1 MASON P: A contested application for leave to appeal in this matter was heard before Hodgson and Ipp JJA on 29 September 2005. At that stage, the respondent was represented by counsel (Mr J Drummond) instructed by solicitors (Hartmann & Associates). Because of the inadequacy of the material provided to the Court, judgment was reserved and directions given to provide further material. Leave to appeal was granted on 6 December 2005. Reasons were provided, indicating that there were substantial grounds available to challenge the result at first instance (see Neilson v Letch [2005] NSWCA 430).
2 The Notice of Appeal was filed on 19 December 2005 and it was served on Hartmann & Associates. On 15 March 2006, Hartmann & Associates informed the appellant's solicitor that their client had not given any further instructions to act in the matter.
3 There were subsequent directions hearings and callovers before the Registrar. The appellant was granted leave to amend her notice of appeal and an amended notice of appeal was served on 17 March 2006.
4 On 20 April 2006 the respondent was directed to file and serve submissions on or before 9 June 2006.
5 On 24 April Hartmann & Associates filed notice of ceasing to act as the respondent's solicitor. The notice, which was served on 26 April, indicated the last known residential address of the respondent, being an address in Thailand. Subsequently, pursuant to directions by the Registrar, letters were forwarded to the respondent at that address enclosing copies of the appellant's submissions and chronology, informing the respondent of the Registrar's directions that he file his submissions by 30 June 2006, and informing the respondent of a change in the appointed hearing date for the appeal.
6 None of these communications elicited any response. Nor were the documents returned.
7 When the matter was called for hearing the respondent did not appear.
8 The orders from which leave to appeal was sought were made on 17 December 2004 by Master McLaughlin in proceedings in which the appellant Ms Neilson had sought an order against the respondent Mr Letch for the sale of the property 14/103 Kirribilli Avenue, Kirribilli and an equal division of the net proceeds. The Kirribilli property had been acquired by the parties as joint tenants and as an investment. The purchase price was $181,000. $150,000 was borrowed from the Commonwealth Bank secured by a joint mortgage.
9 By the time of the Master's judgment, the parties agreed that the property should be sold. Contracts were exchanged on 9 March 2004 at a sale price of $400,000. Settlement was effected on 23 April 2004. The net proceeds of sale ($276,420) were deposited in an interest-bearing controlled moneys account in the names of the parties, to be held until further order of the Court. By the time the Master made his orders, the invested amount was $280,230.
10 The Master declared that the parties were entitled to the proceeds in the amounts of $88,986 for Ms Neilson and $191,245 for Mr Letch; and he left the parties to bear their own costs of the proceedings.
11 The Court was informed that the proceeds of the fund were divided between the parties in accordance with the Master's orders some time before the appeal was launched.
12 The Master made the following factual findings:
22 The parties met in 1982. The de facto relationship between the parties commenced in September 1989. In the meantime, however, on 29 May 1989 the Plaintiff, at the request of the Defendant, who was the proprietor of a liquor shop at that time, lent to the Defendant the sum of $30,000 in order that he might meet certain Liquor Board fees. That sum has never been repaid.
23 In December 1989 the Plaintiff advanced a further sum of $40,757 to the Defendant, which sum was used by him towards the purchase in his sole name of a residential property situate at and known as 9/378 Miller Street, Cammeray.
24 In March 1990 a property at Nelson Bay which had been owned by the Defendant before the commencement of his relationship with the Plaintiff (and, indeed, before he had even met the Plaintiff) was sold.
25 In April 1993, during the course of the de facto relationship between the parties, the Plaintiff through her Solicitors sought payment to her by the Defendant of the sum of [$70,000]. That sum was not paid to her.
26 In September 1993 the Kirribilli property was acquired by the parties at auction for the sum of $181,000. As I have already recorded, that property was purchased in the names of the Plaintiff and the Defendant as joint tenants. That purchase was funded by a mortgage loan of $150,000 from the Commonwealth Bank at Northbridge in the joint names of the parties. Despite the assertions of the Plaintiff that she was ultimately responsible for such funds, the deposit of $18,100 was paid by the Defendant from his bank account with the Commonwealth Bank at Northbridge on 13 September 1993. In addition, the Defendant paid stamp duty of $4,829 from the same bank account, and upon settlement paid a further sum of $13,000. The Defendant said that to the best of his recollection he also paid the legal fees on the purchase in an amount of about $1,000. According to the Defendant those funds paid by him had their source in the proceeds of the sale of the Defendant's property at Nelson Bay and of the sale of the Defendant's Porsche motor car.
