JUDGE1
PERRY J
The plaintiff claims that a property situated at 5 George Street,
Norwood, which was transferred into the sole name of the defendant
as
registered proprietor of an estate in fee simple in February 1981, is burdened
by a constructive trust in her favour pursuant
to which she is entitled to one
half of its present value, after giving credit to the defendant for the whole
of the purchase price,
which he paid, namely, $45,500. For the purposes of the
proceedings that value has been agreed at $205,000. Specifically, she claims
an equitable interest to the extent of one half of the balance after allowing
for the sum of $45,500, that is, one half of $159,500,
or $79,750.
2. The parties met in 1979. At that time, the plaintiff was a divorced lady
who lived with her three children then
aged 12, 10 and 9 years at a house of
which she was the sole owner, situated at 9 Edith Place, North Adelaide.
3. The defendant
is a divorced man who at the time the parties met lived
alone at 12 Figtree Court, North Adelaide, where he was the sole owner of
a
townhouse.
4. In about mid-1980 the parties commenced a relationship. At about that
time the defendant paid for the plaintiff
to accompany him on a holiday to
Fiji. While there, the parties decided to cohabit in a de facto relationship.
5. The defendant
owned several other house properties apart from the premises
at Figtree Court. The parties agreed, however, that neither the house
at
Edith Place, or at Figtree Court or the defendant's other properties suited
the needs of the household which they wished to set
up together, with the
plaintiff's three children. Accordingly, when they returned from Fiji they
began looking at houses, mainly
in the inner suburbs of Adelaide. Their
preference was for an old house which they could renovate. The plaintiff had
formal qualifications
in architectural design, and the defendant, who was a
qualified engineer, had previous experience in building construction and
alteration.
Both parties had had previous experience at renovating houses.
6. They did not intend to commence cohabiting until a suitable house
property
had been found, although they visited each other and kept company regularly in
the meantime.
7. On 26 January 1981, the
parties inspected the subject property at George
Street, Norwood. The property was a late Victorian bluestone villa which had
been
divided into three flats. The partitioning and other extensions to the
original structure had been poorly executed. The property
was generally in a
poor state of repair, and was littered with accumulated rubbish.
8. Despite the condition of the property, the
parties considered that it had
potential for their purposes.
9. On the same day, the defendant made a written offer to purchase
the
property for $45,500. In the written offer, which he alone signed, the
purchaser was described as "Richard Beresford and/or
nominee". The form of
contract provided for a cash settlement within fourteen days.
10. The words "Richard Beresford and/or nominee"
were written onto the
contract in the presence of both parties and the land agent representing the
vendor. I accept the evidence
of the defendant that the words "and/or
nominee" were inserted by him because he was unsure at the time whether or not
the property
would be transferred into his name or that of a company through
which he conducted his engineering business. He owned other properties
in the
name of that company.
11. When the plaintiff saw that her name was not written into the contract,
the plaintiff said something,
the precise terms of which are the subject of
conflicting evidence given by the parties. I find that the effect of what the
plaintiff said was that she wanted her
"name on the title".
12. When confronted by the plaintiff's assertion that she wanted her name
included, I am satisfied that the
defendant responded by saying that the words
"and/or nominee" would cover the situation, and that they could discuss the
matter after
they had left the land agent. In particular, I accept the
defendant's evidence that he said something to the effect, "Well, 'the
nominees' (sic) will cover that if we can come to some agreement about how you
are going to pay for it".
13. When they left the
agent, they immediately went to the defendant's house
at Figtree Court where a further discussion took place.
14. Before coming
to that discussion, I should say that before that day, the
parties had had discussions as to the terms upon which they proposed to
live
together.
15. I am satisfied that in those discussions the defendant was cautious about
committing himself to marriage. He
had had two previous marriages which had
failed, and he was reluctant to contemplate marriage with the plaintiff unless
or until
they had lived together for a time, and were sure of their
intentions. I find also that during the course of the discussions before
26
January 1981, the plaintiff had indicated that she would be prepared to pay
her share of the purchase price of a property once
it was found, and that to
do so she was prepared to sell Edith Place. The Edith Place property was
unencumbered.
