical conversation with the Defendant in order to make arrangements for the purchase in the Defendant's name to proceed.
8. In his second affidavit, the Plaintiff made the following statements: "… it was Mr Ewart who advised me that I was too old to obtain a bank loan in my own name and I accepted his advice. … Mr Ewart advised me that I was too old to get a loan in my name. Thereafter, I discussed this with Glen and Glen agreed to allow the purchase to proceed in his name. … the conversation occurring between Glen and I followed the advice given by Mr Ewart to me that I was too old to obtain a loan in my name. I also took further advice from Mr Ewart regarding title to the Kingswood property being recorded in Glen's name and Mr Ewart advised that I should approach one of my sons to purchase the Kingswood property in his name on my behalf.
9. The Plaintiff's oral evidence did not resolve the inconsistency. In his examination in chief the Plaintiff repeated the claim in his second affidavit that it was Mr Ewart who suggested that the Plaintiff ask one of his children to assist with the purchase: "Q. You went to see him about the purchase of the property at Kingswood? A. Correct. Q. What did you tell him about the purchase of that property; what did you say to him? A. That I found a property and I'm interested to buy and he just says you can't get the finance, then he says you can use one of your kids. Q. Could you say that again slowly? A. You can ask one of your kids to borrow the money for you on behalf. … Q. Did Mr Ewart say something to you about the finance? A. Yeah, he says to get one of your kids to get the finance. Q. Did you talk to Mr Ewart again after seeing the property? A. I did. Q. Did you tell him about what your son was going to do, which son it was that was going to assist you? A. Yes, I did. I told him one of my son is going to help me out with the finance. Q. Who was that? What did you say to Mr Ewart? What did you say? A. I said I asked one of my son and he's going to finance the property on behalf of me." In his cross-examination the Plaintiff repeated the account he gave in his first affidavit that he had not seen Mr Ewart until after the critical conversation with the Defendant had taken place: " WALLIS Q. In paragraph 17 of your affidavit … you give evidence of a conversation that you had with Glen. Can you have a look at that? A. Yes, sir. Q. That was a conversation that you had after you had spoken to the bank? A. Yes, sir. Q. Before you went to see Mr Ewart? A. Yes, that is. Q. That's your evidence, but I want to suggest to you that you didn't have that conversation with Glen? A. I did. … Q. Paragraph 18 you give some further evidence about a number of conversations that you had with Glen? A. Yes, sir. Q. When do you say those conversations took place? A. In xx Parker Street [the Property]. Q. After you saw the bank you had a first conversation with Glen, you say? A. That's right. Q. Then how long was it before you went to see Mr Ewart? A. A few days. Q. When you're talking in the conversations that you had with Glen in paragraph 18 did those conversations take place before you saw Mr Ewart? A. Yes, sir. Q. But it was several time you say? A. Correct."
10. The Plaintiff called Mr Ewart as a witness in his case but his evidence did not assist the Plaintiff on the critical factual disputes. In his evidence in chief Mr Ewart said that his recollection was that he was contacted by the Plaintiff either by telephone or in person and advised that the "[P]roperty was being purchased in the name of his son". However, Mr Ewart was not asked in chief whether the Plaintiff or the Defendant said anything to him about the reason the Defendant was purchasing the Property, in particular whether the Defendant was acquiring the Property for the Plaintiff's benefit. Nor was Mr Ewart asked whether, as the Plaintiff testified, he advised or suggested to the Plaintiff that he should request the Defendant to take out a loan to enable the Plaintiff to purchase or acquire a beneficial interest in the Property. The absence of any evidence from Mr Ewart on these topics in chief suggests that his evidence would not have been helpful to the Plaintiff. [2]
11. Mr Ewart's evidence in cross-examination is difficult to reconcile with the Plaintiff's claim that he and the Defendant agreed that the Defendant would hold the legal title to the Property beneficially for the Plaintiff. At the outset of Mr Ewart's cross-examination the following exchange took place: "Q. Mr Ewart, when you acted on this transaction, you were contacted by Mr Sam Lucas, who was your longstanding client, as you have said? A. Initially, yes. Q. I suggest that what he said to you was, 'My son is buying a property, and he wants you to act as his solicitor'? A. In so many words, yes, it would probably be purchased in his son's name. Q. You make reference to the name of his son, but what I want to suggest to you is that he simply said that his son was buying a property? A. Yes, that would be the case, yes." (Emphasis added.)
12. Mr Ewart accepted that he would have had contact by telephone with the Defendant before the contract was signed and that he would have discussed with the Defendant the vendor's willingness to reduce the purchase price. Mr Ewart also said that he would have discussed with the Defendant the details of the contract and the finance that was to be arranged through The Winner Partnership.
13. Mr Ewart then gave this evidence: "Q. During the course of this transaction, you never felt the need to advise Mr Sam Lucas or Mr Glen Lucas that they ought to get independent advice? A. Advise them about? Q. That either of them ought to consider getting independent legal advice? A. No. Q. Of course, you would have done so if you had any thought that there was any potential conflict of interest? A. Certainly. Q. As a solicitor of longstanding, you would appreciate the need to properly document transactions such as trust transactions? A. Yes."
14. It is true that Mr Ewart was slow to recognise the conflict that arose in 2010 and 2016 when he gave advice to the Plaintiff. But having regard to Mr Ewart's longstanding relationship with the Plaintiff it is highly unlikely that if he had been told or it had been suggested that the Plaintiff was to have a beneficial interest in the Property, he would have continued to act for the Defendant on the purchase without taking some action to protect the Plaintiff's interests.
15. I found two other aspects of the Plaintiff's evidence to be unconvincing. The Plaintiff claimed that while the tenants occupied the Property from 2002 to 2004, he was "topping the money up that was the rent" to meet the mortgage payments due to ANZ. The Plaintiff did not produce any receipts or other documents to support this claim. When asked how he knew the amounts required in any given month he said he "just guessed". Bearing in mind that the Plaintiff was mistaken in his recollection as to the period the tenants remained in possession of the Property after settlement I do not accept the Plaintiff's evidence on this point.
16. The second matter concerns the Plaintiff's affidavit evidence that he spent about $27,550 on improvements to the Property. The Plaintiff acknowledged that he paid cash for any work that was done and did not retain receipts with the exception of a receipt for window coverings. In the circumstances it is very unlikely that the Plaintiff could recall with any degree of precision the improvements he made to the Property and even more unlikely that he could recall the cost of individual items many years later. The Plaintiff admitted, for example, that the amount of $1,200 he recorded as having been paid for Colorbond guttering was a "rough guess". I also think it more likely that the Defendant arranged and paid for improvements to the garage (items that were on the Plaintiff's list), since these related to his use of the Property to store vehicles.
17. I accept that the Plaintiff paid for some improvements to the Property while he was in possession, but I am not satisfied that he carried out all the improvements identified in his affidavit. Nor am I satisfied that his estimates of the costs incurred in making the improvements are accurate.
18. I do not doubt that by the time the Plaintiff gave evidence he believed that the conversations with the Defendant recounted in his first affidavit took place. As will be seen, I also accept that the Plaintiff paid the deposit of $17,200 and the balance of $21,723.40 required on settlement of the purchase. [3] But I have serious doubts as to the Plaintiff's ability to recall accurately the terms of any arrangement or discussions with the Defendant concerning the terms on which the Plaintiff would contribute funds and the Defendant would acquire legal title. I consider that the Plaintiff's evidence on these matters reflects a considerable degree of reconstruction on his part. This does not imply that all his evidence on disputed matters should be rejected but it does create difficulties in establishing his pleaded case.

