Myers v Clark

Loan facilities

1. I have referred above to the various loan facilities opened in the joint names of the parties and to the subsequent business loan taken out by the defendant in his name only but with a guarantee from the plaintiff. Exhibit E contains an incomplete set of bank statements in relation to various of the accounts. Exhibit 9 contains a more complete set of bank statements in respect of those accounts, as well as bank statements in respect of a "classic account" held solely in the defendant's name. Those bank statements were produced by Westpac, on subpoena issued by the defendant. There were five relevant accounts.
2. First, a Classic Account, held in the defendant's name, the earliest statement for which in evidence being one from December 1999 and the latest being one up to 12 September 2002. From January 2000, the bank statements record loan instalment payments. On the defendant's calculations these total $58,120.59. I would infer that those loan repayments related to the loan for the acquisition of the Londonderry Road Property in about December 1999 (what I have referred to as the original Westpac loan facility).
3. Second, a Westpac Rocket Repay Home Loan Account and a Deposit Account. These seem to have been linked accounts (or at least there are statements on which both account details are set out) and in the names of both the defendant and the plaintiff. These appear to represent the finance arrangements put in place when the construction of the home on the Londonderry Road Property commenced. The first Home Loan statement on this account (for the period from 30 July 2002 to 9 August 2002) shows an opening balance of nil; an initial drawing of loan in the sum of $190,000 on 31 July 2002; and a closing (debit) balance of ($190,000) on 9 August 2002 (Statement number 1 for the period 30 July 2002 to 9 August 2002 - Exhibit E; also in Exhibit 9). For the same period there was a Rocket Deposit Account with an opening balance on 1 August 2002 of $16,166.23 and a closing balance on 9 August 2002 of $13,854.87 (Exhibit E p 1; Exhibit 9). The Home Loan Account statements for this account record a closing balance of nil as at 14 November 2002 and a closing credit balance on the Deposit Account for that day of $6,186.63. The defendant's calculations show that the total repayments on that account were $193,151.32 - however, this introduces the difficulty of loan churn because the final credit payment on that facility appears to be made from the refinancing of that loan by the next loan considered below.
4. Third, the Premium Option Home Loan account was opened (again in the couple's joint names) on about 12 November 2002 (this is referred to in the defendant's aide-memoire submitted with Exhibit 9 as the Westpac Investment Loan Account). (This account was opened, it would seem, just after or at around the time that the couple separated.) Statement No 1 for the Premium Option Home Loan account (for the period 12 November 2002 to 13 May 2003) (Exhibit E from p 2; Exhibit 9) records an opening balance of nil and the initial drawing of loan in the sum of $193,876.07.
5. The defendant said in cross-examination that he could not be certain that this was a "new finance facility for the purchase of a house, for the construction of a house" (T 91.41). Nevertheless, the amounts drawn down on the Premium Option Home Loan facility between February 2003 and June 2003 totalled around $180,000, which is consistent with this facility being the one that was used to fund the construction of the home on the Londonderry Road Property.
6. The account appears to have been closed on 22 October 2007, at which time there was a final loan repayment made of $380,691.88 (that payment, however, being another example of loan churn).
7. Next, there was a First Option Home Loan account opened on 22 October 2007 in the couple's joint names. The opening balance (initial drawing of loan) was in the amount of $490,500 on that day. By 21 April 2011, the balance of the First Option Loan Facility was a negative $898,333.88, further decreasing to a negative figure of $901,409.12 by 26 October 2016. The closing balance as at 22 September 2017 was a balance owing of $414,292.87.
8. Finally, there was a business loan account opened in the defendant's name on 21 August 2015. It was closed on 31 October 2016.
9. It is not disputed that the plaintiff was a party to the necessary applications to subdivide the land and the arrangements with the consultants who project managed the subdivision. She was also jointly liable under the Westpac loan facilities in the joint names of herself and the defendant and she guaranteed the separate business loan in the defendant's name.

Submissions as to the financial contributions by each

1. I have already noted that there is a dispute between the parties as to various aspects of the financial arrangements between them. So, for example, the plaintiff asserts (but the defendant denies) that while the plaintiff lived in the house on the Londonderry Road Property, she paid rectification costs associated with the completion of the construction and all outgoings in respect of the property.
2. I have also noted the plaintiff's further assertion (which the defendant denies) that after she had vacated the house, there was an agreement between the couple that in lieu of any obligation the defendant had to pay child support to the plaintiff, the defendant would pay the whole of the mortgage payments owing in respect to the Londonderry Road Property. (There is also a dispute as to the amount of child support that was in fact paid to the plaintiff over the relevant period.)
3. The plaintiff asserts that the costs of the subdivision were reimbursed from the proceeds of sale of the four subdivided lots. The defendant denies that all subdivision costs were paid from the sales of the subdivided lots. The plaintiff maintains that the amounts advanced by Westpac during the course of the loan facility (at a time prior to commencement of the subdivision) were not related to the subdivision and says that the costs of the subdivision have not been adequately identified.
4. In final submissions, Counsel for the plaintiff handed up a schedule of calculations as to loan withdrawals from 4 February 2009 through to February 2009 (totalling $472,385.19) that it is contended were not for the purposes of the subdivision and interest thereon up to the date of settlement of the subdivided lots in October 2016 (at varying rates, totalling $195,574.68), totalling $667,959.87.
5. The defendant maintains that any "top up loans" in respect of the moneys owing to Westpac were applied for the payment of costs associated with the subdivision, including carrying out works on the Londonderry Road Property required to obtain authority approvals.
6. The defendant has contended (see the letter dated 25 May 2018 from his lawyers - Exhibit 8): first, that $181,123.53 was redrawn on the Premium Option Home Loan (see [62] above) during the period February 2003 to May 2003 representing redraws towards the construction of the house on the Londonderry Road Property; second, that repayments of the business loan in October 2016 in the sum of $395,970.27 related to money from the sale of the subdivided property; third, that repayments to the First Option Home Loan (see [65]) above) during October 2016 in the sum of $487,116.25 related to money from the sale of the subdivided property; and fourth, that the sum of $1,237,399.20 in relation to withdrawals and repayments "represents the changing of loans by opening and closing of loan accounts and increased credit limit" (i.e., the loan churn). The 25 May 2018 letter further advised that: Of the total repayments summarised as $2,752,429.74, they are broken up as follows: a. Subdivided property Settlement No.1 $395,970.27 b. Subdivided property Settlement No.2 $487,116.25 c. Changing loans $1,237,399.20 d. Repayments by the Defendant $631,944.02 e. Total $2,752,429.74
7. The letter asserted that: Your client was a party and previously agreed to all redraws on the various loans. Those redraws were used for joint expenses, most particularly the payment of various development costs. Our client cannot account specifically given the delay in time of your client's request for the various redraws.
8. Pausing here, the assertion that the plaintiff had agreed "to all redraws" on the various loans is not substantiated by the evidence. Indeed, the evidence elicited from the plaintiff in cross-examination was to the effect that she left the management of the mortgage repayments to the defendant. She no doubt was required to sign documents for the opening of the various loan facilities and therefore can be seen to have agreed to the redraws associated with the refinancing of loans (the loan churn) but there is no evidentiary basis for the assertion that she agreed to "all redraws" if, by that, what is meant is the regular drawing down of amounts from the facilities by the defendant.
9. Further, what is apparent from the defendant's own account, through his lawyers, of the loan repayments is that the proceeds referred to in the 25 May 2018 letter as "Subdivided property Settlement No. 2" went to discharge borrowings on the First Option Home Loan, the bulk of that amount being referable not to subdivision costs (which were mainly financed through the business loan - apart from the unsubstantiated sum said to have been paid to Mr Weston, which may well not have related to the subdivision at all - and the unquantified sum paid to Mr Cooper for his preliminary (and seemingly unproductive) efforts in relation to the subdivision).
10. Finally, by way of comment on the financial records, it is the defendant's own position (as communicated through his lawyers and as made apparent through his cross-examination) that he is unable to account specifically for the use made of moneys drawn down from the joint loan facilities. (Therefore, any referral of the matter for an independent audit of the couple's finances would be likely to be unproductive and a waste of money.)
11. Leaving aside the vexed issue of the mortgage repayments, the defendant submits that the evidence establishes that he paid the following amounts over the past 18 years (see [18] of his affidavit sworn 14 April 2018): council rates of about $40,000 (according to the evidence the amounts total $44,679.95 between 10 July 2000 and 20 January 2017); building insurance of about $15,000 (though it is submitted the actual amount is higher than this); and repairs and maintenance of about $30,000 (this last item not conceded by the plaintiff as having been proven) - see the defendant's final submissions at [32].
12. The defendant was prepared to concede (at least for the purpose of the open offer made to the plaintiff in his affidavit) that the current median rent for 3 bedroom properties in Londonderry is $455 per week and for 4 bedroom properties it is $550 per week. Assuming a median rent in 2006 of an equivalent property in Londonderry of $150-$180 per week and that the rental value of the subject property now would be $500 per week, the defendant was prepared to assume a notional occupation fee in the order of $80,000 to $100,000 (against which he maintained there should be offset a contribution by the plaintiff in the order of $482,340) (see his final written submissions [35] - [37]; [39]). Further, for the purposes of the orders to which the defendant was prepared to agree to resolve the claim he was prepared not to press for contribution to the cost of repairs and improvements as he would then enjoy the benefit of those works (see [38] of the final submissions).
13. The defendant's calculations, however, assume mortgage repayments by the defendant of at least $900,000 (attributable to borrowings in relation to the subdivision or any other authorised purpose).

