Woods v McKinlay

Claims for determination

1. Initially Antoinette's statement of claim pleaded a case of equitable estoppel, giving rise to a claimed entitlement to the whole of the equity in the Telopea property. Antoinette's case was that the property was purchased for her and was effectively held by Orlene and David on her behalf.
2. Orlene and David denied that Antoinette had any entitlement to the property. They accepted that the property was purchased with the intention that Antoinette would live there but said that this was as a tenant only; the regular payments made by Antoinette were rent and nothing more. In fact, they alleged, the payments were set at significantly below market rent, as a favour to Antoinette. A cross-claim was filed on their behalf seeking an order for possession of the property, and compensation for the difference between the amounts paid by Antoinette and the (allegedly) higher market rental value of the property.
3. Nevertheless, Orlene and David did acknowledge an obligation to repay to Antoinette the net $115,000 paid off the loan principal with her money. This was to come from the sale of the property once Antoinette had given vacant possession.
4. In the week before the trial was to begin, an application was made on Antoinette's behalf for an adjournment, which I refused: see Woods v McKinlay [2021] NSWSC 831. Following delivery of my judgment on that application, there was a discussion between myself and counsel about the nature of Antoinette's claims in the proceedings.
5. As a result of that discussion, Antoinette's claim was amended. She no longer sought the whole of the property and no longer resisted its sale. Rather, the claim made on her behalf was that the property was subject to a joint endeavour constructive trust of the type recognised by the High Court in Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137.
6. The relief now sought by Antoinette in her amended statement of claim was an order of the type made in Baumgartner. Such an order would provide for the property to be sold; the parties (Antoinette on one hand, and Orlene and David on the other) would receive repayment of their respective contributions to the capital cost; and the remainder would be divided between them.
7. For their part, Orlene and David maintained their position that the arrangement involved rental only. While they continued to acknowledge that $115,000 should be repaid to Antoinette, they maintained their claim to the whole of the equity in the property.
8. At the trial (and the pre-trial applications) counsel for Antoinette was Mr S Stanton. Counsel for Orlene and David was Mr J Trebeck. There were three days of evidence and a fourth day of submissions. Unfortunately, the submissions left some questions unanswered. At the parties' request I adjourned the hearing to allow the parties to confer on identifying the issues and presenting any further submissions which resulted from that.
9. Following the adjournment Mr Trebeck was replaced as counsel for Orlene and David by Mr J Horowitz. Mr Horowitz made an application to lead further evidence, which came before me on 6 September. After some debate, I permitted Orlene and David to rely on a further affidavit. A further hearing then took place on 7 October to complete the parties' submissions.

Chronology of events

1. Antoinette was born in May 1947. For many years she has worked part-time as a member of the support staff (technical officer) at Concord Hospital.
2. Antoinette's former matrimonial home was at Sixth Avenue, Eastwood. She and her former husband shared the property with their two daughters, Eloise and Analisa (known as "Annie"), as well as two dogs and two cats.
3. The Family Court proceedings between Antoinette and her former husband began in about 1998. They were apparently acrimonious. It had become clear by September 2001 that the Eastwood property would have to be sold.
4. According to Antoinette, the arrangements which led to the acquisition of the Telopea property began with discussions between her and Orlene in early October 2001. There is some dispute about the detail of the conversations, which I discuss in more detail below. But certain elements are common ground.
5. The purchase of the property was driven by Antoinette's need for accommodation, and, specifically, for sufficient space for her pets. The property was chosen by her, but she had no money to make the purchase. It was agreed that Orlene would buy the property for Antoinette to live in. David became involved because his borrowing capacity was required to service the necessary loan.
6. Orlene was born in March 1951 and is therefore almost four years younger than Antoinette. Her son, David, is Orlene's only child. He was born in 1975. Orlene's husband died when David was three years old; thereafter Orlene brought David up as a single parent. David has always lived with her.
7. In 2001 Orlene was working full-time as a Senior Treasury Officer for Nestlé and (with David) living in a house at Burwood Road, Concord. The property belonged to Orlene and was mortgaged to her bank, the Commonwealth Bank of Australia ("CBA"). The amount outstanding under the mortgage was then about $170,000.
8. Orlene had previously owned a unit at Auburn which she had rented out as an investment. She acquired this unit in 1997 and operated it on a "negatively geared" basis. That is, the rental income from the unit was less than the interest and other expenses; this gave rise to a loss which could be deducted against Orlene's earnings. Any ultimate capital gain would be taxable only as to fifty per cent. Orlene sold the unit at some stage in the first half of 2001.
9. The contract for the purchase of the Telopea property was dated 11 October 2001. The purchase price was $385,000. Although the contract provided for a ten per cent deposit, in fact only $926.50 was paid to the agent. This amount was paid by Antoinette.
10. The Telopea property was acquired by Orlene and David with finance organised through a mortgage originator, Wizard Mortgage Corporation Limited ("Wizard"). The finance was not approved until 15 October, four days after contracts were exchanged. The loan agreement was executed by Orlene and David on 16 October. Wizard also financed the rest of the deposit with a deposit bond.
11. The Wizard finance package was made up of three separate loans. The first loan was for $170,000 and refinanced Orlene's existing loan on her property at Concord. The other two loans were to fund the purchase of the Telopea property. The total amount lent under the second and third loans was $415,000. The terms of the two loans appear to have been the same, and for convenience I will, unless it is necessary to refer to them separately, treat them as a single loan.
12. The Wizard loan monies were drawn down and the purchase of the Telopea property was settled on 30 November. Antoinette moved in on the following day, 1 December.
13. The total amount drawn down under the Wizard loans was $585,000. Out of this, settling the purchase of the Telopea property (including the stamp duty) and the re-finance of the Concord property accounted for about $567,600. About $3,700 was paid towards fees and stamp duty associated with the Wizard loans. Left over was about $13,700 which was paid by bank cheque to Orlene and was presumably used by her for her own purposes.
14. As part of the purchase of the property, Antoinette had agreed for the vendor to do some work fixing up one of the bathrooms. The tiles which the vendor proposed to use, however, were not satisfactory to Antoinette, who wanted different and more expensive ones. It was agreed that the vendor would use those tiles, but Antoinette would pay an additional $200 to cover the additional cost. This amount was paid by her on settlement.
15. Shortly after she moved in, Antoinette had some wardrobes, flyscreens and ceiling fans installed. The costs of these improvements ($2,770) were paid by her. In due course she also paid for the council rates and water rates. The rate notices were addressed to Orlene and David as the registered proprietors but were forwarded to Antoinette for her to pay. Similarly the insurance was taken out in Orlene and David's name but paid for by Antoinette. It seems that electricity and other services were directly arranged, and paid for, by Antoinette.
16. The loan from Wizard was on interest-only terms for a period of five years, with an option to extend the interest only period for a further five years (which Orlene and David took up). The loan terms also provided for a re-draw facility under which money could be paid in reduction of the principal amount (thereby reducing the interest payable), but later re-drawn on request. Initially the loan was fully drawn and the monthly interest payment on it was about $2,000.
17. According to Antoinette, from November 2001 onwards she made several cash payments to Orlene towards the Wizard loan payments. This is disputed by Orlene, and I deal with the issue in more detail below. But on any view during the first year or so Antoinette's contributions did not cover the whole of the interest cost. Orlene was required to tip in money from her own earnings and she also obtained contributions from David.
18. The tax year covering the purchase of the Telopea property ended on 30 June 2002. Orlene consulted her accountant and her tax return was lodged in August. The return showed rental income from the property of $3,000. Deductions totalling $11,855 were claimed for the Wizard loan interest. Further deductions totalling $2,109 were claimed which included council rates, insurance, water rates and depreciation on the wardrobes and fans (these expenses had of course actually been paid by Antoinette; details of the payments had been provided by Antoinette to Orlene at her request). The resulting loss was split 50/50 between Orlene and David, thereby reducing the tax on their earnings.
19. The Eastwood property had been sold shortly before Antoinette moved into the Telopea property on 1 December 2001. But there appear to have been further disputes in the family law proceedings and it was not until August the following year that Antoinette received her property settlement (a sum of approximately $233,000) and the proceedings came to an end.
20. In October 2002, Antoinette began making regular monthly payments to Orlene by way of direct credit to Orlene's bank account. Initially she paid $700 per month. The first such payment was made on 5 October, and appears to have been for the month of September. Subsequent payments, including for the month of October, were made on the 27th of each month. They were treated as rent for the purposes of Orlene's tax returns and were so described in other documents (see [41] and [68]-[69] below); I will refer to them as such.
21. In December 2002, using monies left over from the settlement, Antoinette gave Orlene two cheques to be paid off the principal amount of the Wizard loan. The cheques totalled $130,000, which sum was credited against the loan account on 20 December.
22. Also, between October and December 2002, Antoinette drew three further cheques on her account, totalling $33,300, which she contends were payments on account of the property. There is a dispute about whether these cheques were paid to Orlene and David, and if so, what they were for. I deal with this issue below.
23. A few months later, Orlene borrowed $140,000 from her brother, Brandon Loos. I say more about this loan below. For present purposes it is enough to say that Orlene received the money and credited it to the Wizard loan account in February 2003.
24. The Concord Hospital had a "salary sacrifice" scheme for its employees under which Antoinette could choose to "package" some of her pay as reimbursement of her personal mortgage repayments, credit cards or rent. She was required to pay the fringe benefits tax ("FBT") on these amounts, but there was still a reduction in her overall tax liability.
25. After she had moved into the Telopea property, Antoinette took advantage of this scheme to package some of her pay as a reimbursement of the "rent" she was paying to Orlene on the Telopea property. For this purpose, rental receipts were required. These were prepared by Orlene at the end of the FBT tax year (which runs from 1 April to 31 March) in 2003.
26. The amount which could be packaged in this way was limited to $9,000. The rental receipts prepared by Orlene are in evidence. They do not cover the full year from 1 April 2002 to 31 March 2003; Orlene simply prepared a sufficient number of monthly receipts to reach the salary sacrifice limit.
27. Orlene's arrangement with Brandon was that his loan would be repaid as required by him. A sum of $10,500 was repaid to Brandon by Orlene by re-drawing on the Wizard loan in May 2003 and further amounts were repaid at irregular intervals in later years.
28. In about 2004, Orlene came up with the idea of redeveloping the Telopea property as a duplex. She made some enquiries with builders, and also obtained a formal report on storm-water options from an engineer, Marco Breakenridge. The idea went no further. According to Orlene, this was because the storm water issues required co-operation from neighbours and also because the builders were not prepared to deal with the consent authority, Parramatta Council.
29. A year or so later, Orlene and David purchased a separate investment property. This was a unit at Mermaid Waters in Queensland. Orlene's tax returns show that the property was first available for rental in July 2006. The returns also show that this property was acquired on a negatively geared basis, although no details about the cost of the property or the financing arrangements are in evidence.
30. Soon afterwards, Antoinette decided that she wanted to replace her car. For this purpose, at Antoinette's request, Orlene redrew $15,000 on the Wizard loan account and paid that amount over to her. The payment was made on 10 October 2006.
31. Orlene and David later acquired two further investment properties. These were a unit at Penrith (first available for rent in November 2012) and a house at Nowra (first available for rent in March 2014). Again, these properties were negatively geared but the details of the purchase price and finance arrangements are not in evidence.
32. The financial arrangements which I have described for 2001-2002 and 2002-2003 continued into later years. Antoinette continued to live at the property and to pay the rates and insurance. She also made various further small improvements at her own expense. From time to time Orlene would notify Antoinette of a change in her monthly payment, based on changes in the interest being charged by Wizard. Antoinette's salary packaging arrangement continued, with Orlene providing the required rental receipts at the end of the FBT year.
33. Orlene and David continued to lodge tax returns showing rental income derived from the Telopea property and claiming deductions for the interest and outgoings (even those paid by Antoinette). The property was subject to land tax and this was paid by Orlene and David. They did not apparently ask Antoinette for reimbursement.
34. According to Antoinette, there were a number of occasions on which the transfer of the property into her name, or the sale of the property with her receiving payment, were discussed between her and Orlene. The first of these alleged conversations took place in mid-2010 when there was a meeting with a loans officer from a credit union with a view to the loan being refinanced with Antoinette as the borrower. Antoinette also gave evidence of a conversation in 2013 about a proposed sale. Orlene denies that any of these conversations involved any acknowledgement of ownership on the part of Antoinette.
35. In June 2014, Orlene was made redundant from her employment. This was shortly after the purchase of the Nowra investment property. Orlene's redundancy was unplanned and unwelcome. She obtained continuing contract work but this ceased in December 2015. Thereafter she tried to obtain further work but was unsuccessful.
36. From the 2013-2014 financial year onwards, Orlene ceased to record income and expenditure from the Telopea property in her tax returns. This was apparently the result of advice given to her by Antoinette's accountant, David Keddie. Orlene continued this until the 2017-2018 financial year, but later amended her tax returns for those years, reinstating the income and expenditure for the Telopea property.
37. In March 2016, the parties conferred with Mr Keddie again. Antoinette was seeking to have the Telopea property transferred to her and wanted advice on capital gains tax ("CGT"). No conclusion appears to have been reached.
38. In October 2016 there were further discussions with a solicitor, Lisa Oddo, who specialised in tax law. These discussions generated some correspondence between Antoinette and Ms Oddo. Also in evidence are email communications starting in October 2016 between Antoinette and Orlene.
39. I will refer to these communications in more detail below, as they are relied on as admissions against Orlene. For present purposes, it is enough to say that Antoinette was looking to have the property sold and to use the proceeds to buy herself somewhere else to live, or alternatively to have the property transferred into her name. She was hoping to avoid any CGT liability and Ms Oddo raised the possibility of avoiding stamp duty on the transfer as well.
40. As the correspondence developed, Antoinette sought from Orlene some sort of written assurance that upon sale of the property she would receive the proceeds (after payment of the balance of the loan, and any CGT). For her part, Orlene was concerned about her prospective pension entitlements. The pension assets test took account, not only of assets held, but also of assets previously given away (referred to in the evidence as "gifting"). Although Orlene appeared willing to hand over David's share, she would not agree to handing over her share of the proceeds if that would prevent her qualifying for the pension.
41. The tone of the emails became increasingly strained and in January 2017 Orlene wrote that there would be no further communications between her and Antoinette on the subject. Antoinette's daughter, Annie, then took matters up with her cousin David, but to no avail.
42. By February, Antoinette had retained Nexus Law Group as her solicitors. Orlene retained Beswick Lynch. There was a proposal to resolve the dispute by mediation and this was debated for some time between the solicitors but without success. Eventually, the present proceedings were commenced in Antoinette's name by the filing of a statement of claim in August 2019. A formal demand by Orlene and David for possession of the Telopea property was served on 9 December 2019.
43. Since the relationship between the parties broke down, Antoinette has continued to pay the bills for the rates and insurance on the Telopea property. She has also continued to make the monthly "rent" payments to Orlene. Orlene has repaid the rest of Brandon's loan. As at 1 June this year, the amount outstanding on the Wizard loan was about $232,000. The parties agree that the property now has a "likely minimum current value" of $1.545 million.

