Plaintiffs v Defendant

Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353, followed.

Currie v Hamilton [1984] 1 NSWLR 687, followed.

Dyer v Dyer [1788] EWHC J8; (1788) 30 ER 42, cited.

Little v Little (1988) 15 NSWLR 43, cited.

Napier v Public Trustee (WA) (1980) 32 ALR 153, followed.

1 This proceeding concerns the ownership of a factory in Bayswater.[1] The factory was bought in 1994 for the sum of $265,000 and registered in the name of the defendant, Mrs Bell. At the time of the purchase, Mrs Bell was the company secretary and a shareholder of the first plaintiff ("Martech"). At all relevant times, the managing director of Martech was Mrs Bell's then husband, Christopher Bell.

2 Mrs Bell paid approximately $15,000 towards stamp duty, registration costs and legal fees for the purchase. The entire contract price and the bulk of the moneys required for settlement of the purchase were paid by Martech. Thereafter, the factory's sole use was for the conduct of Martech's business.

3 The second plaintiff was appointed as the liquidator of Martech on 18 June 2003. The property was sold in 2003 for $600,000. The liquidator says that Martech is entitled to the net proceeds of sale, being $300,731.07, because Mrs Bell held the property on a resulting trust for Martech. Mrs Bell says that she is beneficially entitled to all of the net proceeds.

4 A resulting trust is presumed where, upon the purchase of a property, the legal title vests in the name of a person other than the person who provided the purchase money. The presumption may be rebutted by evidence giving rise to a contrary intention, namely, that no trust was intended.

"The clear result in all cases without a single exception, is that the trust of a legal estate, whether freehold, copyhold, or leasehold; whether taken in the names of the purchasers and others jointly, or in the name of others without that of the purchaser, whether in one name or several, whether jointly or successive, results to the man who advanced the purchase money. This is a general proposition supported by all the cases, and there is nothing to contradict it; and it goes on a strict analogy to the rule of common law, that where a feoffment is made without consideration, the use results to the feoffer. It is the established doctrine of a Court of equity, that this resulting trust may be rebutted by circumstances in evidence."[2]

6 If the purchase price is provided by two or more persons jointly, and the property is put in the name of one only, there is - in the absence of any relationship giving rise to the presumption of advancement - a presumption of resulting trust in favour of those who provided the purchase price in the shares in which they provided it.[3] This is the same result as arises when two or more persons provide the purchase price and the property is put into their joint names.

7 For the presumption of resulting trust to apply, the purchase price must have been provided by the purchaser in the capacity as purchaser and not, for example, by way of loan.

8 Both parties proceeded on the basis that in determining what was the "purchase price", I ought to take into account all of the costs incurred to acquire the factory, which include not only the consideration payable to the vendor, but also incidental costs, fees and disbursements necessary for the transfer to occur, such as legal costs and stamp duty. This is because the underlying principle is concerned with the cost to the purchaser rather than the benefit to the vendor.[4]

9 In the present case, both parties conducted an "all or nothing" case. The plaintiffs argued that Martech had contributed the entire purchase price, so that a resulting trust arose solely in its favour. When asked what I should do if I found that Martech had not contributed the whole of the purchase price, the plaintiffs' counsel argued that if the resulting trust was not rebutted, Martech would be obliged to make restitution to Mrs Bell in the amount of her contribution, to avoid being unjustly enriched.

10 Mrs Bell did not argue that part of the proceeds, proportionate to her contribution towards the acquisition of the factory, was beneficially held by her. She claimed to be entitled to the entire net proceeds, on the basis that she had completely rebutted the presumption of a resulting trust.

11 Notwithstanding the way in which each side argued their case, in my opinion this is not an "all or nothing" case and falls within the principles discussed in paragraph 6.

12 The presumption of a resulting trust may be rebutted or qualified by evidence which manifests an intention to the contrary. This is because equity looks to intention rather than form.

13 In order to ascertain the true intention of the person or persons who paid the purchase price, the court will admit written or parol evidence of the circumstances surrounding the transfer, for example, the relationship of the parties or statements made by them.