Relevant legal principles - section 66G(1)

1. Section 66G of the Conveyancing Act relevantly provides that: (1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
2. In s 66F(1), "co-ownership" and "co-owner" are defined as follows: "Co-ownership" means ownership whether at law or in equity in possession by two or more persons as joint tenants or as tenants in common; and "co-owner" has a corresponding meaning and includes an incumbrancer of the interest of a joint tenant or tenant in common.
3. Section 66F(2)(a) of the Conveyancing Act defines the "statutory trust for sale": Property held upon the "statutory trust for sale" shall be held upon trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses, and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners[.]
4. The power of the Court to appoint trustees for the sale of co-owned property under s 66G(1) is discretionary (see Ngatoa v Ford (1990) 19 NSWLR 72 at 77 per Needham J). However, it has been recognised that, as a general rule, such an order will be made unless (having regard to settled principles) it would be inequitable to permit such an application. In Tory v Tory [2007] NSWSC 1078 White J, as his Honour then was, summarised the position (at [42]) thus: Whilst an order under s 66G of the Conveyancing Act is discretionary and the Courts have declined to define the matters which are [a] bar to a successful application (Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068), such an order is almost as of right unless on settled principles it would be inequitable to allow the application (Callahan v O'Neill [2002] NSWSC 877 at [8]). An application will be refused, if to make the order would be inconsistent with a proprietary right, or a contractual or fiduciary obligation (Re McNamara and the Conveyancing Act; Ngatoa v Ford (1990) 19 NSWLR 72 at 77; Williams v Legg (1993) 29 NSWLR 687 at 693; Hogan v Baseden (1997) 8 BPR 15,723 at 15,726-15,727). Conventional estoppel may be a ground for refusing an order under the section (Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14,685 at 14,701).
5. Relevantly (having regard to the reference made in submissions as to the defendant's personal circumstances in support of an argument that it is unconscionable for the plaintiff to insist on the appointment of trustees for sale: defendant's opening submissions at [51]) there is no general jurisdiction to refuse to grant an order under s 66G(1) on the basis of hardship or unfairness.
6. That is made clear in Hogan v Baseden [1997] NSWCA 150; 8 BPR 15,723, where Beazley JA (as her Honour then was) (with whom Mason P and Stein JA agreed), observed (at 15,726) that, while the section is a discretionary provision and does not give rise to an absolute entitlement to an order, the circumstances where relief has been refused have been constrained. In that case, the findings by the primary judge (that, though there was a specific agreement between the appellants and the respondent that the appellants would have a half interest in the property, each of the appellants intended, at the time of expenditure upon the property, that the respondent (the 71 year old registered proprietor) would continue to reside in the house in her lifetime and that the appellants would occupy the first level) were said by her Honour not (at least by themselves) to be findings which would give rise to the exercise of discretion under s 66G(1) in favour of the respondent (at 15,727).
7. Mason P (who agreed with Beazley JA) added the following (at 15,723): It would not be a proper exercise of the power to decline relief under s 66G of the Conveyancing Act to refuse the application on grounds of hardship or general unfairness: see Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068; Ngatoa v Ford (1990) 19 NSWLR 72 at 75.
8. That statement has been applied on many subsequent occasions. In Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411, Tobias AJA (with whom Bergin CJ in Eq agreed) said at [36]: … [A]lthough the Court has a discretion whether or not to make an order under the section, the grounds on which it will ordinarily refuse to make one are limited. In particular, there is no general jurisdiction to refuse to grant such an order [under s 66G(1)] on the basis of hardship or unfairness. An example of when the limited discretion to refuse to make an order can be exercised is where such an order would be inconsistent with a proprietary right or a contractual or fiduciary obligation: Grizonic v Suttor [2004] NSWSC 137; 12 BPR 22,797 at [8] per Campbell J.
9. One example of the refusal of relief under s 66G(1) is Ngatoa v Ford, where relief under s 66G(1) was refused in circumstances where there was a contract between the parties which limited their ability to dispose of their interests in the property. However, Needham J did not think it desirable to attempt to define exhaustively the circumstances in which an order may be refused, saying (at 77), that "judicial experience is that such matters should be resolved on a case by case basis".
10. Another example of the refusal of relief (at least for a time) is Capolingua v Da Silva [2016] NSWSC 1212, where the parties were bound by a deed that included provision that "[n]one of the parties shall under any circumstances seek to exercise any rights of sale conferred by Section 66G of the Conveyancing Act" unless (relevantly) the property had been marketed "conscientiously" for a period of one year. Darke J accepted (at [56]) that it was not appropriate, where that requirement had not yet been fulfilled, to make orders under s 66G(1) because to do so would be inconsistent with the deed. His Honour accepted that it would be inequitable to deprive the defendant of the benefit of the relevant clause (at [56]). His Honour considered the preferable course was to adjourn the s 66G(1) application to permit time for the conditions of the clause to be satisfied by the time the matter returned before the Court (at [58]).
11. In the present case, the defendant does not assert the existence of any contractual arrangement that would limit the plaintiff's entitlement to seek orders for the statutory sale of the properties. Rather, reliance is placed by the defendant on what was said in Woodson (Sales) Pty Ltd v Woodson (Aust) Pty Ltd (1996) 7 BPR 97,590 by Santow J (as his Honour then was) (referred to, though not applied, in Jolevski v Jolevska [2010] NSWSC 416) which the defendant says was to the effect that unconscionability may be a discretionary factor affecting whether a s 66G(1) order should be made if the application involves one party in a dominant position taking unconscientious advantage of the vulnerability of the other party, or involves one party asserting or retaining the benefit of relevant property where it would be unconscionable to do so. The defendant also refers to Callahan v O'Neill [2002] NSWSC 877, where Young CJ in Eq, as his Honour then was, recognised at [57] that there was "some room for general unconscionability to be relied on as a defence" to a s 66G(1) application.
12. Woodson (Sales) Pty Ltd v Woodson (Aust) Pty Ltd was a case where certain trade marks were held, in the equal ownership of each of the Wood family and the Carson family respectively, on a constructive trust declared as a result of earlier litigation arising out of a business relationship. The Carson interests sought an order for sale of the whole of the property. Santow J declined to make an order for sale under s 66G(1), explaining (at 31) that (emphasis in original): The Carson interests would derive the benefit of half the sale proceeds attributable to the advantage of selling the whole of the trade marks to a purchaser, rather than selling a partitioned half interest. … The reciprocal detriment suffered by the Wood interests starts with the fact that previously as a half owner of the trade marks they could continue to exploit them with no further payment. Now if the Wood interests are forced to purchase 100 per cent of the trade marks to preserve access, and are successful in doing so, they may have to over-pay to acquire that interest.
13. His Honour considered (without, however, making final orders) that the appropriate order would be make an order for sale under s 66G(1) but to impose a condition on the order requiring the Carson interests first to offer the trade marks to the Wood interests for purchase at a fair market value (at 32).
14. Insofar as reference was made in Woodson (Sales) Pty Ltd v Woodson (Aust) Pty Ltd to the assertion or retention of the benefit of relevant property where it would be unconscionable to do so, the defendant argues that this must be a reference to the principle of unconscionable retention of benefit identified by the High Court in Muschinski v Dodds. (I set out the paragraphs relied on from the High Court's decision in Muschinski v Dodds below at [110].).