The Defendant

1. The Defendant's evidence can fairly be described as a mixture of limited concessions and claims that were unconvincing. The Defendant acknowledged, for example, that the Plaintiff provided the funds for the deposit of $17,200 but claimed that the contribution was a loan to him which the Plaintiff subsequently forgave. The Defendant also accepted that the Plaintiff had paid the council rates in respect of the Property from December 2004 until the hearing and that he had also paid the water rates from late 2005 until "right through". When it was suggested that a residential tenant would not normally pay council and water rates the Defendant agreed but said it "was a father son arrangement".
2. On contentious issues the Defendant's evidence was punctuated by long pauses which often created the impression that he was thinking of the ramifications of any answer he might give. The Defendant was also vague on some important matters. For example when asked about the conversation in which the Plaintiff (on the Defendant's account) agreed to lend him the deposit of $17,200, the Defendant said that he had no recollection of the conversation. The Defendant also gave vague answers when asked about the conversations in which the Plaintiff agreed to pay $1,000 per month after entering possession of the Property in June 2004. At one point, albeit in response to a somewhat ambiguous question, the Defendant appeared to acknowledge that he may not have used the word "rental" in those discussions. Shortly thereafter, the Defendant confirmed that the Plaintiff was continuing to pay $1,000 each month but added, unprompted, the self-serving statement that the payments were "consistent with rent". As already noted, when confronted with the significance of the Plaintiff paying council and water rates, the Defendant characterised the agreement as a "father son arrangement".
3. The Defendant's claim that the Plaintiff lent him the deposit of $17,200 and subsequently forgave the debt was particularly unconvincing. I have already observed that the Defendant's evidence about the making of the loan was vague. When offered the opportunity to explain why he needed to borrow money from the Plaintiff when he (the Defendant), was a partner in an apparently successful business, he did not provide a clear answer.
4. The Defendant acknowledged that at the time the Plaintiff was said to have forgiven the loan he (the Defendant) owned two properties (not including the Property itself) and was the partner in a business that was going well. The Defendant had very limited resources and was paying $1,000 per month while living on the Property. Moreover, the Defendant claimed that the Plaintiff missed some payments and the Defendant repeatedly asked him to make his payments on time. The Defendant was again asked to explain why the Plaintiff, in these circumstances, would have forgiven the debt. Again the Defendant did not provide a satisfactory answer.
5. The Defendant was adamant that although he could not produce any receipt or bank statements to show that he had paid the amount of $21,723 required for settlement, he had provided a cheque for that amount. In response to a question concerning the loan of $17,200, the Defendant volunteered that the funds for the amount required on settlement of the purchase of the Property were transferred by Ms Calaunan from the United States. The cross-examination of Ms Calaunan on the third day of the trial included the following passage: "Q. Do you know, for example, that Mr Sam Lucas provided [$]17,200 towards the deposit of that property, to purchase that property? A. I'm actually really not sure if - I mean, it may have been something that Glen and his father had an agreement on, but I'm not sure about that. Q. Did you take steps yourself to arrange for any funds to be provided to Glen for the acquisition of that property? A. No. Q. You didn't take any steps to ask your mother in America for funds? A. No, not for that property. Q. And you didn't ask your mother to wire over funds for the purchase of this property? A. No."
6. Ms Calaunan gave only brief evidence but she impressed me as giving clear and direct answers to questions. I accept her evidence, which directly contradicts that of the Defendant in relation to the source of the sum of $21,723 required to settle the purchase of the Property. While Ms Calaunan may have arranged the transfer of funds for the purchase of another property she did not do so for the purchase of this Property as the Defendant claimed.
7. The Defendant's tax returns lend support to his account that the monthly payment by the Plaintiff had the character of rent. But at the same time they cast doubt on the Defendant's claim that the Plaintiff fell behind in his payments and the Defendant was forced to press him repeatedly for payments. The returns for each of the first three years of the Plaintiff's occupation of the Property record that the Defendant received precisely $12,000 in "rent". The returns therefore lend no support to the Defendant's contention that the Plaintiff regularly failed to make the agreed payments of $1,000 per month.
8. The Defendant gave evidence that the Plaintiff knew nothing about the ANZ loan: "Q. You told your father, 'I'll be making an application to my bank at ANZ Eastlakes for a bank load [sic] to purchase the property'? A. Incorrect. Q. You never told him that you were going to apply for a loan to buy the property? A. Absolutely not. It's - my father had no knowledge whatsoever. He obtained that information from just documentation that I had stored at the property and it's not Eastlakes. It's East Gardens"
9. I found this evidence rather surprising as it is common ground that the Plaintiff and Defendant enjoyed a good relationship at the time. It is also clear that the Plaintiff played a significant role in providing funds for the purchase (at the very least by paying the deposit) and in facilitating the transaction through introducing the Defendant to Mr Ewart. There is no obvious reason why the Defendant or, for that matter, Mr Ewart would not have kept the Plaintiff informed about the progress of the Defendant's loan application.
10. The Defendant's evidence is difficult to reconcile with the contents of the letter of 5 April 2002 from Mr Ewart to the Defendant. That letter refers to a discussion between the Plaintiff and Mr Ewart the previous day in the context of the latter's concern that approval had not been forthcoming for the anticipated bank loan. I infer from the letter that it is very likely that Mr Ewart told the Plaintiff about progress (or lack of it) concerning the Defendant's application for a bank loan. However, the Plaintiff's evidence suggests that he did not know the precise amount ANZ was to provide on settlement.
11. In my view, despite the concessions made by the Defendant, it is necessary to treat his evidence with considerable caution. He was prepared to make some claims either that he knew were incorrect or did not know to be true. That is not to say that none of his evidence can be accepted unless it is independently corroborated or is against his own interests. But in the absence of contemporaneous documentation supporting his evidence on contested issues I hesitate to rely on it.
12. I mention one further matter for the sake of completeness. Mr Reuben placed a good deal of emphasis upon the Defendant's failure to include his interest in the Property in the statement of assets filed in the Local Court at Katoomba in October 2007. Although the Defendant gave more than one explanation for the omission, Ms Calaunan's evidence suggests that she was well aware at the time that the Defendant was the registered proprietor of the Property. Her evidence, which I accept, was that the decision to omit reference to the Property was mutual and, from her point of view, reflected the fact that the Property was mortgaged and the Plaintiff was living there. In view of this evidence I do not draw any inference adverse to the credibility of the Defendant from the omission of the Property from his statement of assets.

