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[2012] QSC 412
General information, not legal advice.
Supreme Court of Queensland
2012-12-14
Henry J
Original judgment source is linked above.
Smithfield Law as town agents for Marks Griffith and Bova for the defendants
[1] Silkwatch Pty Ltd, the first defendant, is the registered proprietor of freehold property at lot 155 Colenso Road, Killaloe near Port Douglas ("the land"/ "the property"). It acquired the property on 10 April 2006.
[2] The plaintiff claims she contributed to the purchase of the property and seeks the following relief:
"(1) A declaration that the First Defendant holds the land on trust for itself and the Plaintiff as tenants in common pursuant to a constructive trust as 52/100 for the Plaintiff and as to 48/100 for the First Defendant.
(a) a declaration the First Defendant holds the land on trust for itself and the Plaintiff as tenants in equal shares; and
(b) on a sale of the land there be an equitable account as between the Plaintiff and First Defendant to account for the Plaintiff's payments for maintenance and improvement of the land.
(3) An order that the trusts be performed and that the First Defendant transfer the Plaintiff's interest in the land to the Plaintiff.
(4) An order pursuant to Section 38 of the Property Law Act appointing statutory trustees for the sale of the land."[1]
[3] The plaintiff, Joyce Wakefield, asserts she became interested in purchasing the property during a visit to Port Douglas in May 2005. Mr Edge, the alleged former de facto husband of the plaintiff,[2] conducted negotiations on her behalf with the vendor's real estate agent. A contract for the purchase of the property by the plaintiff was entered into on 6 June 2005.
[4] At that time the plaintiff was using the name Joy Barlow rather than Joyce Wakefield. She explained in evidence that Barlow was her maiden name, which she still used occasionally, but no explanation was advanced as to why she chose to use it and the shortened form of her first name in this particular instance. More curiously, in the course of negotiations conducted by Mr Edge, he went by the name Will Barlow and represented himself to be the husband of the plaintiff.[3]
[6] Mr Edge became known to one Rod Brennan, the husband of the second defendant, in about June 2005.[6] Mr Brennan sold his share in a business known as Nature Care College for $2.5 million in October 2005. Discussions must have occurred between Mr Brennan and Mr Edge for, on 8 January 2006, Mr Brennan contacted Cameron Price, the solicitor acting in the plaintiff's initial ill-fated attempt to purchase the property, and advised that he and Mr Edge wanted to purchase the property in a company name and that he would be contributing half of the purchase price.[7]
[7] On 12 or 13 January 2006, Mr Brennan and his wife, Anna, the second defendant, inspected the property with Mr Edge.[8] The plaintiff was not present. Mr Brennan had previously told his wife Mr Edge had invited him to buy the property with him and referred to the prospect of redeveloping the block by subdividing it and retaining an area for their own houses.[9] During the inspection Mrs Brennan had a conversation with Mr Edge in which he explained he wanted to "go halves" with Mr Brennan because he could trust him.[10] Mrs Brennan alleges that during the inspection Mr Brennan and Mr Edge agreed to proceed with their acquisition of the property.[11] She took a photograph of them shaking hands to confirm their agreement.[12]
[8] In contrast, the plaintiff claims to have reached an agreement with Mr Brennan at a time after the Brennans' inspection of the property had occurred. She asserts that, on what must have been the day after the inspection, she and Mr Edge collected Mr Brennan from Treetops Resort in order to go for a drive around the local district. She deposes to a conversation with Mr Brennan while they were having a cigarette outside the resort with Mr Edge standing nearby. She claims Mr Brennan said he and his wife liked the property and that they would buy their share in his wife's name as a retirement venture and he allegedly told the plaintiff that he would get in touch with her solicitor to sort out the necessary change to the contract.[13] She asserts that later that day, whilst at the Julatten Tavern, Mr Brennan suggested he and the plaintiff could look at subdividing the property after five years and go ahead and each build their own houses on the property.[14] She asserts that at some unspecified later date Mr Brennan contacted her and told her, instead of Mrs Brennan and he being purchasers on the new contract, he had purchased a company named Silkwatch Pty Ltd ("Silkwatch") that would purchase the property and that his wife would have 50 per cent of the shares in that company. The plaintiff alleges Mr Brennan told her he would arrange for Mr Price to do up a trust deed for her shares that Mr Brennan was holding in trust for her.[15]
[9] In early January 2006, Mr Edge contacted Mr Price and told him a replacement contract had been agreed and that Mr Price would hear from Mr Edge's partner with regard to proposed ownership.[16] On 8 January 2006, Mr Price was telephoned by Mr Brennan who told him he was involved with Mr Edge and that they wanted to purchase the property in a company name. Mr Brennan explained he was contributing half of the eventual purchase price.[17]
[10] On 22 February 2006, Mr Price received $165,000 into his trust account. He billed the plaintiff for all work done in respect of his file relating to the initial ill-fated contract and credited the balance of $161,683 to the new file in which he was acting for Silkwatch.[18] Thus while the payment was $165,000, the amount of it which contributed to the purchase was $161,683.
[11] The deposit of $165,000 took the form of a bank cheque issued on 22 February 2006 acquired by "Mrs. Joyce Wakefield", the plaintiff, endorsed with the payee being "Cameron A. Price Solicitor".[19] The Mudgee branch of the Westpac Bank issued that bank cheque. The plaintiff held an account with Westpac and her statement of account for the relevant period indicates that on 22 February 2006 she withdrew $240,215 from the Mudgee branch of the Westpac Bank.[20] The obvious inference arising from that evidence is that the payment to Mr Price of $165,000 was funded by part of the withdrawal of funds from the plaintiff's bank account.