Relevant legal principles - Accounting between co-owners of property

1. The defendant submits that, while at common law a co-owner who has improved or repaired the jointly owned property without the assent of the other co-owners has no claim to recover contribution towards the cost of the improvements or repairs (see Leigh v Dickeson (1884) 15 QBD 60 at 64-65 (Brett MR); Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635; [2008] HCA 27 at [80]) unless they have (expressly or impliedly) requested or agreed to the said improvements or repairs (Leigh v Dickeson at 65; Suburban Towing and Equipment Pty Ltd v Suttons Motor Finance Pty Ltd (2008) 74 NSWLR 77; [2008] NSWSC 1346), in equity a claim for contribution may be made in the context of proceedings seeking adjustment as between the co-owners when the co-ownership comes to an end (see Leigh v Dickeson at 65, 67; Brickwood v Young (1904) 2 CLR 387; [1905] HCA 12; Squire v Rogers (1979) 39 FLR 106 at 125; Cardinaels- Hooper v Tierney (1995) 7 BPR 97,566).
2. In Leigh v Dickeson at 67, Cotton LJ said (emphasis added): [I]n a suit for a partition it is usual to have an inquiry as to those expenses of which nothing could be recovered so long as the parties enjoyed their property in common; when it is desired to put an end to that state of things, it is then necessary to consider what has been expended in improvements or repairs: the property held in common has been increased in value by the improvements and repairs; and whether the property is divided or sold by the decree of the Court, one party cannot take the increase in value, without making an allowance for what has been expended in order to obtain that increased value…
3. In Squire v Rogers, the Federal Court affirmed an order made by the Supreme Court of the Northern Territory for the sale of a property jointly owned by the plaintiff and the defendant. The plaintiff had left Australia, and had for many years lived in America; she had had nothing to do with the property during that time; and the defendant had built significant improvements and carried on a business during that time. On her return to Australia (after about 13 years) the plaintiff sought a sale of the property and, at first instance, an order was made for the sale of the property.
4. On appeal to the Federal Court, Deane J noted (at 121) that the defendant, on the hearing of the appeal, had relied on laches and estoppel by conduct to attack the order for sale. His Honour concluded that no factual foundation for either of these defences had been made out but did not exclude the possibility that such a defence would be available in any action by a joint legal owner of property for an order for partition or sale.
5. His Honour explained the circumstances in which a co-owner may be required in equity proceedings to account for the value of expenditure by another on improvements to the property as follows (at 125): As a general rule, capital expenditure upon permanent improvements to land by one joint owner without the authority of his co-owner creates a passive equity which attaches to the land. The joint owner making the improvements is not entitled to bring proceedings for contribution against his co-owner. In circumstances where his co-owner (or a successor in title of his co-owner other than a purchaser for value without notice) would otherwise unfairly benefit under an order in equity (including partition or sale of the property), he is entitled to an allowance for his expenditure on such improvements to the extent to which they result in the present enhancement of the value (or the price on sale) of the land …
6. In Forgeard v Shanahan (1994) 35 NSWLR 206 Meagher JA said (at 223): The allowance [for capital improvements upon sale or partition] is not a reimbursement of the amount expended, but an allowance in respect of the amount by which the value of the property has been increased, not exceeding the amount expended, the "value" to be ascertained at the commencement of the action. contrasting this (at 224) with an allowance for repairs: What is meant by [improvements] is something more than mere repairs and maintenance, for which no allowance can be made…
7. However, in Ryan v Dries [2002] NSWCA 3; 10 BPR 97,948, Hodgson JA said (at [67]) that an allowance should be permitted if the "repairs" increased the value of the property: In my opinion, as a matter of principle and authority, there is no difference in the application of these principles as between an increase in value to property caused by improvements and such an increase caused by ordinary repairs.
8. Other issues may arise as to the liability of the co-owner to pay an occupation fee or to contribute to mortgage repayments made by the other co-owner. As to the former, in Forgeard v Shanahan, Meagher JA first said the following in relation to the common law position (at 223): Turning to the liability of a co-owner in occupation to pay an occupation fee, the position at law is fairly clear. He is not liable unless he excluded his co-owner, in which case he rendered himself liable in ejectment and for mesne profits, or if he constituted himself a bailiff, in which event he would be liable in an action of account, like any other bailiff… but went on to note that: As far as equity is concerned, an occupation fee will be exacted in at least two circumstances: first, in a partition suit (or related litigation): if there has been an exclusion, the tenant in occupation will be charged with an occupation fee (see, eg, Pascoe v Swan (1859) 27 Beav 508; 54 ER 201); this is an example of equity following the law; and secondly, if the owner in occupation claims an allowance in respect of improvements effected by him, equity will permit such an allowance only on terms that he is accountable for an occupation fee - this is an example of he who comes to equity having to do equity…
9. In Ryan v Dries at [12] this was explained as a long established rule, namely that: … One co-owner A in occupation of a property is not liable to pay an occupation fee to the other co-owner B unless A has excluded B from occupation or A is claiming from B an allowance for his expenditure on repairs or improvements to the property (Luke v Luke (1936) 36 SR 310). A different rule could have been devised in an attempt to adjust matters equitably between A and B. But, as Mahoney JA said of claims between co-owners in Forgeard v Shanahan (1994) 35 NSWLR 206 at 220, "[t]he decisions which have been laid down represent ... a practical attempt to accommodate the justice of competing claims of this kind".
10. As to mortgage repayments, in Forgeard v Shanahan, Meagher JA said (at 224): Apart from questions of improvements and occupation fees, which arise from the relationship of co-owners, it will also often happen that co-owners are joint debtors (for example, on a mortgage, or because rates are levied on the property). If one co-owner pays such a debt in full he is entitled to require the other co-owner to contribute a rateable amount; at least that is the prima facie position. In this regard the parties' rights arise from the equitable doctrine of contribution, not from the law of property…
11. His Honour therefore expressed doubt about the conclusion that a co-owner seeking contribution for from a co-owner for mortgage payments should be obliged to pay an occupation fee, saying (at 225): In the case where one party is claiming an allowance for improvements and the other is seeking to charge an occupation fee, both claims can arise in partition actions (and related actions), and only in such actions. Each claim is a potential incident of a partition action. In this context, "no rent if no improvements" makes good sense. The discharging of joint debts stands in a different position. An adjustment occasioned by such a discharge is not necessarily made in a partition action: it could be made in an action for contribution[.]
12. However, it was not necessary to decide that point in Forgeard v Shanahan as there was no cross-appeal in relation to the relevant aspect of the primary judge's decision.
13. The contrary view was expressed in Ryan v Dries, where Hodgson JA expressed the view that there was no distinction between mortgage repayments and improvements in the context of the obligation to pay an occupation fee, saying (at [70]): [I]f the co-owner does rely on equitable principles in making such a claim, in my opinion the co-owner is seeking equity and is required to do equity, no less than if allowance for improvements was being sought.
14. As noted above, s 66F(2)(a) of the Conveyancing Act provides that where property is held upon a statutory trust for sale the trust is subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners. In Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839, Bryson AJ described the statutory trust for sale as follows: The end point of the definition is that the trustees hold net proceeds upon such trust as may be requisite for giving effect to the rights of the co-owners. The rights of the co-owners are legal or equitable interests in land which have been converted into equitable interests in a fund. The rights of the co-owners do not in my opinion include equitable or legal claims for money payments which co-owners have against each other. Claims like those are not interests in land or aspects of ownership. If one co-owner has a mortgage, or a charge of any kind legal or equitable over the interests of another co-owner which is an interest in land, that is to be given effect under the statutory trust for sale. If a co-owner has a legal or equitable claim against another co-owner for debt, for contribution to a shared obligation which has been discharged or any other claim other than an interest in land, the statutory trust does not give effect to it. See Re Fettell (1952) 52 SR (NSW) 221, Whitehead v Whitehead [2002] NSWSC 486, (2003) NSW ConvR 56-045.
15. In Boyd v Thorn [2017] NSWCA 210; 18 BPR 37,101, having referred at [46] to the decision of McLelland J (as his Honour then was) in Re Fettel (1952) 52 SR (NSW) 221 at 228, Macfarlan JA said (at [48]) that when making an order under s 66G(1) to give effect to the statutory trust for sale identified in s 66F(2)(a), the Court's authority is limited to making adjustments to reflect the rights of the co-owners in their capacity as such (giving, as examples, the provision for the payment of an occupation fee by one co-owner to another or the making of an allowance for the value of improvements made by one co-owner).