Witnesses

1. Antoinette was the only witness to give evidence in her own case. She was cross-examined and her credit was challenged. I consider this challenge later in the judgment when dealing with the factual issues about the dealings between the parties.
2. At the trial in July, Orlene and David gave evidence in their case and were cross-examined. Brandon also gave evidence in the defence case and was cross-examined. Affidavits from two other witnesses (see [114]-[118] below) were read in the defence case without objection or cross-examination. Pursuant to the leave I granted on 6 September, an affidavit from another brother, John Loos, was read in the defence case without objection or cross-examination.
3. Brandon's evidence was only the subject of brief cross-examination and his credit was not questioned. Orlene's credit was however challenged. I will deal with this challenge (and David's evidence) later in the judgment.

Agreement concerning Telopea property

1. Antoinette's statement of claim pleads her case as one arising out of an agreement made between herself and Orlene before the purchase of the Telopea property. The agreement allegedly included the following elements: 1. the property would be purchased in the names of Orlene and David for Antoinette to live in; 2. Orlene and David would make a contribution (unspecified) to the purchase price; 3. when Antoinette received the money from her divorce settlement she would make a payment in the reduction of the mortgage; 4. Antoinette would also pay all ancillary costs, including mortgage repayments, rates, maintenance and for any improvements; 5. Antoinette would have exclusive use of the property; 6. "when sold the full proceeds of the property would be paid to Antoinette less the contribution by [Orlene and David]".
2. As already mentioned, initially the statement of claim pleaded Antoinette's case as a conventional proprietary estoppel. It alleged that Antoinette had made an assumption of a "particular legal relationship" induced by the agreement and had acted to her detriment in paying money off the mortgage and paying other expenses associated with the property. Following the amendments, the factual allegations about the agreement and Antoinette's subsequent conduct remained, but the conduct was pleaded as having been undertaken in performance of the agreement rather than as a form of detrimental reliance.
3. Documentary evidence: There is no contemporaneous record of the conversations in October-November 2001 between Antoinette and Orlene which pre-dated the purchase of the Telopea property. There is however documentary evidence of how the parties later described the arrangement.
4. The earliest record of how the arrangement was described by Antoinette is found in a letter dated 2 August 2002 addressed to Coralie Stapleton of the ACT/NSW Regional Registrar's office of the Child Support Agency. In the letter Antoinette stated that she was paying rent of $350 per week and was "in arrears for the last four months due to financial hardship".
5. The next record is a letter dated 16 August 2002 to Antoinette from the solicitors who were acting for her in her divorce proceedings. The letter stated (emphasis added): We note that Justine of our office has advised the writer that she had a telephone conversation with you last Thursday, pursuant to which you advised her that you would be using the money you received by way of a property settlement to repay your relatives the amounts they paid on your behalf in relation to your legal costs and using the balance to reduce the mortgage secured against the property where you are currently residing, which is registered in the joint names of your sister and her son. When Justine queried why you are not keeping the money in your name or obtaining a part of the said property, you apparently replied that you do not wish your former husband to have a claim against that money. We wish to advise you as follows in relation to the above conversation you had with Justine: 1. Your husband cannot commence any further proceedings against you in relation to property settlement as orders can only be made under section 79 of the Family Law Act on one occasion. 2. If you are using part of your property settlement to reduce the mortgage secured against the property owned by your sister and her son, you should at the very least, enter into a written agreement with them which sets out your beneficial interest in the property. 3. Your sister and your nephew should give their written consent, as registered proprietors of the said property, to you lodging a caveat against the property, arising out of your beneficial interest in the property. Please contact the writer if you wish to discuss the above. There is no evidence that Antoinette made any further enquiry or took any further action in response to this advice.
6. On 30 May 2004 Orlene and David wrote to Antoinette advising of an increase in the rent payable for the Telopea property. The letter was handwritten and stated: This is to advise that due to the increase in interest rates we have to increase the rent on the [illegible, perhaps "residence"]. The rent increase is effective from the 1st July 2004. Would you please continue to pay the rent to the Commonwealth Bank account as per our previous agreement. Antoinette counter-signed the letter and wrote the words "rent increase accepted" on it.
7. Next is a letter dated 31 March 2006 from Antoinette to Orlene and David which stated: Dear Landlord, This is to confirm that I Ms Antoinette Woods is currently renting the property [XX] Evans Road, Telopea NSW at a monthly [illegible] of $1,200. I have been renting this property since the 1st December 2001.
8. Also in evidence is a letter from Mr Keddie, Antoinette's accountant, which records a note taken by his secretary when the booking was made for the meeting between Mr Keddie, Antoinette and Orlene in March 2016 (see [53] above). There is no evidence of what transpired at the meeting itself. The booking entry reads: Antoinette Woods coming in to discuss capital gains tax … with sister who bought house for her in 2002 and has claimed negative gearing on it but really was for Antoinette's benefit and wants to transfer to [sic] ownership to Antoinette without CGT or stamp duty.
9. The discussions with the tax solicitor, Ms Oddo (see [54]-[55] above), seem to have begun with an email to her from Antoinette on 12 October 2016 at 12:05 pm. Antoinette stated (emphasis added): I hope you might be able to offer me some help here. I am living in a house that my sister and her son purchased in 2001 for $385,000 with the sole intention of helping me find a home for my two daughters and me to live in after my divorce. She mortgaged her own home and I put in a sum of $130,000 that I received as a settlement towards the mortgage a year later. I have paid all the costs towards the mortgage including rates and ongoing maintenance on the property. She has acted as a caretaker of sorts in this situation and the understanding was that I would be the owner of the property later on. We would like to sell the property and I wish to use the money to find a place of my own. There is still a Mortgage owing on it of about $230,000. Would there be any CGT that is still payable with the sale? Could the property be transferred to my name? I do understand that I would have to pay stamp duty if the property is transferred into my name. As you see this is a complicated issue and we would be able to offer more details with an appointment with you.
10. At 1:02 pm Ms Oddo replied to Antoinette. She wrote: If you have evidence to prove the contents of your email, then we may be able to assist you in avoiding capital gains tax on the sale or transfer of the property. Further, we may also be able to transfer the property to you without you paying full stamp duty. Ms Oddo went on to provide a list of evidence for Antoinette to bring to the meeting.
11. Later that afternoon Antoinette forwarded the two emails to Orlene. Orlene responded: You did not say that I am retired or what your age is. These are very important as gifting means that I cannot apply for any govt pension entitlements for 5 years after you have the house.
12. The significance of this response lies in what Orlene did not say. She did not challenge Antoinette's account of the arrangement.
13. About a month later, on 16 November, Antoinette emailed Orlene to report on the outcome of a further meeting with Ms Oddo: Hi Orlene, Annie and I met with Lisa again yesterday to talk through our options. We spoke to her about ensuring you receive your part pension in the gifting of assets and Lisa had pulled off the qualifier from the govt website. To qualify for the pension or part pension your assets (as in all houses excluding your home, stocks and shares, savings etc) need to be less than $542,500.00. This comes into effect from 1st January 2017 If your assets are less then you do qualify for the pension and there isn't an issue with gifting. In this instance then both David and you gift me the remainder. If your assets are in excess of $542k you will still be able to gift your share ($368k) but you won't qualify for the pension. This will enable me to look for a place under $800k. This rules out any options to buy a place with a garden in Sydney and as I have the cats I will have to look elsewhere. This also rules out my continuing working at Concord so the superannuation will be my safety net. I think it best that you speak to your accountant to work out what your total assets are and hopefully they fall under the threshold so you can qualify for the pension. Please let me know after you speak to your accountant.
14. Orlene replied to Antoinette on 18 November: I will check with my Accountant when I do my 2016 tax in February. It is unrealistic to expect me to forgo any pension. Brandon needs to have his money returned, he has not forgotten: $405,000 - your $130,000 = $275,000 mortgage, not the $230,000. I will draw down the amount and return it to him next month. This will increase the repayments. When the house is sold, at your convenience next year, I suggest you find a place with a garden to rent until you decide to give up work then look for a place to buy. The market will have softened by then. You could ask John to rent you his house. By this stage both parties appear to have forgotten Antoinette's withdrawal of $15,000 in October 2006 to buy a car, hence the reference by Orlene to "your $130,000".
15. On 26 November, following a telephone conversation, Antoinette wrote to Orlene expressing concern at the way in which the situation was developing. She continued (emphasis added): As mentioned to you after speaking with Lisa and referring to the government website, gifting my share from the sale is allowed, legal and what had always been in our agreement, which was well known to all. It does not affect your pension. Your pension is determined by total assets- superannuation, shares, savings and the investment properties you chose to purchase. Do you have any questions for me on this? I am happy to share with you the relevant government links for your reference. You said that you've had other legal advice, please elaborate on what is different to what was provided by Lisa and the government? To move forward, which we all want and need, could you please send me the statement for total interest paid. You can get this from online banking or by calling and asking the bank to issue an e-statement. I would like to have this by next Monday.
16. Orlene's response was blunt. She wrote back on the same day (emphasis added): Anytime you want to put the house up for sale is ok with me. Ask the agent you decide on to call me to sign the sales agreement. I am disgusted with the inference that I am cheating you. Once the house is sold you will receive David's share and whatever I can legally give you. If this is unacceptable, sorry.
17. Antoinette replied on 27 November identifying issues to be resolved. One of these was: "If you paid the money Brandon gave you into the mortgage, how would this be paid back to him?" Orlene then wrote on 9 December 2016 (emphasis added): … I am surprised with the 'If you paid the money Brandon gave you into the mortgage'! How do you think your mortgage is what it is and that your 'rent' over the years remained at $1550 a month. … My lawyer will be the one who handles the sale. In respect to my eligibility for a pension, that is my concern. Whatever I can give you without jeopardising my pension will be paid to you in full. As to how Brandon receives the balance of his money, it will occur prior to settlement. I am ineligible to renegotiate the mortgage. On settlement David and I will instruct our lawyer to pay in full all monies due to David to be paid to you. The other monies will be held by my lawyer until the CGT is calculated by the ATO. The balance will be held until I can be assured by the ATO that I can redirect the amount to you without being penalised. Any gift in excess of $30,000 over 3 years means that I get no pension for 5 years from the date of that gift. I reiterate, ask the agent you decide on to call me to arrange for the sales agreement. There is nothing more I will do until the you decide when and which RE Agent to use.
18. Following some further exchanges, in which Orlene declined to sign any formal contract with Antoinette, Orlene wrote on 6 January 2017: I will not enter into any further communication with you regarding the sale of the house. All issues have been discussed at length with you. Ask any agent you desire, to call me when you decide on a date to sell. I need 2 weeks to have a Contract for Sale completed by my solicitor.
19. By now the relationship between Antoinette and Orlene had broken down into recrimination. On 26 January Orlene responded to an email of Antoinette's (emphasis added): Antoinette understand this very clearly When Stephen [Antoinette's ex-husband] kicked you and your daughters to the kerb, I got myself into debt and David to his detriment, put his own ambitions aside to help put a roof over your heads. … I have REPEATEDLY SAID you will get the 50% share of the proceeds that will be portioned to David and once the full Capital Gains Tax is paid I will give you what I can legally do so. I WILL NOT put myself in a position that penalises me of any pension entitlements. … A REMINDER: If by the end of March 2017 I have not received a call from your preferred real estate agent, I will appoint one myself and put the house up for sale.
20. Antoinette forwarded this email exchange to Annie who in turn, on the same day, attached it to an email to David asking for his help in resolving the dispute. On 30 January David replied (emphasis added): … I have read all of the correspondence contained within your e-mail. I am aware of the ongoing issues regarding the sale of the property. No one is being evicted. My understanding is, it was Antoinette that wished to sell the Telopea house in April. The reason for this was her neighbour Mary, is to put her house for sale at this time also and by (hopefully) selling the houses together to a developer a better price may be achieved. … … If the sale of the house were to go ahead and be successful, mum cannot merely transfer the proceeds (minus tax demands of the ATO) to Antoinette as this will make mum ineligible for any form of pension payment from the Commonwealth Government for at least 5 years. This does not mean that the proceeds of the sale of the house (minus taxes) would not go to Antoinette; it would just have to be done differently as opposed to a lump sum amount going into her account. If you have formal legal advice that shows a lump sum from the sale of the house can be placed in Antoinette's bank account without penalising mum, please forward it to me. The legal opinions I have received so far, state that as far as the Commonwealth Government is concerned, if mum were to do this, it would be tantamount to giving away money that she should use for her living expenses instead of applying for the pension. This even covers giving money to family members. …
21. Annie responded, arguing that, given that Orlene and David owned several investment properties, the gifting threshold should make no difference. There was no further response from David.