16. I find that
there was a more specific discussion along the same lines
when the parties came back to Figtree Court after leaving the agent. I
accept
the defendant's evidence that the gist of the discussion was as appears in the
following passage of his evidence:
"I think
it was agreed that we would live together for a
trial period and then discuss, again, how I would include
Claire's name on
the title; probably by her selling Edith Place.
We both agreed that we would keep our houses in North Adelaide
as a fall
back position in case things blew up very early in the
piece, and Claire could go back to Edith Place and would have
lost
nothing, and I would have acquired another investment
property and gone back to North Adelaide, which I probably would
have
done early, or I would live at Norwood and let my place -
go on letting my place at North Adelaide."
17. I reject the plaintiff's
evidence insofar as it is inconsistent with that
account, and in particular when she asserted that if after a trial period they
decided
"that our relationship would work out", that the defendant would then
transfer the house into joint names without any contribution
from the
plaintiff.
18. It is not without significance that following the failure of his second
marriage in 1975, the defendant
was obliged to make a property settlement in
favour of his second wife which he regarded as unreasonable, having regard to
what he
perceived to be the lack of any contribution to the property (which
was the Figtree Court property) by her. This explains his evidence
as to the
stand taken by him with respect to the subject property, when he said: "I
didn't want to get sunk with another joint property
and then the relationship
fall through in a short period."
19. I am satisfied, though, that there was a discussion between the parties
as to Mr Beresford making a will in the plaintiff's favour. In particular, I
accept the defendant's evidence that as an alternative
to the plaintiff
purchasing a full share of the property, after they had been living for a
reasonable time together, he agreed to
make a will leaving her a life interest
in the property. However, I doubt his evidence that his willingness to do so
was because
he "anticipated we would have a long term relationship". I
suspect that he made that offer to placate the plaintiff. I am not sure
how
genuine he was about it.
20. At all events, on that somewhat shaky foundation, the transaction moved
ahead. The defendant's offer made on 26 January 1981 was accepted by
the
vendor, and settlement was effected about a fortnight later.
21. On settlement, the defendant advanced the whole of the purchase
price of
$45,500.
22. The parties did not move into the property until August 1981. Between the
date of settlement and the time
when they moved in, a considerable amount of
work was done on the property. Indeed, the plaintiff says that following the
signing
of the contract, and before settlement, she spent much of her time
clearing the property of rubbish.
23. After settlement, the partitions
were demolished, various archways
restored, some walls, particularly to the rear of the property, demolished and
rebuilt, and a room
separate from the house and adjacent to a corrugated iron
walled shed against the back fence of the property was renovated and turned
into what was described as a studio for the plaintiff.
24. There was much painting and redecoration following the more major
building
work.
25. As I have said, the parties moved into occupation and cohabited in the
premises from August 1981. Eleven years later,
namely, in September 1992, the
plaintiff and her children left the property and the defendant. They have not
cohabited since.
26.
The plaintiff's evidence was that with respect to the period from the
signing of the contract down to the date upon which they moved
into
occupation, she spent almost every day, including weekends, at the property.
During that period, the defendant was still engaged
in his engineering
business, and his contribution to the work on the property was mainly confined
to weekends.
27. At some stage,
just when it was is not clear, the defendant retired from
active work as an engineer, although he retained a position as director
of his
company. The evidence suggests that during the time they lived in the house,
the parties were more or less continually working
on it, but the most active
period must have been before they moved in.
28. The plaintiff gave much evidence detailing physical work
which she
carried out during the course of the renovations, and as to time spent
visiting antique shops and other suppliers of materials
which were
incorporated into the work, and furniture and other contents. The defendant,
on the other hand, made light of the plaintiff's
contribution, and maintained
that he had put in most of the physical work involved (his evidence was that
he did 95 per cent of the
physical work), and all of the money needed for
tradesmen and materials, and that while the plaintiff would talk about doing
things,
she rarely got down to doing much.
