Zhang v Metcalf; Metcalf v Zhang

Background

1. Ms Zhang and Mr Metcalf commenced living together as a couple in 1990 in a unit that Mr Metcalf was renting in Glebe. In March 1994, they jointly purchased, as tenants in common in equal shares, a factory unit in Alexandria, from which Mr Metcalf began to conduct his business known as Cutting Room Equipment. In October 1994, they entered into a contract to purchase "off the plan" an apartment in Waterloo as joint tenants as their intended home. Their son was born in 1995. The purchase of the Waterloo property completed in May 1996 and they commenced living at that property.
2. The purchase price of the Alexandria factory unit was $248,000. According to Ms Zhang, the transaction costs and incidentals were $11,600, giving a total acquisition cost of $259,600, of which she contributed about $70,000 in cash, Mr Metcalf contributed about $16,000 in cash and the balance of $173,600 was "Metcalf's borrowing - CBA loan". The primary judge found, accepting Mr Metcalf's evidence, that Ms Zhang contributed about $70,000 in cash, Mr Metcalf contributed about $14,400 in cash and Mr Metcalf also contributed about $173,000 which he had borrowed from the Commonwealth Bank of Australia (the CBA loan): PJ [45].
3. The CBA loan was secured by a mortgage over the Alexandria property given by both parties. The mortgage was not in evidence. A letter from the CBA to Ms Zhang dated 18 March 1994 stated that Ms Zhang's present maximum liability under the mortgage was $173,600 plus interest, costs, charges and expenses. It is implicit in his Honour's finding that Mr Metcalf contributed about $173,000 from the CBA loan, that he accepted that Mr Metcalf was the sole borrower on the CBA loan and Ms Zhang was a guarantor/mortgagor, rather than also primarily liable for the CBA loan.
4. On this basis, and ignoring the slight difference in the acquisition cost between Ms Zhang's evidence and his Honour's findings, the parties' respective contributions to the acquisition cost of the Alexandria property were: Ms Zhang about 27 per cent and Mr Metcalf about 73 per cent.
5. However, the primary judge found that there was an express agreement by an undated deed between Mr Metcalf and Ms Zhang that they would hold the Alexandria property jointly, on the conditions it specifies beneficially in equal shares: PJ [52]. The deed contained recitals that the parties had agreed to borrow an amount from the CBA which was left blank, referred to as "the loan"; and that it was agreed that Ms Zhang would only be liable for so much of the loan, referred to as "Linda's share", which when added to the $70,000 contributed by Ms Zhang to the purchase, equals one half of the purchase price for the property, together with all costs of acquisition.
6. The deed provided that Ms Zhang would pay so much of the principal and interest due under the CBA loan as, when added to her cash contribution of $70,000, would equate to an equal contribution by her to the purchase price of the Alexandria property (cl 1). The deed further provided that Mr Metcalf agreed to pay all principal and interest in respect of the balance of the CBA loan and to indemnify Ms Zhang in respect of any loss or damage suffered by her arising out of or in respect of any default by him in paying such principal and interest (cl 2).
7. No claim was made by Ms Zhang in the proceedings based on the personal covenants given by Mr Metcalf in the deed.
8. The purchase price of the Waterloo property was $179,000 which, together with transaction costs and incidentals totalled $186,000. The primary judge accepted Ms Zhang's evidence that she contributed about $66,000 in cash, and that Ms Zhang and Mr Metcalf jointly contributed $120,000, being the amount of a loan advanced by First Mortgage Corporation (the FMC home loan): PJ [75] and [120]. That loan was secured by a mortgage over the Waterloo property given by both parties. The parties' respective contributions to the acquisition cost were: Ms Zhang about 67.7 per cent and Mr Metcalf about 32.3 per cent.
9. In 2001, Mr Metcalf sold his business for $120,000 and from August 2001 leased out the Alexandria property. The primary judge found that Mr Metcalf paid the sale proceeds of $120,000 into his business account with the CBA (the CBA business account): PJ [49]. There is no challenge to this finding. The rental income received under the lease was paid into the CBA business account up until April 2008, when that account was closed. From that time until September 2016, Ms Zhang collected the rental income.
10. In November 2002, Ms Zhang arranged for the CBA loan and FMC home loan to be refinanced at a lower rate as a consolidated loan in joint names with the National Australia Bank (NAB), utilising a "Homeside Lending advance" of $262,000 secured by mortgages over both properties. In January 2004, the NAB loan was split into two loans in joint names: the factory loan of $173,600 and the home loan of $87,921.
11. From 1994 to 2008, payment of instalments of the loans relating to the Alexandria property was made from the CBA business account: PJ [55]. From May 1996 to 2002, Mr Metcalf made the monthly payments on the FMC home loan and thereafter, Ms Zhang arranged for the payments of the NAB loan relating to the Waterloo property from the CBA business account: PJ [76].
12. After April 2008 until September 2016, Ms Zhang arranged payment of the NAB factory loan and the NAB home loan from the rental income she collected on the Alexandria property.
13. In August 2008 and February 2009, Ms Zhang made two lump sum payments to the NAB home loan totalling $28,406, which resulted in this loan being substantially repaid by February 2009. Thereafter, Ms Zhang arranged for the instalments of $20.00 per month on the NAB home loan to be paid from the rent on the Alexandria property. Ms Zhang made a final payment on the home loan of $839.13 on 23 September 2016. The source of this payment is unclear. Ms Zhang gave evidence that "I paid off for home account alone", but the primary judge did not make an express finding in this regard.
14. In 2012, Ms Zhang and Mr Metcalf established a joint loan offset account with the NAB relating to the factory loan (NAB loan offset account). From 2012 to 2015, Ms Zhang made four deposits totalling $60,000 into the loan offset account. She withdrew $9,319.24 from the loan offset account in July 2016.
15. The Alexandria property was sold in 2016 and on completion in September 2016 the proceeds of sale of $1,837,797.62 were paid into the NAB loan offset account. A dispute arose shortly thereafter concerning Ms Zhang's dealings with those proceeds of sale.
16. In December 2016, Mr Metcalf commenced proceedings relating to the Alexandria property and obtained freezing orders against various bank accounts of Ms Zhang (the Alexandria proceedings). Ms Zhang filed a defence and cross-claim relating to her claim to that property.
17. In separate proceedings commenced in 2017, Mr Metcalf sought the appointment of trustees for sale of the Waterloo property under s 66G of the Conveyancing Act 1919 (NSW) (the Waterloo proceedings). Ms Zhang filed a cross-claim relating to her claim to that property.
18. The proceedings were heard together. Mr Metcalf claimed that the Alexandria property was owned by the parties as tenants in common in equal shares and claimed a one-half share of the proceeds of the sale of the Alexandria property. He also claimed that the Waterloo property was owned by the parties as tenants in common in equal shares. Ms Zhang claimed a 71 per cent beneficial interest in the Alexandria property and a 78 per cent beneficial interest in the Waterloo property. In each case, her claim was based on her asserted greater contributions to the combined acquisition cost and loan repayments.

