Nicolitsa Togias v State of New South Wales

Constructive Trusts

1. The plaintiff in this case seeks declaration of a Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 ("Baumgartner") constructive trust over the properties in question. The origin of such a trust can be found in the decision of Deane J in Muschinski v Dodds (1985) 160 CLR 683; [1985] HCA 78 ("Muschinski") at 618-620 as approved in Baumgartner at 147-148: 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 that 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.
2. In Woods v McKinlay (No 2) [2021] NSWSC 1510 at [231], Parker J recently summarised the elements which must be established in a Baumgartner constructive trust by reference to Deane J's statement of principle: (1) the formation of a joint endeavour between the parties; (2) the acquisition of property pursuant to that joint endeavour; and (3) the premature termination of the joint endeavour, leaving one part with a legal interest which that party was not intended to enjoy beneficially in those circumstances.
3. These elements have also been formulated in the terms referred to by Ward J (as her Honour then was) in Austin v Hornby (2011) 16 BPR 30,623; [2011] NSWSC 1059 ("Austin v Hornby") (at [159]): [159] In West v Mead (2003) 13 BPR 24,431; [2003] NSWSC 161; BC200301515 Campbell J (as his Honour then was) considered what was to be established before such a constructive trust could be imposed: first, that there be both a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired (noting that the scope of the joint venture in which the parties were engaging may be of relevance and as Deane J in Muschinski considered, may change from time to time); second, that the substratum of that joint relationship or endeavour must have been removed or the joint endeavour prematurely terminated "without attributable blame"; and, third, that there must be the requisite element of unconscionability (namely, that it would be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.
4. In a Baumgartner constructive trust case, the inquiry is not as to the actual presumed intentions of the parties involved, but rather as to whether, according to the principles of equity, it would be a fraud on the party in question to deny the trust (Austin v Hornby at [157], citing RP Meagher and WMC Gummow, Jacob's Law of Trusts in Australia (Butterworths, 6th ed, 1997) at [13-01]). In addition to this statement, I would repeat my comments made in Loretta Kistmah Craig and Ors v Kia Silverbrook and Ors [2013] NSWSC 1687 ("Craig v Silverbrook") (at [109]) expanding upon this principle: Returning then to the principles governing the imposition of a Baumgartner constructive trust, I would adopt Ward J's analysis in Australian Building & Technical Solutions Pty Ltd v Boumelhem, but emphasise that whilst there is no need for the parties to possess an intention to create a trust, the parties' intention remains relevant in that it must be shown that "the benefit of money or other property contributed by one party [was] on the basis and for the purposes of the [joint] relationship or endeavour" (Muschinski v Dodds at 620). Therefore the plaintiffs must demonstrate both the existence of a joint relationship or endeavour, and that the parties made contributions on the basis and for the purpose of that joint relationship or endeavour.
5. The contributions that parties make to the acquisition of a property need not be limited to monetary assistance. In Baumgartner, Mason CJ, Wilson and Deane JJ noted (at 149): The case is accordingly one in which the parties have pooled their earnings for the purposes of their joint relationship, one of the purposes of that relationship being to secure accommodation for themselves and their child. Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. (emphasis added)
6. Ward J (as her Honour then was) in Austin v Hornby commented (at [158]) that: It has been held nevertheless that 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 constructive trust (Miller v Sutherland (1990) 14 Fam LR 416 at 424 per Cohen J). Contributions to family welfare by way of domestic assistance (such as homemaker and parent) have also been held to amount to the imposition of a constructive trust in some circumstances (Baumgartner at 155-6 per Gaudron J; Bryson v Bryant (1992) 29 NSWLR 188; Stowe v Stowe (1995) 15WAR 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.
7. It should be added to the third element that it would be unconscionable for the party left with the legal interest to enjoy those rights to the exclusion of the other. Deane J in Muschinski expanded upon this point (at 615): The fact that the constructive trust remains predominantly remedial does not, however, mean that it represents a medium for the indulgence of idiosyncratic notions of fairness and justice. As an equitable remedy, it is available only when warranted by established equitable principles or by the legitimate processes of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principle.
8. This comment in particular has come under criticism. In Jacob's Law of Trusts (8th ed, 2016, LexisNexis Butterworths) JD Heydon and MJ Leeming commented (at [13-53], footnotes omitted): The reasoning in Baumgartner v Baumgartner, while purporting to be rooted in basic equity, may give no more predictability or consistency in result than that which follows from the English decisions espousing the 'new model' constructive trust. It remains unclear as to when and why the interposition of equity to prevent unconscientious reliance on legal rights in the Australian cases will give rise in equity to a proprietary rather than a personal right, and a proprietary right which is a constructive trust 'fashioned' by the court.
9. Despite this, the case has continued to be applied in cases concerning the property rights of de facto couples at the end of their relationship, a practice endorsed by the High Court in John Alexander's Club Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 9 (at [58] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ).