[12] Mr Price wrote to the lawyers acting for the vendor on 22 February 2006 explaining he acted for Silkwatch, which was in the process of being incorporated and that Silkwatch and Mr Hanford, the vendor, had agreed to the sale of the property to Silkwatch.[21]
[13] Also on 22 February 2006, Mr Price wrote to the plaintiff, still addressing her as Joy Barlow, confirming his receipt of the $165,000 into trust and his application of $3,317 of it to the account for the failed purchase attempt by her. Mr Price's letter informed her that the new purchaser was Silkwatch and that Mrs Brennan held both shares in the company and was the sole director and secretary thereof.
[14] On 17 March 2006 a new contract was concluded as between Hanford and Silkwatch for a purchase price of $2.3 million. It provided for $1.15 million to be payable at settlement on 6 April 2006 and the balance on 28 September 2006. The payment of the balance was to be secured under the contract by a mortgage in favour of the vendor with a deed of guarantee and indemnity by Mrs Brennan.[22]
[15] The plaintiff's Westpac statement of account indicates that on 6 April 2006 there was a withdrawal from her account, again at Mudgee, of $464,275.86. That same amount was then paid into the trust account of Cooper Grace Ward, the solicitors then acting for the vendor.[23] The plaintiff's evidence was that she had made arrangements for her bank to transfer the amount of $464,275.86 to the trust account of the vendor's solicitor.[24]
[16] The contract completed on 6 April 2006. Allowing for payments that had also been made for Mrs Brennan, a total of $1.38 million had been paid and the balance required to complete the purchase was $920,434.86.[25]
[17] On 1 May 2006, Mr Brennan lent Mr Edge $400,000 repayable within two weeks with interest.[26] The loan was not repaid.
[18] Mr Brennan died on 16 June 2006.[27]
[19] On 29 August 2006, Marks Griffiths and Bova, solicitors acting for the estate of Mr Brennan, wrote to Mr Price to make arrangements for the telegraphic transfer of funds and confirmed their instructions that Mr Edge was to provide Mr Price "with his one-half of the funds due, i.e. $575,000".[28] On 9 September 2006, Cameron Price Lawyers wrote to Marks Griffiths and Bova confirming that:
"Mr Edge has confirmed that he will be transferring funds to my trust account on or about 26 September 2006".[29]
[20] While payments were made on behalf of Mrs Brennan towards the balance prior to the final repayment date, none were made by the plaintiff or Mr Edge. On 6 October 2006, the vendor extended the repayment date to 31 October 2006.[30]
[21] On 26 October 2006, Mr Price emailed the solicitors for the vendor and the solicitors for Mr Brennan's estate saying:
"I have had no contact from Will Edge. The funds have not yet arrived in my trust account from him. I am well aware of the penalty provisions of the mortgage and so is Mr Edge. ..."[31]
[22] On 1 November 2006, lawyers acting for Mr Edge in connection with the sale of a property at Somersby wrote to Mr Price requesting his trust account details, intimating that the proceeds of the sale of Mr Edge's Somersby property were in due course to be transferred, presumably to pay the balance owing.[32]
[23] On 7 November 2006, lawyers acting for the vendor served a notice of exercise of power of sale upon Silkwatch.[33] Attempts continued, however, for the balance owing to be paid. On 17 November 2006, Mr Edge told Mrs Brennan that the vendor was "giving us" another two weeks to pay the outstanding balance.[34]
[24] On 20 November 2006 Mr Edge told Mrs Brennan:
"I will have the money this time for settlement on 29 November. I will also cover any legal costs and interest that you have incurred because of me."[35]
[25] Eventually, on 4 December 2006, Mr Price received $490,000 from Carneys Lawyers who were acting for Mr Edge and advised they had arranged a loan to Mr Edge to assist in the making of the repayment.[36] The next day a further $50,000 was received from Mr Edge's lawyers by Mr Price.[37] On 15 December 2006, the remaining share of Mr Edge's repayment of the balance was still not received and Mrs Brennan paid Mr Price the balance.[38]
[26] In summary then, the plaintiff and Mr Edge each made two payments towards the purchase. Ms Wakefield paid $161,683[39] on 22 February 2006 ("the plaintiff's first payment") and $464,275.86 on 6 April 2006 ("the plaintiff's second payment), a total contribution of $625,958.86. Mr Edge paid $490,000 on 4 December 2006 ("Mr Edge's first payment") and $50,000 on 5 December 2006 ("Mr Edge's second payment"), a total contribution of $540,000.
[27] The combined total of Ms Wakefield's and Mr Edge's contributions was $1,165,958.86. The total cost of the purchase, including stamp duty and legal fees, was $2,411,196.53. The balance of that amount was met by contributions on behalf of the Brennans. Those contributions were $165,000 on 23 February 2006,[40] $460,000 on 4 April 2006,[41] $1,257.93 on 5 April 2006,[42] $576,000 on 25 September 2006,[43] $45,000 on 15 December 2006.[44] Allowing for a refund to Mrs Brennan's solicitor on 2 February 2007 of $2,020.26 the combined contributions on behalf of the Brennans was $1,245,237.67. That represents 51.644 per cent of the total cost of the purchase.
[28] The plaintiff's two payments represent 25.961 per cent of the total cost of the purchase and Mr Edge's two payments represent 22.395 per cent thereof.
[29] The plaintiff has varied in articulating the kind of trust arising in this case.
[30] The plaintiff's Statement of Claim pleads the facts ground either a resulting or constructive trust.