Restoration of contributions to joint venture parties upon failure of a joint venture

1. Finally, in the context of the reliance placed by the defendant on the principles articulated in Muschinski v Dodds, I note that assessment of the respective parties' contributions to a joint relationship or endeavour can include non-monetary contributions and indirect contributions (say, for example, the responsibility assumed by the plaintiff in the present case for child support in respect of the couple's daughter even after a time when the couple's son had attained his majority). Deane J in Muschinksi v Dodds (at 620-621) referred to circumstances where an assertion of a legal right would be unconscionable in this context: Those circumstances can be more precisely defined by saying that 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 specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit the other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do. (my emphasis)
2. In Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59, the majority (Mason CJ, Wilson and Deane JJ) referred (at 147-148) to the result reached by Deane J in Muschinski v Dodds as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them.
3. The pooling of labour by or on behalf of both parties, in the absence of the pooling of financial resources, may in itself found a claim for relief of the kind considered in Baumgartner and Muschinski v Dodds (Miller v Sutherland (1990) 14 Fam LR 416 at 424 per Cohen J); and contributions to family welfare by way of domestic assistance (such as those made by a homemaker and parent) have also been sufficient in some circumstances (Baumgartner at 155-156 per Gaudron J; Bryson v Bryant (1992) 29 NSWLR 188; Stowe v Stowe (1995) 15 WAR 363). The onus is on the party seeking the intervention of equity and the substantiality of the contribution in question will be a factor in determining the issue of unconscionability.

Submissions by the defendant

1. There is no doubt as to the plaintiff's standing, as co-owner of the properties to bring this application and therefore, since the authorities make clear that there is an entitlement "almost as of right" to an order under s 66G(1), it is convenient first to consider the matters raised by the defendant in opposition to the application.
2. In essence, the defendant's argument is that, from about 2005 or 2006, there was in effect a joint venture between the parties for the subdivision of the Londonderry Road Property with the aim of making a profit: noting (though submitting this would be the case even absent such a concession) the concession by the plaintiff (at T 55.41-56.10) to that effect. He submits that it would be unconscionable (and inconsistent with the duties owed between parties to such a venture) for the plaintiff to seek to appropriate to herself half of the net proceeds of sale of the remaining jointly owned properties on the basis of her legal title as 50% co-owner without making proper allowances to the defendant for his expenditure on outgoings in respect of the properties (including rates charged on the property by the local council and the moneys paid by the defendant to the bank by way of interest and principal on the loans secured on the properties). Reliance is placed on the principles articulated in Muschinski v Dodds and in Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 in this regard.
3. The defendant denies that there was an agreement between the parties that the defendant would pay the mortgage payments in lieu of paying child support (see the plaintiff's evidence at T 11.36-11.37). In this regard, the defendant points to the bank statements which record payment of both mortgage payments and child support at the same time in the period from April to August 2005 (to which the plaintiff was taken in cross-examination - see T 21-22; T 23.28-49). The defendant submits that it should be accepted that not long after the separation the parties' son moved in to live with the defendant and his parents while their daughter lived with the plaintiff (noting that the plaintiff agreed with this in cross examination - see T.13) and noting that most of the major work on the subdivision was done after both children had turned 18.
4. The defendant also denies that there was an agreement (as described by the plaintiff in her evidence at T 11.42-11.48) to the effect that there would be a subdivision and that she would get two properties on Londonderry Road and that "he could use the rest of the properties, including the one with the house on it". Reference is made to the cross-examination of the plaintiff on this issue (T 13.28-16.27). It is submitted that this was at best a conversation (in about 2005 - see T 15.32ff) about possibilities which depended upon finding the money to pay for the project (T 14.45).
5. The defendant argues that the plaintiff paid no money toward the moneys payable on the mortgage secured on the property from at least March 2006 (and perhaps earlier if at all) to October 2016 and points to the plaintiff's acceptance (at T 20.48-49) that her failure to check on the mortgage account was negligence on her part.
6. The defendant points to the plaintiff's evidence (at T 20.10) that (after discovering that the loan had "blown out" to about $900,000, "So really, I had to go basically along for the ride because the only outcome would've been bankruptcy and to lose the whole lot". It is submitted that, in effect, the plaintiff accepted that the parties needed to keep the loan accounts in order (and to keep the bank happy) because the alternative would have been that the couple would have "lost the lot".
7. As to the assertions by the plaintiff that the loan had blown out because of some wrongdoing on the defendant's part, the defendant submits that: these are serious allegations (tantamount to allegations of fraud) that have not been made out in any evidentiary way; if the plaintiff wished to make out a case based on these allegations it was incumbent on her to examine the records available to her as co-mortgagee to see if there was evidence of any such inappropriate or improper dealings; and the evidence from the bank accounts shows that, at least at some time, the defendant was required to make payments each month on the mortgage account which exceeded his salary and hence, in order to cover the payments and in order to be able meet his day-to-day living expenses, the defendant made further withdrawals on the loan account.
8. Ultimately, what was submitted by the defendant was that the "problem" as to the moneys that the plaintiff claims were wrongfully withdrawn from the loan facility is restricted in time to the period from February 2009 (or perhaps August 2008), when the bank first required the defendant to make repayments in excess of $6,000 each month, until February 2011. It is submitted that there is a difference of around $300,000 between the total withdrawals from August 2008 to February 2011 (allowing for the re-adjustment of the bank error made in February 2009) and the total repayments to Westpac in that time and that interest on that amount over 5 years 8 months would be in the order of $170,000.
9. Excluding the loan churn, the defendant's recalculation of the payments he made to Westpac from 5 January 2000 to 22 December 2017 "from his own funds" is said to be around $631,944 (originally he put this as being $1,869,343.22 but that included the loan churn). The defendant says that if the "problem" moneys of $470,000 (characterised as repayments by the defendant of excess drawings applied for his own purposes) were to be deducted from that total, that would leave an amount of about $160,000.
10. The defendant says that his total income in the period from 8 June 2005 to 19 September 2017 was $1,180,957, arguing (albeit on the unrevised figures which did not take into account the loan churn) that at least $220,000 of the moneys paid to the bank must have come from moneys borrowed for that purpose and that in most instances it was essential that the defendant borrow or draw down further moneys from the loan account in order to continue to make payments to the bank. The argument in effect was that it was necessary for the defendant to draw down from the joint loan facility to meet loan repayments in order to keep the bank happy and avoid "losing the lot".
11. The difficulty in the defendant's position in this regard is that, even assuming that the plaintiff paid no amounts in relation to the property in the period in which she was in occupation, and even assuming the defendant could establish that the funds paid to Mr Weston related in some way to the subdivision, there is still a large amount of withdrawals from the joint loan facilities that do not appear likely to have been referable to the property or to the then future subdivision (and which were repaid ultimately out of the proceeds of the subdivision).