14 It was common ground that the question of intention should be considered as at the time of the purchase, and that I could have regard to evidence as to "those acts and declarations which occurred before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction."[5]

15 Whose intention is relevant? The plaintiffs submitted that I could only have regard to the intention of the party which advanced the purchase moneys, namely Martech. On the other hand, Mrs Bell submitted that I could also have regard to her intention at the relevant time because she had contributed towards the purchase costs. As Mrs Bell did contribute some of the purchase moneys, I will have regard to the intention of both Martech and Mrs Bell.

16 In searching for the common intention of two or more purchasers, light will rarely be shed by evidence of their uncommunicated states of mind.[6] Further, the court has regard to what a reasonable person would draw from the words or conduct, and not the subjective intention of the purchaser.

17 It was also common ground that evidence of acts and declarations subsequent to the purchase would be admissible only against the party who made them, not in their favour.[7]

18 The above principles do not prevent a party in whose favour the presumption falls from relying on subsequent acts or declarations to impeach the credit of a witness.

19 Martech was incorporated in 1989. The company has always been owned and controlled by members of the Bell family, as well as other persons. Mrs Bell was a director from December 1990 until September 1992, and the company secretary from December 1990 until January 1996. Her husband, Christopher Bell ("Mr Bell"), was a director from October 1989 until May 2001, and the company secretary from January 1996 until May 2001. Mr and Mrs Bell separated in October 1999 and were divorced in October 2001. Their son, Matthew Bell, has been a director and the company secretary since May 2001. At all relevant times, Mrs Bell has been one of several shareholders, and owned somewhere between 60% and 80% of the shares.

20 Raymond Appleton has been a director at all times since September 1992. He was also a shareholder in 1994, as was Douglas Brazier.

21 Prior to the purchase of the factory, Martech had been renting two other premises for the conduct of its business. Those premises became too small and towards the end of 1993, Mr and Mrs Bell started considering the possibility of buying a factory.

22 The factory was sold at auction in February 1994. Mr and Mrs Bell attended the auction and she was the successful bidder.

23 The particulars to paragraph 7 of the amended statement of claim allege that the factory was initially purchased pursuant to a contract signed by Martech, with Mrs Bell subsequently being nominated as purchaser. That allegation was not pursued at trial. The 1994 contract was not discovered or produced at trial. I accept that Mrs Bell was the only named purchaser under the 1994 contract.

24 There is no minute of the Martech board in relation to the purchase of the factory, or the borrowing of the balance of the purchase price from the ANZ bank. There is no document which records the terms of any agreement between Martech and Mrs Bell in relation to the factory.

25 The evidence as to the parties' intentions at the time of the purchase is inconsistent or otherwise unsatisfactory in various respects.

26 The relevant parts of the witness statements of Mr and Mrs Bell are virtually identical and appear to reflect their lawyer's language rather than their own. They also do not go far enough in some respects.

27 Another most unsatisfactory feature of Mrs Bell's case was that potentially significant evidence was sometimes given by her or her witnesses, which had not been mentioned in the pleadings or witness statements or opened on by Mr Lim.

28 The defence pleaded an oral agreement between Mr and Mrs Bell, entered into at their home in or about May 1994, relating amongst other things to the rental of the factory. However, no evidence was led of such an agreement, or of any relevant discussion between them either in or about May or at their home.

29 As managing director, Mr Bell was the principal decision maker for Martech in 1994. He gave evidence which will be discussed shortly. The other director at the time, Raymond Appleton, was not called to give evidence as to the circumstances surrounding the purchase of the factory.

30 Mr Bell said in his statement that he "wanted Kerry to purchase the property as security for her old age." However, elsewhere in his statement he said "[i]n or about March 1994, both Kerry and I approached the ... ANZ to apply for a loan for me to purchase the property"(emphasis added).

31 In his oral evidence, Mr Bell gave a number of other versions. He started off by saying there was an oral agreement between him and his wife as to Martech's occupation of the factory. He said most of the relevant discussion took place while the auction was going on. Asked for more details about that agreement he said:

"We sort of made a quick agreement, maybe a bit too quick, but an agreement that we'd stick our hand up and buy the factory. We worked out that at that sort of money, that the payments would be less than we were paying in rent. ... Well I worked it out and discussed it with Kerry, and Kerry knew what the rent payments in the other factory were, and we thought well here's a big chance. We get a factory that's about three times the size of what we are in for paying about the same amount of money.