Issues in the appeal and cross-appeal

1. Ms Zhang was self-represented at trial and in this Court. She relied upon six grounds of appeal: grounds 1-3 challenge his Honour's finding that each party is entitled to 50 per cent of the sale proceeds of the Alexandria property; ground 4 challenges his Honour's finding as to the final payment of $469,712.78 to be made by Ms Zhang to Mr Metcalf in relation to the proceeds of sale of the Alexandria property; ground 5 challenges the costs order; and ground 6 asserts that the primary judge's decision was affected by bias.
2. Mr Metcalf's cross-appeal relies upon two grounds: ground 1 challenges his Honour's finding that Ms Zhang has a 78 per cent interest in the Waterloo property; ground 2 challenges the costs order.
3. Subject to the preliminary matter raised by the allegation of bias, there are essentially three issues in the appeal and cross-appeal: 1. whether the primary judge erred in finding that the Alexandria property was beneficially owned by Ms Zhang and Mr Metcalf equally; 2. whether the primary judge erred in finding that there was a trust of the Waterloo property based on proportionate contributions of Ms Zhang and Mr Metcalf, to its purchase and the loan repayment; 3. whether the primary judge erred in the exercise of his discretion in ordering Ms Zhang to pay 30 per cent of Mr Metcalf's costs of both proceedings.
4. In addressing issues (1) and (2), the Court is somewhat constrained in dealing with the parties' submissions beyond the findings of the primary judge given that the appeal books included only selected pages from the exhibits at trial. Of particular significance, exhibits A or B, being the bank statements for the NAB factory loan and the NAB home loan to which reference were made in written submissions, were omitted from the appeal books. That omission occurred notwithstanding the Court having drawn the parties' attention in advance of the hearing to the absence of the exhibits in the appeal books.

Allegation of bias

1. Questions of bias should be addressed first, as the High Court explained in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 (Concrete). That is because the necessary result, if bias is established, is a retrial: Concrete at [2]-[3] (Gummow ACJ), [117] (Kirby and Crennan JJ), cf [172] (Callinan J).
2. The asserted factual basis for the allegation of bias is that his Honour made excuses on behalf of Mr Metcalf's case, dismissed Ms Zhang's arguments on the costs issue and greatly disapproved of Ms Zhang's action in transferring the sale proceeds from the Alexandria property to herself.
3. As an unrepresented litigant, Ms Zhang was unsure as to whether her allegation was one of actual bias or apprehended bias. It is appropriate therefore to address both.

(a) Actual bias

1. The test of actual bias in the form of prejudgment requires an assessment of the state of mind of the judge in question: Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [33] (Michael Wilson). It is necessary for Ms Zhang to establish that the primary judge was "so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented": Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507; [2001] HCA 17 (Jia Legeng) at [72] (Gleeson CJ and Gummow J), [176] (Hayne J). As Gleeson CJ and Gummow J observed in Jia Legeng at [71]: The question is not whether a decision-maker's mind is blank; it is whether it is open to persuasion.
2. Ms Zhang failed to identify any expression of preconceived opinions by the primary judge relating to either Mr Metcalf's case or her conduct. Whatever view the primary judge may have had of her conduct, it does not follow that the evidence concerning the parties' respective contributions to the purchase price and repayment of the loan in relation to the Alexandria property was disregarded.
3. Nothing in the reasons for judgment suggests that the primary judge failed to decide the matter in the light of the facts and arguments relevant to the case. The allegation of actual bias through prejudgment is not made out.