Equity is equality

1. In attempting to quantify parties' interests in a constructive trust where there are contributions other than purely financial, it may be useful to consider the maxim "equity is equality" or aequitas est aequalitas.
2. The purpose of this maxim has been described by PH Pettit in Halsbury's Laws of England (Butterworths, 4th ed, 1992) and quoted by JD Heydon, MJ Leeming and PG Turner in Meagher, Gummow and Lehane's Equity Doctrines and Remedies (Butterworths, 5th ed, 2014) at [3-130]: The maxim that equality is equity expresses in a general way the object both of law and equity, namely to effect a distribution of property and losses proportionate to the several claims or to the several liabilities of the persons concerned. Equality in this connection does not necessarily mean literal equality, but may mean proportionate equality. This doctrine of equality, however, operated more effectually in a court of equity than a court of law, and is exemplified in many departments of equity jurisdiction.
3. Furthermore, it has been said that the maxim does not mean literal equality (PW Young, CE Croft and M Smith, On Equity, Lawbook Co, 2009 at [3.230]): Depending on the circumstances, it may mean proportionate equality [Steel v Dixon (1881) 17 Ch D 825 at 830]. In some cases, however, it may translate to mathematical equality [see, eg, Re Steel deceased; Public Trustee v Christian Aid Society [1979] Ch 218]. In other cases, the court may be "driven" to mathematical equality by virtue of the fact that no other guidance is available.
4. This is a maxim of general use that can be found in many categories of cases. In Story's Commentaries for Equity Jurisprudence (Stevens and Haynes, first English edition, 1884) at p 44-45, footnotes omitted) WE Grisby wrote that the maxim applies: For example, to cases of contribution between co-contractors, sureties, and others; to cases of abatement of legacies, where there is a deficiency of asset; to cases of apportionment of moneys due on incumbrances among different purchasers and claimants of different parcels of the land; and especially to cases of the marshalling and distribution of equitable assets. For, although out of legal assets payment must be made of debts, in the course of administration, according to their dignity and priority at right; yet, as to equitable assets, all debts are generally deemed by courts of equity to stand in pari jure, and are to be paid proportionally, without reference to their dignity, or priority at law.
5. The maxim may be illustrated in the way the equity treats the assets of a husband and wife (J Edelman, Snell's Equity (Sweet & Maxwell, 32nd ed, 2010) ("Snell's Equity") at [5-027]): For example, after a divorce the court has refused to dissect meticulously the joint bank account into which the husband and wife paid their income, and upon which they both drew, an instead divided the balance equally between them [Jones v Manyard [1951] Ch. 572] … But even between husband and wife the principle does not apply while they are still living together, for then their rights in a joint bank account are not meant to be attended by legal consequences [Gage v King [1961] 1 Q.B. 188], and each will be the sole beneficial owner of any property which he or she buys with money drawn from the joint bank account, subject to any contrary intention [Young, Trye v Sullivan, Re (1885) 28 Ch.D. 705].
6. This maxim ensures "those who are entitled to property should have the certainty and fairness of equal division in the absence of reasons for any other division" (Snell's Equity at 5-020).
7. Dowson and Edmonds JJ endorsed the above statement in Repatriation Commission v Tsourounakis (2007) 158 FCR 214 ("Tsourounakis") at [119], stating that "the maxim should only be applied when it is otherwise not possible to determine the respective equities". This position was supported by case law expanded upon in [117]. [117]…in Rimmer v Rimmer [1953] 1 QB 63 the Court of Appeal applied the maxim in circumstances in which the parties had contributed to the acquisition of the property, but the Master of the Rolls warned, at 867: I appreciate that to fall back on what may be called a Solomoneque judgment is, as counsel for the husband said, perhaps to yield to obvious temptation to shirk more difficult computations…
8. In a similar vein, Lord Walker described the maxim as providing "no more than a fall-back position where no other basis of division is appropriate" (Waikato Regional Airport ltd v Att Gen (New Zealand) [2003] UKPC 50 at [54], quoted in Snell's Equity at 5-020).
9. In Rimmer v Rimmer [1953] 1 QB 63, however, despite the Master of Roll's comment, he nevertheless divided the property equally between parties commenting "where the Court is satisfied that both the parties have a substantial beneficial interest and it is not fairly possible or right to assume some more precise calculation of their shares, I think that equality almost necessarily follows" (at 72).
10. The Court in Tsourounakis further elaborated on cases in which the maxim has been applied [118]: [118] Macdonald v Macdonals [1957] 2 All ER 690 was also a case in which precise calculation was not possible. In Cobb v Cobb [1955] 1 WLR 731 the Court found an intention, at the time of acquisition, that the home be held in equal shares. In those circumstances the maxim did not apply. The decision of the Court of Appeal in Fribance v Fribance (No 2) [1957] 1 WLR 384 appears to have depended upon a finding that the whole of the resources of the husband and wife were "expended for their joint benefit - either in food and clothes and living expenses for which there was nothing to see or in the house and furniture which are family assets - and the product should belong to them jointly. It belongs to them in equal shares" (per DenningLJ at 387). In Jackson v Crosby (No 2) (1978) 21 SASR 280, the Court concluded that the parties had agreed that the relevant property should be held in equal sahres.
11. The maxim was relevantly used by Mason CJ, Wilson and Deane JJ in the leading judgment in Baumgartner in which their Honours stated (at 149-150): Equity favours equality and, in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create a joint home, there is much to be said for the view that they should share the beneficial ownership equally as tenants in common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind.
12. Their Honours further stated (at 150): The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest.
13. In Cetojevic v Cetojevic [2006] NSWSC 431, Campbell J (as his Honour then was) stated at [43]): a starting point for ownership of the asset is that the beneficial interest ought to be shared equally. That application of the maxim equity is equality places an onus of attributing any other conclusion on a person who asserts that the title should be held unequally.
14. This reflects the flexibility with which Baumgartner constructive trust cases can be applied: West v Mead [2003] NSWSC 161 at [274].