Was anything else discussed in this meeting, or this discussion? --- I said that we haven't got any superannuation scheme of any sort, why don't we use this as a super scheme. I think if you added all our superannuation together, it wouldn't have got to $5,000, I don't think.

Was anything else discussed between you at the auction? --- No, my heart was beating that fast I can't really think of anything else."

32 It seems clear from his evidence that Mr Bell's principal concerns at the auction were to buy the factory and save on the rent that was being paid elsewhere, and in doing so provide some sort of superannuation for whoever he meant by the reference to "we". Pressed several times for any further details of what was discussed, Mr Bell gave no evidence about any discussion as to the structure of the purchase, including how or by whom it would be funded, on what basis Martech would occupy and who would be beneficially entitled to the factory.

33 The following exchange then occurred with Mr Lim:

"Mr Bell, prior to the settlement on 16 June 1994, were there any discussions between you and Kerry Bell regarding Martech's occupation of this property? --- No, not really. I don't know what you'd discuss.

From the time Kerry signed the contract of sale until settlement, what was your intention regarding this property? --- The property was always meant to be for my family."

34 Mr Bell was not an impressive witness. He was argumentative and defensive under cross-examination and quick to blame others, particularly Martech's accountants. He frequently argued his ex-wife's case against the liquidator. Given these traits, the fact that he did not give detailed or consistent evidence as to any relevant intention or agreement relating to the factory seems particularly telling.

35 Mrs Bell's witness statement contained the general statement that "Chris and I decided I should buy a factory and rent it out to Martech so I would be provided for when I retire." However, she gave no evidence as to any relevant discussions or agreement to that effect, which might indicate what Martech's intentions were.

36 In her witness statement, Mrs Bell also said that "[t]he property would be rented to Martech where it would have to pay all the outgoings and rent which would be equivalent to the amount of interest charged by the bank per month and the monthly loan repayment." Once again, neither her witness statement nor her oral evidence provided any details of any agreement to that effect or explained on what basis she acquired that understanding.

37 I accept that Mrs Bell's subjective intention when she entered into the 1994 contract was that the factory would be solely hers. Of course, her actual intention need not have been the same as Martech's intention or as a reasonably determined objective intention.

38 Matthew Bell was 15 when the factory was purchased. He was only appointed a director in May 2001, after his parents had separated. He was not able to give any admissible evidence as to the events surrounding the purchase or Martech's intention.

39 It is therefore not clear on the Bells' own evidence precisely who they assert was intended to be the beneficial owner of the factory and under what arrangement. As mentioned above, it was variously said to be Mrs Bell, Mr Bell, "the family" and "we". The circumstances surrounding the payment of the purchase moneys and their impact on the determination of intention will be discussed shortly.

40 The deposit of $26,500 was paid on 16 February 1994 by a cheque drawn on one of Martech's accounts.

41 Mrs Bell alleged that she borrowed $26,500 from Martech to pay the deposit ("the alleged deposit loan"). There are no documents to support such an assertion, and the alleged deposit loan was never reflected in Martech's accounts. Mr and Mrs Bell both said that Martech agreed to lend her the alleged deposit loan, but gave no evidence as to when or where any such agreement was reached.

42 The defence pleaded that between May 1989 and May 1994, Mrs Bell had lent to Martech more than $26,500. Alternatively, if the amount owing in May 1994 was less than $26,500, Martech would lend Mrs Bell "the sum of $26,500 less the amount owing to [Mrs Bell] by [Martech] and repay any outstanding loan due to [Mrs Bell]. The advance (if any) shall be repaid to [Martech] by way of set-off against future dividends to be declared by [Martech] and payable to [Mrs Bell]." Whatever this alternative plea might mean, no evidence was led in support of it.

43 No evidence was led as to how much Mrs Bell had lent to Martech prior to the 1994 financial year. The witness statements of Mr and Mrs Bell asserted that as at 30 June 1994, Martech owed her the sum of $11,624, which was to be offset against the factory loan. That evidence is simply incorrect according to the accounts and seems to be the result of the inability of the Bells and their solicitor to read the accounts correctly.[8] The 1994 accounts showed that Martech owed "shareholder No 1" the sum of $815 at 30 June 1993 and nil at 30 June 1994. Mrs Bell is the person identified as "shareholder No 1" in the accounts. The same accounts showed that there was an unsecured directors' loan of $11,624 as at 30 June 1994. In the 1995 accounts, the sum of $11,624 is recorded as having been a negative liability of the company in 1994, against the entry "Loan - shareholder No 1". In both accounts, the sum of $11,624 is an asset of the company, not a liability, as at 30 June 1994. That is to say, Mrs Bell owed Martech that amount, not the other way around.