(b) Apprehended bias

1. If Ms Zhang's contention is that of a reasonable apprehension of bias, that assertion cannot properly be based on the reasons given for final judgment. Those reasons reflect a judgment based on the evidence and submissions before the Court, not prejudgment arising prior to the hearing of the case: Michael Wilson at [67] ..
2. The test of apprehension of bias is whether a fair-minded lay person, with knowledge of the matters relied upon by Ms Zhang, might reasonably consider that the decision maker might not carry out his or her functions with an impartial and unprejudiced mind: Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48 at [11]-[13]; Ebner v The Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 (Ebner) at [6]; Michael Wilson at [31]; CNY17 v Minister for Immigration and Border Protection [2019] HCA 50; 94 ALJR 140 at [18], [56], [132].
3. The test has two steps. The first is to identify what it is that might lead the decision maker to decide a case other than on its legal and factual merits. That is what is said to affect a judge's impartiality. Second, a logical connection must be articulated between the circumstances identified in that matter and the apprehension that the case might not be decided on its merits: Ebner at [8]; Michael Wilson at [32]-[33]; British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; [2011] HCA 2 at [139]; Isbester v Knox City Council (2015) 255 CLR 135; [2019] HCA 20 at [21].
4. Accordingly, an allegation of apprehended bias requires an objective assessment of the connection between the facts and circumstances said to give rise to the apprehension and the asserted conclusion that the decision-maker might not bring an impartial mind to bear upon the issues that are to be decided. The question is not whether the decision maker had in fact prejudged an issue: Michael Wilson at [33], [67].
5. Applying those principles there is no basis for finding apprehended bias on the part of the primary judge. Ms Zhang failed to identify anything that might lead his Honour to decide the matter other than on its legal and factual merits. Ground 6 should be rejected.

Ground 3 - equal division of sale proceeds of the Alexandria property

1. Ms Zhang contended that she paid a disproportionately greater contribution to the Alexandria property reflected by her payment of a 30 per cent deposit and her two-thirds payment to the loan and accordingly she holds a 71 per cent beneficial interest in the Alexandria property.
2. Before addressing this ground, it is necessary to refer in a little more detail to his Honour's reasons.

Primary judge's reasons - Alexandria property

1. Ms Zhang did not advance any claim based on the presumption of a resulting trust where two or more persons contribute to the purchase of property in different shares and the property is purchased in their joint names: Calverley v Green (1984) 155 CLR 242 at 247 (Gibbs CJ), 258 (Mason and Brennan JJ), 266 (Deane J).
2. The primary judge rejected Ms Zhang's submission that the deed should be disregarded, giving the following reasons at PJ [53]-[54]: [53] The Deed served both parties' purposes quite well. It explained why she was only getting a half share in the property although she contributed much more of the initial purchase price. But it had the advantage from her point of view that it limited her liability on the mortgage as between the two of them to her share, and it ensured that it could not be said later on that she had a greater responsibility for the mortgage payments that he did. [54] The substantive effect of the Deed of the date that it was signed was to prevent her claiming more than a 50 per cent interest in the property by reason alone of her greater cash contribution to the acquisition of the property. Part of her logic in the present case is to contradict that agreement by claiming a 71 per cent interest in the property.
3. After finding that the rental proceeds were used to repay the loan secured over the Alexandria property and the remaining amount due on the NAB factory loan was ultimately discharged using part of the proceeds of the sale of that property, the primary judge concluded that the parties' respective contributions to the loan advances secured over the Alexandria property had in fact been equal, subject to the advances that Ms Zhang made to the offset account which totalled $60,000.00: PJ [60].
4. The primary judge rejected Ms Zhang's claim based on a Baumgartner type of constructive trust. In Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 at 147-148, the joint judgment of Mason CJ, Wilson and Deane JJ adopted the earlier analysis of Deane J (with whom Mason CJ had agreed) in Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 in the area of domestic relationships, by applying the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions had been made in circumstances in which it was not intended that the other party should enjoy them. In Muschinski v Dodds, Deane J said at 620: ... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended 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: cf. Atwood v. Maude (1868) LR 3 Ch App 369 at 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 Ch D 529 at 531. (Emphasis added.)

Presumption of resulting trust and actual intention of parties

1. The prima facie position is that the beneficial ownership of real property is commensurate with the legal title: Currie v Hamilton (1984) 1 NSWLR 687 at 690 (McLelland J).
2. However, where two persons contribute in different shares to the cost of acquisition of real property which is conveyed to them in equal shares, there is a rebuttable presumption of a resulting trust in the proportions in which they contributed the purchase money: Calverley v Green at 247, 258, 266.
3. The purchase money is taken to include the incidental expenses of buying the property, that is, "the totality of the money which the purchasers have in truth outlaid to obtain the property": Ryan v Dries [2002] NSWCA 3; (2002) 10 BPR 19497 at [53] (Hodgson JA); Black Uhlans Incorporated v Crime Commission (NSW) [2002] NSWSC 1060 at [144] (Campbell J); Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [103] (Ward CJ in Eq).
4. Except in unusual situations, the subsequent payment of instalments under a mortgage over the property is not regarded as a payment of the purchase price, but rather a payment towards securing the release of the charge which the parties created over the property purchased: Calverley v Green at 257-258 (Mason and Brennan JJ); Black Uhlans at [141]-[142].
5. The exceptional case is where the parties intend to acquire not the title to the land subject to mortgage, but the land freed of the mortgage: Bloch v Bloch (1981) 180 CLR 390; [1981] HCA 56 at 402. That is not this case. There was no evidence that the parties intended at the time of acquisition that their beneficial interest in the Alexandria property should fluctuate with their respective contributions to the mortgage from time to time. Indeed, the terms of the deed are inconsistent with such an intention.
6. A different presumption arises where the relationship between the parties falls into a class of dependency and the transfer is presumed to be made for the benefit of the transferee, with the result that the equitable interest is presumed to follow the legal interest and to be at home with the legal title: Nelson v Nelson (1995) 184 CLR 538 at 600 (McHugh J); [1995] HCA 25; Calverley v Green at 267 (Deane J). That is not this case. Unlike transfers from husbands to their wives, the presumption of advancement does not apply to de facto couples: Napier v Public Trustee (WA) (1980) 32 ALR 153; 55 ALJR 1 at 3, 32; Calverley v Green at 260 (Mason J and Brennan J). It is not necessary to consider the position under legislation governing de facto relationships: see [118] below. Here, both parties asked the primary judge to decide the case based on general law principles.