Plaintiff's Submissions

1. The plaintiff submitted that the forfeiture order of 5 May 2014 was limited to Mr Subakti's interests in the Glenwood and Seven Hills property, and not the plaintiff's beneficial interest in the properties.
2. The plaintiff based her claim of beneficial interest around the matter being a contributions case in the sense of Muschinski and Baumgartner.
3. The plaintiff submitted following the commencement of her relationship with Mr Subakti in 1998, he moved in to live with her in her family's home and they entered into a joint relationship or endeavour the purposes of which were to carry on a de facto relationship with each other, and to combine their resources for the purpose of enhancing their joint wealth and welfare.
4. In December 1999, a property was purchased in Wentworthville in the name of Mr Subakti, using money from a workers' compensation payment. The pair then continued to live together in a de facto relationship at the Wentworthville property, using it as their family home, with the common intention that it was their (not his) home.
5. The plaintiff and Mr Subakti in 2000 established a business styled "Bio-form Nutrition Australia" selling health supplements and related products and traded in the name of Mr Subakti as a sole trader ("the Bio-form business"). In 2005, Mr Subakti incorporated a company called Bio-form Nutrition Australia Pty Ltd and through this entity the plaintiff and Mr Subakti continued to operate the Bio-form business. The plaintiff submitted that the Bio-form business in its iterations were established with the common intention of the plaintiff and Mr Subakti that his interest in the business and the income earned in the course of operating the business, was held for the benefit of the joint relationship between him and the plaintiff and for the purpose of enhancing their joint wealth and welfare.
6. The plaintiff recognised that even though her claim is against the defendants as successor of title from Mr Subakti in the properties, the concept of "attributable blame" is to be seen through the prism of the plaintiff and Mr Subakti's former joint relationship and endeavour, and is to be "applied with some tolerance": Hill v Hill [2005] NSWSC 863 ("Hill v Hill") at [35] per Campbell J.
7. Further to this point, in Hill v Hill, Campbell J stated at [35] that: Leaving gross cases involving criminality or similarly reprehensible behaviour on one side, it should usually be understood, in my opinion, that where personal relationships deteriorate and the sharing of a dwelling becomes intolerable to some or all of those concerned, there is, within the meaning of Deane J's expression, no attributable blame and the case is one for an equitable adjustment.
8. The plaintiff highlighted the comments of Hulme J in Togias v New South Wales Crime Commission [2019] NSWSC 1556 at [97] to demonstrate that this comment is inapposite to the present proceeding. There, his Honour stated that he was "satisfied that Ms Togias had no prior knowledge of any serious crime-related activities or illegal activities of Mr Subakti. She bears the onus on this issue and relies upon her own assertion. I am satisfied that her assertion should be accepted."
9. The plaintiff submitted that since 29 January 2010, she has had sole responsibility for causing and ensuring all principal and interest repayments were made to the mortgagee in respect of the Glenwood property, along with making payments of outgoings, including: 1. Payments for the period 29 January 2010 until 3 February 2018 amounted to about $403,000. 2. Interest charges in the period from 29 January 2010 until 4 June 2020 were about $352,718.40.10 3. The plaintiff on and after 4 June 2020 has continued to make payments of monthly principal and interest towards the Glenwood property. 4. The balance outstanding had reduced to about $370,000 by about 31 January 2018, and the equity had increased, by reason of the plaintiff.
10. The plaintiff argued therefore that it would be unconscionable for the defendants to deny her beneficial interest in the properties. To this end, it is submitted, the plaintiff's beneficial interest in the Seven Hills property may be applied towards the Glenwood property; and prior to any sale of the Glenwood property, the plaintiff ought be entitled to seek to buy out any beneficial interest of the defendant, vested in it by dint of the forfeiture order.
11. The plaintiff also addressed the evidence at the hearing, beginning with that of Mr O'Loughlin (the plaintiff's valuer). Ther
12. e was no objection taken to Mr O'Loughlin's affidavits and reports, and the defendant did not lead any valuation evidence seeking to negate Mr O'Loughlin's evidence nor did it cross examine the witness. Therefore, the plaintiff submitted Mr O'Loughlin's evidence should be accepted entirely.
13. The plaintiff argued that Ms Sawtell's evidence adds little to the determination of the issues in this proceeding. The Court ought to infer and find on Ms Sawtell's evidence that it was Ms Togias up until around November 2019 who was the person dealing with the rental agent and facilitating the role of landlord in relation to Seven Hills (T.122/13-T.123/5). Further, the Court ought to infer and find on Ms Sawtell's evidence that Ms Togias was the sole person who paid for the mortgage payments - both principal and interest - from 1 February 2010: see T.123/43.
14. In relation to Mr Seagrave, the plaintiff submitted the Court ought to find on his evidence that it was Ms Togias who was responsible for and making the mortgage payments in order to maintain and retain the Glenwood property after Mr Subakti's incarnation at the end of January 2010 (T136/14-/9). Additionally, the Court ought find on Mr Seagrave's evidence that it was Ms Togias who was responsible for and making mortgage payments in order to maintain and retain the Seven Hills property after Mr Subakti's incarnation at the end of January 2010 (T137/0-/12), with the aid of rental payments from this property, prior to the NSWT&G taking over in 2019.
15. The plaintiff also highlighted some of the evidence of Ms Holz. Ms Holz clarified that despite a freezing order, an individual could keep paying mortgage payments (T.144/15-/28; T.144/30-/32). She agreed that the Crime Commission did not make any payments towards the mortgage of the Glenwood or Seven Hills properties (T.146/7-/29). Ms Holz agreed that she had not undertaken a significant analysis of the "post-arrest activity" financials of Bio-Form (T.160/36-/45). She also agreed that she did not know whether the cash Mr Subakti had on his person when he was arrested was from the business or the proceeds of crime (T.161/34-162/23).
16. Ultimately the plaintiff argued that she had made contributions pre-2010 largely as a homemaker in a domestic setting and post-2010 following Mr Subakti's incarceration. In the later period she had staved off a mortgagee sale and her contributions have caused capital appreciation (T.176/37-44).