Submissions for the plaintiff

1. The plaintiff submits that the costs of the subdivision application that was approved and carried out, including all works necessary to obtain authority approvals, were comprised of the amount advanced by Westpac under the business loan and the amounts paid to Reece Projects Pty Ltd on settlement; and that none of these expenses was incurred prior to the time of the subdivision in 2015.
2. The plaintiff submits that the moneys paid to Mr Weston (or his daughter) were, at best, partly in payment of costs of minor building works carried out at the property, which would mainly have been for the benefit of the defendant and his second wife living there rather than adding substantially to the value of the property and were not part of any subdivision costs. The plaintiff maintains that there is no evidence that the defendant discussed with the plaintiff his intention to make these improvements to the property.
3. As to the amounts paid to Reece Projects Pty Ltd, the project manager for the subdivision, in the sum of $158,000, the plaintiff notes that these were deducted from the proceeds of sale of the subdivided lots.
4. The plaintiff submits that there is no evidence to substantiate the defendant's claim that moneys were advanced by the defendant's father for subdivision costs in circumstances where there was a shortfall in the business loan obtained to fund the works (said by the defendant to be in an amount of $30,000 or $40,000) (see affidavit of the defendant sworn 23 November 2017 at [31(d)] and T 76.37ff).
5. The plaintiff also notes that the defendant conceded that he did not independently pay any of the costs for the works carried out at the direction of Reece Projects Pty Ltd but, rather, that he signed off on invoices which the bank subsequently paid. The plaintiff refers in this regard to the following exchange in cross-examination (T 80.29): Q. You didn't independently pay any of those costs, did you? A. I had to sign off on various - various works as they were completed. Q. And- A. Which were invoices sent to me. Q. And then they went to the bank? A. Effectively, yes. Q. And the bank arranged payment? A. Yes. Q. And that was from that final loan that I just referred to? A. I guess so.
6. The plaintiff also notes that the defendant conceded that the amount paid to Reece Projects Pty Ltd on settlement, together with the amount of the business loan that was discharged from the settlement proceeds, was greater than his estimate of the costs of carrying out the subdivision works, but did not concede that that meant that the total costs of the works were paid out of the business loan or settlement proceeds from the sale of the subdivided lots.
7. As to the retrenchment payment that the defendant says he received in 2011 (but which the retrenchment statement (Exhibit 5) indicates would have been received in 2012), the plaintiff points to the concession by the defendant (albeit one said to have been made "reservedly") that those moneys could not have been used for costs of subdivision as they were received well before any subdivision works were undertaken. It is submitted that there was no evidence suggesting that this purported payment was to do with earlier failed subdivision applications or preliminary works (which the plaintiff argues appear to have been paid out of an increase to the mortgage over the property in 2007).
8. As to the mortgage advances (and the argument by the defendant that the plaintiff ought not be held entitled to a one-half interest in the subject properties because the defendant has made the whole of the mortgage payments (and paid rates and outgoings) in respect of the property and it would be unconscionable for her to receive a half interest in the property without accounting to him for the payments he has made), the plaintiff argues that a large part of this proposition turns on whether mortgage payments that were made by the defendant were in respect of expenses properly incurred for the purchase of the land, the construction of the residence on the land and/or the subdivision costs; or, alternatively, were used for "other improper" or personal costs.
9. The plaintiff's position, in response to the proposition that it was reasonable for the defendant to increase drawings on the loan to meet additional loan payments can be seen in her response to the following questions (T 47.43): Q. Ms Myers, you've given evidence about how you say you found that the loan had blown out to $900,000 and how you formed the opinion that at least some of these moneys were drawn down for wrong purposes, correct, you - A. Personal purposes. Q. Right. Would you concede that if the circumstances were such during the period in which David was making these loan repayments that his entire salary and perhaps more was going on meeting the loan repayments - that he may well have had to borrow money to meet other living expenses? Do you accept that? A. Yeah, but what I am saying if he hadn't withdrawn the money, then he wouldn't need to access the extra money to make the payments -- [my emphasis] Q. I see. A. - Because the interest payments would not be that high.
10. The plaintiff points out that the defendant was taken to numerous entries in the bank statements relating to the mortgage between the period 4 February 2009 and 21 February 2011, where the moneys "erroneously advanced to the plaintiff and the defendant by means of the accidental increase in the loan limit had been drawn against" and was only able to explain what the moneys had been used for by reference to the explanation that the moneys were needed because interest and principal were accumulating, and the amounts required to be paid on the loan were more than his salary: referring to the following exchange (T 95.14): Q. What was that debit for. A. Well, I believe because the amount of the loan was made in error and I did not initially correct it, that basically the interest that was accumulating and the amounts required to repay the loan were in - pretty much in excess of my salary, so -- Q. You didn't ever correct it did you? A. No.
11. The plaintiff also points to the following exchange in cross-examination of the defendant at T 100.40: Q. You see what you've done is you've taken a position that you owed the bank the cost of the house and land with a mortgage that was absolutely manageable on your salary. That's correct isn't it? A. That's correct. Q. And you have turned it into a finance facility that you have used partly for your own purposes and partly to repay the payments that you were required to make. A. Possibly. Q. And in doing so you've created an obligation not just for yourself but for the plaintiff. A. Possibly.
12. It is submitted that the defendant offered no reason for the drawing down of these funds, other than that they were for subdivision costs; and/or they were needed to repay the bank the amount due on the moneys that had been erroneously advanced. The plaintiff submits that the explanation provided by the defendant is plainly not credible - in that even allowing for his admission that the correction of the bank error would have immediately removed the source of the alleged difficulty in making repayments that he repeatedly asserted justified making the drawings, the amounts that were drawn down well exceeded the amount required to service the debt, if that was all they were being used for.
13. The plaintiff argues that it cannot be suggested that she has any obligation to bear any part of the sum of almost $400,000 drawn down on the mortgage advanced from 2009 until 2011 or on any interest that accrued in respect of that drawing. Further, it is submitted that the evidence of the defendant on this issue undermines his credibility as a witness, such that on any issue where he and the plaintiff disagree, the evidence of the plaintiff should be believed in the absence of any corroborating evidence for the defendant's position.
14. In summary, the plaintiff argues that, as a joint owner of the subject properties, she has a prima facie right to an order for the appointment of trustees for sale and the division of the proceeds between the parties. Insofar as the defendant has raised, by way of his evidence and submissions put on his behalf, that he ought to be reimbursed out of any sale proceeds for payments that he had made relating to the property (on the basis that it would be unconscionable for the plaintiff to benefit from payments that the defendant had made partly to meet the plaintiff's obligations as co-owner of the property, namely: council rates; mortgage payments; and home insurance), the plaintiff argues as follows.
15. First, in respect of the mortgage payments and outgoings, the plaintiff says that there was an agreement between the plaintiff and the defendant that the defendant would bear at least the mortgage payments as a set off against the defendant's obligations to make child support payments (see above at [25]-[26]). Second, the plaintiff says that the defendant has had the benefit since 2005 of sole occupation of the land (with his wife) to the exclusion of the plaintiff; and that the defendant has not paid any rent or occupation fee to the plaintiff in respect of her half interest in the property.
16. It is submitted that by the conclusion of the evidence, and having regard in particular to the evidence about the mortgage advances and payments, the defendant is not entitled to any adjustment in his favour, since the amount of any reimbursement in respect of expenses that might properly have been incurred, even if the plaintiff's other arguments are not accepted, is dwarfed by the "improper" mortgage advances taken by the defendant and applied not for the purposes of the property or the costs of subdivision, but rather for the personal uses of the defendant.
17. It is also submitted that, on the evidence that is available, the amount of the mortgage at the date the plaintiff vacated the property consisted of the land and construction loans of approximately $360,000, such that the required repayments were easily affordable by the defendant; that the costs of the subdivision of some $500,000 would have been readily payable from the proceeds of sale of subdivided lots, or, at worst, by some short term additional finance from the bank (which was able to be obtained even in the far less positive position that prevailed when the subdivision occurred); and that the additional costs of failed subdivision applications (of which there is limited evidence) could not have been extensive and could also have been met within the overall framework of the subdivision. The plaintiff says that it appears from the evidence that those costs were most likely paid from an increase in the mortgage in 2007, though there is no evidence before the Court that this further advance was used for any such costs. It is submitted that the Court could infer, consistent with the other evidence to which the plaintiff has pointed, that the additional funds obtained were used by the defendant for his own purposes.
18. The plaintiff's argument is that, without the drawings which the defendant "improperly" made, the current position would most likely have been that, after completion of the subdivision, the parties would still have the two lots that they have retained, would have no balance owing on the mortgage secured over the property, and may well have already received some surplus from the proceeds of sale of the subdivided lots.
19. It is also submitted that the plaintiff has, since 2005, been in a position where she has had no capacity to borrow and to purchase a property of her own; she has been jointly obliged to repay debts which were created by the defendant or accepted by him following the bank error; and she was required to extend that obligation to enable the subdivision to proceed (as the only means of ensuring that her personal financial position would not be severely impacted). Reference is made to the following evidence in cross-examination in this regard (T 35.28): A. And then anything after that, I was - well, there were no more loan documents. It was only withdrawals from the loan, which, like stated before, I didn't find out until much later, until it was all gone, basically. Therefore, the interest would also increase on the loan, which puts that predicament where it headed. Q. But you were in favour of the subdivision going ahead when it eventually did, weren't you? A. The subdivision had to go through, or the whole lot would have been lost because the property was over - the value of the property was under the loan amount.
20. The plaintiff submits that there is no credible evidence to establish any unconscionable conduct by the plaintiff and that the only evidence of unconscionability is that involving the defendant in having: by means of taking advantage of the bank error resulting in the bank advancing considerably more than intended to the parties, having drawn down on those moneys and then seeking to be reimbursed for the repayments that have been made using the very moneys "improperly" drawn down; failing immediately to repay the moneys wrongly advanced by the bank so that the plaintiff would not be liable for the increased borrowings; and /or promising the plaintiff that he would arrange for a subdivision of the Londonderry Road Property and transfer to her title to two of six subdivided lots, and then, by drawing down the moneys erroneously made available by the bank, making the realisation of the subdivision on the terms that had been contemplated, impossible.
21. It is submitted that the last aspect of the unconscionable conduct would give rise to a promissory estoppel (the promise being the transfer of the two subdivided lots following the subdivision, and the plaintiff's detriment being her not making application for a property settlement pursuant to the Family Law Act, not seeking an earlier order for the appointment of trustees for sale and agreeing to continue to be a co-borrower and to guarantee the further advance to the defendant by the bank pursuant to the business loan). (No such claim was pleaded.)
22. Thus it is submitted that, rather than providing a basis for the exercise of the discretion not to grant the orders for the appointment of trustees for sale, the authorities suggest that the orders should be accompanied by a declaration that the plaintiff is entitled either: to be reimbursed from the proceeds of sale, following the sale by the appointed trustees, for the moneys (together with interest on those moneys) repaid to the bank for the advances made in error and applied by the defendant for personal or improper purposes; or to be reimbursed from the proceeds of sale following the sale by the appointed trustees, for the shortfall (if any) between her one-half share in the proceeds of sale and the value of two of the subdivided lots that have already been sold ($550,000 less commission and selling expenses).
23. The plaintiff accepts the principles set out earlier in relation to claims for reimbursement for mortgage payments and outgoings (and the principle that where, in an accounting between co-owners, one co-owner seeks contribution in respect of the discharge of a joint debt, then the party claiming contribution must agree to an occupation fee), but argues that this applies only to those mortgage repayments that were paid for proper purposes (i.e., the purchase of the property, the construction of the residence and the subdivision costs) and that in the circumstances an occupation fee would be payable in any event: citing In re Pavlou [1993] 1 WLR 1046, where Millet J (as his Lordship then was) said: I take the law to be to the following effect. First, a court of equity will order an inquiry or payment of occupation rent, not only in the case where the co-owner in occupation has ousted the other, but in any other case in which it is necessary in order to do equity between the parties that an occupation rent should be paid. The fact that there has not been an ouster or forceful exclusion therefore is far from conclusive.
24. The plaintiff submits that she has effectively been excluded from the property, (something the defendant denies), has been required to obtain alternate accommodation and has been left with insufficient borrowing capacity to purchase her own home.