[31] As to a resulting trust, the plaintiff pleads:
"21. In the premises set out in paragraphs 3 through 13 above the First Defendant holds the land on a resulting trust for itself and the Plaintiff as tenants in equal share."
[32] In addition to pleading some basic facts about the progress of the purchase, paragraphs 3 to 13 of the Statement of Claim plead the alleged agreements reached between the plaintiff and Mr Brennan and the financial contributions to the purchase price and transfer of the land. It is the financial contributions that are most important in support of a resulting trust. The alleged agreements are more important in support of a common intention constructive trust.
[33] As to a constructive trust, the plaintiff pleads:
"22. Further or in the alternative in the premises the First Defendant holds the land on a constructive trust for the Plaintiff and the First Defendant as tenants [in] common in shares proportionate with their respective contributions to the purchase price of the land and their contributions to the maintenance and improvement of the land."
[34] In the opening and closing by the plaintiff's counsel, he submitted for the imposition of a common intention constructive trust.[45]
[35] In his closing, the plaintiff's counsel also submitted, in the alternative, for the imposition of a constructive trust of the kind contemplated in Baumgartner v Baumgartner:[46]
"Alternatively the parties were engaged in a joint enterprise in respect of the land, namely its acquisition with a view to subdivision with the ultimate aim of building a house each on the land. That venture has failed because of a number of factors. Principally however it was the untimely death of Mr Brennan that brought he [sic] venture to its end. Those facts together [with] the contributions made by the plaintiff justify a finding of a constructive trust that arises for [sic] the principles in Baumgartner v Baumgartner..."[47]
[36] The contributions to which the plaintiff's counsel there referred were not only the contributions to the purchase price and transfer of the land, but also contributions allegedly made by the plaintiff to the maintenance and improvement of the land subsequent to the purchase.[48] Those contributions allegedly total $109,378.95.[49] However, the plaintiff did not conduct its case on the basis the contribution of the alleged maintenance and improvement monies ought be included in a calculation of the plaintiff's proportionate share on trust in the property. To the contrary, it contended such contributions should, subsequent to a declaration of the plaintiff's beneficial interest and the sale of the property, be the subject of an equitable account in respect of the plaintiff's payments for maintenance and improvement on the land.[50]
[37] As that background illustrates, the case has not been litigated on the basis that the facts should give rise to a constructive trust founded on the principles in Baumgartner's Case.[51] The plaintiff's case as litigated by it and met by the defendant turns upon either a finding of a common intention constructive trust or a resulting trust. In any event on the facts of this case if it were unsuccessful in seeking either then it would also be unsuccessful in seeking a constructive trust of the kind contemplated in Baumgartner's Case.
[38] The plaintiff's counsel also submitted in his written submissions that the circumstances of the case could give rise to an express trust.[52] The authorities suggest a common intention constructive trust is effectively a form of express trust lacking in writing and that the description of it as a constructive trust is at odds with the principle ordinarily applying to constructive trusts that the intention of the parties is irrelevant.[53] Here the agreement allegedly grounding a common intention constructive trust is the agreement that would also ground an express trust. If the plaintiff were to fail in seeking a common intention constructive trust she would also fail in seeking it under the nomenclature of an express trust.
[39] The potential forms of trusts that therefore fall for material consideration in this case are a resulting trust or a common intention constructive trust.
Prima facie evidence of a resulting trust with a 25.961 per cent interest for the plaintiff
[40] The evidence of the financial contributions suggests a resulting trust in favour of the plaintiff to the extent of her proportionate contribution to the purchase monies. That is an apparently obvious conclusion, subject to evidence going to a contrary intention, as was explained by Gibbs CJ in Calverley v Green:
"Where a person purchases property in the name of another, or in the name of himself and another...it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is...presumed to be a resulting trust in favour of the other or others." [54]
[41] Setting to one side the debate as to the intention of the parties, the evidence as to payments made bespeaks a resulting trust giving a beneficial interest in favour of the plaintiff in the proportion of the overall contributions made towards the acquisition of the property represented by the combination of her two contributions, namely 25.961 per cent.
[42] However, the parties are in dispute as to how those payments and the payments by Mr Edge should be characterised.
[43] The plaintiff pleads that all of the payments identified above as having been made by Ms Wakefield and Mr Edge were actually payments by Ms Wakefield.[55] At the other extreme, the defendant alleges Ms Wakefield did not contribute any of those payments, contending that even the payments apparently made by her were, in substance, payments by Mr Edge who was allegedly seeking to disguise his real interest in the land.[56]
[44] Consistently with those contrasting positions, there is also disagreement as to what common intention was reached between the parties. The plaintiff pleads there was an agreement between the plaintiff and Mr Brennan that the company would hold the property on trust in half shares for the plaintiff and the second defendant.[57] On the other hand, the defendant pleads there was an agreement between Mr Edge and Mr Brennan that the company would hold the land on trust for Mr Brennan and Mr Edge or their nominees in shares proportionate to the contribution of Mr Edge and Mr Brennan.[58]
[45] The critical issues for determination therefore are:
(a) Has the plaintiff proved the agreement upon which she relies for a common intention constructive trust?
(b) If not, what were the financial contributions, if any, by the plaintiff to the purchase and transfer costs which ought give rise to a proportionate beneficial interest in the property by way of a resulting trust?
[46] An issue integral to the resolution of these issues is the plaintiff's credibility. The defendant submitted her credibility was so poor that I should only act upon those aspects of her evidence that were corroborated by other evidence. It is noteworthy that even taking that approach her evidence that she did make the two payments totalling $625,958.96 is corroborated by the evidence demonstrating the payments came from her own bank account.