Defendant's submissions

1. The defendant contends that any common intention or joint endeavour which may have existed that the plaintiff would acquire a beneficial interest in the Glenwood and Seven Hills properties ended on 28 January 2010 when the plaintiff ended her relationship with Mr Subakti.
2. The defendant contended that on and from 5 May 2014, the plaintiff had no right to occupy the Glenwood Property. Rather, it contends that on and from 5 May 2014, the Trustee was entitled to be registered as the proprietor, and to possession, respectively of the Glenwood and Seven Hills Properties pursuant to the Forfeiture Order. Further, that those entitlements were subject to s.23(4) of the Criminal Assets Recovery Act 1990 (NSW) ("CAR Act"), which restrained the Trustee from taking possession of the properties within 6 months of the making of the Forfeiture Order and until any application under s.25 or 26 of the CAR Act was heard and determined.
3. The defendant argued, in relation to the constructive trust issue, that the plaintiff had contributed neither money nor other property to the acquisition of the two properties.
4. The plaintiff's central factual contentions are that she contributed to Mr Subakti's acquisition of the two properties by reason of the unpaid work she did in the Bio-Form business. The argument is that in working unpaid in the Bio-Form business she was therefore contributing to the two properties. The defendant submitted that to the extent that she did so, she did so for the purpose of developing the business. However, the business made little, if any, profit. The income tax returns it lodged in respect of the financial years 2006 to 2010 show that in each year total expenses were approximately equal to income (Affidavit of Inese Holz 11 June 2021, Annexure A, page 8 [9]). Those expenses included the salary of Mr Subakti. The business had insufficient net income to make the payments to the properties and the clear inference is that the source of funds which financed the loan repayments and other expenses of the joint relationship was entirely, or primarily from unidentified sources.
5. The annual periodical transfers into the Glenwood account during the period from 2004 to 2010 were approximately $40,000. In the same period the expenditure of the Bio-Form business approximated or slightly exceeded its income.
6. Furthermore, the defendant submitted that it is instructive to pay close attention to payments made in the financial year 2008. The plaintiff accepted that if the figures in the tax returns of the Bio-Form business were correct, in 2008 there was not enough income to come out of the business for the periodic payments of $37,010 into the Glenwood account. The deficiency in the amount is not made up even when depreciation in the tax returns is added back. In 2008 this would have only made available $19,693.
7. Therefore, either or both Mr Subakti and Bio-Form were receiving money from sources other than the sale of legitimate Bio-Form products, being the sales recorded in the tax returns. This evidence is reinforced by the expenditure of Mr Subakti and Bio-Form in 2015.
8. The 2008 tax returns for the Bio-Form business disclosed a total income of $494,679 and total expenses of $502,150 being a loss of about $7,500.
9. Even if depreciation were added back, any available surplus funds would only have been $19,693.91 (Affidavit of Inese Holz, table on page 38).The total of the periodic payments recorded as coming from Bio-Form into the Glenwood account was $37,010. In that year, the declared income of Mr Subakti was only $11,000.92 (Affidavit of Inese Holz, page 8, subparagraph 7(3)d)).
10. Despite having insufficient income to pay the periodic payments into the Glenwood account, Mr Subakti purchased a new property, namely the factory unit at Seven Hills, by contract dated 18 February 2008. The purchase price was $376,200. Mr Subakti was able to pay the deposit of $34,200. He borrowed $239,400 from Westpac and $80,000 towards the purchase price came from a deposit from Indonesia.
11. The defendant argued it is significant that Mr Subakti took the decision to purchase the property and enter into further borrowings despite the financial circumstances disclosed in the tax returns of the Bio-Form business. It would have been clear to Mr Subakti that the purchase of Seven Hills would not generate any substantial increase in income for the Bio-Form business. As the plaintiff explained in her affidavit at [72], the property was to be used as an office, warehouse, and storage facility for the Bio-Form business. At this time Bio-Form carried on business from a shop at Westfield Shoppingtown Liverpool, pursuant to a lease from Westfield executed in August 2006.93 Also in the financial year 2008, the plaintiff and Mr Subakti were driving luxury cars which were financed by either hire purchase or lease, and which the plaintiff accepted required that sizeable sums be paid monthly on car repayments. The two luxury cars were not declared in the tax returns as expenses of the Bio-Form business:
12. Mr Subakti was also able to invest $32,000 from CommSec for the purchase of shares in Deep Yellow Ltd. Furthermore, he had sufficient funds to enable him to deposit $1,450 and $20,000 on 17 October 2007. He was also able to obtain a further sum of $80,000 from a deposit in Indonesia on 22 May 2008.