Credit

1. Before turning to the factual disputes, I make the following observations as to the credibility of the witnesses.
2. First, as to the plaintiff, I formed the view that the plaintiff was an honest witness. She gave her evidence in a direct way and she conceded matters which did not form part of her case, such as that she and the defendant had been involved in a joint project in relation to the subdivision. Her account of events was plausible and was broadly consistent with the chronology of events. She did not shy away from the fact that she considered that she should receive more than 50% of the net proceeds of sale (notwithstanding this was put to her in a way that suggested this would not be seen in a favourable light) and as to her position that she should not have to account for various expenses. Her evidence as to the discovery that the loan had "blown out" (and her evident unhappiness at the response of the bank to that discovery) as well as her air of resignation at the position in which she found herself (namely, where she considered she had to continue in order to avoid "losing the lot") was credible (as was the wry observation that her conversations with the defendant generally "don't go very well" (T 40.30)). That she left the finances in relation to the subdivision to her ex-husband and made no or little enquiry over the period as to the finances (whether or not that be evidence of misplaced trust in him) does not make her evidence implausible.
3. Second, as to the defendant, his evidence in the witness box was not always consistent with his affidavit evidence nor with the documentary evidence. I formed the view that his recollection as to what had happened with the parties' finances was in general unreliable. His explanation for the drawing down of large sums of money from the joint loan facility (that it was to top-up the loan repayments) was not persuasive - even if there was a requirement from the bank for principal repayments in such a large amount after March 2009, that still did not explain the difference between the amounts drawn down, on the one hand, and the repayments, on the other. The defendant was unable to offer any concrete explanation as to how moneys had been expended and, in effect, conceded the possibility (I would suggest, likelihood) that moneys drawn down or paid out of the joint loan facility in the period before 2015 did not relate to the subdivision of the property.
4. Given the demonstrated unreliability of his recollection as to amounts paid for the purchase of the property or the construction of the loan and of the outstanding amount on the loan facility as at the time of separation, I approach his evidence as to financial matters in general with caution (and, in instances where his evidence conflicted with the plaintiff's evidence, as no more than assertions unless substantiated by contemporaneous documents). The defendant's explanation that it was "negligence" on his part not to approach the bank as soon as he discovered the error in the joint loan facility after the first payment after February 2009 seemed to me to be reasoning from hindsight. While he may not deliberately have sought to gain advantage from the increased loan facility limit, that is clearly what he did obtain.