Has the plaintiff proved the agreement upon which she relies for a common intention constructive trust?
Plaintiff's account of the agreement is uncorroborated
[47] The plaintiff's credibility is particularly important in proof of the common intention alleged by her since her evidence as to this critical matter is not corroborated in any material sense. Two of the central players, Mr Brennan and Mr Edge, did not give evidence.
[48] Mr Brennan is deceased. However, Mr Edge is alive. The plaintiff, who had filed an affidavit from Mr Edge, led no evidence that Mr Edge was not able to attend and give evidence. The plaintiff apparently made a deliberate choice not to call Mr Edge as a witness notwithstanding that his evidence, if truthful, was capable of advancing the plaintiff's case as to the alleged agreement. However, his evidence in respect of what, if any, agreement was reached was arguably also capable of supporting Mrs Brennan's account of the agreement if truthful, so in respect of this aspect of the case his absence is probably of neutral significance. The real difficulty for this aspect of the plaintiff's case is that in Mr Edge's absence the plaintiff's version of events is unsupported by other evidence.
[49] The evidence-in-chief of the witnesses in the proceeding, in the main, took the form of affidavits filed in advance of the proceedings pursuant to directions.
[50] In providing her affidavit, the plaintiff had to have been aware that the true nature and extent of Mr Edge's role in the acquisition of the property was a significant issue in the case. However, it became apparent that the plaintiff had been less than candid as to Mr Edge's role from the outset of her dealings in respect of the property.
[51] The description in her affidavit of her initial attempt to acquire the property made no mention at all of Mr Edge having any particular role in respect of the purchase, save for Mr Edge providing the money for the deposit.[59] However, it was readily apparent from the affidavit of the real estate agent, Barry Muir, filed by the defendants' solicitors subsequent to the filing of the plaintiff's affidavit, that Mr Edge had played an active role in negotiations relating to the first attempted sale. Mr Muir deposed that Mr Edge "appeared to be in charge" and "was asking all of the questions about the property".[60]
[52] In cross-examination, the plaintiff acknowledged the active role Mr Edge had taken, explaining in effect that she had asked him to negotiate the sale on her behalf.[61] When challenged about her failure to depose to Mr Edge's role in the negotiations, the plaintiff was evasive and advanced no sensible explanation for having omitted that feature of the matter from her affidavit.[62] It was obvious the plaintiff had deliberately downplayed Mr Edge's role in the first attempted purchase of the property. Her preparedness to mislead by omission in respect of the true nature and extent of Mr Edge's role was damaging to her credibility, particularly given the critical importance of her candour about that topic in respect of the sale which did proceed.
[53] In the plaintiff's descriptions of the agreement she allegedly reached in conversation with Mr Brennan,[63] she attributed no particular role to Mr Edge in the process, save for his presence nearby at the time of the conversation outside Treetops Resort.[64] The plaintiff's earlier lack of candour in relation to Mr Edge's role is not the only reason to doubt the accuracy of her account about her reaching agreement with Mr Brennan.
[54] The obviously dominant role Mr Edge continued to take in enlisting Mr Brennan and using him to advance the purchase diminishes the likelihood that it was the plaintiff who reached an agreement with Mr Brennan about the purchase. Mrs Brennan's evidence, if accurate, can leave no room for doubt that Mr Edge was actively involved in the process of reaching an agreement with Mr Brennan. Mrs Brennan presented as a credible and reliable witness and her evidence that Mr Brennan and Mr Edge had reached an agreement while physically visiting the property was corroborated by a photograph of Mr Brennan and Mr Edge shaking hands at the property.[65]
[55] It is possible that Mr Brennan may have had separate conversations while visiting the Port Douglas district with Mr Edge, as well as with the plaintiff. However, it is inherently unlikely that Mr Brennan would have reached separate agreements with Mr Edge, as well as with the plaintiff. On the whole of the evidence, it is much more likely that Mr Brennan reached an agreement with Mr Edge.
[56] Mr Brennan may have died, but there is a body of other evidence providing strong support for Mrs Brennan's evidence that it was Mr Edge with whom her husband dealt in relation to the property. In particular, the plaintiff had no dealings with Cameron Price, but in contrast Mr Edge and Mr Brennan did. In his conversations with Mr Price, Mr Edge referred to Mr Brennan as "his partner" in respect of the proposed purchase.[66] Furthermore, Mr Brennan, in his dealings with Mr Price, referred to Mr Edge as the person he was involved with in respect of the acquisition of the property.[67]
[57] I do not believe the plaintiff's evidence that she reached the agreement with Mr Brennan as alleged by her. The plaintiff has failed to prove the agreement upon which she relies to found the common intention constructive trust.
Potential inference of common intention from evidence re preparation of trust deed
[58] It is the actual intention of the parties that is relevant where a constructive trust is to be imposed based on the parties' common intention,[68] however, the intention of the parties need not be expressed as an agreement and can be inferred from the conduct of the parties.[69] While the plaintiff's case in support of a common intention constructive trust was plainly founded upon the existence of her supposed agreement with Mr Brennan the plaintiff also seeks an inference of common intention from pleadings and evidence relating to the topic of a trust deed.
"18. In or around July 2007 Cameron Price Lawyers prepared a trust deed and provided them [sic] to the Second Defendant's accountant Lance Maguire that would have constituted a trust of the land in favour as to one half to the Plaintiff and one half to the Second Defendant."