13. It was submitted that the above demonstrates that in the financial year 2008 Mr Subakti had access to substantial funds which were not surplus funds from the Bio-Form business. A comparison of, on the one hand, the income and expenditure of Bio-Form and the income of Mr Subakti and, on the other hand, the expenditure of Mr Subakti in all other relevant years, leads to the same conclusion.
14. The defendant highlighted that the plaintiff did not lead evidence from Mr Subakti who has been living in the Glenwood Property with the plaintiff since his release from custody. The defendant noted that the plaintiff had accepted that if she wanted Mr Subakti to give evidence in support of her claim he would have been in a position to do so (T.92/50). The plaintiff had given evidence in Mr Subakti's case before Hall J in 2016. The inference to be drawn is that the evidence of Mr Subakti would not have assisted the plaintiff's case.
15. The defendant submitted that the evidence does not support the plaintiff's contentions in the Further Amended Statement of Claim. That is, it cannot be established that the Glenwood and Seven Hills Properties were acquired using funds from the Bio-Form business, and that income from the business was applied to loan repayments on the properties and to the other expenses of the relationship between the plaintiff and Mr Subakti.
16. The defendant argued that the principles stated by Deane J in Muschinski at 620) as quoted by Mason CJ, Wilson and Deane JJ in Baumgartner at 147-148 referred to the benefit of money or other property contributed by one party. These were the relevant contributions which led to interest arising in a constructive trust. In Baumgartner at 49, Mason CJ, Wilson and Deane JJ referred to the contributions of the relationship "financial and otherwise", however, this was in the context where the parties had pooled their earnings for the purpose of securing accommodation for themselves and their child.
17. The defendant further highlighted the comments of Campbell J in West v Mead at [61] in which his Honour referred to the unconscionability of one party retaining at the end of the relationship a disproportionate share of the assets they had jointly built up when that was the basis on which those assets were contributed.
18. The defendant distinguished the current proceedings from these cases, submitting that the plaintiff contributed no money or property to the relationship. There was no pooling of earnings, capital, or property. There were no contributions that she made to the acquisition or retention of property in the course of the joint relationship.
19. Although the plaintiff carried out unpaid work for Bio Form, including working in the store, that cannot be considered to be a contribution to the acquisition or retention of Glenwood or Seven Hills properties, even if it were thought to be a contribution to the Bio Form business. Amongst other things, the fact remains, that the declared net earnings after expenses from the Bio Form business were insufficient to be the source of the contributions to the acquisition or retention of those properties. It is the plaintiff who has the onus of proof to establish that net earnings after expenses from the Bio Form business were sufficient. She has not done so.
20. Furthermore, the defendant submitted that the plaintiff has the onus "to demonstrate both the existence of a joint relationship or endeavour, and that the parties made contributions on the basis and for the purpose of that joint relationship or endeavour" (Craig v Silverbrook at [105]-[109]). In Craig v Silverbrook at [105], reference was made to Lloyd v Tedesco (2002) 25 WAR 360 where Pullin J with whom Hasluck J and in effect Murray J at [46] agreed) said at [86] that "proof of the joint endeavour required proof of an actual intention to pool resources". The defendant argued the plaintiff had not discharged that onus.
21. The defendant submitted that the plaintiff has the onus of establishing the quantum of contributions she alleges she made and any proportional beneficial interest she may have. She has not quantified the contributions she made to the common pool of the income and assets of the relationship in the period from December 1999 to January 2010. Nor has she identified any principles by which her claim to a beneficial interest in the properties may be ascertained.
22. The defendant submitted that were a constructive trust to be imposed it would be imposed with effect from 28 January 2010 when the plaintiff asserts she ended her relationship with Mr Subakti and therefore reliance could not be placed on the plaintiff's expenditures after this time.
23. The defendant argued that the loan repayments that the plaintiff made in respect of the Glenwood Property were not made in accordance with the constructive trust as she contends, rather so that she could continue to have a roof over her and her children's heads (see T.86/10). Further, in occupying the Glenwood Property the plaintiff has not paid rent and has not established that the loan repayments would exceed the rental value of the property.
24. Nor has the plaintiff established the extent of any beneficial interest in the Seven Hills Property. In that case the rent being received from the tenant exceeded the loan repayment secured over the property. The plaintiff received the benefit of the difference. The plaintiff has not provided an account with respect that benefit.
25. The defendant also asserted that the plaintiff does not explain why it would be unconscionable for the Trustee to assert its legal title in the circumstances.