Factual Findings

1. As to the factual matters in dispute, the most relevant relate to the agreements that the plaintiff said were reached over the period - first, in relation to the replacement of child support payments with mortgage repayments and, second, as to the arrangements to be put in place for the subdivision.
2. As to the first, while the evidence is consistent with an arrangement of the kind that the plaintiff says was agreed, I bear in mind that the financial records in evidence are not necessarily complete. I am not persuaded, on the balance of probabilities, that there was an actual agreement to that effect as opposed to an informal arrangement of that kind. That said, there does not appear to be any dispute that the plaintiff in fact was responsible for the support of the couple's daughter throughout most of the period after the couple's separation and after the time at which the couple's son had attained his majority (and I so find. Therefore, I find that to some extent there were unequal contributions by each of the parents to the overall support of their two children during their childhood.
3. As to the second, there was clearly an arrangement of some kind between the parties in relation to the subdivision of the property. And it is logical that such an arrangement must have been agreed at least by the time the plaintiff vacated the home on the property and the defendant moved in with his now second wife (if not earlier, such as at or about the time of the couple's separation, when the defendant himself agreed he saw the potential for subdivision). That makes sense because otherwise it is difficult to understand why the plaintiff would have continued to be a party to the joint loan facilities (a new one having been opened in November 2002 not long after their separation - see [62] above - the proceeds of which were used for the construction of the home on the property, but which remained open well after that time). Certainly, by the time the First Option Home Loan account was opened on 22 October 2007 in the couple's joint names (see [65] above) there must have been some understanding or agreement between them as to a proposed future subdivision of the property since otherwise there seems no explanation for the continuation of joint loan arrangements at that time.
4. That is consistent with the plaintiff's evidence that as at 2007 the parties agreed that neither was in a position to buy out the other; and it is consistent with the plaintiff's apparent willingness to allow the defendant to have practical control over the joint loan account.
5. I find that by October 2007 the parties had reached an informal understanding or agreement that they would pursue a proposed subdivision of the property and that funds available under their joint loan facility would be used for that purpose and to fund the mortgage requirements. However, I am not able to find on the balance of probabilities that the terms of the arrangement reached between the parties were as the plaintiff has deposed (though I accept that it would have made sense for such terms to have been agreed). The difficulty is simply that I am faced with opposing accounts and no contemporaneous evidence to support either account.
6. In this regard, I accept the defendant's submission that (even without the plaintiff's concession in this regard) the evidence establishes that the parties engaged in a joint project to achieve a subdivision of the Londonderry Road Property with the aim of making a profit and that in those circumstances it is relevant to consider the contributions made by each to the joint venture in determining whether it is unconscionable for the plaintiff to seek to retain her half interest as registered proprietor without making account for moneys spent by the defendant in relation to the property. Further, I accept that in that context the parties would no doubt have owed obligations of the kind commonly assumed by joint venturers participating in such a joint venture (such as obligations of good faith) even though no formal joint venture agreement was entered into between them. (Of course, I also note that the term joint venture is not a term of art and that if one were to characterise the precise nature of those obligations it may be that they did not go so far as to amount to fiduciary duties owed by each of the parties.)
7. That said, the characterisation of the parties' informal arrangements as a "joint venture" does not in my opinion greatly assist the defendant in the present case, having regard to the conclusions I have reached as to the drawings made by him from the joint loan facility after March 2009 (to which I will come in due course).
8. As to the other factual dispute - the basis of the submission by the plaintiff that she has been effectively excluded from the property (and has been required to obtain alternative accommodation and left with insufficient borrowing capacity to purchase her own home) - the defendant denies that the plaintiff was excluded from the property. I consider that the plaintiff's version of events far more likely to be the accurate one on this aspect of the matter. The plaintiff's evidence that conversations with the defendant generally did not go very well had the ring of truth and the evidence by the defendant that the plaintiff would have been welcome to share the home on the Londonderry Road Property with him and his second wife (T 89.33-89.42) has a distinct air of unreality about it.
9. It is not, however, necessary to make any finding as to whether the plaintiff was literally excluded (as in barred) from the home. It is sufficient to note that I accept that the plaintiff's borrowing ability after at least March 2009, if not before, would no doubt have been severely limited by the increasing borrowings on the joint loan facility (irrespective of the one-sixth interest the plaintiff is said to have held in another property in Londonderry with her siblings). I consider the plaintiff's limited borrowing capacity to be consistent with her evidence (relied upon by the defendant in closing submissions) to the effect that she was left in the position of having to continue with the joint financing arrangements after she discovered the loan had "blown out" or risk losing the lot (see above at [118]).
10. Ultimately the fact that I cannot be satisfied as to either of the agreements as alleged by the plaintiff does not lead me to conclude that it is unconscionable for the plaintiff now to seek an order for the sale of the remaining two subdivided lots without accounting for a half share of the payments the defendant has (or claims to have) made in relation to the property.
11. That is because I accept the plaintiff's characterisation (and I so find) of the bulk of the moneys withdrawn from the joint loan facility in the period from March 2009 to 2011 as being for purposes not related to the subdivision and, to a large extent, not being able to be justified as payments required to meet the shortfall between the defendant's income and the mortgage repayments required in relation to the property. I do not find that there was conscious dishonesty in that regard (and hence the complaint that this is tantamount to an allegation of fraud and should have been pleaded goes nowhere) but I am comfortably persuaded (and I so find) that the defendant regularly drew down on the joint loan facility in the period from March 2009 up to at least 2014 for his personal use.
12. If indeed the explanation be that this was simply negligence on the defendant's part, I nevertheless do not accept that the plaintiff should be financially disadvantaged by having to account to the defendant for payments necessary as a result. Nor do I accept that the plaintiff should bear the burden of the defendant's personal borrowings simply because she left to him the management of the mortgage repayments under the loan facility. As between the two, I am of the view that it is not unconscionable that the defendant should bear the responsibility for his decision to continue to draw down moneys and make use of the increased loan limit for his personal needs or desires when by so doing the level of borrowings (for which the plaintiff was jointly liable) inexorably continued to increase.

Should the plaintiff be required to make any (or any further) contribution to the defendant for the expenses of the subdivision and/or relating to the property?

1. As to the question of contribution as between the parties, on a broad brush notional accounting and leaving aside the question of interest, I would have held that but for the position in relation to the personal drawings of the defendant, the plaintiff should make contribution for half of the council rates paid for the period in which the defendant has paid those rates (at least insofar as the defendant has been able to substantiate the quantum of those payment) - a sum of around $22,339.98; the building insurance payments - a half share of which would be in the order of $7,500 (on the defendant's estimate of those payments); and for the mortgage payments that repaid funds advanced for the purchase of the property, construction of the home and the subdivision. I come back to those shortly.
2. As to the claimed amount spent for repairs and maintenance and minor renovations to the house at the Muscharry Road Property, the defendant has been unable to provide accurate accounts and invoices for this expenditure. He has estimated that he spent around $30,000-$40,000 but in other instances his estimates have been shown to be unreliable (such as his estimate as to the cost of purchase of the property and of the amount outstanding on the loan facility at the time of separation). It is submitted for the defendant that the estimate of $30,000 is conservative (being less than $2,500 per year over the 12 years). For present purposes, however, assuming his estimate here to be accurate, the plaintiff's contribution would be in the order of $15,000.
3. If the sum of around $632,000 is accepted as being the amount of mortgage payments referable to the mortgages securing loans taken out for the purchase of the original land, the construction of a house and the subsequent subdivision of the land, then the plaintiff's half share of those payments would amount to around $316,000.
4. Rounding those figures (i.e., a half share of the claimed amount for repairs and maintenance, the building insurance, the rates and the mortgage payments), the plaintiff's contribution would be in the order of $360,000.
5. I would not include in any such contribution amount any sums in relation to the moneys said to have been paid to Mr Weston (or his daughter) or to Mr Cooper (which sum are either unquantified, in the case of Mr Cooper, or the subject of no more than a varied and unreliable estimate by the defendant, in the case of Mr Weston); nor the moneys said to have been expended by way of financial assistance from his father or out of the retrenchment moneys received by the defendant in 2012. Most of those moneys cannot have been expended in relation to the subdivision itself (such as the moneys to Mr Weston, which the defendant accepted were for general improvements to the property, and the moneys from the retrenchment payment) in any event.
6. Accepting the defendant's assessment of a likely occupation fee (for present purposes) of somewhere between $80,000 to $100,000 for the period of his occupation of the home, and notionally offsetting that against the $360,000, would leave a contribution payable by the plaintiff of, say, $240,000 to $260,000. Even assuming an amount payable by the plaintiff for the 12-18 months that she lived in the property, there would still be a reasonable amount payable by the defendant in respect of his occupation of the property from 2005.
7. More significantly, there is the need for account to be taken of the moneys drawn down by the defendant out of the joint loan facility for purposes that have not been shown to be related to the property (or its subdivision) at all. Those were calculated by the plaintiff at being in the order of $470,000 (or $472,385.19, to be precise). Again leaving aside interest, it is clear that if the defendant were to account to the plaintiff for those moneys then he would be on the debit side of the ledger by a not inconsiderable sum. It is not in my opinion an answer to say that the defendant was forced to draw down sums on the joint loan facility in order to make up a shortfall in his income (from which he was meeting the mortgage repayments). That vicious cycle of borrowings was directly referable to his failure in a timely way to address the bank's error (at least insofar as that error may have led to a requirement by the bank that he make principal repayments in the sum of about $5,000-$6,000 on top of interest repayments after the bank error had resulted in an increase in the amounts available to be drawn down under the facility - noting here that there was no independent evidence of any such requirement). Moreover, it is clear that the defendant drew down more than necessary to "top up" the loan repayments in any event.
8. I also interpose here that, if one were looking to assess the plaintiff's indirect contributions over the years (in the sense considered in Muschinski v Dodds on which the defendant relies), one would take into account that - even if there was an agreement between the parties at an earlier stage to replace child support payments by the defendant with his payment of mortgage payments due on the Londonderry property - there is no evidence that the plaintiff received any child support for the couple's daughter after August 2005; and, in view of the disparity in the ages of the children, as between the two parents she must have borne the brunt of the overall child support over the years.
9. The defendant made various assertions as to the plaintiff's entitlement to an interest in another property (with her siblings) which it is said would have been brought into account as part of the pool of matrimonial assets had there been an application for a property settlement in the Family Court in, say, 2003, following their separation, or 2005, after their divorce. That, however, is beside the point. No such application was made (according to the plaintiff this was ultimately because of an agreement reached in relation to the subdivision) and any interest the plaintiff has with her siblings in another property is not relevant to an account of the contributions as between the couple in relation to the Londonderry Road property.
10. Significant, in my opinion, is that the proceeds of sale of the four subdivided lots in October 2016 (see [52] above) went not only to paying the subdivision costs but also to reducing the significant sum then outstanding on the joint loan facility (against which the defendant had drawn down considerable sums that can only be taken to have been for his personal benefit, as I have found for the reasons already explained above). He has, therefore, already benefited from the subdivision (by means of the discharge of borrowings largely referable to his personal use of funds from the joint loan facility) in circumstances where the plaintiff has received nothing of tangible value from it.
11. In those circumstances, the orders sought by the plaintiff should be made. I am not making any order that the plaintiff account to the defendant for council rates, home insurance or past mortgage payments paid by the defendant over the course of the co-ownership. In the absence of any such order, what will occur is that the balance of the loan secured by the mortgage on the properties will be discharged from the proceeds of sale (with the effect that the parties bear that liability equally). The reality in this regard is that the outstanding balance on the loan at present (approximately $414,000) is not far removed from the level as at the time the plaintiff vacated the property ($360,000).