Payments

1. The parties were in dispute as to the source or character of the payments required for the purchase of the Property, other than the funds provided by ANZ. The following are my findings on these issues.

The deposit

1. The Defendant accepted that the Plaintiff provided the sum of $17,200 paid as a deposit to the agent. As has been seen, the Defendant claimed that the Plaintiff lent this sum and subsequently forgave the debt. For the reasons I have given, I do not accept the Defendant's evidence to this effect.
2. This conclusion does not affirmatively establish that the Defendant paid the deposit because the parties agreed that the Defendant should hold the Property for the Plaintiff beneficially. That is a separate question.

Disbursements

1. On 11 February 2002, Mr Ewart's firm issued a trust account receipt to the Defendant for $500 in respect of "disbursements". According to Mr Ewart, this amount was required to pay for a report on the Property from Antipest Technology. Mr Ewart's recollection was that at this stage he had not seen the Defendant and that he thought that the Plaintiff had made the payment. But Mr Ewart also said that his usual office procedure was to issue a receipt in the name of the person making the payment, although he qualified that evidence by saying that sometimes the receipt would be in the name of the client rather than the payer.
2. The Plaintiff said he paid the sum of $500 in cash to Mr Ewart's firm. The Plaintiff rejected a suggestion that it was the Defendant who paid for disbursements. The Defendant said that he had a "vivid recollection" that he paid the sum of $500. I have expressed reservation about the Plaintiff's ability to recall events accurately. By the same token the Defendant claimed to have a "vivid recollection" that he paid the balance of the purchase price, a claim I do not accept. [4]
3. In this rather unsatisfactory state of the evidence it is necessary to take into account that the best (and only) contemporaneous record of the payment is the trust account receipt issued in the name of the Defendant. [5] While it is possible that the firm issued the receipt in the name of the client (the Defendant) even though the Plaintiff paid the amount of $500, I consider the receipt to be probative of the fact that the Defendant paid that amount to Mr Ewart's firm. I therefore cannot be satisfied that the Plaintiff paid the sum of $500 to the firm. If it is necessary to make a finding on the balance of probabilities as to the source of the payment I would conclude that the Defendant made the payment.

Stamp duty

1. On 25 March 2002, Mr Ewart's firm issued a receipt to "Mr G Lucus [sic]" for the stamp duty of $4,514. The copy of the trust account ledger in Mr Ewart's file recorded the receipt of $4,514 from "G Lucas". Mr Ewart's account of 3 May 2002 addressed to "Mr G Lucas" identified the "amount paid by you an account of stamp duty [$]4,514.00".
2. As with the payment for disbursements both the Plaintiff and the Defendant claimed to have paid this amount. Neither referred to any documentary evidence in support of their claims, other than the contents of Mr Ewart's file. Once again, the best (and only) contemporaneous evidence as to the source of this payment is the material in Mr Ewart's file. For the reasons already given, in this state of the evidence I cannot be satisfied that the Plaintiff paid the stamp duty. If it is necessary to make a finding on the balance of probabilities I would conclude that the Defendant made the payment.