Whether the primary judge should have found a Baumgartner type of constructive trust?

1. The remaining question is whether there is a basis for finding the existence of a beneficial interest under a Baumgartner type of constructive trust arising after the transaction of purchase was completed and overriding the parties' agreement in relation to equal beneficial interests, as reflected in the deed: Calverley v Green at 263.
2. An essential aspect of the Baumgartner principle is a joint relationship or endeavour, and an asset acquired in the course of, or for the purposes of, that joint relationship or endeavour: Baumgartner at 149. That involves identifying the scope of the joint endeavour, which is a question of fact. The basis for a constructive trust only arises where there is a premature termination of the relationship: Baumgartner at 150; West v Mead at [64].
3. The majority in Baumgartner adopted an "extended notion of contributions" to the acquisition cost, so that non-monetary contributions are taken into account: Baumgartner at 149. No reliance is placed by Ms Zhang on an extended notion of contributions in relation to the Alexandria property.
4. Unlike the position in relation to resulting trusts (see [50] above), the payment of mortgage instalments after a property has been acquired using money borrowed and secured by the mortgage, has been accepted as a contribution: Baumgartner at 148; Calverley v Green at 263 (Mason J and Brennan J).
5. Further and importantly, it is necessary to distinguish between mortgage instalments which include a component of principal and interest. As Campbell J explained in West v Mead at [61]: … But the fact that part of the instalment is a payment of interest means that the beneficial interest in property acquired as a result of paying an instalment is not likely to be equal in value of the amount of the instalment paid. It is the proportions in which contributions to the purchase price are made which matter in determining beneficial ownership, not the absolute amount of such contributions.

Ms Zhang did not make greater contributions to the loan repayments

1. Ms Zhang's contention that she made disproportionately greater contributions to repayment of the loan in relation to the Alexandria property does not find support in the evidence.
2. Ms Zhang accepted, as his Honour found, that between 1994 and 2008 Mr Metcalf made interest-only loan repayments of $1,250.66 per month from his CBA business account: at PJ [55]. Whilst the contribution of these payments to the purchase price was not the same as the payment of principal (West v Mead at [61]), that does not assist Ms Zhang. She made no repayments of the principal during this period.
3. Next, there is no challenge to the findings that in 2001 Mr Metcalf deposited $120,000 from the sale of his business into his CBA business account, and that from August 2001 to April 2008, the rent from the Alexandria property, to which the parties were jointly entitled, was also deposited into the CBA business account from which account Ms Zhang paid the interest-only repayments on the NAB factory loan until April 2008. Thus no greater contributions to interest-only repayments were made by Ms Zhang from 2001 to 2008.
4. Finally, from 2008 to 2016, the source of the principal and interest loan repayments of the NAB factory loan was the rent from the Alexandria property, to which the parties were equally entitled: PJ [57].
5. Ms Zhang's contention that she paid more than 50 per cent of the loan repayments on the Alexandria property is based on the argument that from 2002 the she contributed one-third of the repayments of the NAB consolidated loan of $262,000, comprising her lump sum payments of $88,406, and that the balance of the NAB loan was paid equally as to one-third by each of the parties. Ms Zhang explained that contention in her 19 May 2017 affidavit at par 21: I, on the other hand, had repaid about one-third of the total Homeside loan of $262,000 through my lump sum payments totalling $88,406. If we consider the two parties have equally paid the remaining two-thirds of the loan through the rental income and the final pay off, I have paid approximately two-thirds of the loan for both the factory unit and the home unit.
6. The premise of this contention is incorrect. Ms Zhang did not pay one-third of the NAB loan of $262,000 through her lump sum payments totalling $88,406. Those payments were made by Ms Zhang after the NAB loan was split into two loans in 2004. To the extent that part of those payments, being $28,406, was paid into the NAB home loan account, the significance of those payments is addressed below in relation to the Waterloo Property. The balance of $60,000 was deposited into the NAB loan offset account. It is not in dispute that those deposits did not reduce the NAB factory loan.

Ground 4 - calculation of division of sale proceeds of Alexandria property

1. Accepting that the parties' beneficial interests in the Alexandria property are equal, ground 4 contends that the primary judge made three errors when determining the sum to be paid by Ms Zhang to Mr Metcalf as the balance of his entitlement to an equal division of the net proceeds of sale of the Alexandria property.
2. It is necessary first to record some additional facts.

Additional facts

1. On 19 September 2016, the proceeds of sale of the Alexandria property of $1,837,797.02 were deposited into the NAB loan offset account. Without telling Mr Metcalf, Ms Zhang electronically transferred two amounts from the loan offset account to an account with NAB solely in her name: $1,615,000, on 19 September 2016 and $147,500 on 21 September 2016. On 8 November 2016, Ms Zhang paid from her NAB account $168,991 to the ATO, being the amount of GST received on the sale of the Alexandria property. On 6 December 2016, Mr Metcalf withdrew the sum of $123,288 from the loan offset account and deposited this amount into an account in his own name with CBA.
2. On 15 December 2016, the Court made orders authorising the NAB to apply the funds in Ms Zhang's NAB account in full repayment of the balance of the NAB factory loan (the amount of $121,959.45 was paid into the NAB factory loan on 21 December 2016) and in payment of $225,406 to Mr Metcalf's solicitors. The orders also authorised payment to Ms Zhang of the balance being $348,027.50.

(1) Entitlement to 50 per cent of Ms Zhang's deposit into NAB loan offset account

1. The first asserted error is that the primary judge gave Mr Metcalf the benefit of 50 per cent of Ms Zhang's deposit of $60,000 into the NAB loan offset account. This contention requires further elaboration.
2. It is common ground, as his Honour found, that Ms Zhang made four payments totalling $60,000 into the NAB loan offset account between October 2012 and April 2015: PJ [82]. Ms Zhang accepted in her evidence that she withdrew $9,319.24 from the loan offset account in July 2016.
3. The primary judge found that as at 9 September 2016 the credit balance of the loan offset account was $50,680.76 and that Mr Metcalf was "already entitled" to one-half share of those pre-existing funds, namely, $25,190.38: SJ [28]. His Honour reasoned that when Mr Metcalf later withdrew $123,000 from the loan offset account on 6 December 2016, that withdrawal included his own share of those pre-existing funds, namely, $25,190.38 and accordingly, only $97,809.62 of his $123,000 withdrawal notionally related to his one-half share of the net proceeds of sale of the Alexandria property: SJ [28]. (As indicated, the actual withdrawal by Mr Metcalf was $123,288.)
4. Accepting that the credit balance in the NAB loan offset account on 9 September 2016 was $50,680.76 and that this amount reflected the undrawn balance of Ms Zhang's deposits totalling $60,000, the primary judge erred in finding that Mr Metcalf was entitled to one-half share of those funds, namely, $25,190.38. Counsel for Mr Metcalf fairly conceded this error.
5. Correction of this error requires that the amounts specified in the declaration in order 2(a) and the component of the judgment in order 3(a) in favour of Mr Metcalf should each be reduced by $25,190.38, and the award of interest in order 3(b) should be recalculated. Adopting the same approach to interest as his Honour, interest on $417,934.88 at 2 per cent per annum for 3 years is $25,076.07. Accordingly, the judgment in favour of Mr Metcalf in order 3 should be reduced to $443,010.95 ($417,934.88 plus $25,076.07).

(2) Disregarded Ms Zhang's $70,000 contribution

1. The second asserted error is that the primary judge disregarded Ms Zhang's claim based on her contribution of $70,000 to the purchase price of the Alexandria property. The misconceptions underlying this contention have been addressed at [54]-[55] above. The parties' beneficial ownership of the Alexandria property in equal shares reflected their actual intentions as recorded in their deed. Ms Zhang made no claim against Mr Metcalf based on his personal covenants in the deed.

(3) Award of interest

1. The third asserted error concerns the award of interest in favour of Mr Metcalf at 2 per cent for a period of three years on the amount found to be due by Ms Zhang to Mr Metcalf. Ms Zhang says that his Honour failed to take into account that she had paid all costs relating to the Waterloo property, including utility bills and support for the parties' son, being costs which she said should have been shared between her and Mr Metcalf.
2. The short answer to this submission is that there is no relevant connection between the asserted contributions by Ms Zhang to expenditure relating to a different property and for purposes unrelated to the Alexandria property and the parties' respective beneficial ownership of the Alexandria property. Such expenditure was not part of the joint endeavour with respect to the Alexandria property. As his Honour said in his Supplementary Judgment at [37]-[38]: [37] Ms Zhang disputes she is liable to pay any interest on the money she has held for three years. Her submission in response criticises the whole interest claim. She submits: she put food on the table for their son during this period; she paid bills for the home in which he lived; she paid family health insurance that included Mr Metcalf; and, she paid for their son's student exchange to the United States. [38] Ms Zhang's submissions may identify events that indeed have occurred. But this is not a matter in the Family Court of Australia. A broad sharing of personal expenditure, apart from investment in the Waterloo and Alexandria properties is not directly taken into account in these proceedings. But another undoubted fact is that, since 19 September 2016, Ms Zhang has derived the financial benefits for over three years of having the proceeds of sale of the Alexandria property in a bank account in her name, proceeds to which she was not fully entitled. She should account for her unauthorised retention of those funds, rather than be given the windfall from what was, on her part, a transfer of shared funds without Mr Metcalf's consent.
3. There was no error in the approach to the award of interest.

B. Waterloo property

1. Mr Metcalf accepted at trial that the parties made unequal contributions to the acquisition cost of the Waterloo property, being about 65 per cent (Ms Zhang) and about 35 per cent (Mr Metcalf). He submitted that there was evidence rebutting the presumption of a resulting trust. This submission relied upon two essential matters:

• " … for a considerable period up to 2008, the whole of the home loan repayments, not just his pro-rata share, were made from funds in Mr Metcalf's business account to which he had an entitlement"; and
• "From 2002 up until September 2016, Ms Zhang collected and used the factory rental income to pay for everything, including the mortgages for both the factory unit and the home unit, the bills and outgoing for both real properties. To the extent that the rental income was not needed for such purposes, she had the use of it for her own purposes".

1. It should be observed that the first submission requires qualification. The rental income from the Alexandria property which was deposited into the CBA business account from August 2001 to April 2008 (see [14] above) was money to which both parties were jointly entitled.

Primary judge's reasons - Waterloo property

1. The primary judge accepted Ms Zhang's submission recorded at PJ [117] that she made "a direct initial financial contribution of 35% of the purchase money to the Waterloo property and that she contributed 43% of the acquisition costs of the Alexandria property" (emphasis added). The reference to the "Alexandria property" is an error. Given Ms Zhang's written submissions below, his Honour should be taken to have intended to refer to Ms Zhang's asserted contribution to the acquisition costs of the Waterloo property, which Ms Zhang submitted arose from her contribution to two-thirds of the loan repayments.
2. His Honour's dispositive reasoning is found at PJ [120]: [120] But the situation is different with respect to Waterloo. The Court accepts Ms Zhang's case as to her initial and continuing contributions to that property. There was no agreement between the parties about the ownership of that property after its initial acquisition as joint tenants. But their ultimate joint endeavour varied greatly from those first years. Mr Metcalf distanced himself entirely from financial and personal arrangements to do with that property and largely handed over management to Ms Zhang. In my view, that reflects the general acceptance on his part that, so far as this joint endeavour was concerned, he was content with the arrangements that she was making with respect to that property as she recounts. They largely reflected the arrangements that he was making in his personal life with respect to their child. The Court will declare that she has an interest in the Waterloo property of 78% as claimed.

Decision

1. There is no evidence as to the parties' actual intentions at the time of purchase of the Waterloo property with respect to its beneficial ownership. Mr Metcalf repeated his submission at trial that the presumption of a resulting trust pro-rata to the parties' contribution to its acquisition cost is rebutted by the conduct of the parties after the purchase. That is a reference to the matters recorded at [83] above. According to the submission, it is not unconscionable that Mr Metcalf should retain his half-interest as joint tenant. Mr Metcalf did not contend for a Baumgartner type of constructive trust.
2. The difficulty with Mr Metcalf's reliance upon evidence of the parties' conduct after the purchase of the Waterloo property is that such evidence is not admissible to rebut or qualify the presumption of a resulting trust. It does not constitute subsequent declarations by a party which are admissible only as admissions against interest: Charles Marshall Pty Ltd v Grimsley at 366; Nelson v Nelson at 600; Caverley v Green at 251, 262, 269; Bryson v Bryant at 215.
3. Insofar as Mr Metcalf referred in oral argument to the possibility of an equitable charge over the Waterloo property securing his asserted unequal contributions to the home loan repayments (Morris v Morris (1982) 1 NSWLR 61), senior counsel for Mr Metcalf acknowledged that no argument as to a charge was advanced at trial. Such a claim can be put aside.
4. As to the suggestion of the possibility of a resulting trust on a Bloch v Bloch basis, counsel for Mr Metcalf properly acknowledged that there was no evidence that this was the parties' intention at the time of acquisition of the Waterloo property. Nor could the quantum of such a claim, in terms of contributions to repayment of the home loan, be assessed in the absence of the relevant bank statements.
5. I conclude that Mr Metcalf has failed to demonstrate that the presumption of a resulting trust is rebutted by either direct evidence or inferences from the circumstances. On his Honour's unchallenged findings as to the contributions of the parties to the purchase, the resulting trust of the Waterloo property is in the proportions of Ms Zhang 67.7 per cent and Mr Metcalf 32.3 per cent.
6. It is apparent that the primary judge decided the claims in relation to the Waterloo property, not on the basis of a resulting trust but implicitly on the basis of a Baumgartner type of constructive trust. For the reasons that follow, that finding cannot be supported on the evidence.

Error in finding 78 per cent beneficial interest

1. Mr Zhang's calculation of "her initial and continuing contributions to [the Waterloo] property", referred to at PJ [120], is not set out in his Honour's reasons. However, it is possible to undertake the calculation using the same methodology as Ms Zhang adopted with respect to her claim to a 71 per cent interest in the Alexandria property.
2. On his Honour's factual findings at PJ[75] and [120], Ms Zhang's claim to a 78 per cent interest in the Waterloo property was calculated as follows: Initial contribution to acquisition cost: Ms Zhang $66,000 $66,000/$186,000 35.4% Contribution to loan repayment: Ms Zhang 2/3 2/3 x ($120,000/$186,000) 43% Total contribution: Ms Zhang 35.4% + 43% = 78.4%
3. There are two errors in Ms Zhang's methodology. In fairness to his Honour, the second error was not the subject of submissions by Mr Metcalf, either at trial or in this Court.
4. The first error is that in calculating her initial contribution to the acquisition cost, Ms Zhang overlooked that she was a joint borrower on the FMC home loan. Accordingly, as already mentioned, her contribution to the acquisition cost was 67.7 per cent, calculated as follows: $66,000 cash plus $60,000 (being half of FMC home loan of $120,000) 126,000/186,000 = 67.7 %
5. The second error is that Ms Zhang did not make a two-thirds contribution to loan repayments on the Waterloo property: see [66] above. Indeed, accepting the limitations of the available evidence, which does not include all relevant bank statements, the reasonable inference is that the parties made relatively equal contributions to the repayment of the home loan, taking into account the following matters.
6. First, as already noted, the lump sum payments made by Ms Zhang to the NAB home loan in 2008 and 2009 only totalled $28,406.
7. Second, Mr Metcalf accepted in this Court that Ms Zhang made ten fortnightly periodic payments of $500 in respect of the Waterloo property totalling $5,000 between 1 July 2008 and 27 January 2009.
8. Thus the contributions made solely by Ms Zhang amount to about $33,406.
9. Third, it is not in dispute that Mr Metcalf made sole contributions to the FMC home loan from May 1996 to 2001 in the sum of $1,076 per month. Accepting that the balance of this loan was about $87,921 when refinanced with NAB in 2002 (see [15] above), it may be inferred that the principal component of the principal and interest repayments by Mr Metcalf alone was about $32,000.

Other matters

1. The two other grounds raised by Ms Zhang can be dealt with briefly, given that they are not dispositive of the appeal.

Ground 1 - whether de facto relationship after 2002

1. Ground 1 contends that his Honour erred in finding that the parties' relationship ended no later than 2002. At trial, the primary addressed this issue in some detail as "important background", notwithstanding the parties apparently took the position that it was not necessary to decide the issue: PJ [15].
2. Ms Zhang submitted that there was "undeniable evidence to the contrary" that the parties' relationship continued until 13 December 2016, the day that Mr Metcalf notified her of the commencement of the proceedings. Her submission was directed to challenging his Honour's acceptance of Mr Metcalf's evidence.