22. Antoinette's testimony: In her affidavit, Antoinette deposed that in early October 2001 or thereabouts she was looking for temporary rental accommodation because of the impending sale of the Eastwood property, but was having trouble finding a rental property where she would be allowed to have her pets. She mentioned this to Orlene who suggested that it would be better to buy rather than rent, but the property should be kept out of Antoinette's name because of the divorce proceedings. The following conversation took place: Orlene: … I'II check if the bank will lend me the money using the equity in Burwood Rd [Orlene's Croydon property] so you can buy a place of your own. However, you will have to pay for everything as it will be yours eventually. Antoinette: I will be so grateful if you could do that. Orlene: It's fine, it will be your property. I'll just help you to buy a place of your own for your daughters and the pets. Antoinette: Okay, I'll start looking at some properties.
23. According to Antoinette, she found the Telopea property and decided it was the place she wanted. Orlene said she would approach her bank, the CBA. The following conversation then took place: Antoinette: I've been thinking and Evans Rd, Dundas is the perfect place. Do you want me to get a contract? Orlene: Yes! That's good! I've got things ready with my bank. I was approved $405,000 which would cover the Stamp Duty and Legal fees. So we can go ahead with the purchase. You can put the money after settlement into the mortgage. Your mortgage will be substantially reduced and make it easier for you. You will be responsible for all the finances on the property including mortgage, council rates, water, insurance, and all improvements and repairs. Antoinette: I will. Thank you!
24. This seems to telescope events together. The formal offer of finance was made a few days after the contract was signed by Orlene and David. Also, Antoinette herself stated that initially Orlene was to be the borrower but the lender required David to be added as a second borrower. Antoinette was not present when the contract was signed and solicitors instructed by Orlene acted on the purchase.
25. Antoinette stated that following her discussions with Orlene, she understood that she was entitled to the whole of the equity in the Telopea property, less any contribution from Orlene and David. She did not identify what contribution that might be.
26. Antoinette referred to the payments of $130,000 that she made to Wizard in December 2002 (see [5] and [37] above) as something which always had been contemplated from the outset. She stated that she rang Orlene and told her the family law settlement monies had come through; Orlene gave her direct transfer details and she made payment accordingly. This last detail must be incorrect as the payments were in fact made by cheque.
27. Antoinette denied Orlene's evidence that she helped with looking at properties or choosing the Telopea property (see [120]-[122] below). Antoinette also said that she was not aware of any reluctance on David's part to act as a co-borrower because he would have to shelve a proposed working holiday in the United Kingdom (see [149] below). In fact she said she was unaware of this proposal at all. She suggested that, based on David's previous academic and work career, it was unlikely.
28. Antoinette stated that she paid for all of the costs associated with the purchase, including stamp duty and agents' fees. In fact the stamp duty and other costs associated with the purchase came, in the first instance, out of the monies borrowed from Wizard (see [29] above).
29. Antoinette also said that she made all of the mortgage repayments and paid all of the outgoings such as rates and insurance. In her affidavit in chief, Antoinette set out a list of repairs undertaken by her, which included roofing repairs, replacement of the back fence, an air conditioning unit, downlights and a stove, plumbing repairs, removal of a tree, and ongoing landscaping and maintenance works. She also set out a list of improvements, which included the new kitchen tiles, ceiling fans, flyscreens and built in wardrobes (see [30]-[31] above), as well as a carport, a gas connection, a shade house, roof ventilation, an alarm security system, a hot water system and a new aerial. Antoinette said that she never asked for permission to undertake any of these works.
30. In her affidavit in chief, Antoinette described regular requests by Orlene for her to alter her regular monthly payment, which she described as her "mortgage payment". She did not refer to the May 2004 letter (see [68] above) concerning the increase in "rent". She stated that the March 2006 tax letter (see [69] above), which referred to her "renting" the property, was signed by her at Orlene's request, after Orlene told her that she was potentially in trouble with the Tax Office.
31. The next event Antoinette described in her affidavit in chief was a visit she and Orlene made to the office of a credit union. She placed this as having occurred in about mid-2010. According to Antoinette, this was after Orlene had agreed for Antoinette to take over the mortgage and ownership of the property. Antoinette stated that "unconditional approval" was given at the meeting for a loan of $245,000 to allow her to take over the property, but Orlene took no action to put this into effect. Antoinette stated: In or about mid-2010 I had a further conversation with Orlene to the following effect: Me: Hey Orlene. I'd like to go ahead with the loan from the CUA. Orlene: I think it would be just as good with the current arrangements. You don't have to worry about anything as I have put it in place that the house will be yours when you're ready to retire.
32. Antoinette next described a proposal she made in about 2013 for the property to be sold in advance of her retirement in 2017. Again, this came to nothing because Orlene took no action.
33. Antoinette gave some evidence supplementing the email correspondence with Ms Oddo. There were two meetings. The first was attended by Orlene. One proposal was to sell the property and pay the CGT. It was also suggested that Annie could buy the property so that Antoinette could continue to live there. It was this proposal which was followed up at the meeting on 15 November, which Annie attended. At that meeting Ms Oddo outlined options for getting around the gifting problem applicable to Orlene's pension.
34. Antoinette said that she was unaware of the shortfall between the "rent" payments and the payments under the Wizard loan (see [166] below). Nor was she aware that Orlene was paying land tax on the property. She said that Orlene had never made any complaint about financial stress.
35. Antoinette's evidence was that she was also unaware that anyone else was making a contribution to paying off the mortgage. In particular, she stated that she only found out much later about Orlene having borrowed $140,000 from Brandon and having applied it to reduce the mortgage debt. This was when it was mentioned in Orlene's email of 18 November 2016 (see [76] above). Antoinette stated that after she received the email she discussed the matter with Brandon, telling him that she had learned from Orlene that he had "contributed money for the deposit on my house". Brandon replied that he advanced the money to Orlene for personal reasons and had been repaid.
36. Antoinette did not refer in her affidavit in chief to the proposal to develop the property as a duplex in 2004. When this was raised in Orlene's affidavit, Antoinette replied that in fact it had been her own idea. She described Mr Breakenridge coming and looking at the property and telling her that "water drainage would be a problem". On her account, the idea seemed to have gone no further than that. She said it was revisited in 2012 but Orlene took no action.
37. Antoinette acknowledged that she had obtained $15,000 from Orlene towards buying a car in 2006. She said that she described this at the time as money drawn "off my mortgage".
38. In cross-examination, Antoinette accepted that in 1999, she was in a very difficult position. She had been involved in Family Court proceedings and was in a dispute with her former husband about the division of matrimonial property. She did not accept counsel's suggestion that she had "very little money" but agreed that she was "not very well off" at the time. She could not afford to buy out her former husband from the Eastwood property, and also could not afford to buy a house on her own. She accepted that the home at Eastwood had been sold in late 2001, and she knew she had to vacate by the end of November. There was a date looming and she was searching for rental accommodation. At the time she was talking with Orlene, she was anxious about where she was going to live.
39. Antoinette also accepted that in October-November 2001, the amount she was going to receive in her settlement was uncertain. She said that at that point she had "no idea" how much it would be. Nevertheless she denied Orlene's account of the conversations between them, in which Orlene presented the arrangement as a rental one only.
40. Counsel cross-examined Antoinette on her evidence that Orlene had suggested that the property not be put in Antoinette's name because of the Family Court proceedings. She maintained that this idea had come from Orlene and denied that it involved deception of the Family Court or her ex-husband.
41. Counsel also cross-examined Antoinette about the letter she wrote to the Child Support Agency saying that she was paying "$350 a week rent" (see [66] above). Antoinette accepted that on any view this was an overstatement of what she was paying Orlene at the time. Antoinette also accepted that the letter was written with a view to obtaining financial advantage. She would not accept that she had been dishonest but emphasised at the time her state of mind was "very bad" as a result of the dispute with her ex-husband.
42. Concerning the FBT salary packaging from 2003 onwards (see [40]-[42] above), Antoinette stated that the packaging was her idea. But she was going to use credit card payments for that purpose. She said that Orlene proposed that instead the packaging apply to the "rent" payments on the grounds that it would be "easier".
43. Antoinette was cross-examined both on the May 2004 "rent" letter and the March 2006 letter prepared for the Australian Taxation Office ("ATO"). She volunteered that the March 2006 letter had made her "uncomfortable" but maintained that the letter had been prepared at Orlene's request to help Orlene out.
44. Antoinette was not asked about the 2004 proposal to redevelop the property into two townhouses. It was however put to her that the later proposal to borrow from a credit union to buy Orlene out had not resulted in an actual loan approval. Antoinette insisted that it had.
45. In her affidavit evidence, Antoinette had denied that she ever rented the property, or that Orlene and David were her landlords. She adhered to that position in cross-examination. She also maintained that, on her understanding, the property was in effect acquired by Orlene and David on her behalf. The following exchange occurred: Q. On your case you are saying that Orlene had agreed to assist you to purchase the house on your own, correct? A. That's right. Q. The case that you're putting forward in this Court case today is that the home, that Evans Street property, was your home from the get-go, right at the beginning, correct? A. That is correct.
46. Brandon's testimony: Brandon deposed that, although he and his brother, John, had assisted with Antoinette moving house, he was not involved in any of the discussions between Antoinette and Orlene which preceded the purchase. He recalled that Orlene later told him: I have purchased a house for Antoinette and the two girls to live in while the divorce settlement is going through.
47. He was also told, then or on a later occasion by Orlene: I have told Antoinette that she could pay me the amount of the mortgage as rent as this is lesser than rent in this area. She could also do things to the house to suit her later on as she could buy the house.
48. Brandon stated that he also became aware, after the event, that Antoinette had paid $130,000 off the mortgage on the Telopea property. He said that he was told by Orlene: This amount will be taken into consideration when it comes to Antoinette buying the property.
49. Brandon's evidence was that he could not recall ever being told that Orlene would give the title of the property to Antoinette. Nor could he recall being told anything by Antoinette about her owning the property. He said that he was aware that she was making regular payments by way of "rent" on the property. He recalled that Orlene once mentioned that she needed to increase these payments because of an increase in the amount of interest being charged by Wizard.
50. Brandon confirmed that he did not discuss his advance of $140,000 to Orlene with Antoinette at the time it happened. It seems that he was not actually aware at that point what Orlene had done with the money. He recalled the issue later being raised by him with Antoinette, but did not recall her saying that the money had been used to "contribute to her deposit".
51. Counsel for Antoinette put to Brandon that in giving evidence as part of the defence case, he was effectively taking Orlene's side in the dispute with Antoinette. He rejected this and I fully accept his evidence in this regard. It was clear that Brandon was distressed by the dispute between his sisters and was doing his best to tell the truth as he recollected it in a non-partisan manner. He was not challenged on the evidence he gave concerning his discussions with Orlene and Antoinette and I accept that evidence so far as it goes, and bearing in mind the difficulty of precise recall when many of the events were so long ago.
52. Mr Breakenridge's testimony: An affidavit was read from Mr Breakenridge, the engineer who prepared the storm water report for the proposed redevelopment of the property in 2005 (see [44] above). As already noted, the affidavit was read without objection and Mr Breakenridge was not required for cross-examination.
53. Mr Breakenridge's evidence was that he was retained to prepare the report by Orlene on behalf of herself and David, and he only dealt with her. He did meet Antoinette on one occasion when he visited the property, but she was introduced to him as the person who was living there. Their discussion was purely social and he was not told that she had any interest in the property, nor did she give him any instructions about the redevelopment.
54. Ms Abdallah's testimony: An affidavit was read in the defence case from Jennifer Abdallah. Ms Abdallah is the accountant for Orlene and David and has been responsible for preparing their tax returns since 2000. Her affidavit was not the subject of objection or cross-examination.
55. In her affidavit, Ms Abdallah recorded her recollection of her initial instructions from Orlene about the Telopea property. She said she received those instructions in or about the end of 2002 or the beginning of 2003, but in fact they must have been provided before the 2001-2002 tax return was completed in August 2002 (see [34] above). Ms Abdallah stated that she was told by Orlene: David and I purchased a rental property with an investment loan attaching to help minimise our taxes by negative gearing and [it] will be rented to my sister to assist her after her divorce.
56. According to Ms Abdallah, she recommended that a formal rental agreement be drawn up. Orlene declined this on the grounds that she trusted her sister. Ms Abdallah's evidence was that ever since, she has prepared the tax returns on the basis that the property belongs to Orlene and David, and is the subject of a rental agreement with Antoinette. She did not say anything about the period from 2014 onwards when the recording of income and expenditure from the Telopea property ceased, and then was re-instated by amendment.
57. Orlene's testimony: In Orlene's affidavit, she recalled that in 2001, Antoinette had wanted to purchase the former marital home in Eastwood, but did not have the borrowing capacity to do so. She told Orlene that it was being "sold under court orders" and that it was going to be put on the market in the second half of 2001. In September 2001, they began speaking about Antoinette's housing situation and had the following conversation: Antoinette: Where am I going to live now that my house is to be sold to pay off Stephen's bank debts. I don't want to end up in housing commission. Orlene: You could find an affordable place to rent out west, that will allow you to have your dogs and cats. Antoinette: Eloise and Annie already blame me for losing their home and they would hate me even more if they had to live in housing commission, or in the western suburbs. Could you take some time off to help me look for a place to rent?