Balance of the purchase price

1. It is clear that either the Plaintiff or the Defendant provided a bank cheque for $21,732.40 to enable settlement of the purchase to take place, I do not accept the Defendant's evidence that he made the payment. His evidence that Ms Calaunan was the source of the funds was directly contradicted by her. It is true that Mr Ewart wrote to the Defendant requesting a cheque, but it is clear that there was also contact between Mr Ewart and the Plaintiff (as shown by Mr Ewart's letter of 5 April 2002). There is nothing in the correspondence or Mr Ewart's evidence suggesting that the cheque was provided by the Defendant.
2. The Plaintiff was also unable to point to any documentary evidence supporting his claim to have obtained the bank cheque, but on balance I prefer his evidence on this issue to that of the Defendant. The Plaintiff had already paid $17,200 towards the purchase and the uncontradicted evidence indicates that he had sufficient savings to make the payment required to complete the purchase.

Payments to the Defendant

1. The Plaintiff tendered receipts for payments he made while he occupied the Property. Mr Reuben attached a chart to his final written submissions showing the amount and date of each payment and the account into which the payment was made. Mr Wallis did not dispute that the chart correctly summarised the receipts in evidence, although he did not concede that two of the payments on the chart were in respect of the Property. Mr Reuben's position was that the payments recorded on the chart were not necessarily the entirety of the payments made by the Plaintiff because the Plaintiff did not have access to all the bank statements.
2. The chart shows that during the period of 42 months from mid-June 2004 until 31 December 2007, the Plaintiff made payments totalling $38,700. All except three payments were for $1,000 (two were for $800 and one for $1,100). The payments were made more or less on a monthly basis although on several months no payments are recorded and the pattern of payments is not entirely uniform.
3. During the 50 months from 4 February 2008 until 30 April 2012 (apparently the month in which the Defendant refinanced the ANZ loan through Westpac) the chart records that the Plaintiff made 45 payments totalling $46,257.85. [6] Nine of the eleven payments in 2008 were for the sum of $1,100, while the tenth and eleventh were for $1,000. All payments from 16 February 2009 were for $1,000 except for the two disputed payments.
4. According to the chart, the Plaintiff made eight payments during the eight month period from 1 May 2012 until 31 December 2012. These payments were of varying amounts from $700 to $1,000 and totalled $6,498.63.
5. The Defendant's tax returns for the financial years ending 30 June 2003, 2005-2007, 2010 and 2012 were also in evidence. Each return included a "Rental Property Statement" for the Property. This section of the 2004 tax return was also in evidence. The statements for 2003 and 2004, when the Property was rented to third parties, each disclosed a loss ($1,781 and $3,459 respectively) after deduction of expenses such as interest, rates, repairs and agent's fees.
6. The returns for 2005 to 2007 each showed that gross rent of $12,000 had been received and that the Defendant had derived a positive net rent from the Property ($1,967, $1,458 and $1,212 respectively). The only expenses the Defendant claimed as deductions in these years were interest and borrowing expenses, insurance (in 2005 only) and land tax (2006 and 2007). It appears that land tax was payable by the Defendant in 2006 and 2007 because he had purchased another rental property that took his holdings above the land tax threshold. No deductions were claimed in these years for rates, repairs or agent's fees.
7. The return for 2010 showed gross rental from the Property of $7,280 and interest of $7,419, producing a loss of $139. The 2012 return showed gross rental of $11,038, interest of $7,417 and a net rental of $3,620. These returns also did not claim any deductions for rates, repairs or agent's fees.
8. I find that the Plaintiff made payments of $1,000 per month to the Defendant or at his direction during the first three years he occupied the Property. Not all payments were made strictly in accordance with a monthly timetable, but the full amount was paid by the Plaintiff. Thereafter the Plaintiff paid amounts very close to $12,000 per annum, although probably not with the same regularity as in the first three years.

Outgoings

1. As has been noted, it was ultimately not in dispute that the Plaintiff paid council and water rates in respect of the Property from December 2004 (council rates) and late 2005 (water rates). The likelihood is that he paid all rates as they fell due after he occupied the Property in mid-2004.
2. The Plaintiff said that he paid all insurance premiums in respect of the Property. Clearly he did not do so while the Property was rented (2002-2004). The Defendant's tax return for the 2005 year suggests that he and not the Plaintiff paid the insurance premiums in that year. The Plaintiff's affidavit recorded some receipts for subsequent years indicating that he paid insurance premiums in respect of the Property in those years. His evidence that he paid all insurance premiums falling due after 30 June 2005 was not seriously challenged and I accept it.

Summary of findings of primary fact

1. In summary, the following findings have been made on contested issues: (i) The Plaintiff paid the deposit of $17,200 and the balance of the purchase price of $21,723.40. The deposit was not a loan to the Defendant, nor did the Plaintiff tell the Defendant that he did not have to repay the deposit. (ii) The Plaintiff did not pay the sum of $500 towards disbursements or the stamp duty of $4,514. These amounts, on the balance of probabilities, were paid by the Defendant. (iii) Tenants occupied the Property from shortly after settlement until the Plaintiff took up possession in mid-2004. The tenants paid rent at the direction of the Defendant and the Defendant arranged payment of mortgage instalments to ANZ. The Plaintiff did not make up any shortfall between the rent and the mortgage instalments during this period. (iv) For the first three years after taking occupation in mid-2004 the Plaintiff paid $1,000 per month to the Defendant, albeit not always precisely on time. Thereafter the Plaintiff made similar payments but probably at less regular intervals. (v) The Plaintiff paid all rates in respect of the Property after taking occupation and paid insurance premiums falling due after 30 June 2015. (vi) The Defendant arranged for payment of the mortgage instalments out of the moneys paid by the Plaintiff. (vii) The Defendant accounted for the payments made by the Plaintiff in the Defendant's tax returns, although it is not entirely clear that all payments were accounted for in the tax return for the 2009-2010 year.