"11. Silkwatch and Anna Brennan deny the allegations in paragraph 18 of the statement of claim and say that:
[60] The plaintiff contended para 11 of the Further Amended Defence of the First and Second Defendants ("Further Amended Defence") was an implied admission to her allegation a trust deed was prepared.[70] It was not. Paragraph 11 may have been inadequate in advancing reasons for its denial, but it was nonetheless a denial of the plaintiff's allegations. No evidence was advanced to prove Cameron Price Lawyers prepared a trust deed. Moreover, such evidence as was advanced was inconsistent with him having done so.
[61] On 18 September 2006, Lance Maguire, a person seemingly acting in the interests of Mrs Brennan, emailed Mr Price asking whether it would be possible for Mr Price "to raise the matter of implementing a unit trust structure with Will and Joy".[71] On 5 October 2006, Mr Price wrote in a letter to Mrs Brennan's lawyers:
"I have asked Mr Edge to liaise with you in respect of the drafting of a document to record the beneficial interest in Silkwatch Pty Ltd held by Anna Brennan on behalf of Joy Barlow".[72]
On 20 December 2006, Lance Maguire emailed Mr Price asking if he had any further update on creating a unit trust and Mr Price responded that he had not followed the matter up.[73]
[62] It is apparent from that sequence of communications that Mr Price did not prepare a trust deed and was not instructed to do so.
[63] The September 2006 email merely shows that after Mr Brennan had died, the possibility of raising the implementation of a unit trust structure with Mr Edge and the plaintiff was raised by someone acting for Mrs Brennan. This falls considerably short of giving rise to an inference of the existence of a common intention that the plaintiff was to have in the vicinity of 50 per cent of the beneficial ownership of the property.
[64] There is no particular dispute that the Brennans would have had an expectation of contributions being made by someone other than them and thus of a person or persons other than them potentially having a beneficial interest in the property proportionate to those contributions. The dispute goes to what, if any, common intention was ever arrived at about whether that person or persons would be Mr Edge or the plaintiff or both of them and the quantum of the beneficial interest or interests.
[65] The plaintiff has not proved her allegation that she and Mr Brennan had already agreed she would have a 50 per cent beneficial interest and the facts tell against the inference that a common intention to that effect was arrived at as events unfolded. It will be recalled that by September 2006 the plaintiff had made her two payments but significant contributions were yet to be made. It is inherently unlikely given Mr Brennan's death, the long delay preceding the eventual two payments by Mr Edge and the complicating impact of the loan to him by Mrs Brennan that in that era there was any common intention arrived at about what persons other than Mrs Brennan would have a beneficial interest in the property or what the extent of that beneficial interest might be.
[66] As to the fact that in October 2006 Mr Price urged the recording of the plaintiff's beneficial interest, that is consistent with the plaintiff already having made her two payments. Those payments had the potential to ground a beneficial interest in the property to the extent of 25.961 per cent. Mr Price's letter of 5 October 2006 did not identify the extent of the plaintiff's beneficial interest. It does not, of itself or in conjunction with the broader evidence, sustain an inference of the common intention sought by the plaintiff.
[67] A final piece of evidence relating to the topic of a trust deed is the plaintiff's evidence that in mid July 2007 Mr Edge told her he had received a call from Mr Price who said he had been trying to call the plaintiff without success and asked Mr Edge to let the plaintiff know the trust deed had been done and sent off to Mr McGuire.[74] That hearsay evidence, which relates to an era after the contributions had been made, is unsupported by evidence from Mr Edge or Mr Price. It is not evidence that a trust deed had been done and is not evidence from which a common intention of the kind contended for could be inferred.
[68] The upshot is that other than the plaintiff's evidence of her supposed agreement with Mr Brennan, which evidence I have rejected, there exists no other evidence from which there can be inferred a common intention constructive trust as contended for by the plaintiff. The plaintiff's case for a declaration of a constructive trust must fail.
What were the financial contributions, if any, by the plaintiff to the purchase and transfer costs which ought give rise to a proportionate beneficial interest by way of a resulting trust?
[69] The consideration of whether the circumstances ground a resulting trust involves the resolution of two disputes. The first dispute is whether, as the defendant's allege, the plaintiff's first and second payments should be characterised as, in substance, contributions by Mr Edge and not by the plaintiff. The second dispute is whether, as the plaintiff alleges, Mr Edge's first and second payments should in truth be characterised as contributions by the plaintiff and not by Mr Edge.
[70] On the face of it, the plaintiff's first and second payments were payments made from the plaintiff's bank account. Thus, notwithstanding my reservations about the plaintiff's credibility generally, the circumstances support the plaintiff's evidence that those payments were contributions by her.
[71] The defendants deny that the plaintiff made any contributions to the purchase price of the land at all.[75] The defendants plead that to the extent the plaintiff's first or second payments contributed to the purchase price of the land, they were contributions made from funds provided by Mr Edge and Mr Edge was at all times the true beneficial owner of those funds.[76]
[72] The defendants advanced a considerable body of evidence of financial transactions on the part of Mr Edge and, to a lesser extent, the plaintiff.
[73] The plaintiff's evidence was that she sold a craft business operated through a company, Leisure House Pty Ltd, for $1.6 million in 2002.[77] Around the same time she explained she agreed to lend Mr Edge $1.5 million, which loan was evidenced by a loan agreement dated 14 October 2002.[78] The loan was repayable in two years, but was not repaid within that time, resulting in the plaintiff seeking legal advice about a property settlement in respect of their former de facto relationship.[79]
[74] The plaintiff explained that when the deposit of $230,000 on the initial unsuccessful purchase of the property was made, it was made by Mr Edge on the basis that it was part of the money which he owed her.[80] She explained that Mr Edge paid her $1 million of the money he owed her into her bank account, a payment which was made on 23 June 2005.[81] It is that same bank account of the plaintiff from which she made the first and second payments.