58. Orlene then decided to take annual leave to assist Antoinette. She asked whether Stephen would help, to which Antoinette responded: Antoinette: He does not care about us and as soon as Eloise turned 18, he stopped child support, so as soon as Annie turns 18 he will stop. Orlene: How will you pay Annie's private school fees? Antoinette: He has committed to paying for her schooling until she finishes but Annie will be a boarder because she does not want to live in rental accommodation or housing commission and Stephen has agreed to pay.
59. Antoinette and Orlene conducted searches, including visiting real estate agents and inspecting houses. But they could not find a place that Antoinette considered would be suitable for her needs. During this process, they had the following conversation: Orlene: Rents are equivalent or more than mortgage payments. Antoinette: Could you buy a place, now that you have sold your unit. I will rent it from you and pay all the expenses? Orlene: I have a mortgage of my own and cannot afford to borrow $500,000! Antoinette: We should look at houses for about $400,000 regardless.
60. Orlene agreed and took more annual leave to help Antoinette out. After they had been looking for some time, the real estate agent said, "What about Telopea? I have a place that may be in your price range". Orlene recalled that they both went to inspect the property, but she felt it was more than what she could afford. Antoinette was taken with the property and asked Orlene if she could approach the bank. Orlene then had the following conversation with the real estate agent: Agent: How much can you afford? Orlene: Maybe $380,000, including stamp duty. Agent: The vendors will take $385,000 but you have to put down a holding deposit.
61. Following this, Orlene approached the bank about a loan for the Telopea property and was advised that she could not afford the loan repayments in addition to her other commitments. She then went to Wizard, who was willing to lend her the money on the condition that she find a co-borrower. Orlene approached David to see if he would help, but David said that he was planning on leaving his job and travelling to the United Kingdom the following year. Orlene told Antoinette of David's plans, to which Antoinette responded "Can't David delay his plans?" Orlene approached David again. Not wanting to see his relatives end up "on the street", David agreed to be a co-borrower.
62. According to Orlene, Antoinette was not included as a co-borrower as she had insufficient assets and it was thought she might still have to contribute, as part of the property settlement, to debts which had been run up by Stephen. Orlene described Antoinette as being "in a very poor way financially, mentally and physically". The reference to being in a poor way physically she explained by saying that Antoinette was suffering from high blood pressure.
63. Orlene acknowledged that Antoinette paid the initial holding deposit for the Telopea property but otherwise denied that she made any offer to contribute for stamp duty or ancillary costs. These expenses were paid out of the monies advanced by Wizard, and even the need for a substantial deposit was avoided by taking out the deposit bond (see [26] above). Orlene said that she also paid for the building inspection report undertaken before the purchase.
64. Orlene insisted that ownership by Antoinette had never been discussed or considered. Nor did Antoinette's family law proceedings have anything to do with the purchase. Orlene denied referring to the mortgage in discussions with Antoinette as "your mortgage".
65. Orlene stated that Antoinette was only ever looking for a rental property and this did not change once it was decided that Orlene and David would buy the property; they would simply be her landlords. Orlene said that the $700 "rent" was all that Antoinette said she could afford. Antoinette said at the time that she needed to support Eloise who was not earning money apart from Austudy.
66. Orlene acknowledged that Antoinette spent some money on the property, both by way of repairs and improvements. She said that Antoinette would usually ask her for permission before undertaking such work; on at least one occasion when she did not, Orlene rebuked her. Orlene's position was that she could not afford to pay for repairs or improvements but if Antoinette wished to do so that was up to her.
67. Similarly, Orlene denied that there was any pre-plan, or even any request at the time, for Antoinette to pay the $130,000 off the mortgage. According to Orlene, she simply said to Antoinette that it was up to her. Orlene's position was that she considered herself "obliged in conscience to account" for Antoinette's capital contribution to the mortgage (net $115,000) but no more.
68. Orlene stated that the proposal to package the "rent" came from Antoinette. She also noted the May 2004 and March 2006 letters concerning the "rent". Orlene said she was never in trouble with the ATO and she drew up the 2006 letter because of advice she had received from her accountant, Ms Abdallah, that she should formalise the arrangement.
69. Orlene stated that the idea of redeveloping the property as a duplex was her idea. Mr Breakenridge was an acquaintance of hers from university. She said that her idea was that if the development proceeded she could "give, not lend, Antoinette some money for a good size deposit to get a loan and buy a house of her own, in addition to returning the $130,000".
70. Orlene stated that Antoinette would from time to time refer to the Telopea property as her house. Orlene said that when this happened she corrected Antoinette and reminded her that she was only a renter. Orlene denied that Antoinette had described the $15,000 re-drawn in October 2006 as being drawn "off my mortgage".
71. Orlene gave a different version from Antoinette of the visit to the credit union. She stated that it happened later, between 2013 and 2015. Antoinette wanted to borrow to pay out the loan, but the credit union would require security which would have to be provided by herself and David as the owners of the property. She said that this made no sense to her. She denied that the credit union made an offer of a loan; she said that the loan was subject to security. Orlene put to Antoinette that she could buy the house, but she would have to borrow to pay out Wizard, CGT and the stamp duty, and at that point "I will give you back what you put in". Antoinette however balked at paying CGT. She said that there were other people she knew who had not been required to do so on the sale of their homes.
72. Orlene stated that the property market had improved since 2015 and acknowledged that Antoinette started agitating to sell the property. She continued to try to avoid paying CGT but Orlene verified with the ATO that CGT would be payable. Orlene stated that the CGT estimate provided at the time was about $190,000.
73. Orlene also referred to the change in tax treatment of the property in her tax returns from 2014 onwards. She was told by Antoinette's accountant, Mr Keddie, that she did not "need" to include the income and expenses; she could treat the property as if it were a holiday home. Up to that point she had not been aware of that possibility.
74. Orlene sought to place the 2016 correspondence in context. She was under a great deal of stress as a result of losing her job and suffering a foot injury. David was also ill. She just wanted Antoinette to leave them alone.
75. Orlene stated that she did not accept the history given by Antoinette in her October 2016 email to Ms Oddo (see [71] above) but wanted to avoid argument on the subject. The catalyst for the breakdown in the relationship was a conversation with Annie. She suggested that Annie take on ownership of the property, as well as the debt, but Annie refused. Orlene told Annie that she and her sister Eloise should be helping their mother and Annie reacted badly to this.
76. Orlene acknowledged that by the end Antoinette was treating herself as owner of the equity in the property. But she insisted that this had not been the case at the beginning. It had only started at some point after the duplex redevelopment suggestion in 2004.
77. It is clear that Orlene has some experience of financial matters. Initially her position was that she was not an accountant. In cross-examination she said she had never formally qualified as such, although in the past a "finance person" might be described as an accountant because "anyone was an accountant". Orlene's job title at Nestlé was "Senior Treasury Officer" and it is clear that she was a "finance person" in the sense in which she used the term.
78. Counsel for Antoinette drew Orlene's attention in cross-examination to the fact that she was described as an "accountant" for the purposes of her tax return. Orlene said unconvincingly that this was an "error", but I think the more likely explanation is simply that the term was used in the loose sense of an employee concerned with financial operations of a business as distinct from a qualified accountant practising as such.
79. Orlene said that she had paid from her own pocket for the deposit bond, although it was not clear from the evidence how much had been paid or whether indeed there had been a separate payment as distinct from other loan costs.
80. Orlene was pressed in cross-examination about the fact that she signed the contract before finance approval was obtained. In response, Orlene said that there was a discussion at the Telopea property with the agent and Antoinette at which she "committed to look for a loan". Orlene was later present when Antoinette paid a holding deposit in the agent's office. She could not recall whether the contract was signed at the same time.
81. Orlene continued to maintain that she did not suggest that the property be acquired in hers and David's names so as to avoid disclosure in the family law proceedings between Antoinette and her ex-husband. Counsel went so far as to suggest to Orlene that she orchestrated a situation in which her sister was not on the title, for hers and David's benefit. Orlene said that this was "completely false".
82. Orlene was pressed in cross-examination on the fact that she claimed tax deductions for expenses on the Telopea property which were paid by Antoinette, not her. Counsel suggested that this was dishonest, to which she replied that it was "unintentionally so". I found the reference to "unintentional" dishonesty in this context hard to understand. There seems no doubt whatever that Orlene claimed these expenses knowing that she had not in fact paid them. She would have appreciated that this involved defrauding the revenue.
83. Orlene was reluctant in cross-examination to concede that she had read Antoinette's email of 12 October 2016 (see [71] above) even though she wrote in response to Antoinette that Antoinette had left things out of the email. I found this evidence very unconvincing. I am prepared to accept that Orlene might have wanted Antoinette off her back at the time but I think the terms of Antoinette's email and Orlene's response leave no doubt that she did in fact read the email and chose not to respond to Antoinette's description of the history to Ms Oddo, in which Antoinette stated that Orlene had effectively acquired the property as trustee. Why she did not respond is another question which I will address in more detail later.
84. Orlene was also taxed in cross-examination with the statements made in her email of 26 November and 9 December 2016 (see [78]-[79] above) to the effect that Antoinette would receive David's half share of the proceeds of sale of the property, as well as further amounts in due course once CGT was paid and if that could be done without prejudicing Orlene's pension entitlements. Orlene's understanding was that the property was then worth $800,000-$900,000. She said that at the time she believed she had no authority to offer David's half share and in fact had no intention of following through with what she had told Antoinette she would do.
85. Orlene accepted counsel's suggestion that she effectively lied to Antoinette, saying that she did so just to get Antoinette off her back. This is difficult to understand. For Orlene to promise Antoinette to sell the property and hand over the proceeds was hardly likely to result in Antoinette dropping the matter.
86. In explaining herself, Orlene said that she saw the property as a "noose around her neck". But this too is difficult to understand as there was plenty of equity in the property and its sale would have resulted in her obligations to Wizard being discharged. When asked about this, Orlene suggested that the reference to the "noose" was emotional rather than financial. In the end, I do not think she provided any rational explanation for undertaking to do the things she later said she had no intention of doing.
87. David's testimony: In his affidavit, David said that he did not deal directly with Antoinette. All of the conversations that he recounted were conversations with his mother describing the arrangements which she had made with Antoinette. He was told that Antoinette could not find a place to rent. He himself wanted to go to the United Kingdom but agreed to help by being a borrower. He in fact told Antoinette about the United Kingdom job opportunity.
88. David's evidence was that all of the loan arrangements were made by Orlene. Thereafter, he put in top-up monies to pay the Wizard loan repayments as requested by her. He was unaware of any discussions concerning the $130,000 from Antoinette or the $140,000 from Brandon.
89. David was aware of the proposal to redevelop the property as a duplex. He confirmed that this was his mother's idea. He denied that Antoinette was involved in it.
90. David said he took out loan protection insurance until 2019. He said that from his point of view the purchase was intended as an investment and Antoinette had no interest in the property.
91. David confirmed that he had a nervous breakdown in the second half of 2016. He was under psychiatric care and was heavily medicated. He did not wish to deal with the dispute between his mother and his aunt.
92. In cross-examination, David confirmed that he never spoke to Antoinette about the arrangements for the property or the "rent" payments. He maintained that at no stage, even in 2016, did he think that Antoinette had any entitlement to the property. But counsel for Antoinette put to him his mother's email of 26 January 2017 (see [81] above) which referred to the handover of his share. David said she had not discussed this with him but accepted that he had read the email before responding to his cousin Annie on 30 January. He acknowledged that he had not objected to the handover of his share of the equity, or of his mother's, provided that it could be done without interfering with her pension.
93. General comments on credit of Antoinette and Orlene: The dealings between Orlene and Antoinette were oral and go back almost twenty years. The observations by McLelland J in Watson v Foxman (1995) 49 NSWLR 315 at 319 concerning the difficulties of proof of the content of oral agreements or representations apply with particular force to Antoinette's evidence.
94. I have already indicated that I think Antoinette's affidavit account was inaccurate on some matters of detail. Antoinette did not strike me as the sort of person who would have been interested in those details and I am not satisfied she has any clear recollection of them. There is also her evidence about the annotation of her cheque butts, which I address below, and disbelieve. And as I explain below, Antoinette's evidence on the 2004 redevelopment proposal was contradicted by Mr Breakenridge and I must reject it.
95. Mr Trebeck submitted for Orlene that I should draw a Jones v Dunkel inference against Antoinette because of her failure to call as witnesses two of Antoinette's siblings and the agent involved in the purchase of the Telopea property. But I see no reason to think, given the lapse of time, and the fact that the critical conversations took place between Antoinette and Orlene, that the failure to call those witnesses was of any particular significance. Furthermore, there was nothing to suggest that the witnesses would not equally have been available to Orlene.