Plaintiff's claim for relief

1. If the Plaintiff is to be granted the relief he seeks he must establish that he and the Defendant entered into an agreement or arrangement whereby the Plaintiff was to be the beneficial owner of the Property on the following terms:

• the Plaintiff could call upon the Defendant to transfer legal title to the Property when the Plaintiff was in a position to pay out or refinance any mortgage debt incurred by the Defendant in acquiring title to the Property;
• the Plaintiff was entitled to occupy the Property provided that he made "all manner of mortgage payments" and attended to payment of all outgoings and utilities so that the Defendant was relieved from meeting any payments; and
• the Defendant would on payment by the Plaintiff of the balance of the mortgage debt transfer legal title to the Property into the name of the Plaintiff.

The affirmative defence

1. The Defendant's affirmative case in opposition to the Plaintiff's claim is that he (the Defendant) acquired the Property as the beneficial owner. On the Defendant's case, the only part played by the Plaintiff in acquiring the Property was to lend the Defendant the sum of $17,200 required for the deposit. The Defendant obtained a mortgage loan in his own name and paid all other amounts required to purchase the Property including stamp duty and the balance of the purchase price.
2. It was common ground that the Plaintiff began to live on the Property in mid-2004. The Defendant's case was that he allowed the Plaintiff to move in because the Plaintiff faced eviction from his rented accommodation. The Plaintiff paid $1,000 per month as rent to the Defendant who received the payments as beneficial owner. The Plaintiff's contention was that he took possession pursuant to the agreement reached with the Defendant prior to the purchase of the Property. On the Plaintiff's case, he paid the sum of $1,000 per month in order to relieve the Defendant of the burden of mortgage instalments in accordance with the agreement. The payments were not on account of rent.
3. I do not accept the Defendant's affirmative case. One essential plank in his case is that the Plaintiff lent him the deposit and later forgave the debt. A second is that the Defendant paid the balance of the purchase price after allowing for ANZ's mortgage out of his own resources. I have not accepted the Defendant's evidence on these matters and have found that the Plaintiff made each of these payments neither of which was a loan to the Defendant. These findings negate the Defendant's case that he acquired the beneficial interest in the Property without the Plaintiff playing any role other than to lend him the deposit and introduce him to Mr Ewart.
4. The fact that the Defendant disclosed payments made by the Plaintiff in the tax returns as rent does not establish the Defendant's case. The reason for the payments being disclosed as rent was not explored in evidence. However, Ms Wahhab's calculations in the Winner Statement suggested that the Plaintiff would have to pay $228 per week (about $11,850 per annum) to "break even". I infer that the figure of $1,000 per month was selected as the "break even" amount covering the mortgage instalments and outgoings. In the event, the Plaintiff paid most if not all the outgoings including rates and insurance premiums. The tax returns are consistent with the Defendant having received advice that the appropriate way of recording the payments was as rent. Whatever the reason for disclosing the payments as rent, the tax returns cannot change the events that occurred two years before the Plaintiff began making the regular payments.

Plaintiff's case

1. As has been noted, the rejection of the Defendant's affirmative case does not mean that the Plaintiff has established the terms of the agreement on which his pleaded case depends. There are a number of difficulties in accepting that case.
2. First, for the reasons that have been given I do not consider that the Plaintiff had a clear recollection of any discussions between the Defendant and himself that preceded the acquisition of the property. While the Plaintiff was not consciously attempting to mislead the Court, the serious inconsistencies and errors in his evidence count against accepting his evidence as to the content of the agreement he says was reached with the Defendant in 2002. This is not to say that all his evidence on contested issues is to be rejected but the inconsistencies and errors militate against accepting his evidence that he was to acquire beneficial ownership of the Property on terms entitling him to a transfer of the Property upon payment out or refinancing of the mortgage debt.
3. Secondly, there is no evidence that the Plaintiff told Mr Ewart at any time before 2010 that he and the Defendant had agreed that he would acquire a beneficial interest in the Property and could call for a transfer of title when he was in a position to refinance or pay out the ANZ loan. Having regard to the Plaintiff's longstanding relationship with Mr Ewart and the fact that they were in contact while Mr Ewart was acting on the Defendant's behalf in the transaction, it is highly unlikely that the Plaintiff would not have told Mr Ewart that there was an agreement in place whereby he was to be the beneficial owner of the Property albeit on particular terms agreed with the Defendant. Had he informed Mr Ewart of such an agreement the latter would have taken steps to protect the Plaintiff's interests.
4. Thirdly, I consider it inherently improbable that the Plaintiff and the Defendant would have discussed an arrangement under which the Plaintiff would be entitled to require a transfer of title when he was able to pay out or refinance the ANZ mortgage loan. On the Plaintiff's own account he had been told (by whom is not presently relevant) that he was too old to obtain a mortgage loan. It is difficult to see how the Plaintiff, who accepted that he had no knowledge of such facilities as reverse mortgages, could have realistically thought that his position might improve to such an extent that he would be able to pay out or refinance the mortgage. The Plaintiff did pay the agreed sum of $1,000 per month to the Defendant after he took possession of the Property in mid-2004. But this does not demonstrate that in 2002 the Plaintiff contemplated that he would be able to pay out or refinance the ANZ loan. There is no evidence that the Plaintiff attempted to refinance the mortgage at any time prior to 2016, by which time the parties were in dispute and the Plaintiff had obtained legal advice.
5. Fourthly, as Mr Wallis pointed out, the agreement on the terms propounded by the Plaintiff were not complied with from the outset. The Plaintiff did not take possession on settlement of the purchase but only after the tenancy was terminated two years later. During the period the tenants occupied the Property, the Plaintiff made no contributions to the mortgage instalments or outgoings. These commitments were met by the Defendant out of the rent paid by the tenants. Moreover the Defendant's tax returns for those years indicate that the rent in each year was insufficient to meet outgoings. The Plaintiff did not make any contributions to the shortfall.
6. Fifthly, I have found that the Plaintiff did not pay the stamp duty on the contract of sale or the $500 required by Mr Ewart's firm for disbursements.
7. It is true that the Plaintiff moved into the Property in mid-2004 and thereafter paid a monthly amount sufficient to cover the mortgage instalments and also paid all rates and insurance premiums. These actions are indicative of some sort of an understanding or arrangement with the Defendant. [7] But I do not accept that they point to an agreement in the terms alleged by the Plaintiff.
8. For these reasons I am unable to accept the Plaintiff's evidence that he and the Defendant agreed that he would become the beneficial owner of the Property upon terms that entitled him to a transfer of the Property if he paid out or refinanced the Defendant's mortgage loan.