Primary judge's reasons

1. The primary judge observed that he had the advantage of observing both parties in the courtroom and their appearances gave every impression of a couple whose relationship had not just broken down in 2016: PJ [16].
2. The primary judge found that although the parties lived in the same house, that somewhere by the late 1990s Mr Metcalf was living an independent existence: PJ [20]. His Honour further found that at a personal level, things had completely changed by 2002, being the date Mr Metcalf used as a termination point, and conveniently adopted by his Honour as undoubtedly correct. His Honour found that since 2002, although they lived in the same premises, the parties have lived separately and apart: PJ [25].
3. His Honour rejected Ms Zhang's evidence that if she and Mr Metcalf had truly separated in 2002 she would have "certainly severed our financial ties completely" finding that there was a very good reason why she did not do so namely, that the financial arrangements worked reasonably well for her and in particular for their son who, in 2002, was only seven, and they had a roof over their head. His Honour found that severing financial arrangements and reaching a settlement would have created uncertainty for them, including a possible loss of their domestic residence and it suited Ms Zhang to continue the loose and unspecified financial arrangements that had grown between her and Mr Metcalf. His Honour did not accept Ms Zhang's evidence that their relationship had only deteriorated gradually in the last five years. He found that long before the last five years Mr Metcalf and Ms Zhang had led separate lives and that he was seeing other women: PJ [38].

Decision

1. It must be accepted that appellate restraint is required with respect to review of factual findings which are likely to have been affected by impressions about credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. That includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts: Lee v Lee [2019] HCA 28; (2019) 372 ALR 383 at [55].
2. Here, Ms Zhang has failed to establish that the primary judge's finding is erroneous because of "incontrovertible facts or uncontested testimony" or is "glaringly improbable" or "contrary to compelling inferences" in the case: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29]; Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 at [43]; Lee v Lee at [55].

Ground 2 - relevance of de facto relationship legislation

1. Ground 2 contends that his Honour erred because "the exercise of discretion goes beyond constraints set down by legislation in making orders for the case of the de facto relationship's financial dispute, and in enforcing its orders". The reference to "legislation" may be taken to be a reference to the Property (Relationships) Act 1984 (NSW) and the Family Law Act 1975 (Cth), as amended by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2009 (Cth), which came into effect on 1 March 2009.
2. The effect of this contention was that when applying the general law principles concerning resulting and constructive trusts, his Honour should have adopted the approach under statute to the determination of property disputes between de facto couples.

Decision

1. There is no merit in this ground. The primary judge determined the competing claims to the Alexandria property and the Waterloo property, which were based on the application of general law principles concerning resulting and constructive trusts, as the parties asked the Court to do so: PJ [98(3)]. Neither party made any application under the State nor Federal legislation concerning de facto relationships which his Honour found would have been well out of time: PJ [98(1)].
2. Nor did Ms Zhang challenge the primary judge's conclusion on the jurisdictional issue raised by his Honour, that s 90RC(2) of the Family Law Act did not prevent the parties from applying to courts of a State or Territory for relief under the general law as between former de facto couples, such as in the present case: PJ [95]. In the circumstances, it is not necessary to say anything further in relation to the jurisdictional issue.

C. Costs orders

1. As indicated, both Ms Zhang and Mr Metcalf challenge the costs order that Ms Zhang pay to Mr Metcalf 30 per cent of the costs of both proceedings.
2. Ms Zhang seeks an order that each party pay its own costs.
3. Mr Metcalf seeks an order that Ms Zhang pay his total costs of both proceedings as agreed or assessed.

Primary judge's reasons

1. In reaching his decision on costs, the primary judge took into account the following considerations: 1. the Court's costs discretion was not governed by what might have happened in the Family Court of Australia, given that the case was not being decided in the Family Court; 2. the exercise of the costs discretion should be analysed separately in relation to the s 66G proceedings relating to the Waterloo property and the Alexandria property proceedings; 3. given there was a real need to bring s 66G proceedings, the costs of commencing such proceedings had to be incurred by one or the other party, and Mr Metcalf should not have to bear the full costs of the s 66G proceedings. Rather, the costs of those proceedings should be borne on an equal basis; 4. the costs of Ms Zhang's cross-claim in the s 66G proceedings overlap to a degree with the costs incurred in the Alexandria property proceedings; 5. Mr Metcalf has been substantially successful in the Alexandria property proceedings; 6. it was relevant that the two proceedings were heard together, there was a strong dispute in the s 66G proceedings about the relative interest of Mr Metcalf and Ms Zhang in the Waterloo property and Ms Zhang's contentions about her 78 per cent interest prevailed; 7. Ms Zhang's conduct of the proceedings has been less than ideal. Reference was made to her general unwillingness to deal with lawyers on the other side giving rise to delay and expense to Mr Metcalf no less attributing blame for the breakdown in communications between Ms Zhang and Mr Metcalf is quite difficult; 8. Ms Zhang's submissions complaining that Mr Metcalf failed to negotiate were not persuasive; 9. any costs order should seek to avoid, if possible, a complex costs assessment, such as separate costs orders in each proceeding which invites argument about which of potentially overlapping costs were incurred in each of the proceedings.
2. The primary judge concluded that the Court should make a single costs assessment order in both proceedings, doing the best it can in the circumstances with the various competing factors: SJ [64].

Decision

1. It is not sufficient that this Court might conclude that it would have exercised the discretion differently if the discretion had been conferred on it in the first instance: Micallef v ICI Operations Pty Ltd [2001] NSWCA 274 at [45] (Heydon JA). To succeed in challenging the exercise of a discretion, such as that which the primary judge exercised in making the costs order, an error in the House v The King sense must be established, namely, that the primary judge made a material error of legal principle or fact, that he failed to take into account a relevant consideration or took into account an irrelevant consideration, or that he arrived at a conclusion so unreasonable or unjust as to bespeak of an error of such a kind: House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40.