96. Mr Trebeck attacked Antoinette's credit over her dealings with her ex-husband and the Child Support Agency at the time of her property settlement proceedings. On neither party's version of events was Antoinette actually concealing any assets, and it seems to me unlikely that disclosure of the arrangement would have made any difference to the outcome of Antoinette's property settlement proceedings. Nevertheless, it was clear enough that Antoinette did wish to conceal it. And she accepted that, on any view, she exaggerated the "rent" that she was paying in her letter to the Child Support Agency.
97. Furthermore, I do not accept Antoinette's attempt to place responsibility onto Orlene for the way in which the "rent" payments were described. As I explain below, I think Antoinette was herself quite content for the payments to be described as such to the tax authorities. She did not concern herself with whether that was a complete or accurate description.
98. These matters, although they do not bear directly on the issues in this case, do reflect adversely on Antoinette's credit. In all the circumstances, I have proceeded on the basis that the reliability of Antoinette's evidence is generally questionable.
99. Orlene's evidence on matters of detail was not contradicted by other evidence in the way in which Antoinette's was. I am inclined to think it is more reliable than Antoinette's on questions such as the sequence of events. But the difficulties which arise when witnesses try to remember oral conversations years after the event of course apply to Orlene's evidence just as much as they apply to Antoinette's.
100. Orlene's evidence had other difficulties. As I have noted, it is clear that she claimed tax deductions to which she was not entitled. I have also explained why I find her unsatisfactory in her attempts to explain away her conduct in 2016. I was not satisfied that her evidence was fully candid, and I treat it with reservation.
101. Conclusions: Given the comments I have made on the reliability and credibility of both Antoinette and Orlene, objective factors are likely to provide the surest guide to deciding whether Antoinette has made out her case as to the nature of her arrangement with Orlene.
102. The first objective circumstance to be considered is the level of Antoinette's financial contribution to the property. I will deal with the disputed aspects of this in the following section of the judgment, but there are four things which are not disputed.
103. First, Antoinette paid the initial holding component of the deposit on the property. Second, from the outset she paid for all improvements, repairs and maintenance and outgoings on the property. Third, she paid $130,000 off the mortgage in December 2002. Fourth, she paid at least $320,000 in monthly payments of "rent" (this is the figure accepted by Orlene and David up to 30 June 2021).
104. While initially there was a shortfall, over the whole twenty year period Antoinette's contributions of "rent" would have covered the lion's share of the Wizard loan repayments (and, to the extent that they did not, the interest component was claimed as a tax deduction by Orlene and David, thus reducing the cost to them). Even on a shortfall of $47,000, which was the figure put forward by Orlene and David, Antoinette contributed far more to reducing the mortgage principal and paying the costs of holding the property than they did. In fact, as I show below, the shortfall was less than that.
105. Against this background, Orlene's claim that Antoinette agreed to rent the Telopea property and nothing more, is, I think, inherently unlikely. All the parties agree that the arrangement was initially an act of generosity to Antoinette. On Orlene and David's case, it has turned out to be the other way around, with Antoinette effectively underwriting the acquisition by her sister and her nephew of a property, the equity in which is worth more than $1 million, for a minimal outlay. However desperate Antoinette may have been until her settlement monies came through, it is hardly likely that if she had only been a tenant and nothing more she would have continued with such an unfavourable arrangement for almost two decades afterwards.
106. The holding component of the deposit was small in amount but the payment was of considerable symbolic importance as a contribution to ownership of the property. It was in fact the only part of the purchase price which was paid out of either party's pocket. Similarly, it is in my view significant that right from the outset Antoinette paid for the tiles and other improvements herself. She treated the property as her own.
107. Next, there is the letter from Antoinette's solicitors of August 2002 (see [67] above). The letter makes two things clear. One is that Antoinette was planning to use the surplus monies from her settlement to pay down the mortgage. The letter contradicts Orlene's claim (see [129] above) that the decision to put monies from Antoinette's settlement into the mortgage was only made in December 2002. I am satisfied that, although the amount could not of course have been known at the time, it was part of the plan between the parties from the outset that Antoinette would make a capital contribution to paying down the mortgage from her property settlement when she received it.
108. Secondly, the letter shows an intent on Antoinette's part to avoid a perceived claim by her ex-husband. As already noted, it seems unlikely that any such claim would have been available, but clearly enough that was not what Antoinette thought. It is not necessary to decide whether this idea came from Orlene or not. What is important is that the wish to conceal the arrangement implies an understanding between the parties that Antoinette was entitled to some sort of proprietary interest in the property.
109. The letter of course post-dates the actual arrangement between Antoinette and Orlene by about ten months. But that is relatively contemporaneous, at least by comparison with the other evidence presented in this case. There is nothing to suggest that there was any change in the arrangement between October 2001 and August 2002.
110. I also think the 2016-2017 correspondence between Antoinette and Orlene is significant. At no point in that correspondence did Orlene assert that Antoinette was just a tenant. Orlene described and explained the monthly payments as repayments of the mortgage interest. Indeed, her letter of 9 December 2016 (see [79] above) referred to the payments as "rent" in inverted commas. As I will explain in a moment, the correspondence was long after the event and was therefore not necessarily a good guide to the precise terms of the original arrangement made in 2001. But even so it is quite inconsistent with Orlene's case that the arrangement was a rental one throughout.
111. I accept Brandon's evidence that he was never told, or at least could not remember having been told, that the Telopea property would be gifted to Antoinette. But that does not go very far. Antoinette does not suggest that there was an agreement that the property would be transferred to her as a gift, in the sense that she would make no financial contribution to it. Indeed, Brandon himself remembered being told that she might in the future "buy" the property. In the context that presumably would have involved Antoinette finding the money to pay off the rest of the mortgage. I see this as more supportive of Antoinette's case than of Orlene's rental-only characterisation of the arrangement.
112. As I have said, David was not directly involved in the negotiations between his mother and his aunt. David appeared to me to be loyally supporting his mother, but I was not satisfied that his evidence (which was essentially second hand anyway) was based on any firm recollection.
113. In passing, I think it is clear on the evidence that David had no independent role in the arrangement. His only involvement in the purchase and the obtaining of finance was to act as a second borrower at his mother's request. The terms of the arrangement with Antoinette were negotiated by Orlene alone, and without any input from him. Thereafter all he did was to top up the monies required to make the loan repayments, again at his mother's request. Most significantly, it was clear from the 2017 correspondence that he was content for his mother to deal with his share of the property as she wished and without prior reference to him. In effect he acted as her nominee throughout.
114. It is true that Antoinette described herself as "renting" the Telopea property in her letter to the Child Support Agency, her FBT packaging claims, and her letters of May 2004 and March 2006, which were clearly prepared for tax purposes. But the existence of a legal tenancy is not inconsistent with Antoinette having a beneficial interest, in whole or in part, in the property. In fact trusts providing for the beneficiary to occupy a property, on terms that the beneficiary is to pay for the upkeep of the property, are not uncommon in testamentary and other family arrangements.
115. In any event, I do not accept that Antoinette went along with describing herself as a tenant because she saw herself as a renter and nothing more. I think she did it simply because of the perceived tax advantages from representing the arrangement in that way.
116. For these reasons, I reject Orlene and David's assertion that the arrangement was for Antoinette to pay rent and outgoings, and nothing more. But rejecting this assertion is not necessarily the same thing as accepting Antoinette's contention that it was agreed that the equity in the property would be held exclusively for her benefit.
117. Again, the objective circumstances and the documentary evidence are a better guide than the conflicting testimony of the parties. The strongest points in Antoinette's favour emerge from the 2016-2017 correspondence. Two points in particular stand out.
118. First, in her email to Ms Oddo of 12 October (see [71] above) Antoinette described the arrangement in terms indicative of a trust. She wrote that Orlene and David had "acted as a caretaker of sorts" and that the understanding "was that I would be the owner of the property later on". As I have already described, I am satisfied that Orlene did indeed read that description and did not dispute it.
119. The second important factor is Orlene's preparedness to hand over the whole of David's share of the property, after CGT, to Antoinette (and Orlene's own share, if that could be done without interfering with her pension entitlements). As already noted, I did not find Orlene's attempt to explain how the property was a "noose" around her neck persuasive. Although Orlene claimed that she did not actually intend to go through with her offer, the important thing is that she never tried, in her negotiations with Antoinette, to limit Antoinette's entitlement to repayment of the amounts paid off the mortgage. Effectively Orlene accepted the premise that Antoinette was entitled to the equity, subject only to ensuring that Orlene kept her pension entitlements.
120. Mr Horowitz submitted that the terms of the 12 October email to Ms Oddo did not compel the conclusion that this was where the parties ended up. Counsel pointed out that Ms Oddo in her email had asked Antoinette to provide supporting evidence to support her description of the terms of the arrangement. Counsel also pointed out that Ms Oddo had later advised that CGT could not be avoided. Counsel submitted that if the arrangement had truly been a trust arrangement then CGT would not have been payable, and Ms Oddo, as a tax expert, could be expected to have realised that. Therefore, in counsel's submission, I should infer that Ms Oddo had looked into the matter and concluded that it was not a trust arrangement.
121. I do not accept this argument. There are too many suppositions in it. In particular, I am not at all sure that if the arrangement was properly characterised as a trust for Antoinette, that CGT would not be payable. It seems to me that once the property had been described in Orlene's tax return as a rental property then CGT would probably be payable on disposal, whoever the beneficial owner of the property was.
122. Furthermore, Mr Horowitz had no explanation for the undertaking to hand over David's share (and Orlene's, so long as it was done in a way which preserved her pension entitlements) other than that the undertaking was given to get Antoinette to leave Orlene and David alone. I have already noted that giving such an undertaking would not have been a very sensible way of achieving that objective.
123. The 2016-2017 correspondence thus supports Antoinette's case on complete ownership. But other objective evidence from closer to the event is not so clear.
124. As already noted, the letter from Antoinette's solicitors of August 2002 does indicate that Antoinette understood the arrangement as one which gave her some sort of ownership interest in the Telopea property. But the letter did not state that this was a beneficial interest in the whole property. Instead it spoke of Antoinette "obtaining a part" of it.
125. Orlene's evidence about the redevelopment proposal which resulted in her obtaining a report from Mr Breakenridge was not challenged in cross-examination. I do not find Antoinette's explanation of the background, namely that this redevelopment would be for her benefit, persuasive. Her evidence is hardly reconcilable with Mr Breakenridge's, which her counsel did not challenge, and I think I must therefore reject it.
126. It might have been one thing for Orlene, as an act of generosity, to help Antoinette with accommodation during her hour of need. It would have been quite another for Orlene to have undertaken a redevelopment of the property purely for Antoinette's profit. It hardly seems likely that Orlene would have gone to the trouble, let alone the expense, of investigating the redevelopment option unless she was to obtain some benefit from it, as she suggests.
127. What this means I think is that as at 2005 Orlene did not see the property as being in the exclusive beneficial ownership of Antoinette. Rather, her attitude seems to have been that, provided Antoinette's interest in having a roof over her head could be satisfied, any surplus value in the property belonged to her and David, or at least they were entitled to a share of it. Admittedly, the redevelopment was proposed three years or so after the arrangement between Antoinette and Orlene was entered into. But it is much closer in time to the relevant events than the 2016 correspondence.
128. Ultimately the question is what finding I can make about the terms of the agreement between Antoinette and Orlene at the time the property was acquired. I am satisfied that the property was acquired on the basis that it would be used to provide a home for Antoinette, and in return Antoinette agreed to cover the costs of borrowing and the other holding costs such as rates and insurance. On Orlene's own evidence, and on what she told Brandon, it was also agreed that Antoinette might "buy" the property in the future, and monies contributed to the mortgage would count towards the "purchase". Obviously "buying" the property would involve discharging the balance of the monies borrowed to purchase it.
129. Despite Orlene's protestations, it seems that by 2016 she had accepted that Antoinette would get the equity in the property. She may well have accepted that by the time the parties made the earlier visit to the credit union. But although that supports the inference that that was the agreement from the outset, it is not definitive.
130. Orlene said that it was not until some point after the townhouse redevelopment proposal in 2004 that Antoinette took the position that she was entitled to all the equity in the property. I think that the objective evidence supports that view. I suspect that the issue was simply not discussed in October 2001. That would not be surprising given the family nature of the transaction, and the fact that at the time no one knew how much Antoinette would receive from the property settlement, or indeed whether she would receive enough to make the arrangement viable at all. It is also consistent with the vagueness of the August 2002 letter.
131. In these circumstances I would not, I think, be justified in inferring that there was before the purchase of the property in 2001 any agreement, express or implied, that Antoinette was entitled to the whole, or some defined share, of the equity in the property. Nor was there any agreement on the terms upon which Antoinette would be able to purchase the property at that stage. There was a mutual understanding that she had an interest in the property, but that interest was not defined.