What was the arrangement?

1. The evidence establishes that the Plaintiff paid the deposit and the balance of the purchase price with the knowledge and the concurrence of the Defendant. The Plaintiff was aware that the Defendant was to borrow the bulk of the purchase price on the security of a first mortgage and was to obtain registration as the proprietor of the Property subject to the mortgage. The Defendant obviously appreciated that the purchase could not take place without the Plaintiff's financial contribution.
2. The Plaintiff has not made out his pleaded case as to the content of the agreement or arrangement with the Defendant. Even so, the overwhelming probability is that the parties entered into some arrangement or understanding at about the time the Plaintiff made his contributions to the acquisition of the Property. It is hardly likely that the Plaintiff contributed some $40,000 - virtually his entire savings - without reaching an understanding with the Defendant as to how the Plaintiff's contribution would be recognised. I do not assess the Plaintiff as someone naïve or thoughtless to take such a course.
3. Although I have not accepted the Plaintiff's evidence that the parties agreed that he would have beneficial ownership of the Property on specified terms, I have not rejected his evidence in its entirety. The Plaintiff said that he and the Defendant agreed that he could move into the Property on the basis that he would meet the mortgage instalments and all outgoings in respect of the Property. Since this is what ultimately happened I think it likely that the Plaintiff and the Defendant had conversations in which an understanding to this effect was reached. While the Plaintiff was not specific as to when those conversations took place I think conversations to this effect probably occurred in 2002.
4. The conclusion that conversations to this effect took place in 2002 is supported by the Defendant's explanation for the Plaintiff's willingness to pay rates and insurance premiums in addition to the monthly payment of $1,000. The Defendant said that the additional payments reflected the fact that this was not a commercial agreement as such but rather a "father son arrangement". This seems to me an apt description of the arrangement or understanding reached by the parties in 2002, at about the time the Plaintiff made his financial contributions to the acquisition of the Property.
5. I accept the Plaintiff's evidence insofar as he said that he and the Defendant agreed or reached an understanding in 2002 that he could occupy the Property as his home on the basis that it would not cost the Defendant anything. The understanding was that the Plaintiff could choose to occupy the Property as his home and could remain there so long as he attended to the mortgage repayments and accepted responsibility for all outgoings.
6. This is in substance what happened from mid-2004 until the dispute occurred in 2016. The Plaintiff's evidence on this matter is also consistent with the calculations in the Winner Statement which formed the basis for determining the monthly amount ($1,000) the Plaintiff was to pay the Defendant. The sum agreed upon was not the market rental for the Property but an amount sufficient to enable the Defendant to "break even": that is, to ensure that he did not have to pay anything in respect of the Property from his own pocket. The Plaintiff finished up paying not only the "break even" amount (which was to include the cost of at least some outgoings) but all outgoings as well. Nonetheless the arrangements implemented in 2004 reflected the understanding the parties reached in 2002 at the time the Plaintiff made his contributions.
7. One reason for not accepting the Plaintiff's evidence that he was to acquire beneficial ownership of the Property and a right to require a transfer of title is that the Defendant said nothing to Mr Ewart about the alleged agreement. An informal understanding that simply allowed the Plaintiff to move into the Property and remain in possession as long as he paid the mortgage instalments and outgoings is of a different character. The Plaintiff might well have formed the view that, even though he had made a substantial contribution to the acquisition of the Property, there was no need to inform Mr Ewart of such an understanding.

Express trust?

1. The Plaintiff's pleaded case, as Mr Reuben explained in his closing oral submissions, depends on establishing the existence of an express trust. [8] As I have not accepted the Plaintiff's evidence as to the contents of the conversations with the Defendant in 2002 the claim based on an express trust must fail.
2. There is therefore no need to address other difficulties in the path of establishing the existence of an express trust in the terms pleaded. These include Mr Reuben's apparent concession in argument (from which he subsequently sought to withdraw) that if the Plaintiff predeceased the Defendant before the Property was transferred to him, the Defendant would remain or become the beneficial owner.

Resulting trust?