44 Mrs Bell has not persuaded me on the balance of probabilities that an agreement was made in or around early 1994 for Martech to make the alleged deposit loan to her.

45 As far as the balance of the purchase price was concerned, Mr Bell agreed in cross-examination that it was not intended that his wife was going to pay anything for the factory. Martech was to pay for the factory. The Bells' witness statements simply said that the balance of the purchase price would be financed by a bank loan. Neither Mr nor Mrs Bell's witness statement contained any suggestion that Martech agreed to borrow the purchase price from the ANZ bank and then to on-lend it to Mrs Bell, to enable her to purchase the factory. Far less did they suggest she would be paying interest to Martech on any such loan. At their highest, they said that Martech would pay rent to her, and Martech would make the alleged deposit loan (apparently on an interest-free basis). Nor did Mrs Bell's pleadings or Mr Lim's opening suggest any such on-lending or interest payments.

46 However, in cross-examination, Mrs Bell suggested for the first time that Martech was to lend her the money to buy the factory, and that this had been suggested by Ian Whitmore of the ANZ bank. Mr Whitmore was not called to give evidence. This evidence only came out after Mr Menting suggested in his oral evidence, in Mrs Bell's presence, that the proper accounting treatment would have been for the accounts to show Martech making a loan to Mrs Bell. Whilst I do not believe that Mrs Bell knowingly gave false evidence about this, she was not a sophisticated business person and her evidence about the on-lending arrangement had the flavour of reconstruction more than a decade after the relevant events. Given the pleadings and other evidence mentioned above, and the circumstances in which this evidence was given by Mrs Bell, I am not satisfied that there was any agreement that Martech would lend Mrs Bell the entire purchase price.

47 It is not clear precisely when finance was first sought or in whose name. The initial correspondence suggests that Mrs, and possibly also Mr, Bell originally tried to borrow the purchase price, but did not have the financial capacity to do so. This also seemed to be suggested by Mrs Bell's witness statement. However, in cross-examination, she denied that ANZ had refused to lend her the money.

48 A letter from ANZ to Mrs Bell's former solicitors, David H Tan & Co ("Tan"), dated 2 March 1994, noted that "Mr and Mrs Bell have not to date called to discuss finance to assist with factory purchase". A letter from Tan to Mrs Bell at her home address dated 4 March 1994 noted "your advice that you shall be applying to the ANZ Bank Lilydale for finance to complete this purchase."

49 ANZ's letter to Tan dated 6 April 1994 is somewhat ambiguous as to the identity of the proposed borrower. It may be referring to the Bells, or Mrs Bell and Martech, when it uses the plural and speaks of "our mutual clients" who have purchased the property, "customers", and the "applicants" who, based on the financial results for 30 June 1993, could not service the additional indebtedness. In other parts, the letter is clearly just referring to Martech, for example when it requires a business plan for Martech and refers to the company's cashflow and trading results.

50 Later correspondence from ANZ is addressed to Martech and clearly refers to Martech as the borrower. The final letter of offer, dated 10 May 1994, offered Martech a fixed interest rate fully drawn advance of $240,000 ("the ANZ loan"). The ANZ loan was to be secured by security already held by ANZ and by new security which was to be taken. The existing security was an unlimited directors' guarantee by Mr and Mrs Bell and a second registered mortgage over the Bell family home. No evidence was led which explained the circumstances in which these existing securities had been provided or what facilities they secured as at May 1994. The new security to be provided included an unlimited guarantee from the other director, Mr Appleton, a mortgage over the factory ("factory mortgage") and a mortgage debenture over the assets and undertaking of Martech ("company charge").

51 On 7 June 1994, Mr Bell and Mr Appleton executed the company charge on behalf of Martech; it was registered on 6 July 1994.

52 The factory mortgage was registered on 29 June 1994. The factory mortgage was stamped as collateral security for advances of $333,000. The excess above the sum of $240,000 borrowed for the factory purchase appears to relate to securing other advances to Martech, but no evidence was led as to what those facilities were.