27 At the outset, in February 1993 the mortgage repayments were in an amount of $1,361 a month. They continued in that amount until February 2002, when the Defendant negotiated a variation to $1,109 a month.
28 The Kirribilli property had been purchased by the parties with the intention that it should be an investment property. It was not the intention of the parties that it should be a residence for either or both of them.
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30 The parties separated on 13 July 1996 and the de facto relationship which had formerly obtained between them terminated on that date.
31 In mid-1999, when the then current lease of the Kirribilli property came to an end, the Defendant moved into residence therein.
32 In February 2002, the Defendant negotiated a reduction in the mortgage loan repayments, those repayments being (as I have already recorded) then reduced to $1,109 a month. However, the Defendant, although accepting responsibility for the outgoings from February 2002 did not make any payment of strata levies after November 2002.
33 I have also already recorded that the subject property was subsequently sold in April 2004, consequent upon orders made according to Short Minutes agreed upon between the parties on 9 October 2003 (which included reservation of the Plaintiff's costs), and that the net proceeds of sale are presently held in an interest bearing controlled moneys account in the names of the two parties. The most recent information presented to the Court was that as at 31 August 2004 the balance of that account (representing those net proceeds of sale together with accrued interest thereon) was $280,230.
13 At first instance the appellant relied primarily on her legal entitlement as the legal owner of a one-half share in the property. The respondent contended that he had contributed more than the appellant to the acquisition of the property, with the consequence that the legal estate was held in trust for the parties as tenants in common proportionate to their respective contributions.
14 The Master noted a submission for the appellant that the presumption of a resulting trust relied upon by the respondent in consequence of his greater contribution to the acquisition costs was rebutted. Had the submission been accepted, the accounting would have proceeded from a starting point that the legal and equitable titles were coincident. Having implicitly (but without giving reasons) rejected the appellant's submission, the Master proceeded to work out the contributions of the respective parties in acquiring, improving and maintaining the property.
15 The Master treated the respondent as having provided the deposit ($18,100), the balance of the settlement moneys ($13,000), stamp duty and legal fees. These sums totalled $36,829 and were paid from the respondent's cheque account at the Commonwealth Bank. The remaining $150,000 provided on settlement came from the Bank and was subject to a joint mortgage.
16 The Master thus found an initial contribution by the respondent of $36,829 to which he added one-half of the $154,123 which the respondent had actually paid in respect of the mortgage, giving $113,890. This represented 60.96% of what had been paid, with the consequence that the respective interests of the parties in the property were 60.96% for the respondent and 39.04% for the appellant. Applied to the proceeds of sale, this yielded $170,828 to the respondent and $109,301 to the appellant.
17 The Master found the respondent had paid mortgage payments of $154,123, strata fees of $13,646, rates of $3,597 and water rates of $2,826, a total of $174,193; and that the appellant was liable to contribute half of that, $87,097. He found that the appellant had made mortgage payments of $3,600, that the respondent had received rents of $72,494 and that the value of the respondent's sole occupation of the property was $57,270; and he found the appellant was entitled to a credit for half these sums, totalling $66,682. The difference between this figure and the respondent's $87,097, namely $21,415, when subtracted from $109,401, gave the figure of $88,986 which was ordered to be paid to the appellant.
18 The Master rejected a submission for the appellant that she should be given credit for amounts of $30,000 and $40,757 lent by her to the respondent in 1989. He said:
70 I do not overlook the submission of the Plaintiff that there should also be added to her entitlement the amount of $41,757 (being the totality of moneys acknowledged by the Defendant to have been paid into his cheque account by the Plaintiff, almost four years before the acquisition of the Kirribilli property) and the amount of $30,000 (which was advanced by the Plaintiff to the Defendant in order to meet his indebtedness to the Liquor Licensing Board, more than four years before the acquisition of the Kirribilli property).