29. After carefully considering their evidence, I have reached the view that
there is more truth
in what the defendant says than in the assertions of the
plaintiff. On the other hand, clearly, in the wake of their failed
relationship,
there is still much bitterness between the parties which caused
them to adopt during the course of the case, extreme positions.
In the
result, the defendant's denial of any substantial contribution by the
plaintiff is overstated to a degree, although I have
no doubt that in terms of
both physical work and financial contributions, almost all of what was put
into the property came from
him.
30. It would serve no useful purpose to go through the evidence of the
plaintiff in respect of each of the various items of
work which she maintains
that she was responsible for, and for various payments she says that she made.
It is sufficient to say that
with the reservation which I have indicated, I
have preferred the evidence of the defendant where it conflicts with that of
the plaintiff
as to the nature and extent of the work, and for that matter, as
to their respective financial contributions.
31. The plaintiff
also gave evidence of contributing design concepts,
including the preparation of sketches offering ideas as to how the work both
inside and outside the house might be executed. She certainly made a
contribution towards matters of design and layout, but in my opinion this
was
far more basic and inconsequential than she was prepared to concede. The
plans upon which council approval was obtained, and
the technical drawings
upon the basis of which demolition and construction proceeded, were all done
by the defendant.
32. The plaintiff
sold her Edith Place property for $85,000 in August 1985.
33. As to contributions in terms of money, in her Statement of Claim,
the
plaintiff asserts that from the date of settlement until sale of the Edith
Place property, she "expended moneys in the approximate
amount of $13,000
aside from her contribution in terms of labour" (para 25); that between August
1981 and August 1985 she expended
approximately $18,000 "on furniture and
household effects for the George Street property" (para 31); and that she
spent $16,000 from
the proceeds of sale of her house property at Edith Place
"towards the purchase of further furniture and effects, and towards effecting
further improvements on the George Street property" (para 33).
34. Expenditure on furniture and household effects is irrelevant
to the
issues in the case. I was given to understand that a division of chattels has
already taken place between the parties. The
claim for equitable relief
pursued in the proceedings turns on contributions alleged to have been made in
terms of physical labour
and money spent towards the fabric of the house
itself.
35. While it is true that the parties shared the cost of ordinary household
expenses, the defendant paid or reimbursed to the plaintiff all of the rates
and taxes, fuel and the like outgoings and gave her
a regular amount each week
towards the cost of food. The plaintiff must, nonetheless, be treated as
having made some contribution
to their living expenses, but it is impossible
on the evidence to say how much or in what proportion. The situation in that
respect
is complicated by her need to look after her children, albeit with
some support from her former husband, and social security. The
property was
owned freehold, and there were no mortgage repayments. In those
circumstances, the only basis upon which an equitable
interest could be
regarded as arising is by reference to the plaintiff's contribution, either in
money or labour, to the physical
improvement of the house. Mr Richards for
the plaintiff more or less conceded this during the course of his closing
address.
36.
The plaintiff applied $48,000 of the proceeds of sale of her Edith Place
property towards the purchase in June 1986, with the defendant,
of a property
situated on Hindmarsh Island. The defendant had by then sold his property at
North Adelaide for over $100,000, and
had sufficient money to buy the
Hindmarsh Island property which was purchased for a little more than $95,000.
I accept the defendant's
evidence that he discussed with the plaintiff whether
she wanted to put her money into the Norwood property or take up a half share
in the Hindmarsh Island property, and that she indicated that she would prefer
to put it into Hindmarsh Island.
37. The Hindmarsh
Island property was duly purchased by them jointly in that
fashion, and transferred into their names as joint tenants. On 24 May
1985
the parties signed an "Agreement" as to the basis upon which they owned, and
agreed to maintain, the Hindmarsh island property.
That agreement provides
basically for an equal financial contribution by each of them.