53 Mr Hayes argued that the fact that Martech gave the company charge indicates that Martech intended the property to be held for its benefit. But that need not be the case. Such an inference assumes that the company directors were acting in accordance with their fiduciary duties to Martech, a finding I would not necessarily make given Mr Bell's casual, at times even cavalier, attitude towards both the company as a separate legal entity and the company's creditors.

54 Mr Appleton was not called to explain his understanding of the transaction or why he provided a personal guarantee for the loan facility which was used to purchase the factory. No evidence was led or explanation given as to why Mr Appleton might have been prepared to give a personal guarantee to enable Mrs Bell, and not Martech, to acquire the factory at the company's expense. It might be thought more likely that Mr Appleton would have given a personal guarantee to enable the company of which he was a director and shareholder to acquire property. There was no evidence that the liquidator knew of Mr Appleton's whereabouts, however Mr Bell gave evidence that Mr Appleton is currently in Vietnam, where Mr Bell now lives and works.

55 Settlement occurred on 16 June 1994. The transfer was registered on 29 June 1994. Martech paid the following additional purchase costs at settlement: solicitors' fees for ANZ's solicitors, Mills Oakley McKay, totalling $583.95 and a loan approval fee of $2,540.

56 Mrs Bell paid the following purchase costs: stamp duty of $13,264 and registration costs of $801, around 18 or 19 July 1994, and Tan's legal fees of $980 on 26 July 1994. No evidence was led as to any discussion between Mr and Mr Bell about the making of these payments. They are not reflected in any way in Martech's accounts.

57 After settlement, the Bell family spent about one month cleaning, repainting and preparing the factory for operation. No capacity was led as to the capacity in which this work was done. Martech moved into the factory around August 1994. There is no written agreement recording the terms on which Martech occupied the factory.

58 Until July 1994, Martech's external accountant was Dick Hames of B P Hulls & Associates. In July 1994, the old accountant transferred his accounting and taxation practice to Lilydale Accounting and Taxation Services Pty Ltd, owned by David Anderson and his father, John Anderson. The new accountants, who later changed their name to Anderson Quayle Cincotta and then Anderson & Associates, prepared the Martech financial accounts and tax returns for the financial years ending 30 June 1994 to 30 June 2002. John Anderson was primarily responsible for the 1994 and 1995 accounts. David Anderson prepared the subsequent years' accounts, under his father's supervision.

59 In order to prepare the 1994 accounts, the new accountants merely updated the interim accounts which had been prepared by the old accountant to 31 May 1994 ("the interim accounts"). According to Mr Bell, the old accountant prepared the interim accounts from information in Martech's books. The new accountants were never shown and never sighted the 1994 contract of sale or any document relating to the title to the factory. They did not go back and question the assumptions made in the interim accounts. Both the interim and final 1994 accounts showed the factory deposit as an asset of Martech.

60 David and John Anderson both gave evidence that they first learned that Mrs Bell was the registered proprietor of the factory in 2003.

61 Mr Bell said that during his first meeting with David Anderson in about August 1994 he told David Anderson that his wife had bought the factory and rented it out to Martech, and Martech had lent the amount of the deposit to Mrs Bell. He asserted that he told David Anderson that the alleged deposit loan would be offset against any money owing to Mrs Bell by Martech. David Anderson had no recollection of any such conversation. Mr Bell went on to say in several places that "against my specific instruction" David Anderson "amended" the accounts and recorded the $26,500 as a deposit paid by Martech. In cross-examination, Mr Bell eventually conceded that he had given no such specific instruction. Nor were the accounts "amended" as Mr Bell sought to argue; the old accountant had recorded the deposit as an asset of Martech and the new accountants retained that classification. Furthermore, in so far as Mr Bell's statement about the deposit loan is based on his assertion that Martech owed Mrs Bell money at that time, that assertion is simply wrong, for the reasons discussed earlier.

62 When the new accountants prepared the 1995 accounts, the factory was included as an asset of Martech and the ANZ loan as a liability. That accounting treatment continued in subsequent years.

63 The 1995 accounts also record a rent item of $24,955, compared with $15,538 in the previous year. Subsequent accounts record no further rent payments by Martech. David Anderson could not categorically say, but assumed the 1995 rent item might relate to arrears on properties previously rented by Martech. John Anderson's evidence was that the rent shown for 1995 may have been an incorrect allocation of expenses. Apparently Martech would have been paying rent on its previous premises at least until August 1994.