The plaintiff's evidence

1. The plaintiff filed one affidavit in the proceedings dated 2 October 2020.
2. The plaintiff met Mr Subakti while working in a café in mid to late 1997: [9]. About a year or so after meeting him they began their relationship: [10]. In 1999 when Mr Subakti was intending to purchase a property with the workers compensation money he received, the plaintiff inspected some apartments with him in Wentworthville on numerous occasions and he consulted her on which property she thought was the best for them to purchase: [27]-[28]. The plaintiff accompanied Mr Subakti when visiting a friend of a friend to organise a loan for the purchase of the Wentworthville Property: [31]. The plaintiff states that she and Mr Subakti made an offer to purchase the Wentworthville Property which was accepted: [32]. After moving into the property, the plaintiff was responsible for the housework, the grocery shopping, and sometimes the cooking: [33]. During the time they lived in Wentworthville the pair regularly looked at display homes, house and land packages they could potentially buy: [36].
3. Following moving into the Wentworthville Property the plaintiff and Mr Subakti began to concentrate more on the Bio-Form business, selling products to retail outlets and operating as a wholesaler: [35]. In April 2000 the plaintiff became pregnant with the couple's first child and continued to operate the Bio-Form business: [37]. The plaintiff's role in the business involved promoting products by setting up stalls at shopping centres, as well as placing advertisements and organising mail-outs: [39]. Mr Subakti did not speak English very well, so the plaintiff was responsible for communicating with the USA director of the Bio-Form company, organising import permits and issuing tax invoices to customers: [40]. The plaintiff was responsible for looking after the deliveries of products from the USA and arranging for them to be delivered to the garage of the Wentworthville apartment from the customs forwarding agent: [41]. In late 2000, Mr Subakti purchased a Toyota Echo for the plaintiff through which they promoted their business by putting promotional decals for the Bio-Form business on the body of the car: [43].
4. On 7 January 2001, the plaintiff gave birth to her and Mr Subakti's first child: [44].
5. In late 2002 or early 2003 the plaintiff suggested that the couple open a retail store: [46]. A day or so later, they went to the Liverpool shopping centre and came to the conclusion that there was no competition in the area. The plaintiff arranged for the pair to view premises nearby and after inspection they entered a lease for the shop premises.
6. In the first half of 2003, the plaintiff suggested the couple look at some display homes and they drove through the Glenwood area and saw that the Glenwood Property was for sale: [47]. Following Mr Subakti's indication that he wished to live there the plaintiff called the agent and arranged for them to inspect the property: [48]. She then arranged to sell the Wentworthville Property to ensure they had the funds for Glenwood: [49]. The plaintiff accompanied Mr Subakti to arrange finance for the property but was told a loan should be in his name alone because of her lack of credit history: [50]. The plaintiff also mainly communicated with the solicitor and broker the couple engaged to purchase the Glenwood Property because of Mr Subakti's limited English: [51]. The couple purchased the Glenwood Property and from July 2003 to about January 2010, the plaintiff was responsible for making the home loan repayments using funds from Mr Subakti's accounts or the Bio-Form business accounts: [52]. In about July 2003 Mr Subakti, the plaintiff and their daughter moved into the Glenwood Property: [53]. After moving in, the plaintiff was responsible for the housework and most of the cooking: [54].
7. In about July 2003 the plaintiff and Mr Subakti opened the retail store for the Bio-Form business: [55]. The plaintiff worked in the store 7 days a week. At the same time they continued the wholesaler business but on a smaller scale. The plaintiff also continued to attend fitness expos to sell the Bio-Form products to wholesale customers. In about July 2004 the couple moved the Bio-Form business to a new shop they had arranged to lease, also in Liverpool: [58].
8. On 25 May 2005, the plaintiff gave birth to the couple's second child: [59].
9. In the first half of 2005 the plaintiff was present with Mr Subakti at a meeting with their accountant who told them they should operate their business through a company rather than as a sole trader: [62]. This was arranged with Mr Subakti as the sole director and shareholder and the two continued to operate the business through the new company. In or about September 2006, the pair found new premises at Liverpool Westfield and moved the Bio-Form business there: [63].
10. The plaintiff did not receive any wages for the work performed for Bio-Form until around November 2014: [64]. After this time she began to pay herself a wage. All of the income from the business was either paid to Mr Subakti's personal bank accounts or after the Bio-Form Nutrition company was incorporated, into the company's bank account. The funds from Mr Subakti's account were used to pay the loan repayments on the Glenwood Property and to pay household expenses. The plaintiff was responsible for preparing cheques for the business expenses and had a secondary card for Mr Subakti's credit card account and used this to pay the household expenses.
11. The plaintiff cared for Mr Subakti while he was suffering from acute renal failure and then later recovering from a kidney transplant between mid-2007 and early 2009: [67].
12. In early 2008 the plaintiff and Mr Subakti decided to look at purchasing a warehouse to store the Bio-Form products: [70]. Around the same time they went to inspect an industrial unit in Seven Hills: [71]. In about May 2008 they purchased the Seven Hills Property and from that time to May 2010 used it as an office, warehouse and store facility for their business: [72]. The couple arranged to finance the purchase using a re-draw facility on the Glenwood Loan and a further loan from Westpac: [73]. From about May 2008 to May 2010 they made the loan repayment on the Seven Hills Property using income from the Bio-Form business which the plaintiff managed online: [74].
13. On the morning of 28 January 2010 Mr Subakti and the plaintiff met to look at some potential shop premises with a view to opening a further retail shop: [75]. That was the date that Mr Subakti was later arrested and when the plaintiff ended her relationship with him: [77]-[78].
14. After Mr Subakti's arrest the plaintiff found it difficult to get loans or funds for the cashflow of the business or her personal expenses as she did not have a credit history because everything was in his name: [80]. She used the Centrelink payments she received for business and living expenses. She also found out his sports cars were secured against the Glenwood and Seven Hills Properties as was her 4WD. She sold these cars to pay off their finance and keep her vehicle.
15. During Mr Subakti's incarceration between 2010 and 2014 the plaintiff continued to operate the Bio-Form business: [81]. In early February 2010 the plaintiff was told by her accountant that she should establish a new business to operate the Bio-Form Business [82]. On 22 February 2010, the accountant arranged for the company Bio-Form Sports Nutrition Australia Pty Ltd to be incorporated with the plaintiff as the sole director and shareholder. After incorporating Bio-Form Sports the plaintiff has continued to operate the business through the old company, Bio-Form Nutrition Australia Pty Ltd and arranged to be appointed a director of that company: [83]. In 2015 the plaintiff began trading the Bio-Form business through the company, Bio-Form Sports: [87].
16. From about May 2010 the plaintiff arranged to lease the Seven Hills Property to a tenant who continues to rent the premises currently: [84].
17. For the entire period that the plaintiff has lived at the Glenwood Property, both before and after Mr Subakti went to prison on each occasion, she has continued to be responsible for the household duties and been the primary carer of the couple's two daughters: [95]. She also continues to operate the Bio-Form business. Following Mr Subakti's incarceration in January 2010, the plaintiff has been responsible for making the home loan payments for the Glenwood Property using funds she earned from the Bio-Form business, funds from her personal bank accounts, funds borrowed from her sister and on one occasion funds borrowed from her daughter's bank account: [96]. She continues to pay the home loan repayments in respect of the Glenwood Property: [97].

The defendant's evidence

1. The defendant relied on the affidavits of Ms Rachel Sawtell of 15 June 2021, Mr Mark Seagrave of 17 November 2020 and of Ms Irene Holz of 11 June 2021. All three witnesses were cross examined and their evidence was largely uncontroversial. The defendant used the witnesses' evidence to identify the source of funds used to purchase the properties or to leave unanswered the origins of some amounts to suggest they were derived from illicit activities.