Payments referable to Telopea property

1. The Wizard loan payments were directly debited to an account held by Orlene with the CBA. The CBA statements, or most of them, are in evidence, and the amounts paid are not in dispute.
2. The Wizard loan payments were made monthly. They were interest-only for the first ten years (until 30 November 2011). The payment regime converted to principal and interest from 1 December 2011. This lasted for ten months. Then from 1 October 2012 the loan payments reverted to interest-only. This lasted for three years. The payment regime has been principal and interest from 28 September 2015 onwards.
3. During the interest-only periods the monthly payment would be fixed by Wizard every so often in an amount which roughly equated to the interest payable at the time. If payments were made in reduction of the principal (for instance, Antoinette's payment of $130,000 in December 2002) the actual interest would be less than the amount which had been fixed by Wizard and the excess would reduce the principal until the regular monthly payment was adjusted again. But there also appears to have been a minimum payment amount to be paid irrespective of the actual interest being charged. For these reasons there were times when reductions of principal were taking place even during periods when the loan repayments were on an interest-only basis.
4. The monthly "rent" payments made by Antoinette (see [36] above) were made from an account held by Antoinette with Endeavour Australia Credit Union ("Endeavour"). The monthly payment amounts are set out in the following table: Sep 2002 - Jun 2003 $700 Jul 2003 - Jun 2004 $1,000 Jul 2004 - Mar 2007 $1,200 Apr 2007 - Aug 2007 $1,250 Sept 2007 - Mar 2008 $1,300 Apr 2008 - Jul 2008 $1,500 Aug 2008 onwards $1,550

1. There are two categories of disputed payment. First, Antoinette claims that she made cash withdrawals from her Endeavour account which she paid to Orlene to cover costs of the loan or the property. The withdrawals in question are set out below: Date Amount Narrative 26/11/01 $1,000 ATM Eastwood 26/11/01 $1,000 ATM Eastwood 27/11/01 $1,000 ATM Burwood 27/11/01 $1,000 ATM Burwood 27/11/01 $2,000 Cash withdrawal 29/11/01 $1,000 ATM West Ryde 27/02/02 $550 ATM West Ryde 05/04/02 $500 ATM Eastwood $8,050

1. The second category of disputed payments consists of cheque withdrawals from Antoinette's Endeavour account. Antoinette's cheque butts record payments which Antoinette claims were made for the loan or the property. The cheque butts record the date of the cheque, the amount and the payee. They also contain annotations identifying the nature of the payments. The statements from Endeavour confirm that they were presented.
2. Two of the cheque butts are for the $30,000 and the $100,000 payments made to Wizard in December 2002 (see [37] above). These are recorded as receipts on the Wizard statements and are not in dispute. There is also a cheque butt for $600 dated June 2002 which matches a deposit into Orlene's CBA account in July; Orlene accepts that this was a payment of "rent". The other alleged payments are disputed.
3. The cheques are summarised in the following table: No. Date Amount Payee/ Presented Agreed Disputed Annotation 333 25/06/02 $500 Orlene 25/06/02 $500 [XX] Evans Mortgage Orlene 334 26/06/02 $600 [XX] Evans 17/07/02 $600 Mortgage 338 09/09/02 $700 Orlene 09/09/02 $700 Mortgage Cash 339 26/09/02 $720 Home Insurance 01/10/02 $720 [XX] Evans David 342 20/10/02 $15,000 ?? House 22/10/02 $15,000 [XX] Evans 346 19/12/02 $30,000 Wizard 20/12/02 $30,000 8136-2 347 19/12/02 $100,000 Wizard 20/12/02 $100,000 8136-3 348 19/12/02 $15,000 McKinlay 24/12/02 $15,000 Mortgage David Mc 349 19/12/02 $3,300 Mortgage 24/12/02 $3,300 [XX] Evans Total $130,600 $35,220

1. Disputed payments in 2001-2002 financial year: The cheque butt for cheque 333 identifies the payee as Orlene and is annotated to refer to the mortgage on the Telopea property. As I explain in more detail below, I see no reason to doubt the accuracy of the cheque butt, and the figure ($500) is of the same order of magnitude as the later undisputed payments of "rent". There is no credit in Orlene's CBA account which corresponds with the cheque but a statement from another account held by Orlene, with Citibank, records a receipt of $500 on 25 June, which matches the date of the cheque butt. I find the inference irresistible that the cheque represented a "rent" payment to Orlene.
2. Orlene's CBA account statement records the receipt of $4,000 on 3 December 2001 as a "deposit". Counsel for Antoinette suggested that this derived from the cash withdrawals totalling $7,000 made by Antoinette in late November. Counsel invited me to conclude that all of the cash withdrawals (or at least $4,000 of them) had indeed been paid to Orlene as Antoinette claimed.
3. The CBA statements show that Orlene was having part of her salary directly deposited to the CBA account every month. There were also deposits every so often which were annotated on the statements as having come from David. There was no annotation against the $4,000 entry. Orlene suggested in cross-examination that it might have been money from the sale of the Auburn property, but elsewhere in her cross-examination it emerged that she had sold the property well before.
4. Orlene was unable in cross-examination to identify any other source for the $4,000 receipt. But the supplementary affidavit from her brother John (see [61] above) suggested that it represented a repayment of monies he had borrowed from her for his wedding the previous year. Although John's evidence was not challenged, counsel for Antoinette continued, as I understood him, to press for a finding that all of the cash withdrawals by Antoinette had in fact been paid to Orlene.
5. Orlene's 2001-2002 tax return records total "rent" of $3,000. There is no reason to doubt that Orlene received payments from Antoinette totalling that amount. Probably those payments included the $500 cheque drawn on 25 June 2002 and the remaining $2,500 was paid in cash. But it is unnecessary to go into that level of detail. I am satisfied $3,000 was paid. Other cash payments may possibly have been made by Antoinette for expenses but on the evidence I cannot be satisfied that this was so.
6. Disputed payments in 2002-2003 financial year: It is convenient to refer to cheques 334 and 338 together. Each cheque butt identifies the payee as Orlene and is annotated to refer to the mortgage on the Telopea property. As already noted, cheque 334 is admitted as having been paid into Orlene's CBA account.
7. In cross-examination, it was suggested to Antoinette that the annotations were not made when the cheques were drawn but were instead made after the event. Antoinette denied this but I do not accept her denial. The annotations on the cheque butts about which Antoinette was asked were plainly made using a pen which was different from the pen used to record the date and payee, and Antoinette did not dispute this. It seems to me fanciful to suppose that she would have made the annotation in a different pen on the same occasion as that on which she wrote the cheque.
8. This however is no reason to doubt that the dates and payees were incorrectly recorded on the cheque butts, and that was not suggested to Antoinette. There is no reason, therefore, to doubt that the disputed cheques were in fact drawn in Orlene's favour, or that, when presented, they were presented by her (presumably by deposit into a bank account other than the CBA account, or negotiated for cash).
9. Having been made at a later point, the annotations may have involved a degree of reconstruction or inference. But even so, that does not necessarily make them unreliable for present purposes. The amount of the disputed cheque (number 338) is of the same order of magnitude as established "rent" payments at around the same time, and no alternative explanation of the payment was offered by Orlene.
10. Antoinette's case is also supported by the tax return lodged by Orlene for the 2002-2003 financial year. That return showed rental income from Antoinette of $8,200. Ten direct debit payments of $700 are accounted for. A further $600 was admittedly banked in July. This suggests that the disputed cheque ($700 on 9 September) was also a payment of "rent" (the reconciliation with the tax return figure is $100 out but I think that is of little significance in the circumstances).
11. Next is cheque 339, for $720 on 26 September. The cheque does not fit into the pattern of monthly "rent" payments. The annotation itself states that it was a payment for insurance (on the Telopea property). I see no reason to doubt that was what it was. Presumably the cheque was paid directly to the insurer, or its cash proceeds were.
12. Finally there are the three other cheques, totalling $33,300. In his evidence, David accepted that he received the $3,300 cheque of 19 December, and produced a statement showing it was paid into a bank account of his. He deposed that he had no recollection of receiving the $15,000 cheque of 20 October, and had found no record of having done so.
13. Antoinette denied that she asked David for money for the Family Court proceedings. Antoinette said that the only family members she borrowed from was Brandon and his wife Rosie.
14. Antoinette was asked about the question marks on the cheque butt for the $15,000 payment to David in October 2002. She insisted that the payment was for stamp duty but, when confronted with the fact that the stamp duty had been only $12,000 she insisted that this is what she had been told by Orlene.
15. Orlene denied receiving either of the $15,000 cheques. She produced her passport which showed that she was in Fiji between 21 October and 15 November. The cheque was not presented until 22 October, after she had arrived in Fiji.
16. Nevertheless I am satisfied that the two $15,000 cheques were paid to Orlene or David. As I have already noted, there is no reason to doubt the accuracy of the cheque butts and no reason to suppose that the cheques were presented by anyone else. The October cheque, which was drawn in favour of David, may or may not have been deposited into a bank account of Orlene's. The day it was drawn, 20 October, was a Saturday. Orlene travelled to Fiji on the Sunday. She could readily have left instructions with someone to deposit the cheque on the Monday.
17. The final question is what the payments were for. David deposed that he advanced some money to Antoinette to help her to pay her legal fees. He was unable to recall the details but suggested that the $3,300 paid to him on 19 December could have been a repayment. On balance I accept that the $3,300 was probably a repayment of legal fees earlier paid by David.
18. This leaves the remaining two $15,000 cheques. For the period up to October 2002, the shortfall between the "rent" paid by Antoinette and the loan payments to Wizard was about $13,000, and there was an ongoing shortfall of about $1,500 per month. No other reason for the payments was suggested. There is also the fact that separate cheques, each in the same amount, were drawn in favour of Orlene and David, who were the joint borrowers. On balance I am satisfied that the cheques were paid on account of the loan liability on the Telopea property.
19. Payment summaries: For the purposes of the case, Orlene prepared summaries of the payments made to her by Antoinette (both monthly "rent" and capital) and the payments made by her on the Wizard loan. Adjusting the "rent" payments to reflect my findings on the disputed payments, the total "rental" payments from Antoinette to Orlene over the period from December 2001 to the end of June 2021 was $329,000. Monthly payments to Wizard over the same period totalled $367,719.
20. There was thus, over the period up to the end of June 2021, a shortfall between the "rent" payments and the regular monthly loan payments of $38,719. But as explained, the regular monthly loan payments, although principally interest, would have included some capital component. No calculation of that capital component has yet been done.
21. Orlene in her payment summary allowed capital repayments of $130,000 in December 2002, deducting the $15,000 redrawn in October 2006. In addition, I have found that Antoinette made two payments of $15,000 to Orlene and David on account of the mortgage. Given the lump sum nature of those payments, and the fact that they were not included in Orlene's and David's income tax returns as "rent", I think they are best treated as capital payments. Thus, on my findings, Antoinette made capital payments towards the loan totalling $145,000, of which $30,000 was not actually applied to the loan account and were presumably retained separately by Orlene and David for their own benefit.
22. As already described, Orlene received the sum of $13,700 from the settlement of the Wizard loan advances. Of that amount, $800 represents the difference between the amount borrowed and the amount paid out to refinance the loan on Orlene's Concord property. The balance ($12,900) represents money borrowed under the Telopea property loan which was applied for Orlene's personal benefit. There was no adjustment for this in Orlene's shortfall calculations (or, it seems, in the interest deductions claimed in her tax return).
23. Deducting the money received by Orlene from the Telopea property loan figure ($415,000) gives a principal figure attributable to the Telopea property purchase of $402,100. Deducting the $145,000 contributed by Antoinette results in a principal figure of $257,100. The difference between this figure and the amount currently owing ($232,322 as at 1 June 2021) represents a potential capital contribution to the loan by Orlene. But there are also potential repayments of principal out of the regular "rent" payments. It is thus not possible at present to determine the extent, if any, of Orlene's capital contribution to the Telopea property loan.
24. Antoinette in her affidavit provided costs for improvements and repairs she identified as having been undertaken (see [91] above). The improvements totalled at least $8,400 and the repairs totalled at least $13,700 (not all items of work were attributed a monetary value).
25. Antoinette also produced a list of rates and other outgoings which totalled $61,728. Of this expenditure $9,254 was disputed for various reasons by Orlene and David. On the views I have formed, it is not necessary to address this dispute in the present judgment.