64 Extracts from a handwritten ledger book of Martech for the period 24 April 1995 to 22 January 1996, and a computer ledger for the period 29 July to 29 November 1996, were tendered. They show that some items described as "debit interest" were recorded under a column headed "rent" and some were recorded under a column headed "bank fees". The total recorded under the rent column to 30 June 1994 was $24,412.94, which was about $500 less than the amount recorded as rent in the 1995 accounts. None of the amounts recorded as "rent" in the 1996 ledgers were ultimately recorded as "rent" in the 1996 accounts. There was no evidence that there were any "rent" entries in the ledgers in subsequent years.

65 Mrs Bell said that initially she kept Martech's books, which were ultimately provided to the accountants to prepare the annual accounts. She said that she put factory rent payments in the books as rent. She said that she noticed that the accountants gave some of the columns different names from the ones she used. She said that on one occasion after the factory was bought, probably in 1995, when the accountant had renamed columns, she asked David Anderson if she was doing something wrong and he said "No, it's OK". She said the same thing happened the next year and she queried him again. When asked which items or columns she was referring to, Mrs Bell said she could not specifically remember, except for telecommunications and utilities.

66 Mrs Bell then went on to refer to a conversation which she said she had with David Anderson in which she says she specifically queried him about the rent column and the fact that his accounts did not have a rent column. She says he responded that it would be fixed up the following year. Unfortunately, such a conversation was not mentioned in her witness statement, was not opened upon by Mr Lim and was not put to Mr Anderson.

67 In early 1995, Lorn Kaing took over from Mrs Bell as Martech's bookkeeper. She wrote most of the entries in the handwritten ledger book and the computer ledger. She gave evidence that Mrs Bell told her that she owned the factory and that interest charged by ANZ should be treated as rent. Mrs Bell did not tell her to make any adjustment to Mrs Bell's loan account or any other accounting adjustment to reflect these payments. Ms Kaing did not deal directly with the accountants regarding the company accounts and has never seen the final accounts. Nor did she have any relevant discussion with any of the directors.

68 Mr Bell and Mr Appleton signed Martech's accounts for the financial years 1994 - 2000 inclusive. In every one of those accounts, the deposit or the factory was recorded as an asset of Martech. Mr Bell said that he "browsed through the accounts" before he signed off on them. Mr Bell continued to argue his ex-wife's case when he described the process by which he signed the annual accounts and directors' minutes. He said the documents were brought to him, without any explanation as to their contents or bringing to his attention "the significant changes" the accountants had made in Martech's accounts in relation to the factory. In fact, there were no "significant changes" to the accounts made by the new accountants; as mentioned earlier, they simply continued to reflect the accounting treatment adopted by the old accountant, in circumstances where they received no instructions to the contrary from the Bells. Indeed, later in his evidence, Mr Bell conceded that at no time prior to December 1995 did he say anything to the old or new accountants about "how the property was to be accounted for or who was to own it or anything of that nature".

69 Mrs Bell signed the minutes of a directors' meeting and a shareholders' meeting, both purportedly held on 16 December 1994, which recorded that the 1994 final accounts had been tabled and adopted. The minutes for the shareholders' meeting record the following persons as shareholders present at the meeting: Mrs Bell, Raymond Appleton and Douglas Brazier. In fact, her evidence was that no such meetings had occurred.

70 The interim accounts were in existence at the time of the purchase and are admissible in support of Martech's claim that Martech was the true owner of the factory. The company accounts for subsequent years, which continue to record the factory as an asset of Martech, are not sufficiently contemporaneous with the transaction to be admissible in support of Martech's case.

71 In so far as there were some accounting and ledger entries for rent in the 1995 and 1996 financial years, whilst they might be admissible against Martech's interests, their true nature and the arrangements under which they were made has not been explained sufficiently to rebut the presumption of resulting trust.

72 Mrs Bell has never declared any rental income in her tax returns since 1994. The new accountants, primarily David Anderson, prepared her tax returns for the financial years 1996 to 2002. Mrs Bell never told the accountants to include rent from the factory in her income or to claim factory expenses as a deduction.

