A and M - [2004] FMCAfam 431

FEDERAL MAGISTRATES COURT OF AUSTRALIA

A & M

[2004] FMCAfam 431

FAMILY LAW – Property – Accrued jurisdiction – trusts – where wife’s parents reside in house owned by husband and wife for many years – implied or resulting trust – whether wife’s parents contributed to purchase of home – if so whether payment established resulting trust in favour of parents – constructive trusts – whether payments on mortgage and other outgoings gave rise to a constructive trust – trust not established – interveners application refused – wife given opportunity to pay out husband’s fifty percent share – if not paid house ordered to be sold.

Family Law Act 1975, s.79

Calverly v Green (1984) 155 CLR 242 at 246
Allen v Snyder [1977] 2 NSWLR 685

Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 160

Baumgartner (1987) 164 CLR 137
Muschinski v Dodds (1985) 160 CLR 583
Atwood v Maude 107 (1868) L.R. Ch. App. 374
Lyon v Tweddell 108 (1881) 17 Ch. D. 529
Green v Green (1989) 17 NSWLR 343
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Beatty v Guggenheim Exploration Co (1919) 22 NY 389

Applicant:

R N A

Respondent:

B A A

Interveners

M J M and M P M

File No:

BRM3094 of 2003

Delivered on:

25 November 2004

Delivered at:

Parramatta

Hearing dates:

28 & 29 April 2004

Judgment of:

Ryan FM

REPRESENTATION

Counsel for the Applicant:

Mr R. Galloway

Solicitors for the Applicant:

Finemore Walters & Story

Counsel for the First Respondent:

Ms M. Clifford

Solicitors for the First Respondent:

Stuart Fowler & Partners

Counsel for the Interveners:

Mr S. Austin

Solicitors for the Interveners:

Steven T Parrott

ORDERS

The interveners application is dismissed.
Within fourteen (14) weeks of the date of these orders the wife pay to the husband the sum of Two hundred and eleven thousand, two hundred and fifty dollars ($211,250.00).
Simultaneously upon compliance by the wife with Order (2) the husband shall do all acts and execute all documents as are necessary to transfer to the wife the whole of his right, title and interest in the property situate at and known as the Nelson Bay property in the State of New South Wales.
In the event the wife fails to comply with Order (2) the parties do all such acts and execute all such documents as may be required to effect a sale of the former matrimonial home situate and known as the Nelson Bay property in the State of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale proceeds of the sale be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home;
(b)Fifty (50) per cent to the wife, from which she shall pay the husband fifty (50) per cent of any monies paid of an adjustment of council and water rates; and
(c)Balance then remaining to the husband.
In the event that the matrimonial home has not been sold by or before a date six (6) months from the date of these orders then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the Auctioneer.
(c)That auction will take place within three months of the wife failing to comply with Order (2).
Each party has the right to bid at the auction.
Until completion of the sale the wife has the right to occupy the property (to the exclusion of the husband) subject to wife paying the council and water rate instalments; household building and contents insurances; repayments in respect of any mortgage secured on the property and any other as they fall due, keeping the property tidy, clean and in repair (having regard to its present condition) and permitting inspection by agents and prospective purchasers at all reasonable times:
All exhibits tendered in these proceedings shall be returned at the expiration of one calender month unless an appeal is lodged.
The solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
Subject to any application for costs all outstanding applications are dismissed.
Any application for costs shall be made within twenty eight (28) days from today’s date, the cost application to be listed by arrangement with my associate.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