[75] The defendants attack the credibility of the plaintiff's account of how she sourced the funds giving rise to her first and second payments.
[76] Firstly, the defendants submitted that the plaintiff did not in fact lend Mr Edge $1.5 million in October 2002. On the face of it, however, the proceeds of sale appear to have gone to Mr Edge via a solicitor's trust account.[82] The payment into the solicitor's trust account was $1,590,679, somewhat greater than $1.5 million, although that discrepancy may be accounted for by some part of the funds being retained by the solicitors.[83]
[77] In support of its argument that there really was no loan, the defendant contended the Leisure House business was Mr Edge's, as distinct from the plaintiff's. In that regard, the defendants highlighted that under the contract for the sale of the business only Mr Edge was obliged to enter into a deed of restraint, however, the clause requiring that to occur also acknowledged that Mr Edge was not a party to the contract for the sale of the business.[84] In a similar vein, the defendant emphasised that under the contract only Mr Edge agreed to provide consulting services to the purchaser after completion.[85] However, the relevant clause of the contract clearly provided that was to occur in accordance with a separate agreement, namely a consultancy agreement entered into between Mr Edge and the purchaser. The same clause[86] contained an acknowledgment that Mr Edge was familiar with the business. That Mr Edge may have had an active role in the business does not mean it was his to sell. However, it does tend to explain why Mr Edge may have agreed to enter into a deed of restraint and agreed to provide consulting services.
[78] The defendant also placed weight on the fact that Mr Edge, rather than the plaintiff, was sued by the purchaser. However, it is plain from the Further Amended Statement of Claim in respect of that proceeding[87] that Mr Edge was sued in relation to misrepresentations allegedly made in the course of negotiations for the sale of the business and it was not alleged that the plaintiff had engaged in any such misrepresentations. The fact that Mr Edge was sued for such misrepresentations does not logically support an argument that he must have been the real owner of the Leisure House business. The defendant placed emphasis on the fact that Mr Edge agreed to settle the claim against him by agreeing to make a payment of $900,000[88] whereas no account was taken of this in relation to the plaintiff's loan to Mr Edge. On the available evidence it is difficult to see why account should have been taken of it in respect of the loan. The full circumstances of the settlement are simply unknown and, furthermore, the settlement related to the action against Mr Edge. Such circumstances do not raise a logical expectation that the plaintiff should have subsidised Mr Edge's settlement of a claim against him personally.
[79] The defendant has also placed weight on the fact that an ASIC current and historical extract in relation to Chansonette Pty Ltd - which was formerly Leisure House Pty Ltd - recorded the plaintiff as having formerly been a shareholder and in that entry appeared the words "beneficially owned: N", suggesting Ms Wakefield had not been a beneficial owner of the one share to which that entry relates.[89] Even accepting that "N" meant no, that is, that the reference to the plaintiff's share indicated it was not beneficially owned by her, the difficulty confronting the defendant is the absence of any additional material information, particularly as to what era the entry related to. The content of the extract does not mean the business was not the plaintiff's to sell.
[80] The defendant also emphasised the fact that no security was given for the loan. Obviously, it would be prudent to obtain security for any loan of a significant amount of money, however, it does not follow from the absence of security that there was not a loan, particularly in circumstances where the loan was to a personal friend. It ought also be borne in mind that the loan was evidenced by the loan agreement entered into two years before the purchase of property with which this case is concerned.
[81] A collective consideration of the arguments raised by the defendant may raise a basis for suspicion, but does not compel the adverse circumstantial inference sought by the defendant.
[82] The defendant submits that in fact the de facto relationship had never ended. The defendant points to a variety of pieces of evidence showing that Mr Edge was regularly keeping company with the plaintiff and, in all probability, living from time to time at the property.[90] However, that evidence is not inconsistent with the possibility that the plaintiff and Mr Edge remained close friends and or that the relationship may have fluctuated in and out of a de facto relationship over the years. It certainly does not establish that they were in a de facto relationship at the time of either the alleged loan or the alleged part repayment of it.
[83] The defendant further submits that the $1 million paid by Mr Edge into the plaintiff's bank account in 2005 was not paid as part of any de facto relationship settlement. It is submitted in support of that proposition that no settlement had been reached by the date of the payment, but that assumes there was a need for some form of formal settlement between them before Mr Edge would pay the plaintiff money.
[84] The plaintiff's Further Amended Reply - As Amended at Trial ("Further Amended Reply") pleads:
(c) The monies paid by Edge to the Plaintiff were paid to satisfy his obligations to the Plaintiff under a property settlement as set out at paragraph 10 below."
"13. The Plaintiff admits the allegations made in paragraph 6(b)(xiv) of the Amended Defence that on 23 June 2005 Edge transferred $1 million to Joyce Wakefield's Max-1 Direct Account at Westpac (032-646 29-6687) and says such monies were paid to the Plaintiff by Edge for satisfaction of a de facto property settlement made between the Plaintiff and Edge."
"19. The plaintiff denies the allegations made in paragraphs (6)(b)(xxiv) of the Amended Defence.
The Plaintiff believes the allegations to be untrue because the monies paid by Edge to the Plaintiff were paid to satisfy his obligations to the Plaintiff under a property settlement as set out at paragraph 10 above. ..."
[87] Notwithstanding the above references to para 10 setting out the property settlement, the Further Amended Reply contained no pleading setting out the property settlement at para 10 or elsewhere. The defendants did not raise that pleading error and or seek further particulars relating to the nature of the property settlement in the course of the trial.