Joint endeavour constructive trust

1. Counsel for Antoinette sought the declaration of a constructive trust over the property in accordance with the principle set out in Muschinski at 620 and approved in Baumgartner at 147-148: the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do:
2. Two issues arose. The first was whether the Muschinksi principle is applicable at all. The second was, if it is, the terms of the constructive trust to be declared.

Applicability of Muschinski principle

1. In Muschinksi, an unmarried couple agreed to buy a block of semi-rural land. They intended to renovate a cottage which already stood on the land so that it could be used by the woman as an arts and craft centre, and to buy a pre-fabricated house to be erected on the land for them to live in. The land was acquired in their joint names on the understanding that the woman would pay the purchase price from her own funds and the man would renovate the cottage and pay for the pre-fabricated house.
2. The parties separated without the cottage having been renovated or the pre-fabricated house acquired. The woman had contributed $25,000 to the purchase and improvement of the property and the man $2,500. The order of the Court, as formulated by Deane J in accordance with the principle which I have already quoted, was to declare the couple held their shares of the property on trust (after payment of any joint debts incurred in improvement of the property) to repay to the parties their respective contributions, and as to the residue for them both in equal shares (see at 623-624).
3. By reference to Deane J's statement of principle, the elements which must be established are: 1. the formation of a joint endeavour between the parties; 2. the acquisition of property pursuant to that joint endeavour; and 3. the premature termination of the joint endeavour, leaving one part with a legal interest which that party was not intended to enjoy beneficially in those circumstances.
4. Mr Horowitz began his argument by drawing a distinction between, on the one hand, a joint endeavour constructive trust of this type, and, on the other, a common intention constructive trust. In counsel's taxonomy a common interest constructive trust is a trust recognised by the court where property is acquired by A pursuant to an agreement with B, or otherwise under a common intention with B, that B is to have an interest in it, and B acts to his or her detriment on the basis of that common intention, typically by contributing to the purchase or holding costs: Green v Green (1989) 17 NSWLR 343; see also Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886.
5. Mr Horowitz pointed out that despite the amendments to her statement of claim, Antoinette had presented her case as one in which she was entitled to the whole of the equity in the property. He emphasised in particular her evidence that she considered herself to be entitled to the equity in the property "from the get-go" (see [107] above).
6. This, counsel contended, made Antoinette's claim one for the recognition of a common interest trust. Though such a trust is described as a constructive one, it can only be recognised where the parties did actually hold the relevant common intention when the property was acquired: Shepherd v Doolan [2005] NSWSC 42 at [23]. Counsel submitted that this element was lacking on the facts in the present case.
7. At the outset I should say that I am not sure that the division between the two types of trust is as water-tight as counsel's submission assumes. In Bijkerk Investments Pty Ltd v Bikic [2020] NSWSC 1336 Leeming JA, sitting at first instance, questioned whether the common interest constructive trust continues to exist as a recognisable doctrine in Australian law. His Honour referred at [117] to the institution as having originated in England as a "response to the problem which was addressed by the High Court" in Muschinksi and Baumgartner. It has also been suggested that the doctrine is simply a particular application of the doctrine of proprietary estoppel: see [116] and [118].
8. There are other illustrations of the doctrinal uncertainty. One is the distinction between the decisions of Campbell J in Anson v Anson [2004] NSWSC 766 and White J (as his Honour then was) in Shepherd, which I discuss in more detail below. On similar facts involving the same type of property, Campbell J found a joint endeavour constructive trust but White J rejected such a trust and found a common interest constructive trust instead. See also Lloyd v Tedesco (below at [244]) at [5].
9. In this context it is worth referring to Pallant v Morgan [1953] Ch 43. In that case, Mr Pallant and Mr Morgan were both interested in acquiring part of a piece of land which was going up for auction. Agents retained by each of them attended the auction. The agents agreed that Mr Pallant's agent would not bid and instead Mr Morgan's agent would do the bidding; if his bid was successful the property would be divided between the parties. Mr Morgan's agent won the auction with a bid of £1,000, which Mr Morgan paid. The parties fell out over the division of the property and Mr Morgan claimed to be entitled to retain it for himself.
10. Harman J found that the agents' agreement was insufficiently certain to give rise to a binding and enforceable contract. Nevertheless, Mr Pallant succeeded in obtaining relief. His Lordship said (at 50): In my judgment, the proper inference from the facts is that the defendant's agent, when he bid for lot 16, was bidding for both parties on an agreement that there should be an arrangement between the parties on the division of the lot if he were successful. The plaintiff and the defendant have failed to agree on a division, and the court cannot compel them to agree. The best it can do is to decree that the property is held by the defendant for himself and the plaintiff jointly, and if they still fail to agree on a division the property must be resold, either party being at liberty to bid, and the proceeds of sale divided equally after repaying to the defendant the £1,000 which he paid with interest at 4 per cent.
11. It seems that the main argument put on Mr Morgan's behalf was based on the statute of frauds, and the case has been understood as an illustration of the principle that equity will not allow the statute to be used as a vehicle for fraud. But why would equity recognise Mr Pallant as having an interest in the land in the first place?
12. It seems to me that the facts of the case could readily be accommodated within the Muschinski principle as stated by Deane J. Mr Pallant and Mr Morgan, through their agents, engaged in a joint endeavour which was frustrated by their inability to agree on the division of the property. But for that joint endeavour (which involved Mr Pallant's agent withdrawing from the bidding) Mr Morgan would not have obtained the legal title. His "fraud" lay in seeking to retain the title in circumstances where it had not been agreed between himself and Mr Pallant that he would be able to do so in the event of such disagreement. The parallel is reinforced by the striking similarity in the relief granted in the two cases.
13. A further doctrinal complexity is that the Muschinski principle, at least as developed in Baumgartner, has come under academic criticism as being in substance a reorganisation of the parties' rights according to what the court perceives to be "fair" (J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [13-52]-[13-53]). And, as Sackar J pointed out in Craig v Silverbrook [2016] NSWSC 530 at [103], there have been suggestions from the High Court that the principle is ripe for reconsideration, although that has not yet happened.
14. But even if the doctrinal distinction is valid, I do not accept Mr Horowitz's submission. What Antoinette said in cross-examination, at the instigation of the cross-examiner, can only be her opinion based on the facts as she understood or asserted them. It cannot prevent me from applying the relevant equitable doctrine to the facts as I find them to be. On my finding, while the parties agreed that Antoinette would occupy the property and pay the outgoings and interest on the mortgage, there was no agreement about who would get the equity in the property.
15. This however was not the end of Mr Horowitz's argument. Mr Horowitz contended that a joint endeavour constructive trust could not arise unless the joint intention involved mutual economic benefit to the parties. Counsel submitted that on the facts that condition was not satisfied, because there was no evidence of any intent to share the proceeds.
16. In support of his contention, Mr Horowitz relied on the Western Australian Full Court decision in Lloyd v Tedesco (2002) 25 WAR 360, especially at [31]. He also drew support from the following passage from the judgment of Campbell J in West v Mead [2003] NSWSC 161 (at [62]): Part of the justification for imposing the Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available for the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and assets acquired from it, would be used for their ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up.
17. The Western Australian Full Court in Lloyd relied upon the decision of this State's Court of Appeal in Green (which, as we have seen, has been classified as a common intention constructive trust case) and upon the earlier Full Court decision in Stowe v Stowe (1995) 15 WAR 363. All three of those were cases of de facto relationships where the possibility of indirect and non-financial contributions made by the plaintiff as homemaker could be taken into account. In each case, the court was concerned to reject the idea that merely by forming a de facto domestic relationship, one party to the relationship would become entitled, by application of the Muschinski principle, to a share (presumptively a one-half share) in assets subsequently acquired by the other.
18. The context appears clearly in Lloyd at [15]-[16] and explains the full wording of [31] (emphasis added): A joint endeavour of this character is one which has the aim of adding to the parties' material wealth for their mutual benefit rather than being one where the plaintiff simply provides loving care and support to the defendant as a normal incident of a de facto relationship. In that sense it is right to say that the joint endeavour must be one intentionally or deliberately entered into for the purpose of advancing the parties' mutual material wealth. Only if it bears that character will it be unconscionable to allow the defendant to retain the entirety of the beneficial interest in that wealth. To hold otherwise, and in particular to hold that it would be sufficient if in fact the efforts of the plaintiff advanced the defendant's capacity to acquire wealth, would, in my opinion, be to commit the error to which Deane J adverted in Muschinski of giving undue rein to the court's idiosyncratic notions of fairness and justice.
19. This concern does not arise in the present case. The case does not involve a de facto relationship and no question of non-financial contributions arises.
20. In my view there is no reason in principle for any such limitation as contended for by Mr Horowitz. It is not mentioned in Deane J's formulation of the doctrine in Muschinski. In that formulation, equity's intervention is explained negatively. Equity acts to prevent one party to the relationship from obtaining an advantage from a legal title acquired by that party in the course of the joint endeavour where it was not agreed that that party would so benefit. So understood, the doctrine is not based on any affirmative intention to share the property.
21. Properly understood, the judgment of Campbell J in West does not contradict this. The passage relied upon by Mr Horowitz forms part of an explanation his Honour gave as to why intention can be relevant. Even so, it was said only to be "part" of that explanation. The passage must be read subject to the preceding sentences of the paragraph in which it appears: Another aspect of difference between the Baumgartner basis for a constructive trust, and a resulting trust, concerns the role which the intention of the parties plays. The Baumgartner type of constructive trust is imposed to prevent an unconscionable assertion of legal title, in circumstances where the parties had no explicit intention about how the legal title would be held in the circumstances which have arisen. By contrast, the presumption of a resulting trust is one which seeks to give effect to the intention of the parties, by making a presumption about what that intention was ….
22. In the second sentence Campbell J states the principle as applying where there is "no explicit intention about how the legal title would be held in the circumstances which have arisen". That is, with respect, entirely consistent with the way Deane J expressed the principle in Muschinski. On my findings, it also describes the present case.
23. I return to the decisions of Campbell J in Anson and White J in Shepherd. Each case concerned a parcel of Crown land at Norah Head, north of Newcastle, acquired in the 1960s as a "weekend lease" and subsequently converted into a fee simple.
24. In Anson, the property in question was acquired by three brothers as joint tenants for the purpose of building a family holiday home. Each of the brothers contributed, both in cash and in kind, to the acquisition of the land or the building of the holiday home, or both. Thirty years later, disputes arose about the parties' entitlements and notice was given severing the joint tenancy. Campbell J found that there had been no agreement between the brothers at the time of acquisition about what was to happen if the joint tenancy was severed. He found (at [42]) that the acquisition and improvement of the property was a joint endeavour of the relevant type, which had come to an end as a result of the severance of the joint tenancy in circumstances where no agreement had been reached by the parties to cover that eventuality.
25. In Shepherd, the property was acquired by the deceased, and the plaintiff, who was the deceased's de facto wife, claimed an interest in it on the footing that she had contributed to its acquisition and development. White J rejected the suggestion that a joint endeavour constructive trust could arise, and instead found a common interest constructive trust. The reason for rejecting the constructive trust was that his Honour was not satisfied that the joint venture had come to a premature end: see at [33]. It may be that his Honour considered that, as the arrangement had been terminated by the death of the deceased, this was not a premature end: compare the discussion of Bryson v Bryant (1992) 29 NSWLR 188 in Jacobs' Law of Trusts at [13-53], although in Shepherd it was not the claimant's death which terminated the relationship.
26. If it is necessary to distinguish between these two decisions, then I think Anson is closer to the present case. There has clearly been a falling out here which brought the venture (the provision of accommodation to Antoinette) to an end. No question of one party succeeding to the other's interest arises.
27. For these reasons I consider that the Muschinski principle applies in the present case. There is no need to consider whether the facts of the case would fit a common intention constructive trust (or, if that is only an application of proprietary estoppel, whether that doctrine would apply, as originally pleaded).
28. In passing, I note that in Togias v NSW Trustee and Guardian [2021] NSWSC 573 at [24] I identified the elements of the cause of action as the parties' entry into the joint endeavour, and the acquisition of property pursuant to it. I refused an application for particulars of the plaintiff's post-acquisition contributions on the ground that it was not necessary to establish liability.
29. In Anson however Campbell J said (at [36]): The time as at which the Court decides whether or not a constructive trust of this kind exists is when the joint relationship or endeavour has concluded. It is only then that the Court can tell whether, given the contributions which the various parties have made to the joint endeavour, it would be unconscionable to allow the property rights in the assets which were part of the joint endeavour to be split up in accordance with legal entitlements which exist independently of the imposition of a constructive trust.
30. Clearly I should have identified the breakdown in the joint endeavour as another element of the cause of action. With respect, however, I am not sure about there being a further requirement to evaluate the parties' respective contributions before granting the relief.
31. In Muschinski, Deane J spoke only of benefits being converted in circumstances where they were not intended to be. I take his Honour's reference to intention as being an intention which existed at the time the property was acquired.
32. His Honour also went to some trouble to explain at 614 that, although a constructive trust is imposed by the court and is remedial in that sense, it reflects entitlements which equity recognises as having arisen out of the events when they happen; in that sense the imposition of the constructive trust is retrospective. This is reflected in the relief awarded in Muschinski which involved effectively taking an account going back to the date of the original agreement. What happens is that, when the contingency not foreseen by the parties occurs, equity intervenes, but it does so by retrospective adjustment of the parties' rights so as to achieve a just outcome having regard to the parties' omission to deal with that contingency at the time the property was acquired.
33. It is not necessary to pursue this question further in the present case. The breakdown of the relationship and the consequent falling of the legal estate into the lap of Orlene and David was not specifically provided for. Arguably this itself satisfies the relevant requirement. If it is necessary to go further and to show that this state of affairs results a disproportionate benefit to Orlene and David, having regard to the parties' respective contributions, then that is clearly made out. As I have already mentioned, if equity does not intervene, Orlene and David will retain a property with equity of more than $1 million having made an out-of-pocket contribution which, on their own case, was no more than $47,000.