1. As an alternative to the Plaintiff's principal claim for relief the ASOC seeks an order by way of resulting trust for the return to the Plaintiff of moneys expended by him towards the purchase and capital improvement of the Property. Neither party's written submissions addressed in any depth the alternative claim for relief nor did they consider the position if neither the evidence of the Plaintiff nor that of the Defendant was accepted in full. In the course of oral submissions I drew the parties' attention (not for the first time) to the possibility that the Plaintiff's primary case might not be accepted in full and invited them to consider the Plaintiff's alternative claim.
2. Mr Reuben contended that the Plaintiff should be entitled to the benefit of a resulting trust based on his contributions to the purchase price. On Mr Reuben's calculations, the Plaintiff's contributions amounted to $43,937 or 25.5 per cent of the purchase price of $172,000. It followed, so Mr Reuben argued, that the Plaintiff should have the benefit of a resulting trust entitling him to a 25.5 per cent beneficial interest in the Property. Mr Reuben later submitted, without elaboration, that the Plaintiff should also have the benefit of his contributions in paying down the amount due under the mortgage. He did not address the difficulty that the ASOC does not claim, at least in terms, a resulting trust based on the proportion of the purchase price contributed by the Plaintiff.
3. Mr Wallis briefly responded to these contentions. He submitted that even if contrary to the Defendant's evidence, the Plaintiff contributed to the purchase price of the Property, a resulting trust did not arise. Mr Wallis contended that the presumption of advancement applied to any contributions made by the Plaintiff, with the consequence that any contributions made by the Plaintiff should be regarded as for the Defendant's benefit. In any event, so he argued, the only remedy available to the Plaintiff is a charge over the Property in favour of the Plaintiff to secure the repayment to him of his contributions. [9]
4. In the absence of detailed submissions by the parties I propose to deal briefly with the Plaintiff's alternative submissions.
5. In Amit Laundry Pty Ltd v Jain [10] Ward CJ in Eq helpfully summarised the relevant principles as follows: [11] "[161] The relevant presumption was formulated (at 266-267) in Calverley [v Green [12] ] by Deane J in the following terms (see also Gibbs CJ at 246-247 and Mason and Brennan JJ at 258): … where two or more persons advance the purchase price of property in different shares, it is presumed that the person or persons to whom the legal title is transferred holds or hold the property upon resulting trust in favour of those who provided the purchase price in the shares in which they provided it. … [163] The presumption of a resulting trust is … a presumption as to a declaration of trust, premised on a presumed intention to create an equitable (beneficial) interest in the acquired property in someone other than, or in addition to, the person in whom legal title is vested. Once the primary fact giving rise to the presumption is established (for example, that one or more persons has or have provided part or all of the purchase price but the legal title has been vested in another), the burden falls on the party disputing the existence of a resulting trust … to rebut the presumed fact on the balance of probabilities … Where that party fails to rebut the presumption, the court 'upon consideration of all circumstances presumes there was a declaration [of trust] though the plain and direct proof thereof be not extant' … [164] So understood, the presumption of resulting trust is thus the 'starting point of a factual enquiry' about the intention of the party (or parties) who provided the funds for the purchase in question … the presumption operating 'to place the burden of proof [on the party disputing the trust], if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase' …" (Most citations omitted.)
6. The Plaintiff contributed to the purchase price of the Property by paying the deposit and the balance of the purchase price after allowing for the mortgage. Those payments amounted to $38,923.40 or 21.7 per cent of the total cost of the Property ($179,323) including stamp duty, legal costs and disbursements. The payments made by the Plaintiff were neither loans nor gifts. They bore the character of contributions to the purchase price of the Property for the purposes of the law of resulting trusts. [13]
7. The Plaintiff also made regular monthly payments after he occupied the Property. These were effectively disbursed, as the parties intended, to meet the mortgage instalments payable to the mortgagee. The result was that the principal outstanding was reduced over the period the Plaintiff was in occupation and paying the agreed monthly amount of $1,000.
8. The general principle is that a contribution to the purchase price of a property for the purposes of the law of resulting trusts must be made prior to the acquisition of the property. Thus payments in reduction of a mortgage debt are not usually relevant in determining the payer's equitable interest in the property, although it may be relevant on an equitable accounting. [14] If the parties intend to acquire land free from a mortgage, as distinct from acquiring title to land subject to a mortgage, the contributions made to discharge the mortgage can be taken into account in determining the parties' respective beneficial interests. Mortgage payments therefore may be considered when quantifying the parties' interests under a resulting trust of a mortgage free investment. However, this will rarely be the case when the property is acquired as a home for one or both parties to live in. [15]
9. Where a parent provides purchase money for the acquisition of a property in the name of an adult child, the presumption of advancement applies. As Deane and Gummow JJ explained in Nelson v Nelson, [16] the parent-child relationship is one of those relationships from which equity infers that any benefit provided by one party at the cost of the other has been provided by way of "advancement". The consequence is that the equitable estate follows the legal estate and there is no reason to assume that a trust arose.
10. The strength of the so-called presumption of advancement varies from case to case. [17] The presumption can be rebutted by proof that the party contributing to the purchase price did not intend to benefit the party taking the property in his or her own name. Anything relevant to that issue is admissible. [18]
11. In my view, the circumstances of this case are such that the presumption of advancement is relatively weak. The Plaintiff contributed virtually the entirety of his savings to the acquisition of the Property. The Defendant, although not wealthy, had substantial resources by comparison yet contributed very little to the acquisition of the Property other than procuring the mortgage loan. It is certainly not a case of where an adult child is dependent upon a parent or has less commercial experience than the parent.
12. In any event the evidence is sufficient to rebut the presumption. I have found that the Plaintiff contributed to the purchase price intending to obtain a benefit from the acquisition. The benefit included an entitlement to live on the Property subject to payment of a sufficient monthly sum to ensure that the Defendant was relieved of the obligation to pay mortgage instalments and outgoings. His contributions were intended to entitle him to a home.
13. In my opinion, subject to an issue arising from the form of the ASOC, the Plaintiff's contributions to the purchase price of the Property gave rise to a resulting trust in his favour. His contributions amounted to 21.7 per cent of the purchase price of the Property (including stamp duty and legal costs). Accordingly, the Plaintiff is entitled to a declaration that the Defendant holds the legal title on trust for the Plaintiff as to a 21.7 per cent beneficial interest.
14. As the previous paragraph implies, I do not think that the Plaintiff's payments of $1,000 per month should be regarded as contributions for the purposes of quantifying his equitable interest in the Property. This is not a case where the parties intended to acquire a title to land free from a mortgage. The Property could not have been acquired but for the mortgage and there was no obligation on the Plaintiff to ensure that he made payments sufficient to discharge the mortgage.
15. There is also no basis for including in the Plaintiff's contributions the cost of his improvements to the Property. The Plaintiff adduced no evidence indicating the works increased the value of the Property. And I have found that the Plaintiff's evidence as to the cost of the improvements was not reliable.
16. As has been noted, the ASOC seeks an order recognising a resulting trust limited to the return of moneys expended by him. The language used is ambiguous. The more natural reading is that the relief sought is limited to the return of the amounts actually expended. A more generous interpretation would extend the relief claimed to a resulting trust entitling the Plaintiff to a beneficial interest in the Property proportionate to his contribution to the purchase price.
17. Mr Wallis did not submit that the Defendant would suffer unfair prejudice if the more generous interpretation of the ASOC is adopted. The question of whether the Plaintiff's contributions created a resulting trust in his favour was always in issue in the proceedings. So too was the hotly disputed factual question as to the extent of the Plaintiff's contribution to the acquisition of the Property. In these circumstances I consider it is open to grant relief to the Plaintiff in the form of a resulting trust conferring on him a beneficial interest in the Property proportionate to his contributions.