[88] The detail about what "property settlement" was being spoken about when the plaintiff was cross-examined on the topic and confirmed the $1 million paid to her on 23 June 2005 was paid for satisfaction of a de facto property settlement[91] did not explore the nature of the de facto property settlement referred to. Further, the plaintiff's affidavit strongly suggests that the $1 million payment was made at a time when the plaintiff had sought advice about, but not significantly advanced, any formal attempt to finally settle any property dispute lingering as between her and Mr Edge in the aftermath of their de facto relationship.[92] Moreover, it is obvious from the plaintiff's affidavit that her particular concern in seeking that advice was that the loan was overdue for repayment.[93]
[89] In speaking of this era when the plaintiff was seeking the advice, the plaintiff's affidavit stated:
"7. I was however concerned about the costs I was incurring with what appeared to be very little result and in March 2005 I wrote directly to Will suggesting that we should try and resolve things ourselves. In that letter I told Will that if he couldn't manage to repay me all of the loan I would be pleased if he would get me some of it so that I could start to look for a property to retire to.
[90] That evidence strongly supports the inference that the reference to a property settlement in the Further Amended Reply and the cross-examination of the plaintiff referred to above included the informal settlement process of the plaintiff seeking Mr Edge's belated repayment of at least some of the loan.
[91] The defendant further submitted that the $1 million was paid by Mr Edge to keep it away from the Commonwealth Bank rather than for the purposes of any settlement or repayment of the loan. The events relied upon by the defendant's counsel in support of that submission[95] make much of the timing of Mr Edge's acquisition of loan monies, but do little to support the specific hypothesis advanced that Mr Edge was endeavouring to keep the money from the Commonwealth Bank. Indeed, the only fact cited in support of the hypothesis that relates to the Commonwealth Bank is an internal email of Cameron Price Lawyers summarising a telephone call received from a person from the National Australia Bank's cheque fraud department noting, inter alia:
"It seems that the CBA was scammed into lending $7m to a Mohammed Saleh, $230,000 of which is believed to have been paid into our trust account in cash on 8 June."[96]
[92] The apparent link between Saleh and Mr Edge was confirmed by an ASIC current and historical extract in respect of TDM Australia Pty Ltd,[97] a company of which Mr Edge was a director and Mr Saleh had been a director and to which receivers and managers were appointed on 24 June 2005.
[93] Again the circumstances relied upon by the defendants when considered collectively may raise a suspicion but they fall short of proving the hypothesis advanced. There was, of course, no onus on the defendant to prove its hypothesis and its only acknowledged aim in raising the circumstantial pieces of evidence relating to Mr Edge and his questionable financial conduct was to damage the credit of the plaintiff's evidence.
[94] A difficulty for the defendant in this context is that even if Mr Edge had his own ulterior motives in paying, at least in part, the money he owed the plaintiff, it does not mean the money paid to the plaintiff was any less hers to deal with as her own. There is certainly no evidence that the plaintiff was in some way a party to or aware of an actual fraud by Mr Edge nor was such an allegation pleaded.
[95] The upshot is that the defendants' submissions have not altered the prima facie starting point that the money in the plaintiff's bank account was her property and that in paying the money from that bank account as the first and second payments it was the plaintiff who was contributing to the purchase of the property.
[96] It follows that there ought be a resulting trust in the plaintiff's favour at least reflecting the proportionate contribution of those two payments.
[97] As to Mr Edge's first and second payments, the plaintiff does not enjoy the same favourable evidentiary starting point as she did in respect of her first and second payments. Mr Edge's first and second payments were not made out of the plaintiff's bank accounts or made directly by her in any other sense.
[98] The plaintiff's affidavit relevantly asserts:
"40. Towards the end of 2006 I was aware that the balance of the payment of the purchase price was due to be paid to the seller and I needed Will to come up with the balance of the monies he owed me from our de facto relationship financial settlement. I had been reminding him of that during the second half of 2006 and recall him telling me that he had been trying to sell a property he owned at Somersby to raise the rest of the money he owed me but that he hadn't been having much luck with that.
[99] The inference sought by the plaintiff is that Mr Edge's first and second payments were payments he made on the plaintiff's behalf, such payments representing monies he owed her. Mr Edge could clearly have given direct evidence of those critical facts, indeed, he was the most obvious and relevant witness in respect of this issue. The plaintiff did not call him, notwithstanding that the plaintiff filed an affidavit by him.[99] Mr Edge's absence as a witness was not explained.
[100] In the circumstances, the rule in Jones v Dunkel[100] is enlivened. I infer Mr Edge would not have advanced the plaintiff's case on the critical issue of whether his payments were made on behalf of the plaintiff.
[101] Mr Edge was not the only relevant witness whose evidence could not advance the plaintiff's case on this critical issue. Mr Price was called by the defendants as a witness. He presented as honest and reliable. He did not confirm the plaintiff's evidence that she suggested to Mr Price he liaise directly with Mr Edge to make arrangements for the balance of the purchase price to be paid by Mr Edge by way of repayment of monies he owed the plaintiff.
[102] Mr Price's evidence that he did not even have contact with the plaintiff until a much later era was not challenged.[101] In addition, the evidence of Mr Price, including the exhibits to his affidavit, demonstrates that in the months leading up to the making of Mr Edge's first and second payments, Mr Price was actively seeking out Mr Edge.[102] Such evidence is inconsistent with a communication of the kind alleged at paragraph 41 of the plaintiff's affidavit occurring.