38. The plaintiff gave evidence as to her
application of the balance of the
proceeds of sale of the Edith Place property. Putting that evidence against
other evidence from
the defendant as to his knowledge of various payments made
by her, I am not satisfied that any substantial amount was put into the
Norwood property following sale of Edith Place. The plaintiff gave evidence
that she bought a car costing $10,000 and put another
$12,000 in trust
accounts on behalf of her three children. She may have repaid a loan due to
Satisfac of the order of $10,000 - $12,000, but the evidence as to that is not
conclusive.
39. In assessing the credit to be given to the plaintiff's assertions which
find expression in the Statement of Claim,
and in particular the paragraphs to
which I have referred in which the various alleged financial contributions are
indicated, it
is necessary to have regard also to the other sources of income
available to the plaintiff.
40. It does not appear that the plaintiff
had any regular employment before
early 1988 when she commenced full-time employment with the Housing Trust.
She ceased work with
the Housing Trust in March 1991. She gave evidence that
during the time she was there she earned an annual salary of the order of
$25,000 gross.
41. In 1983, she commenced a course of study which lasted for some three
years and which led to her obtaining a Bachelor
of Arts in interior design.
She obtained this degree before commencing with the Housing Trust. On either
side of the period she
was employed by the Housing Trust, I am satisfied that
she had some casual and intermittent work as a consultant in architectural
design, and in school teaching. But there is very little satisfactory
evidence which could lead to a finding that she earned much
in her other work
apart from the Housing Trust.
42. She also received some maintenance for her children which at one stage
was of
the order of $15 per child per week.
43. Until its sale, she received $100 per week, which later rose to about
$130 per week with
respect to her renting out of the Edith Place property.
44. Be that as it may, the evidence of financial contributions to the
improvements
effected at the George Street property was both fragmentary and
unconvincing. Although the plaintiff prepared a detailed list of
certain
alleged contributions which she had made, accompanied by some accounts and
receipts, many of the items in that list relate
simply to contents and also to
expenses such as rates and taxes, and fuel and other accounts. As to the
financial contributions which
were said to have been made respectively by the
parties, I prefer the evidence of the defendant.
45. The plaintiff was candid enough
to admit during the course of her
evidence that she never "bothered about finances" and that her "financial
affairs are chaotic".
46. The defendant produced a long schedule of items of material and labour
contributed by tradesmen between 19 February 1981 and
16 December 1992,
totalling $26,255.10. Some of those items were disputed by the plaintiff, but
most of them were not, and she conceded
that those which were not were paid
for by the defendant as detailed in the schedule.
47. The defendant's evidence was that even
when the plaintiff did pay for a
few items, he made a point of reimbursing her because he was wary of her
becoming financially involved
in the house during the course of its renovation
for fear of complications if they should separate.
48. I should say, in case it
might be thought that I have overlooked the
matter, that at one stage before the Edith Place property had been sold, the
plaintiff
said to the defendant words to the effect (to quote the evidence of
the defendant) "how about drawing up a document that would ...
put my name on
the title if we don't get married". In response, the defendant drew up a
document, which he showed to her, and which
provided, inter alia, for payment
by her of a fair price, and for an option in favour of the defendant to
repurchase the half share
if they later separate. I accept the defendant's
evidence that when she read the document, the plaintiff tore it up.
49. In view
of the unsatisfactory nature of the plaintiff's evidence
generally and the absence of any reliable records indicating how much money
she expended on the property, it is very difficult to assess what figure, if
any, should be allowed for both the physical contributions
and financial
payments made by her. Certainly there has been no proof that anything like
the amounts pleaded was expended.
50. In all the circumstances, I would
assess the financial value of the
contributions made by the plaintiff, either in terms of labour and time, and
also allowing for
whatever payments of money she made for or towards items
which were incorporated in the renovations, at $7,500.
51. Having found
that the plaintiff has made a contribution to the subject
property which in money terms should be valued at the amount of $7,500,
the
only remaining question in the case if whether the circumstances of that
contribution provide a proper basis for a finding that
the defendant holds the
property in trust to the extent of that contribution.