Errors asserted by Ms Zhang

1. As to the asserted errors identified by Ms Zhang, his Honour correctly rejected her submission that the approach in Family Law cases had any application to these proceedings. The issue of costs in Supreme Court proceedings is governed by the Civil Procedure Act 2005 (NSW), s 98 and the Uniform Civil Procedure Rules 2005 (NSW), Pt 42, in particular r 42.1.
2. As to the significance of any offer by Ms Zhang at the court-ordered mediation in March 2017, that was an irrelevant consideration and correctly disregarded by his Honour. Evidence of anything said or of any admission made in a mediation session is not admissible in any proceedings before any court or other body, other than on application to give effect to any agreement or arrangement arising out of a mediation session: Civil Procedure Act, s 30(4)(a). These proceedings did not involve an application by Ms Zhang for an order under s 29 of the Civil Procedure Act to give effect to any alleged agreement or arrangement arising out of a mediation session.
3. As to the relevance of Ms Zhang's conduct of the proceedings, there was no error by his Honour in taking this matter into account which his Honour found had been less than ideal and gave reasons for that finding which are not challenged on appeal: SJ [60].

Errors asserted by Mr Metcalf

1. Mr Metcalf says that the primary judge erred because he ought to have found that there were no sufficient factors displacing the general rule that costs follow the event of both proceedings. According to the submission, it is not possible to rationalise the notional set-off of the costs outcome in both proceedings with an award of only 30 per cent of Mr Metcalf's costs of the proceedings.
2. It is apparent from the matters referred to at [125] above that his Honour gave express consideration to whether the general rule that costs follow the event had been displaced: UCPR, r 42.1. In that regard, his Honour correctly took into account the parties' relative success in the two proceedings. Mr Metcalf's substantial success in the Alexandria proceedings was muted by Ms Zhang's success on her cross-claim in the Waterloo proceedings, notwithstanding the appointment of trustees for sale on Mr Metcalf's application.
3. His Honour also correctly took into account that the usual order in relation to costs of the s 66G proceedings would be that the costs of the proceedings be paid from the net proceeds of sale, and hence, be borne equally. That is because the costs of s 66G proceedings is an incident of joint ownership and would be necessarily incurred by one or other of the parties in obtaining an order for the appointment of trustees for sale: Ferguson v Hyndman [2006] NSWSC 538 at [3].
4. Since the proceedings were heard together, it was appropriate that there be a single costs order to reflect a notional set-off of his Honour's assessment of the overall result. His Honour was required to weigh all the matters requiring consideration, including his finding that Ms Zhang's conduct of the proceedings was in some respects unreasonable. His Honour's reasons reveal that in undertaking that assessment he did not omit any relevant consideration or take into account any irrelevant matter. Neither party has demonstrated that there is any proper basis upon which this Court should interfere with his Honour's discretionary decision on costs.

Conclusion and orders

1. Both the appeal and cross-appeal have failed, except for one part of ground 4 of the appeal. As a consequence, there will be a relatively small reduction of $25,109.38 plus interest in the judgment in favour of Mr Metcalf.
2. In these circumstances, the appropriate costs order in this Court is that there should be no order as to costs, to the intent that the parties bear their own costs of the proceedings in this Court.
3. As to the proceedings below, there is no reason to interfere with the costs discretion either on the grounds advanced by Ms Zhang and Mr Metcalf, or because of the relatively small variation in the amount of the judgment given in favour of Mr Metcalf.
4. Accordingly, I propose the following orders: 1. Appeal allowed in part as to ground 4. 2. Appeal otherwise dismissed. 3. Cross-appeal dismissed. 4. Vary orders 2, 3, 4 and 5 made by the primary judge on 19 December 2019 by: 1. deleting all references to the figure "$447,899.38" and inserting in its place the figure "$422,709"; 2. deleting all references to the figure "$469,712.78" and inserting in its place the figure "$443,010.95"; 3. deleting the reference to the figure "$26,587.52" and inserting in its place the figure "$25,076.07"; 4. extending the date in order 5 from "5 February 2020" to "7 October 2020"; 5. such that orders 2, 3, 4 and 5 as amended, with effect from 19 December 2019, are as follows: (2) Declare that: (a) the Plaintiff as against the Defendant is entitled to an award in the sum of $422,709.00 on his claim for the balance of his entitlement to such net proceeds of sale; and (b) the Defendant as against the Plaintiff is entitled to an award in the sum of $4,774.12, on her claim for an account for the benefits flowing from her advance of $60,000 to the mortgage offset account in respect of the said land. (3) Judgment and order for the Plaintiff against the Defendant in the sum of $443,010.95 comprising: (a) the balance of the awards in 2(a) and (b) above, namely $417,934.88; and (b) interest on such balance from 16 September 2016 up to judgment but only for three years for the reasons indicated at the rate of 2% per annum, namely $25,076.07. (4) Order that the Freezing Order of the Court made in proceedings 2016/371835 on 12 or 15 December 2016 be varied only so as to enable funds in the sum of $443,010.95 to be paid or transferred to the Plaintiff from [account No. 1856]. (5) Order that the Defendant take any necessary steps and sign all necessary documents to procure the payment of such sum of $443,010.95 into the Trust account of the solicitors for the Plaintiff by 4.00 pm on 7 October 2020. 1. No order as to costs of the appeal or cross-appeal, to the intent that the parties bear their own costs of the proceedings in this Court.

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