The Plaintiff's possession of the Property

1. The Defendant has not filed a cross-claim and has not sought to terminate the Plaintiff's occupation of the Property. The Plaintiff has failed in his principal claim to be entitled to beneficial ownership of the Property subject to discharging the mortgage. However, I have found that the Plaintiff and Defendant had an understanding that he could remain in occupation of the Property as long as he paid the mortgage instalments and outgoings (or equivalent amounts).
2. The position has been complicated because the Defendant elected to refinance the original ANZ mortgage and then to pay off the replacement Westpac mortgage. However, the understanding between the parties entitles the Plaintiff to remain in occupation of the Property provided he pays $1,000 per month to the Defendant and meets all outgoings in respect of the Property.
3. In the absence of agreement, there appears to be no basis upon which the orders can be made in these proceedings giving effect to what I have found to be the Plaintiff's entitlement to remain in occupation of the Property. Clearly it would be in the parties' interests to avoid further litigation and to agree upon orders resolving the question. In any event, I will give the parties the opportunity to make submissions on any further orders that should be made in the proceedings.

Orders

1. A declaration should be made in the following form:
2. Declare that the Defendant holds his interest as registered proprietor of the fee simple estate in the property at XXX Parker Street, Kingswood, New South Wales, being the land in folio identifier 24/247948 (Property) in trust for the Plaintiff to the extent of a 21.7 per cent beneficial interest in the Property.
3. The following directions should also be made:
4. Direct the parties to file and serve within fourteen days agreed short minutes of any additional orders that should be made in the proceedings.
5. In default of agreement the Plaintiff file and serve within fourteen days short minutes of any additional orders he proposes should be made in the proceedings, together with brief written submissions in support of his proposed orders.
6. The Defendant file and serve within a further seven days short minutes of any additional orders he proposes should be made in the proceedings, together with brief written submissions in support of his proposed orders.
7. My present view is that the Defendant should pay the Plaintiff's costs of the proceedings on the ordinary basis. If either party proposes that any different costs order should be made, the proposed order and brief written submissions in support of it should be included in the matter filed and served in accordance with the above directions.

Endnotes

1. The affidavit said the Plaintiff went into occupation in 2002 but this was clearly wrong and he later corrected the date.
2. Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419 (Handley JA).
3. See at [129] below.
4. See at [129] below.
5. A copy of a page from what appears to be the firm's trust account ledger was in Mr Ewart's file. This seems to record the payment as having been received from "Mr Lucas".
6. This figure includes two of the payments disputed by the Defendant, totalling $2,357.85. The basis for disputing that these payments was that no receipts were provided and that they were for unusual payments.
7. See at [148] below.
8. For a brief discussion of the authorities relating to the requirements for an express trust see Dunphy v Russell [2018] NSWSC 721 at [113]-[116] (Sackville AJA).
9. As occurred in Morris v Morris [1982] 1 NSWLR 61 (McLelland J).
10. [2017] NSWSC 1495 (Amit Laundry).
11. Amit Laundry at [161], [163], [164].
12. (1984) 155 CLR 242; [1984] HCA 81.
13. Amit Laundry at [166] and authorities cited there.
14. Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 at 252 (Gibbs CJ); 257 (Mason and Brennan JJ).
15. Calverley v Green at 263 (Mason and Brennan JJ) distinguishing Bloch v Bloch (1981) 180 CLR 390; [1981] HCA 56.
16. (1995) 184 CLR 538; [1995] HCA 25 at 547. See also at 576 (Dawson J); 585-586 (Toohey J).
17. Amit v Laundry at [258] citing JD Heydon and MJ Leeming, Jacobs Law of Trusts in Australia (LexisNexis 8th ed 2016) at [12-12].
18. Martin v Martin (1959) 110 CLR 297; [1959] HCA 62 at 304-305 (Dixon CJ, McTiernan, Fullager and Windeyer JJ). 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: 28 June 2018