Final orders

1. As already mentioned (see above at [145]), in closing submissions, Counsel for the plaintiff submitted that the Court should order that the plaintiff be reimbursed out of the proceeds of sale for the whole of the amounts improperly drawn down on the joint loan by the defendant, and the interest accrued on those amounts; or for the shortfall (if any) between her one-half share in the proceeds of sale and the value of two of the subdivided lots that have already been sold (see plaintiff's closing submissions at [49], [56]). An order of the kind just described was not part of the relief sought in the plaintiff's summons and was not pleaded. The plaintiff says, however, that the appropriateness of such an order emerged from the course of the evidence, particularly the defendant's evidence, during the hearing of the matter.
2. I do not propose to make such an order. To be comfortably persuaded of the quantum of any such reimbursement, I would need to have had available to me a more complete account of the parties' financial history than has been made available in the context of this hearing.
3. Finally, I note that, in closing submissions, as adverted to earlier, Counsel for the defendant put the proposition that if, I were minded to make orders for the sale of the properties, then consideration should be given to a stay of the appointment of trustees for, say, three months so that the parties might take the time to sell the properties themselves without the expense of the trustees and suggested that in that time the question of the final accounting might be referred to an accountant pursuant to the referral powers under the Uniform Civil Procedure Rules 2005 (NSW) for the purpose of report to the Court. It was submitted that the parties could either arrange a sale by agreement between them or by orders from the Court that they appoint an independent solicitor to act on the sale. It was further submitted that, pending the accountant's report and any final orders from the Court, the proceeds of sale be held either in an independent solicitor's trust account or in a controlled moneys account pending orders as to the final distribution of those proceeds (see T 157).
4. As to the suggestion that there be a referral to an independent accountant to prepare a report as to expenditure incurred over the past 15 or so years, this is inconsistent with the submission earlier made for the defendant that this would be an additional cost and that such a course should not be adopted. Moreover, as I understand the defendant's evidence (and the submissions made on his behalf) there is no further information the defendant could usefully provide as to the relevant expenditure. (Although in a different context, see Hons v Hons [2010] NSWSC 247 at [9]; [87]-[89] for the proposition that, in exercising discretion whether to order the taking of accounts - there, the filing of accounts by the administrator of an estate - one may take into account the fact, if it be the case, that due to lack of record-keeping the accounting would be unlikely to produce a definitive outcome. Such a difficulty would obviously arise having regard to the evidence in the present case.) In those circumstances I am not minded to refer the matter for an account to be carried out by an independent accountant.
5. As to the submission that the parties should have an opportunity to arrange the sale of the property themselves, there are a number of matters that point against any such course.
6. First, there appears to have been a marked lack of co-operation between the parties to date (and I say this without attributing blame to either side) - the initial correspondence by the plaintiff through her solicitors and offers made by her to resolve the issue seem to have met with no real response until the defendant's open offer made in his affidavit sworn 14 April 2018 (see above at [6]) and his lawyers' 25 May 2018 correspondence to which I have earlier referred; and the plaintiff's evidence (which I have no reason to doubt) is that conversations between the two do not go very well.
7. Second, the evidence is that the defendant is suffering from a terminal medical condition. It is by no means clear what steps he will be able to take in relation to any sale process even assuming his co-operation in the process.
8. Third, it seems to me that the defendant has had ample opportunity to seek to resolve the dispute, whether with or without the need for a sale of the properties and, if there were to be a sale, by an agreed sale process of the kind now put forward. There had been an offer by the plaintiff to settle her claim on the basis that she take the vacant block of land unencumbered, together with a payment of $50,000, and for the defendant to retain the Muscharry Road Property and assume responsibility for the mortgage repayments: see Annexure E to the plaintiff's affidavit sworn 16 May 2017. It was not until the hearing was well advanced that it appears there was any acknowledgement on the defendant's part that the defendant has already had the benefit of substantial draw-downs from the joint loan facility at the expense of the plaintiff (and even then he sought to justify this as due to a shortfall in his income). In the absence of agreement by the plaintiff to an agreed sale process of the kind put forward in closing submissions for the defendant, I see no reason why the ordinary course of a sale by statutory trustees appointed for that purpose should not be followed.
9. Therefore, I will make the orders as sought by the plaintiff. If there is to be any application for special costs orders other than those that have been sought by the plaintiff I will make directions for submissions to be filed in relation thereto and will deal with any such application on the papers.

Orders

1. For the above reasons I order as follows: 1. Order pursuant to s 66G(1) of the Conveyancing Act 1919 (NSW) that George Ayoub and Sashi Veale be appointed as trustees for the sale of the land situated at: 1. Lot 10 Namatjira Avenue, Londonderry in the State of New South Wales being the land comprised in certificate of title 10/1162092 ("Lot 10"); and 2. 1 Muscharry Road, Londonderry in the State of New South Wales being the land comprised in certificate of title 11/1162092 ("Muscharry Road"). 1. Order that the land comprised in Lot 10 and Muscharry Road vest in George Ayoub and Sashi Veale subject to incumbrances affecting the whole of the respective properties but free from incumbrances (if any) affecting any undivided share therein to be held by the said trustees on the statutory trust for sale under Division 6 of Part 4 of the Conveyancing Act 1919 (NSW). 2. Order that the plaintiff's costs be paid out of the proceeds of sale of Lot 10 and/or the proceeds of sale of Muscharry Road and that the defendant bear his own costs of the proceedings. 3. Order that the trustees, George Ayoub and Sashi Veale, be paid for their services as trustees out of the proceeds of sale of Lot 10 and/or the proceeds of sale of Muscharry Road at a rate not to exceed $350.00 per hour.

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: 06 July 2018