71 However, it must be appreciated that at the time when those payments were made the parties were living in a de facto relationship. Further, I am presently concerned only with the entitlement of the parties to the proceeds of sale of the subject property; I am not concerned with the rights of the parties under the Property (Relationships) Act . It is possible, although I express no concluded view in this regard, that the Plaintiff may be able to establish that the foregoing moneys were in the nature of loans made by her to the Defendant. If so, she may still have some right of recovery (subject, of course, to any limitation defence). However, I do not consider that it is appropriate for those amounts to be taken into consideration in calculating the entitlements of the parties to the proceeds of sale of the subject property (in the performance of the exercise which may compendiously be described as an equitable accounting).
19 The Master had previously noted that proceedings had been brought by the appellant under the Property (Relationships) Act, but had been dismissed by the Registrar. An application to vacate that order was dismissed.
20 It had been common ground at trial that the appellant had advanced or lent to the respondent $40,757 towards the purchase of a unit at Cammeray. This had been acquired in the respondent's name in early 1990 for $175,000 subject to a bank mortgage of $65,000.
21 The $30,000 and $40,757 loans made by the appellant to the respondent in 1989 had left the respondent with no significant cash reserves.
22 Throughout the de facto relationship the parties identified as a married couple. Each was in paid employment for most of the time. Household expenses were shared ("amalgamated" in the respondent's words), with the appellant performing the domestic and housekeeping duties.
23 In granting leave to appeal Hodgson JA (Ipp JA agreeing) said that the real question concerned whether there was error in the finding of a resulting trust or failure to address the question of its rebuttal and/or not giving any credit to Ms Neilson for $30,000 or $40,757. Hodgson JA continued:
11 In my opinion there are arguable errors in those respects, including the following:
1. Failure to advert to evidence that the proceeds of sale of the Cammeray property, purchased by Mr. Letch using $40,757.00 provided by Ms. Neilson, went towards the funds from which Mr. Letch paid $36,829.00 towards purchase of the Kirribilli property, when this matter would be relevant both to the question whether $36,829.00 was in substance all Mr. Letch's money and to the question whether the presumption of resulting trust was rebutted.
2. Failure to address the question whether the presumption of resulting trust was rebutted. This being a case where both parties contributed to the purchase, objective circumstances were more important than uncommunicated intentions: Calverley [ v Green (1984) 155 CLR 242] at 261-2; and there were objective circumstances that could support rebuttal of the presumption, including the circumstance that at the time of the purchase Mr. Letch was not only using money that may be found to have included proceeds of Ms. Neilson's $40,757.00 but also owed her a further $30,000.00 of which she had recently sought repayment.
12 If it is found that there were such error, and if it is found that the $36,829.00 was paid from an amalgam that included something like $40,000.00 of Ms. Neilson's money, it could also be found that much of Mr. Letch's pre-separation payments of mortgage instalments and other outgoings were made from an amalgam that included a remainder of about $22,000.00 of Ms. Neilson's money, at a time when Mr. Letch also owed Ms. Neilson a further $30,000.00; and in those circumstances, the basis for the adjustment of $21,415.00 in favour of Mr. Letch by reason of his payments of mortgage instalments and outgoings could be undermined. If the result were an equal division of the proceeds of sale, this could result in a costs order in favour of Ms. Neilson.
13 In my opinion, if there are such errors and they remain uncorrected, this would involve significant injustice to Ms. Neilson, particularly as otherwise she may not be able to recoup any part of the total of $70,757.00, by reason of the limitation statute. Accordingly, in my opinion leave to appeal should be granted.
24 I am satisfied that the errors tentatively detected by Hodgson JA were made. I respectfully adopt Hodgson JA's reasoning.
25 Where two or more persons have contributed the purchase money in unequal shares and the property is purchased in joint names, there is, in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money (Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6, 224 ALR 280, 80 ALJR 589 at [55]). Calverley held that the presumption of advancement does not apply to a de facto relationship.
26 The resulting trust that is presumed in the circumstanced referred to in the previous paragraph is itself capable of being displaced by evidence showing that the parties had a common intention to share an equal interest in the property and/or that the party making the disproportionate contribution intended that the parties would have an equal interest in the property notwithstanding. As an American judge (Lamm J) stated in Mackowik v Kansas City St J & C B R Co 94 SW 256, 262 (1906):
Presumptions … may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts.