Mr Crawford prepared the draft answer " No " in relation to the requisition.
21 Mr Crawford also prepared draft answers to requisitions in relation to securities to be provided by Geltrom over lot 34 Seamist Drive. In relation to the same requisition in relation to the advance on security of lot 34, the answer was "Yes Geltrom Pty Ltd as trustee for the Geltrom Unit Trust".
22 Mr Thompson had no recollection of the requisitions, or the answers to requisitions. He accepted that if he had any concerns, he would have contacted Mr Crawford immediately. He thought it probable that he gave the document to his accountant to go through before sending the answers back to Mr Crawford.
23 These answers to the requisitions are clearly inconsistent with Mr Thompson's intending at that stage that Geltrom, in its capacity as trustee of the Geltrom Unit Trust, should be the beneficial owner of all three properties.
24 On 26 May 1995, Mr Crawford had a telephone conversation with Mr Hillier. His file note of the conversation records:
" Explained, 'will have to accept as is'."
25 The purchase of lot 43 was completed on 2 June 1995. The purchase of lot 238 was completed on 9 June 1995. After settlement of the purchase, Mr Crawford completed a form of notification of change of ownership required to be lodged at the Office of State Revenue and the Registrar of Titles with the Department of Lands in Queensland. Mr Thompson was shown as the transferee and purchaser. There was a space to be completed if the transferee/purchaser was a trustee. The space was left blank.
26 The defendant also points to the fact that the vendor of lot 43 assigned the benefit of the lease of that lot to Mr Thompson, and that Mr Thompson entered into fresh tenancy agreements with respect to lot 238 after settlement. However, that is not inconsistent with Mr Thompson's being a trustee of the properties.
27 On 30 June 1995, 64,000 further units were issued in the Geltrom Unit Trust to Mr Thompson. 71,000 units were issued in the name of "Geltron (sic) Super Fund No. 1", and 11,000 units in the name of "Geltron (sic) Super Fund No. 2". Ultimately, the units held by Mr Thompson in the Geltrom Unit Trust were redeemed. However, that did not occur until 1 July 1999.
28 All of the rents in respect of lots 43 and 238 were received by Geltrom and accounted for by it as income held on the trusts of the Geltrom Unit Trust. It met all of the mortgage repayments and other expenses in relation to the properties. This included rates, insurance, repairs and agents' commission. Mr Thompson did not include any of the income or expenses of the investment properties in his personal income tax returns. The insurance policies were issued to Geltrom.
Resulting Trust
29 The plaintiff contends that the defendant holds lots 43 and 238 on either a resulting trust or a constructive trust. It is convenient first to consider whether, on the principles applicable to resulting trusts, Geltrom, in its capacity as trustee of the Geltrom Unit Trust, acquired a beneficial interest in the land when it was purchased, and if so, what interest. It will then be necessary to consider whether it acquired any different beneficial interest, either at the time of purchase or subsequently, by reason of a constructive trust.
30 The purchase price and the costs of purchase of both properties were wholly funded by borrowings from the Bank of Melbourne. Although deposits of $1,000 were paid, and there were interim borrowings to meet expenses and stamp duty, I infer that these were repaid from the loans provided by the Bank of Melbourne. The borrowings were made by Geltrom, Mr Thompson and Mrs Thompson jointly. The properties were purchased as investment properties. The property which the parties intended to acquire was property subject to the mortgage.
31 The initial presumption arising from Mr Thompson being the registered proprietor of the lots is that he has full ownership of them (Currie v Hamilton [1984] 1 NSWLR 687 at 690; Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 at [128]). However, as three persons provided the purchase price, but the land was put only in the name of Mr Thompson, there is a presumption that the beneficial ownership of the property is held in the proportions in which they each contributed to the purchase price (Calverley v Green (1984) 155 CLR 242 at 246, 258, 266-267). The fact that Geltrom made all the mortgage payments does not mean that it should be treated as having made all of the contribution to the purchase price. (Calverley v Green at 257-258, 262-263, 267-268; Currie v Hamilton [1984] 1 NSWLR 687 at 692-693). It is unnecessary to consider whether this presumption arises in the case of Mrs Thompson (Mercier v Mercier [1903] 2 Ch 98; Ingram v Ingram [1941] VLR 95 at 102; Calverley v Green at 247; compare Brown v Brown (1993) 31 NSWLR 582 at 598-599 per Kirby J; Nelson v Nelson (1995) 184 CLR 538). She has made no claim in these proceedings. It is presumed that Mr Thompson held his title to the two lots on trust for Geltrom to the extent of a one-third beneficial interest in those properties. That presumption can be rebutted by evidence of actual intention.
32 There are conflicting indications of Mr Thompson's intentions.
33 In my view, his intention was that the properties would be acquired beneficially by his superannuation funds. However, that was not possible as the trustee of those funds could not borrow to acquire the properties. Nor would that intention be given effect to by Geltrom acquiring the beneficial ownership of the properties as trustee of the Geltrom Unit Trust, as the trustee of the superannuation funds was not the only holder of units in the trust. A unit in the unit trust did not confer on the holder of the unit any interest in an asset forming part of the trust fund of the unit trust.
34 I do not regard the minute produced by Mr Hillier of a resolution of directors of Geltrom of 4 April 1995 as displacing the other evidence of Mr and Mrs Thompson's intentions. The minute was not signed by Mr or Mrs Thompson. It was prepared by Mr Hillier in an attempt to regularise matters as it was thought to be too expensive either to transfer the legal title to Geltrom or, presumably, have Mr Thompson execute a declaration of trust. As the minute is not a declaration of trust, and, even if it were, it could not be admitted as such without duty being paid on it, its evidentiary value is as to the intentions of Mr and Mrs Thompson in relation to how the beneficial ownership of the properties should be held. Mr Thompson had no recollection of what was said at the meeting of 4 April 1995. He and Mrs Thompson did not follow their usual practice of signing a record of what took place at the meeting. They did not give evidence of having reviewed the minute at the time and having understood or agreed with it. All Mrs Thompson could say of the meeting was that she must have attended it, but she did not recall having done so. In those circumstances, I do not regard the minute as representing their actual intentions. Rather, it was Mr Hillier's attempt to regularise the position. If the minute did reflect Mr and Mrs Thompson's intentions, one would expect that Mr Thompson would have completed the purchase of the properties "in the name of the Geltrom Unit Trust" as the resolution required.
35 I accept that Mr and Mrs Thompson did not distinguish in their own minds between the Geltrom Unit Trust and their superannuation funds. They had the mistaken belief that the two properties previously acquired in Queensland were held by their superannuation funds. They would readily have accepted their accountant's advice that the properties should be purchased by the trustee of the unit trust. They bought lot 34 in the name of the Geltrom Unit Trust and apparently thought that by doing so they were buying it for their superannuation funds. Their actual intentions at the time, as they declared them to be to Ms Jurca and the finance broker, were that the properties should be acquired by their superannuation funds, but that the legal title should be held by Mr Thompson so he could borrow the purchase price.
36 The fact that, following the completion of the purchase, all of the income of the property was derived by Geltrom, and accounted for as being held on the trusts of the Geltrom Unit Trust, and the fact that all of the mortgage payments and other expenses in connection with the properties were incurred by Geltrom as trustee of the Geltrom Unit Trust, is evidence from which it can be inferred that it was then the intention of the parties that Geltrom, in that capacity, be the beneficial owner (Burns v Burns [1984] Ch 317 at 329; Gissing v Gissing [1971] AC 886 at 900, 907; Grant v Edwards [1986] Ch 638 at 648-649, 654; Green v Green (1989) 17 NSWLR 343 at 355). In principle, evidence of later payments and derivation of income can be used to infer the parties' intentions at the time of purchase. However, given the express statements of Mr and Mrs Thompson of their intentions at the time of purchase, I do not think that such material carries much weight in ascertaining the parties' intentions at that time. I prefer the express declarations of Mr and Mrs Thompson. I infer that they left the accounting of such matters to Mr Hillier.
37 The evidence as to the parties' actual intentions confirms that there was no intention on the part of Geltrom to contribute the money borrowed by it, along with Mr and Mrs Thompson, to Mr Thompson as a gift. The defendant submitted that it should be inferred that Geltrom was only added as a borrower because it was to give a mortgage over lot 34, to support the loan for the purchase of lot 43. In substance, he submitted that Geltrom was a guarantor of a loan made to Mr Thompson, or perhaps to Mr and Mrs Thompson. I do not accept this characterisation of the documents. The contract of loan unequivocally provides for a joint borrowing by all three parties.
38 The evidence of the parties' intentions at the time of the purchase of lots 43 and 238 as to who would beneficially own them is confused and contradictory. The presumption of a resulting trust does not "give way to slight circumstances" (Shephard v Cartwright [1955] AC 431 at 445; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365; Brown v Brown at 596). It has not been rebutted. I therefore conclude that at the time of purchase, Geltrom was entitled to a one-third beneficial interest in both properties.
Constructive Trust
39 A "common intention" constructive trust will arise preventing an unconscientious denial by the legal owner of another party's rights if the parties have agreed, or it was their common intention, that the claimant should have an interest in the property owned by the other and the claimant acted to its detriment on the basis of that agreement or common intention (Grant v Edwards; Green v Green; Maharaj v Chand [1986] AC 898 at 907; Shepherd v Doolan [2005] NSWSC 42 at [31]). It is likely that at some time after completion of the purchase Mr and Mrs Thompson and Geltrom (which was then only the trustee of the unit trust) had, and acted on, the common intention that Geltrom was the beneficial owner of the properties which it held on that trust. That is consistent with the way the parties accounted for the purchase and for the income derived and expenses incurred in relation to it. Mr Thompson could have consummated that intention by executing a declaration of trust, although there would then have been stamp duty consequences. He did not do so. It is not sufficient in order to establish a constructive trust that the parties had a common intention as to the beneficial ownership of the properties. Geltrom must have acted to its detriment in reliance on that common intention.
40 The same question, of whether Geltrom has acted to its detriment in reliance on the parties' common intention so that it is unconscionable for Mr Thompson's trustee in bankruptcy to deny its beneficial interest, would arise if the proper conclusion were that, at the time of purchase, Mr and Mrs Thompson intended that the properties be beneficially acquired by Geltrom as trustee of the Geltrom Unit Trust.
41 The detriment Geltrom points to is that it has paid instalments under the mortgage and incurred all the other expenses associated with holding the properties, and that these exceed the income derived from the properties. However, under the resulting trust, Geltrom is a one-third beneficial owner of the properties. It is entitled to contribution from the other borrowers for having paid the joint debt, and is entitled to a charge to secure that entitlement (Ingram v Ingram at 102; Currie v Hamilton at 692-693; Calverley v Green at 263). No argument was advanced on the question whether Geltrom would be liable to account for two-thirds of the rent received, or be entitled to an allowance for two-thirds of expenses paid in relation to the property (Lee v Dickerson [1884] 15 QBD 60; Forgeard v Shanahan (1994) 35 NSWLR 206 at 222). It has received all the rents, and if it is liable to account for two-thirds of the rents received, it must be entitled to recoup two-thirds of the other expenses paid. Once its one-third beneficial interest and its rights of contribution secured by charge are taken into account, I do not accept it suffered a relevant detriment. Indeed, for Geltrom or the plaintiff to take the whole of the beneficial interest would give it a windfall at the expense of Mr Thompson's creditors. It would receive a windfall because the purchase price was contributed jointly by Geltrom and by Mr and Mrs Thompson. Even if the parties' intentions were as simple as the plaintiff contends, it would not be unconscionable for the defendant to deny that Geltrom has any greater interest in the properties than a one-third beneficial interest and a right of contribution secured by a charge.
42 Reduced to its essentials, this case involves Mr and Mrs Thompson as, beneficiaries of their superannuation funds, seeking to keep the whole of the properties out of the reach of Mr Thompson's creditors, where they were not prepared to pay the stamp duty which would have been payable in 1995 had they substituted Geltrom as the purchaser, or had Mr Thompson executed a declaration of trust. It is not unconscionable for Mr Thompson's trustee in bankruptcy to deny Geltrom's claim, except to the extent Geltrom has acted to its detriment. The requirements of conscience are satisfied by recognising Geltrom as a one-third beneficiary under a resulting trust, and its secured right of contribution.
43 For these reasons, I reject the plaintiff's claim that the defendant holds the two properties on trust for it, and that it holds the beneficial interest in those properties on the trusts of the Geltrom Unit Trust. In my view, it is beneficially entitled as tenant in common to a one-third interest in the properties. As successor to Geltrom, it is also entitled to an equitable charge over the properties to secure its rights of contribution. There was no detailed evidence as to the extent of any such right of contribution. Nor was the matter the subject of argument. If necessary, I will hear further argument on that question.
44 Accordingly, I direct the parties to bring in short minutes of order in accordance with these reasons. If the parties cannot agree upon the declaration to be made as to the plaintiff's right of contribution, I will hear argument on that. I will also hear argument on the question of costs.