73 Mrs Bell could not explain why she has never declared any rent from the factory in her tax returns, save to say that it was her accountants' fault and all a "big mess up".

74 Mrs Bell also pleaded that at all material times the insurance policy taken out for the factory was taken out in her name as beneficial owner and there was no mention of Martech's alleged interest in the factory.

75 In fact, the only evidence before me was a renewal schedule for the period 28/6/00 to 28/6/01 and another one for the period 28/6/03 to 28/6/04. Both documents showed the insured as "KJ Bell and Martech Pty Ltd" and did not support Mrs Bell's claim.

76 Dick Menting is a close personal friend of the Bell family, particularly of Mr Bell. He is a former ANZ bank manager and financial consultant. In January 2002, he was requested by Mr Bell to look into Martech's accounts because ANZ was "pestering" for more financial information. By that time, Mr Bell was living in Vietnam and it seems that ANZ had some concerns about Matthew Bell's age and inexperience and the company's financial performance. Acting as a friend, Mr Menting helped prepare Martech's quarterly accounts, as well as personal statements for the family, including Mrs Bell, to provide to ANZ.

77 In January 2002, Mrs Bell filled in and signed as true and correct an ANZ form headed "Personal Statement", which purported to list her assets and liabilities, income and expenditure. Although she noted the factory as an asset, and recorded income from another investment property, she did not list any rental income from the factory as income. Whilst she and her husband were quick to blame the accountants for any failure to include rental income in her tax return, the accountants played no role in the preparation of this personal statement. She prepared it with Mr Menting's help. Her failure to include any income from the factory in this document is consistent with there being no agreement for Martech to pay rent.

78 In his covering letter to ANZ dated 29 January 2002, which enclosed the tax returns for Mrs Bell and Mr Appleton, Mr Menting said "[p]lease note that the income of Kerry does not show rental income". It is not clear whether this was intended to be a reference to her rental income from the factory as well as from her other investment property (which she apparently never included in her tax returns either). It does seem clear that in early 2002 Mr Menting was trying to help put the financial position of Martech and the Bells in the best possible light as far as ANZ was concerned. That may explain why he did not also tell ANZ that the expenses on any rental property would need to be offset against any rental income, and that Mrs Bell's net income would be accordingly reduced.

79 Much evidence was called on behalf of Mrs Bell relating to alleged discussions during 2002 between David Anderson and the Bells or Dick Menting. In summary, it was alleged that the Bells only learned that the factory was recorded as a company asset in Martech's books in 2002, and they thereafter made numerous attempts to have David Anderson correct the accounts.

80 Mr Menting gave evidence that when he saw the 2001 draft accounts, he noted that they showed the factory as being owned by Martech. He says he told this to Mr Bell, who expressed shock and told him to sort it out with David Anderson.

81 Mr Menting said he met with David Anderson at the factory in January 2002 and told him, in the presence of Mrs Bell and Matthew Bell, that Martech did not own the factory and it should be taken off Martech's books. Mr Menting said that David Anderson said he'd fix it. In general terms, Mrs Bell and Matthew Bell confirmed Mr Menting's evidence in this regard, although Matthew's evidence did not sit entirely comfortably with another part of his witness statement.[9]

82 David Anderson could not recall speaking with Dick Menting about the accounts. He said that had he been told at the factory that there was such a mistake, he would have fixed it up then and there.

83 Mr Menting gave oral evidence that he also told David Anderson at the January 2002 meeting that Mrs Bell had not paid any tax in relation to income from the property for 6 years and asked him to fix it up. Mrs Bell and Matthew Bell gave no evidence of overhearing such a statement. This allegation was not mentioned in Mr Menting's witness statement, opened on by Mr Lim or put to Mr Anderson for him to comment.

84 Mr Menting also said in cross-examination that he had spoken to David Anderson on the phone a couple more times after the January 2002 meeting, asking him to correct the accounts. Unfortunately, this allegation was also not mentioned in Mr Menting's witness statement or Mr Lim's opening, or put to David Anderson.

85 In cross-examination, Matthew Bell said that a few months after the January 2002 meeting, he asked David Anderson what was happening about fixing up the accounts. At first he said that David Anderson told him it would be fixed up at the end of that financial year. When it was pointed out to Matthew Bell that it was not "fixed up" in the 2002 accounts which he had signed as a director, he changed his evidence and said it had been agreed to be done in the following financial year. Once again, nothing about this alleged conversation was in Matthew Bell's witness statement, opened upon by Mr Lim or put to Mr Anderson.