Terms of constructive trust

1. I have already referred to the form of the constructive trust declared in Muschinksi, which provided for the sale of the property in question, the repayment of the parties' respective contributions (and of any outstanding debt used in the purchase), and the division of any residue into equal shares. In a resulting trust, where property is acquired with the assistance of a loan, the parties' shares of the equitable interest are determined in accordance with liability under the loan at the time the property is acquired. If the loan is a joint one, contribution under the loan is treated as equal, and this is not affected if the parties actually later make unequal contributions to repaying the loan. But for the purposes of a joint endeavour constructive trust, loan repayments, at least of principal, count as "contributions": see Zhang v Metcalf [2020] NSWCA 228 at [59]-[60].
2. In the present case, the terms of the constructive trust sought by counsel for Antoinette would require the sale of the Telopea property, and repayment out of the proceeds of the Wizard loan and the parties' respective contributions (none of which is controversial), but with the residue divided between Antoinette on the one hand and Orlene and David on the other in the ratio 90:10. The rationale for this was that, so counsel submitted, Antoinette's total contributions were far greater than those of Orlene's and David's. On counsel's calculations the respective contributions were $540,000 for Antoinette and $38,500 for Orlene and David.
3. Counsel relied for this form of relief on the decision in Baumgartner. That too was a case of a property acquired in the course of a relationship between a de facto couple, Mr and Mrs Baumgartner (Mrs Baumgartner adopted her de facto husband's name even though they were not married). The parties initially lived together in a home unit which had been bought by Mr Baumgartner before the relationship began. Mr Baumgartner sold this property and applied the proceeds to buying a house for them both to live in.
4. The house was acquired in Mr Baumgartner's name. He borrowed the money required to complete the purchase. The parties pooled their income and used the pooled monies to pay for their household expenses, including the loan repayments. It was agreed that Mr Baumgartner and Mrs Baumgartner had contributed to the pooled income in the ratio 55:45. This included an allowance in Mrs Baumgartner's favour for a period during which she was unable to work while she gave birth to, and then looked after, a child who was born to the parties. After Mr and Mrs Baumgartner separated, Mrs Baumgartner claimed a share of the house in equity.
5. The leading judgment was given by Mason CJ, Wilson and Deane JJ. Their Honours concluded that a joint endeavour constructive trust should be imposed, applying the principle stated by Deane J in Muschinski. It therefore became necessary to decide the terms of the trust. Their Honours stated (164 CLR at 149-150): Equity favours equality and, in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create a joint home, there is much to be said for the view that they should share the beneficial ownership equally as tenants in common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind.
6. The question was therefore whether an equal split would have given rise to such an injustice, given Mr Baumgartner's greater contribution to the pooled earnings. Their Honours stated (at 150): The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest. We do not think, however, that the difference in the present case can be regarded as relatively insignificant.
7. In the result, the declaration was that the parties were entitled to ownership of the property in the ratio of 55:45, with adjustments in Mr Baumgartner's favour for the contribution he made out of the unit which he had previously acquired, and for payments made off the mortgage after the relationship had broken down.
8. In West, Campbell J noted at [55]-[56] that the Baumgartner approach appeared to have been influenced by the idea, which underlies the recognition of resulting trusts, that it is generally just for the parties' shares of a jointly acquired asset to reflect the contributions they have made to its purchase, rather than for the property to be divided into equal shares by applying the presumption that "equity is equality". It is notable that in the passage quoted at [267] above, Mason CJ, Wilson and Deane JJ referred to the beneficial interest as "consequential" on the level of the parties' contributions.
9. In many cases, once allowance is made for repayment of the parties' contributions, there may not be very much difference between the two approaches. If the parties' combined contributions exceed the current value of the property, then the result will be the same.
10. But the present case is an example at the other extreme. On the current market value of the property, it contains equity which, in nominal terms, is three or four times the amount that was actually expended on buying the property. This equity has been built up as a result of the huge increase in property values in Sydney over the last twenty years, and bears little or no relation to the contributions made to the purchase price and the repayment of the mortgage principal.
11. In my view, a division of the equity based on contributions to the loan repayments would ignore an important aspect of the relationship between the parties. At the beginning, over ninety-nine per cent of the total acquisition cost represented monies borrowed in the names of Orlene and David. I do not find it necessary to decide whether David in fact gave up an opportunity to travel to the United Kingdom. On any view, taking on the Wizard loan involved a significant opportunity cost and a significant risk, without which the benefit of the later increase in the property's value could never have been obtained. In fact, during the first year or so Orlene and David were required to put in extra contributions because Antoinette was unable to. Although their contribution may be small when compared with Antoinette's total contribution over twenty years, it came at a crucial time.
12. Furthermore, Baumgartner was a de facto relationship case where the parties had pooled their assets and used pooled funds to make contributions in the form of the loan repayments. The agreed contribution ratio also included an allowance in favour of Mrs Baumgartner for non-financial contributions (although calculated in terms of lost earnings). The element of domestic sharing is entirely lacking in the present case, where there was no cohabition between the parties.
13. Although the Court in Baumgartner adopted a form of constructive trust which was different from that adopted in Muschinski, there was no suggestion that the form adopted in the earlier case had been inappropriate. The cases in this area frequently refer to it being one where equity is at its most flexible.
14. To my mind, an order in the Muschinkski form best reflects the rationale for equity's involvement, namely to deal with a capricious outcome of the breakdown of the relationship between the parties, being an outcome which they did not anticipate in their earlier agreement. In the present case, the parties did not, on my findings, consider how the equity in the Telopea property, if there was to be any, would be shared. In my opinion the fairest way to deal with this is, subject to a point I will make in a moment, to split the equity equally.
15. Such an equal splitting must, however, take account of timing issues. The largest contribution by either party was Antoinette's payment of $130,000, which was made almost twenty years ago. As a result of the fact that the loan repayments have largely kept pace with interest, the remainder of the debt is in nominal terms similar to what it was then. But in terms of purchasing power, particularly power in purchasing property, it is massively less.
16. In Pallant the time value of Mr Morgan's £1,000 payment was reflected by an allowance of interest in his favour. But in the present case, where the parties' contributions were made out of after-tax earnings, I think that the appropriate way to adjust the contributions for the purpose of the calculation is to index them so as to produce an indexed capital sum. Given that I am dealing with the acquisition of a residential property, the index used should, if possible, reflect movements in property prices rather than just consumer prices (compare Campbell J in Anson at [44]). I will leave the selection of the appropriate index for further debate, and if necessary evidence, if that is required.
17. The orders will thus need to provide for the amount of Antoinette's contribution to be determined (for reasons given below, there is no need to determine a separate contribution for Orlene and David). When that is done the result will be indexed. When the property is sold, the indexed contribution will be deducted from the net sale proceeds, the financed component of the Wizard loan (see below) will be repaid, and the remainder will be split equally between Antoinette on one hand and Orlene and David on the other.
18. The process of determining Antoinette's contribution will require an accounting exercise. Set out below are my tentative views on how that should proceed. Those views are subject to any further submissions counsel may make.
19. The process will require the calculation of three figures. The first I will refer to as the "capital cost". As its name suggests, this represents the total cost, on capital account, of buying the property and establishing the borrowing structure associated with the purchase. The second component is Antoinette's contribution, namely the payments made by her towards the purchase of the property (including, for present purposes, repaying the loan). The third component I will refer to as the "financed component" of the price. This represents the difference between the capital cost and Antoinette's contribution at any particular time.
20. The components and quantum of the capital cost may be the subject of further evidence or submissions. The components I have identified are: 1. the purchase price of the property under the contract; 2. plus stamp duty and legal fees; 3. plus loan establishment fees and the like paid out on settlement of the loan draw-down; 4. plus the cost of improvements to the property (but not repairs or maintenance: see below).
21. The components of Antoinette's contribution which I have identified are: 1. the initial deposit; 2. plus improvements paid for by Antoinette; 3. plus the $130,000 paid in December 2002; 4. plus the two payments of $15,000 in October and December 2002 which I have found were made on account of the loan, although they were not in fact applied to the Wizard loan account; 5. less the $15,000 redrawn by Antoinette in October 2006 to buy a car.
22. Antoinette's contribution should also take account of the monthly payments of "rent" made by her. But one of the terms of the agreement on which the parties agreed to proceed was that Antoinette would cover the holding costs. This is only fair, as she has had the benefit of exclusive occupation of the property, without paying rent, since 2001.
23. I think the solution is to allow a credit in Orlene and David's favour, against Antoinette's monthly payments, of interest on the Wizard loan (the financed component only). There should also be a credit in Orlene and David's favour for any other expenditure which they incurred as a result of holding the property, such as land tax (of course, this would only be the additional component referable to ownership of the Telopea property).
24. Since Antoinette consented to a structure whereby her payments were treated as rent for tax purposes, Orlene and David should also be allowed credit for the tax liability incurred by them, to the extent that Antoinette's payments exceeded the interest, and other expenditure, such as land tax, incurred by Orlene and David. Of course, Orlene and David's tax returns are not a proper basis for determining this tax credit. The returns falsely included deductions for payments made by Antoinette. They also included all of the interest charged by Wizard on the loan rather than limiting the interest to the financed component of the loan.
25. Orlene and David are not themselves seeking equitable relief, so the imposition of a condition that they amend their tax returns may not be directly available: cf Nelson v Nelson (1995) 184 CLR 538. But I think I can effectively achieve the same result by imposing that requirement as a condition of allowing Orlene and David the credits to which I have referred.
26. During the periods when Antoinette's contributions fell short of the interest being charged on the Wizard loan the allowance for her monthly contributions will be negative (that is, they will operate in Orlene and David's favour) and the financed component of the Wizard loan will increase. When Antoinette's contributions exceeded the credits allowed to Orlene and David the reverse will apply and the financed component will decrease. In this way allowance will be made for contributions made by Orlene and David without the need for any separate calculation.
27. The formula I have described leaves out the other holding costs incurred by Antoinette, such as rates, and also maintenance costs. But I think that is appropriate. The payment of these expenses was also part of the terms on which Antoinette was permitted to occupy the property. I think they should lie where they fall rather than being treated as contributions by Antoinette to the purchase price.
28. This accounting process should cover the period up to the date on which the joint endeavour broke down. I would fix that date as the date of the demand for possession by Orlene and David (9 December 2019). The declaration of constructive trust should take effect as at that date.
29. From that date onwards, Antoinette was not entitled to remain in possession on the previous terms. She should pay to Orlene and David, as constructive trustees of the property, an occupation fee fixed by reference to market rent, with a credit for rates and other expenses which she has paid on behalf of Orlene and David as owners.

Conclusions and orders

1. I have concluded that: 1. Antoinette has made out her case for the imposition of a constructive trust over the Telopea property; 2. subject to further submissions, the constructive trust will provide for sale of the Telopea property with the proceeds being applied first in repayment of Antoinette's contribution to the purchase cost (as indexed) and the remainder being divided equally between Antoinette and Orlene and David, in accordance with the accounting process I have described earlier in this judgment.
2. It will also be necessary to make arrangements for the sale of the Telopea property, the distribution of the proceeds, and the lodgement of trust tax returns for the period from 9 December 2019 onwards. Unless the parties can agree on a cheaper alternative, I will appoint an independent person as the trustee of the trust to carry out these tasks.
3. In addition to any submissions from the parties, the accounting process may require further evidence, and the calculations will need to be undertaken. It may be appropriate for the Court to conduct the account if it is not too time-consuming. Otherwise I would propose to refer the process out, perhaps to the independent trustee if one is appointed.
4. The parties will need to consider these matters as well as the question of costs. I will stand over the proceedings for a short time to allow that to happen.
5. The orders of the Court are: 1. Adjourn the proceedings to 9:30 am on 30 November 2021 or such other time as may be arranged with my Associate. 2. Direct that the parties confer on the form of orders to be made to give effect to this judgment and to deal with costs, and, no later than 24 hours before the adjourned hearing, submit proposed orders for this purpose.

Amendments 13 December 2022 - typographical and grammatical corrections DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 December 2022