Consideration

1. This is an unusual case. I am satisfied the plaintiff never made and indeed was simply incapable of making any direct contribution to the purchase of any assets, property or chattels.
2. During the course of her evidence it became clear the plaintiff did not have a detailed appreciation of the financial situation of Mr Subakti nor for that matter the Bio-Form business. Her knowledge and appreciation of the finances was of a most vague and general nature. Her frequent response to detailed questions about finances was simply without the benefit of objective corroboration that the business was making a lot of money and therefore was able to make all relevant repayments necessary for each of the properties concerned.
3. The defendant relied upon financial analysis undertaken by Ms Ines Holz, a forensic accountant whose evidence I accept. I also accept the evidence of Mr Seagrave and Ms Sawtell.
4. In relation to the Wentworthville property it is not clear how that was purchased. But Mr Adrian Peitersz, Mr Subakti's business partner at the time, was involved it seems in organising the finance. It is accepted that Mr Subakti received $200,000 from a worker's compensation payout. This property was sold for it seems $235,000.
5. So far as Glenwood was concerned the purchase price it is accepted was $690,000. There was a loan from Perpetual Trustees Victoria of $552,000. But additional funds were required of $137,568. Settlement occurred in 2003.
6. However there is a dispute in the evidence about where an amount of some $37,000 came from towards the purchase. The plaintiff asserts it came from the sale of Mr Subakti's motor vehicle in 2003 whereas the records available show that the vehicle was not transferred to the purchaser of the vehicle a friend of Mr Subatki's until June 2004 almost a year after the purchase. This anomaly given Mr Subakti was not called has not been sufficiently explained.
7. The Seven Hills Property was acquired on 18 February 2008 for $376,000.The purchase was funded in part by a loan from Delta Home loans of $106,000 and an amount from Westpac of $239,400.
8. The Delta Home loan was it appears two deposits into that loan account of $80,000 from an account in Indonesia on 22 May 2008 and a further amount of $35,000 deposited on 19 August 2008.
9. In the years from 1999 to 2010 the Bio-Form business operated from various premises namely, Adrian's house, the garage at the Wentworthville property, a shop on Elizabeth Drive, Liverpool, a shop on George St, Liverpool, and a shop at Westfield Shopping Tower, Liverpool and finally the Seven Hills property was used for office/storage area from May 2008 to at least May 2010.
10. However the income and expenditure for the financial years from ATO records discloses on average losses with the exception of a $700 odd profit (2007) and a $2500 odd profit (2009). This analysis was undertaken by Ms Holz.
11. By contrast, in Mr Subakti's tax returns from 2005 to 2010, his employer from 2006 to 2010 was said to be Bio-Form Nutrition Australia Pty Ltd. His salary varied from a high of $35,665 to a low of $6150.
12. The plaintiff on the other hand lodged tax returns for 1998 and 2000. Thereafter she lodged a return for 2011.
13. Ms Holz analysed the home loan payments for the Glenwood property and in the period 2004 to 2010 Mr Subakti expended a total of $318,025 on home loan repayments. In that same period his total expenditure was $822,013. It was also clear that on 2 July 2007 he flew to Indonesia. On 4 July he deposited A$1450 and A$20,000 into the Commonwealth Bank of Australia, Denpassar, Bali. He again flew to Indonesia on 17 October 2007 and the next day deposited into the same bank A$20,000. When arrested in 2010 the police recovered the deposit slips for those transactions. The account in Indonesia could have been that of Mr Subakti's father.
14. Both the plaintiff and Mr Subakti during the year 2008 drove luxury motor vehicles but it was not until 2010 that any claim was made by Bio-Form for any business expense for any car. There is no clear evidence where the monies came from, for the financing of these vehicles.
15. On 22 May 2008 an amount of $80,000 was remitted from Indonesia ostensibly from Mr Subtaki's father to Mr Subatkti's Westpac account. Those monies would appear to have been deposited into Mr Subakti's Delta Home Loan account on 26 May 2008. This transfer was on the same day he drew down the $106,000 from the Delta account for the settlement of the Seven Hills Property.
16. Also in 2007 and 2008 Mr Subakti deposited $32,000 into a Commonwealth bank account for the purchase of shares in a company called Deep Yellow Ltd. There are no details as to what that company did.
17. And when arrested in 2010 Mr Subakti had cash in his pocket of $4615. A further $1790 was found at the Bio-Form shop at Westfield Shopping Centre and a further $31,620 was found at the Glenwood Property.
18. The Plaintiff said she did know about the money at the Glenwood property but she speculated the other monies might have been from some legitimate business activities.
19. Mr Subakti had been incarcerated on two occasions relating to drug offences and so therefore trying to make entire sense of the financial situation is a somewhat futile and idle endeavour. It is clear that on Ms Holz's analysis the net income from Bio-Form would likely have been insufficient to make the loan repayments to Perpetual on the Glenwood property. The annual periodical payments on Glenwood for the period 2004 to 2010 were approximately $40,000. In the same period the expenditure approximated of slightly exceeded its income.
20. The deposits in and transfers from Indonesia are not credibly capable of explanation and certainly none was forthcoming from Mr Subakti.
21. What cannot be denied is that some of the sales of Bio-Form were for legitimate goods but it is impossible to say how much. It seems inescapable that money was coming from another source other than sales through the Bio-Form business for Mr Subakti to maintain his and the plaintiff's lifestyle, with property purchases, stock, cars and shares. There was no evidence that the products at the shop were not legitimate health related items of some sort, although in theory some of the processed transactions were for drugs. I am satisfied that the business traded and continues to trade stock. On top of that, however, Mr Subakti supplemented his ability to buy and sell.
22. The plaintiff made no direct financial contribution to the acquisition of the properties or the Bio-Form business. But like so many women she did substantially contribute in an indirect way.
23. She supported Mr Subakti when he was deciding to purchase assets, was a homemaker, the mother of his two children and more to the point, worked in or in connection with his business.
24. However, I am also satisfied she has exaggerated some of her evidence out of an understandable desire to salvage something out of what in many respects has been a disastrous relationship.
25. Whilst she did not put in her money she did put in her time and her efforts. This is not a case where a simple mathematical calculation is possible. But she is without blame in the relevant sense of the authorities.
26. It is not suggested she was complicit in Mr Subakti's criminal pursuits. She enjoyed a lifestyle but on the evidence trusted him. The business he ran was turning over considerable monies albeit not profitably. She ended the relationship the moment he was arrested.
27. However, it cannot be said that she contributed nothing to the relationship. At the risk of repetition, I am satisfied her efforts were frequently underestimated and hence underappreciated. Much of what she did was as it were behind the scenes. The mere fact that Mr Subakti had everything in his name and never it seems, on the evidence, gave much thought to the financial wellbeing of his partner and it seems his two daughters does not mean the plaintiff is not in equity entitled to have her not inconsiderable efforts recognised.
28. If the existence of the trust is based on a common intention although there is obviously no need for there to be a contract there does need to be a finding of a common intention in fact.
29. What must be proved is that the parties expressed an intention that a party would for example obtain an interest in property or that such an intention must be objectively inferred from their conduct. The court is not free to impute to the parties a common intention on the basis they would be likely to have had the common intention if they applied their minds to it.