86 Mr Bell's witness statement said that he saw David Anderson at least three times in 2002 and asked him if he had amended Martech's accounts. He said that Anderson told him he had not done so and wanted to wait until the end of the financial year. On the other hand, David Anderson gave evidence that he could not recall meeting Mr Bell once he left for Vietnam. Given my earlier comments about Mr Bell's performance as a witness, I would prefer David Anderson's evidence over Mr Bell's evidence in relation to this topic.

87 None of Mr Menting, Mr or Mrs Bell or Matthew Bell put anything in writing about these alleged conversations with David Anderson. That no file notes were kept may not be surprising, particularly in the case of the Bells, who are not sophisticated business people. However, it seems rather remarkable that they did not send a single letter or e-mail to Mr Anderson, given the magnitude and duration of the alleged mistake, the number of alleged conversations with him and the fact that he was apparently not going to fix it up immediately. This is particularly remarkable once discussions had commenced about the possible appointment of an administrator to Martech. As a former bank manager and financial consultant, Mr Menting would have been well aware of the need to keep some sort of documentary record, particularly in circumstances where such a significant error was alleged to have been made and not remedied despite repeated requests.

88 These alleged discussions in 2002 and 2003 are not admissible or probative on the question of Martech's intention back in early 1994. So much of the evidence led on behalf of Mrs Bell in relation to these discussions was not referred to in pleadings or witness statements, not opened on by Mr Lim and not put to David Anderson. I do not know whether that occurred due to recent invention on the part of Mrs Bell's witnesses or the way in which Mr Lim prepared and conducted the defence. In those circumstances, I do not believe it would be fair to make any credit findings based upon that evidence.

89 I am satisfied that Mrs Bell contributed a total of $15,045 of the purchase moneys, and that Martech paid the remainder of the purchase moneys, namely $268,123.95.

90 For the reasons expressed earlier, I am not satisfied that Martech agreed to make the alleged deposit loan or that Martech paid the balance of the purchase moneys in the capacity of a lender to Mrs Bell.

91 Applying the principles enunciated in Calverley v Green which were discussed earlier, I find that there is a presumption of resulting trust in favour of Mrs Bell and Martech in the shares in which they each provided the purchase moneys. Mrs Bell has not satisfied me that the presumption of resulting trust in favour of Martech has been rebutted.

92 Whilst this conclusion does not sit well with either side's "all or nothing" pleadings and submissions, in my opinion it represents the correct application of the relevant legal principles to the facts as I have found them.

93 For these reasons, I propose to make a declaration that the sum of $300,731.07 is held on a resulting trust for the plaintiffs and the defendant in the proportions of their contributions to the total purchase moneys of $283,168.95.

94 I will hear from the parties as to the precise form of orders, including any consequential orders necessary as a result of my declaration, and on the question of costs.

1. [1] The factory is the land comprised in certificate of title volume 9362 folio 829 and known as 49 Gatwick Road, Bayswater.
2. [2] Dyer v Dyer [1788] EWHC J8; (1788) 30 ER 42 at 43. The principle is well-established in Australian law, see for example: Napier v Public Trustee (WA) (1980) 32 ALR 153; Calverley v Green [1984] HCA 81; (1985) 155 CLR 242.
3. [3] Calverley v Green at 246, 266-7.
4. [4] Currie v Hamilton [1984] 1 NSWLR 687 at 690-1; cf Little v Little (1988) 15 NSWLR 43.
5. [5] Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353 at 365; Calverley v Green op cit at p298.
6. [6] Calverley v Green at 261.
7. [7] Charles Marshall Pty Ltd v Grimsley op cit; Calverley v Green op cit.
8. [8] Even in discussion, after hearing evidence from the accountants, Mr Lim kept insisting that the sum of $11,624 was money which Martech owed to Mrs Bell. He did not seem to understand that a negative liability is an asset.

[9] Matthew Bell's witness statement referred to a conversation with David Anderson in May 2003, in which Anderson told him (and not the other way around) that the books showed the factory as an asset of Martech and said that the first thing the administrator would do was sell the factory.