[103] Further, Mrs Brennan had prolonged dealings with Mr Edge in seeking payment. There was no mention whatsoever to her that Mr Edge's eventual payments were payments made or to be made on behalf of the plaintiff.
[104] Moreover, there was no financial or other paper trail leading up to the payments of a kind that would corroborate the plaintiff and suggest Mr Edge's payments were made on behalf of her. For instance, the payments were not made in the first instance into the plaintiff's bank account. Nor were they made in compliance with any order or documented agreement.
[105] The defendants advanced some other arguments why Mr Edge's two payments were not made on behalf of the plaintiff.[103] It is unnecessary to deal with them. In the light of the considerations I have already canvassed and my earlier discussed reservations as to the reliability of the plaintiff's evidence, I do not believe Mr Edge's two payments were made on behalf of the plaintiff.
[106] In all of the circumstances, I do not accept that Mr Edge's two payments were payments by, for or on behalf of the plaintiff. It follows I will not declare a resulting trust favouring her to an extent that includes the proportion of the contribution of Mr Edge's two payments.
[107] I will, however, declare a resulting trust with a 25.961 per cent beneficial interest for the plaintiff, reflecting the proportionate contribution of the plaintiff's two payments.
[108] As to whether the declaration should identify the balance of the beneficial interest, namely 74.039, as being the first defendant's, the only other potentially interested person is Mr Edge. Given his provision of an affidavit he was plainly aware of the proceedings and he deposed to having no interest in the property. In those circumstances, the balance of the beneficial interest should simply be identified as the first defendant's.
[109] The affidavit of the plaintiff of 12 November 2012 annexed a summary of the costs the plaintiff asserts she would have had spent on the property. In the course of cross-examination it became clear that some of the costs included in the schedule could not reasonably be said to be payments for the maintenance and improvement of the property.[104]
[110] However, I reject the defendants' submission that the plaintiff has not established any entitlement to an equitable account for any amount whatsoever. It is tolerably clear on the whole of her evidence that she has made some financial contributions towards the maintenance and improvement of the property, for instance, the payment of rates.
[111] It is unnecessary to resolve here just which payments made by the plaintiff ought be taken into account. That can be considered, failing agreement between the parties, as part of any enquiries or accounts taken as may in due course be directed by the Court. Whether any account taken ought be in the nature of an equitable account or an account directed pursuant to s 42 of the Property Law Act 1974 (Qld) has not been the subject of any material argument, although the plaintiff's counsel intimated in his opening a preference for an account directed pursuant to s 42.[105] Similarly, there was no material argument in respect of the appropriate form of order for the performance of the trust by the appointment of trustees to sell the property pursuant to s 38 of the Property Law Act 1974, the course intimated as preferred by the plaintiff's counsel in his opening.[106]
1. It is declared that the first defendant holds land described as Lot 155 Crown Plan NR78 County of Solander Parish of Victory being the land comprised in title reference 50400139 for the first defendant and the plaintiff as tenants in common, pursuant to a resulting trust as to a 25.961 per cent interest for the plaintiff and a 74.039 per cent interest for the first defendant.
(a) the appropriate form of orders for performance of the trust, including any orders pursuant to ss 38 and 42 of the Property Law Act 1974 (Qld); and
[1] Statement of Claim, Prayer for Relief.
[8] Ex 2, [17], [19]; Ex 15, [17].
[23] Ibid, [33]. Mr Price's affidavit actually indicates he received advice from Cooper Grace Ward of receipt of the amount of $460,275.86 on 5 April 2006 but that is likely a typographical error in that it appears from the Westpac statement of account of the plaintiff that the amount was not actually withdrawn until 6 April 2006.
[39] The amount of the $165,000 transferred less deductions for solicitor's fees owing in respect of the former attempted purchase.
[45] T1-4, L10; Plaintiff's Outline of Submissions, [16]-[19].
[46] [1987] HCA 59; (1987) 164 CLR 137 ("Baumgartner's Case").
[47] Plaintiff's Outline of Submissions, [20].
[50] Statement of Claim, Prayer for Relief , para 2(b); Plaintiff's Opening at T1-3, L40 to T1-4, L3; Plaintiff's Outline of Submissions, [26].
[51] Statement of Claim, Prayer for Relief.
[52] Plaintiff's Outline of Submissions, [3]
[53] See, eg, Allen v Snyder (1977) 2 NSWLR 685, 692, 699.
[54] [1984] HCA 81; (1984) 155 CLR 242, 246.
[56] Further Amended Defence of the First and Second Defendants ("Further Amended Defence"), [6], [6A].
[68] Shepherd v Doolan & Ors [2005] NSWSC 42, [34].
[69] Allen v Snyder [1977] 2 NSWLR 685.
[76] Further Amended Defence, [6] (b)(xxiv) and (c)(v).
[90] Defendants' Closing Submissions, [27].
[92] Ex 2, [6]. According to Ex 12 a certification relating to the plaintiff's claim under the Property (Relationships) Act 1984 against Mr Edge in the New South Wales Supreme Court was dated 31 March 2005 but the claim was not filed until 4 July 2005.
[95] Defendants' Closing Submissions, [30].
[99] The plaintiff was permitted to tender part of his affidavit (Ex 22) but merely for the purpose of proving Mr Edge disclaims any interest in the property, in anticipation of an argument the declaration sought ought not be made because Mr Edge is an interested party (T2-82, L 9).
[100] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
[103] Defendants' Closing Submissions, pp 10-12.
Wakefield
Silkwatch Pty Ltd & anor [2012] QSC 412
(1987) 164 CLR 137
(1984) 155 CLR 242
(1977) 2 NSWLR 685
(1959) 101 CLR 298