30. What is to be enforced is the actual intention, inferred as a matter of fact and that that intention must relate to a property to which the defendant holds title.
31. The plaintiff gives no evidence of any conversation between herself and Mr Subakti in which he acknowledged interest of any kind in either the Glenwood or Seven Hills Property in the plaintiff. The properties were at all times in his name solely. As far as the evidence goes at all times after he started the Bio-Form business all relevant bank accounts were in his or Bio-Forms name. Although the plaintiff did administrative work on the accounts and from time to time provided information to the accountants for the preparation of the tax records it is clear that at the very same time Mr Subakti was dealing profitably with illicit drugs for which he was arrested in 2010. The plaintiff denies knowing about Mr Subtaki's criminal activity and so she could not know what the source was of all funds coming in and out of the business or in relation to the purchase of any assets.
32. When asked about the business and the various discrepancies between income and expenditure she was clearly unable to provide anything except somewhat high level explanations. Answers along the lines that the business was always doing well and there was sufficient monies to pay expenses. That position is to be contrasted with her plight when Mr Subakti was incarcerated in 2010 for the first time and she has to use her own personal funds, funds borrowed from her sister and even from her daughter suggestive of the fact that Mr Subakti made monies available from his criminal activities for the business and maintenance of the couple's lifestyle.
33. The plaintiff clearly assisted Mr Subakti in the running of what was obviously "his" business both when he was and when he was not incarcerated although under a different name. She "paid" expenses from time to time from the business when Mr Subakti was in gaol. I am satisfied she managed the business and organised the payments of expenses. However apart from foregoing a wage there is no evidence before the court which would permit an accurate calculation to be done on the basis for example of how much she would have been paid if employed at arm's length. She does say at one point she started paying herself a wage, there is no evidence about what that was.
34. She set up a business on the advice of her accountant to establish a new company to operate the Bio-Form business in 2015. It would appear to be a phoenix operation. Apart from the fact that the plaintiff is now sole director and shareholder of Bio-Form Sports Nutrition Pty Ltd, for all intents and purposes it would appear the very same business previously owned and conducted by Mr Subakti. The plaintiff says without explanation she has arranged to become a director of the old Bio-Form company. But the plaintiff supplied very little by way of detail about how all that came about.
35. This was a relationship marred it seems to me by Mr Subakti's controlling, disrespectful and violent aggressive behaviour. On numerous occasions he lied to the plaintiff about his age, his previous relationship and the children from that relationship whilst it seems at or about the same time undertaking his criminal activity. As a result she suffered from depression and had suicidal thoughts.
36. In addition he was unfaithful to the plaintiff and prevented her from going to work at his shop because he did not want her to discover that the person he was having an affair with was working there.
37. The plaintiff did not complete university and she has therefore not acquired any qualifications. So far as the Bio-Form business is concerned she had no expertise so it seems in health supplements or other goods the business sells. She has in effect been a clerical assistant attending to simple record keeping tasks. She does appear to have been in the retail premises that often partly due to the fact that Mr Subakti would not permit it because he had the woman working there with whom he was having an affair.
38. The plaintiff does assert that she was party to discussions with Mr Subakti from time to time when he acquired the properties at Wentworthville (December 1999), Glenwood (2003) and Seven Hills (2008). She also asserts that she kept house, cooked and cleaned from time to time but was never in a position to make any direct financial contribution to the acquisition of any assets. I am satisfied the substance of that evidence is accurate and truthful. Indeed it is unchallenged.
39. She says unequivocally she ended the relationship soon after Mr Subakti was arrested in January 2010.
40. There is really no dispute on the evidence that as Mr Subakti's partner she did over the years leading to their relationship ending make substantial indirect contributions. The question though is whether that was as a result of a common intention as understood in the authorities. I think not. I am unable to find in the evidence as a matter of fact the requisite intention. I am fortified in that finding by reason of a failure on the plaintiff's part to call Mr Subakti.
41. The next question however is whether in the absence of such a common intention she is entitled to a finding of a remedial constructive trust. In that situation the inquiry the Court must undertake is not as to the actual presumed intentions of the parties, but rather whether it would be a fraud on the party in question to deny the trust. Despite this, intention is not entirely irrelevant as it must be shown that the benefit or money contributed to the acquisition of the property was on the basis and for the purposes of the joint relationship. Further, it is plain from the authorities that a finding of a Baumgartner constructive trust cannot be based on general notions of fairness. To some extent the question is addressed by an analysis of the financial circumstances of the parties.
42. The mere fact that the plaintiff cannot show the exact money she contributed is not fatal. I am satisfied that she did borrow funds and deferred wages to contribute to the properties. Furthermore, as I have already said, she has made significant contributions, financial and otherwise, to the maintenance of the properties, the business and has brought up the children of her and Mr Subakti's former relationship. I am therefore satisfied that a remedial constructive trust should be imposed.
43. As to the quantification of the plaintiff's beneficial interest it is appropriate to consider the maxim "equity is equality". While recognising that the maxim should not be applied in lieu of difficult calculations, this is a case, in line with authorities, where resort to its guidance is in my view more than appropriate. Here, it would be almost impossible to precisely calculate the total sum of the plaintiff's contributions financial and otherwise. Therefore, in applying the maxim I would find that the beneficial interest ought to be shared equally. The plaintiff was not challenged on her evidence as to the significant non-financial efforts she has undertaken and I am not satisfied that the defendant has established that the position should be otherwise.
44. Although the relationship between the plaintiff and Mr Subakti ended in 2010, her efforts in the Bio-Form business and in borrowing funds where needed have managed in practical reality to maintain both properties concerned. The rent exceeds the outgoings of the Seven Hills Property. The plaintiff facilitated the payment of expenses relating to the Glenwood Property excluding the rates. As a result of my judgment there will need to be further debate about precisely the form of relief that I will grant and I note the exchange which took place between myself and counsel at T.182/37-T.183/25; T.198/37-42. I will hear the parties, but consider that both should share equally in capital gains. The question to be debated is out of whose share the rates and any other unpaid expenses should be taken, especially in relation to the Glenwood Property. Any mortgage or mortgages will also have to be discharged. Whatever occurs at the subsequent hearing, the relevant date to consider the parties' interests will be the date of final orders made.

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: 10 December 2021