52. On the findings which I have made, it could not
be concluded that there
was an agreement between the parties that the plaintiff's contribution would
be recognised in any way. There
was no common intention to create a trust
with respect to the land. I am satisfied on the evidence that it was the
defendant's intention
throughout that he would only transfer to the plaintiff
an interest in the Norwood property if she paid for it. I have specifically
rejected the plaintiff's evidence that there was an understanding between them
that if their relationship survived a test period
the defendant would accord
to her, for no further consideration, a joint interest in the property. That
view of the matter, however,
does not conclude the question whether the
plaintiff is entitled to relief by way of constructive trust.
53. The circumstances in
which a constructive trust will be found to exist
where there have been contributions to a home in which the parties have
cohabited
has, over the years, been the subject of conflicting decisions in
the United Kingdom and in Australia. However, certain principles
now seem
clearly to have been established by the High Court, in particular in the cases
of Muschinski v Dodds [1985] HCA 78; (1986) 160 CLR 583, and Baumgartner v Baumgartner [1987] HCA 59; (1987)
164 CLR 137.
54. In Muschinski, Deane J (with whom Mason J agreed) observed (160 CLR at
615) that a constructive trust does not represent "a
medium for the indulgence
of idiosyncratic notions of fairness and justice". It is only to be made
available according to established
equitable principles. He said further
(616): "The mere fact that it would be unjust or unfair in a situation of
discord for the
owner of a legal estate to assert his ownership against
another provides, of itself, no mandate for a judicial declaration that the
ownership in whole or in part lies, in equity, in that other....."
55. However, after making those observations, His Honour went
on to consider
the situation where there is a failure of a joint venture or joint
relationship and a question arises as to the recognition
to be given to
contributions of capital by the persons involved. He said (620):
"... 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 to 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: cf.
Atwood v Maude (1868) LR 3 Ch App at 374-375, and per Jessel MR,
Lyon v Tweddell (1881) 17 Ch D 529 at 531."
56. That passage was specifically approved in the joint judgment of Mason CJ,
Wilson and Deane JJ in Baumgartner (164 CLR
at 148) where Their Honours add
the comment: "In rejecting the notion that a constructive trust will be
imposed in accordance with
idiosyncratic notions of what is just and fair his
Honour acknowledged that general notions of fairness and justice are relevant
to the traditional concept of unconscionable conduct, this being a concept
which underlies fundamental equitable concepts and doctrines,
including the
constructive trust."
57. True it is that an agreement to transfer a joint interest at some time in
the future, if
the plaintiff paid for it, might be thought to preclude the
creation of a constructive trust arising by reason of contributions made
to
the property before any such transfer. But I have no doubt that if their
relationship had not failed, and the plaintiff had wished
to purchase a half
share of the subject property, the defendant would not only have carried into
effect their understanding that
he would do so, but that he would have been
prepared to give some credit for the time and money which the plaintiff had
put into
the property. His attitude in the witness box in the context of
adversarial proceedings following the breakup of their relationship
cannot be
regarded as a reliable indication of what his attitude might have been in that
situation.
58. Given my view as to what
his attitude would have been in those
circumstances, it would seem to me that a proper foundation has been
established by the evidence
for the recognition in equity of a constructive
trust to the extent of what I have found to be the plaintiff's contribution.
This
is so, given that the relationship between the parties has now broken
down, and the opportunity for the plaintiff to purchase a half
share in
accordance with the undertaking which existed when they cohabited, has been
lost.
59. The plaintiff is entitled to a declaration
that the defendant holds his
interest in the Norwood property on trust for the plaintiff to the extent of
$7,500. Just how that
interest is to be protected and enforced, and whether
or not there should be a decree in equity that the plaintiff be entitled to
a
charge on the property to that amount, I will raise with counsel upon delivery
of judgment.
60. I will also hear counsel as to
the question of costs.