BRM3094 of 2003

R N A

Applicant

And

B A A

Respondent

And

M J M & M P M

Interveners

REASONS FOR JUDGMENT

Introduction

This is an application by R N A (“the husband”) for the adjustment of property under s.79 of the Family Law Act 1975. B A A (“the wife”) agrees with the husband’s contention that the parties should keep without further adjustment any property that they currently own in their respective names. They agree that they will divide equally whatever interest they have in a property at the Nelson Bay property and that the wife should have a reasonable opportunity to pay out the husband’s interest in that property. The wife alleges that the husband and wife, although the registered proprietors hold the Nelson Bay property on trust for her parents M J M & M P M. The Moore’s (not their real name) have lived in the property since 1981. They claim financial contributions towards its purchase and later towards the mortgage, outgoings and that they also improved the property. Because of the husband’s s.79 application, they applied to intervene in these proceedings claiming that a resulting trust subsists in their favour or in the alternative, relief based on a constructive trust. The husband’s contention is that no resulting or constructive trust arose in the Moore’s favour and at all material time he and the wife were the full legal and equitable owner of the Nelson Bay property.
With all parties’ consent, on 7 July 2003 an order was made in the Federal Magistrates Court in Brisbane whereby M J M & M P M were given leave to intervene in the s.79 proceedings. Thus, by agreement, in the exercise of its accrued jurisdiction the court will determine the intervener’s application for declarations exercising its equitable jurisdiction.
Excluding the Nelson Bay property, the husband and wife have few assets. They were married for many years and after their final separation in 1993 effected an informal property settlement. They agree that at that time their assets (excluding Nelson Bay) were divided equally. Neither contends that the circumstances warrant further adjustment and the only issue between them is the extent of their interest in Nelson Bay. I agree with the parties’ approach and am satisfied that it will deliver a just and equitable outcome within the meaning of s.79(2) of the Family Law Act 1975. Because of their agreement it is unnecessary to make detailed findings concerning contributions and s.75(2) factors. Nonetheless, it is helpful in order to appreciate the issues concerning The Nelson Bay property to recount some of the key events in the parties’ marriage.

Background facts

M J M was born in 1922. He is 82 years old.
M P M was born in 1924. She is 79 years old.
The Moores have three children, B A A, another daughter and a son.
The husband was born in 1936. He is 67 years old.
The wife was born in 1943. She is 61 years old.
The R N A and B A A “the Adam’s” (not their real name) first child M I A was born in 1965. At that time the parties had not yet commenced cohabitation and M I A lived with the wife and the Moore’s at their home.
The parties commenced cohabitation at about the same time as they married. They were married on 16 August 1968. This was the husband’s second marriage. He has two children from his first marriage, both of whom are adults.
The parties’ daughter C M A was born in 1971.
Following their marriage, the wife stopped paid employment and remained at home caring for M I A and their family. Upon their marriage, the parties lived with the Moores for a number of years. The Moores lived in a home they rented from the Department of Housing. The Moores and Adams shared household expenses.
Until the wife started work at Franklins on 27 July 1978, from the commencement of cohabitation the husband’s income was their family’s only income.
The husband and wife had a joint bank account into which the husband paid his wages and from which the wife managed and paid the household expenses. Unknown to the husband after the wife resumed paid work in 1978, she established a Commonwealth Savings Bank account in her sole name into which she deposited savings from her wages and other small amounts.
On 8 May 1980 the husband and wife settled the purchase of the Nelson bay property. Its purchase price was $34,000. Stamp duty, legal fees and disbursements totalled approximately $1,200, and thus the total acquisition costs were approximately $35,200. The parties unsuccessfully applied to the Commonwealth Savings Bank to borrow $27,000 in order to complete the purchase. However the bank approved a $24,000 loan, which meant that the parties needed approximately $11,200 in order to complete the purchase.
After the Moores moved to The Nelson Bay property, between December 1981 to about 1985 C M A spent her school holidays with her grandparents. This is because her parents were at work and they needed someone to take care of C M A during the day. This fact does not contribute to the Moore’s trusts claim. Nowhere is it suggested that these arrangements were somehow connected to their ownership or use of the property.
When M I A finished school, at about age 15, he moved to Nelson Bay and has resided with the Moores ever since.
The Adams separated on 9 March 1992. Not long after the parties separated the wife collected the certificate of title deed which she gave to her parents for safekeeping.
The Adams reconciled on 27 August 1992 when the husband returned to live with the wife in their rented home at Lalor Park.
The husband retired in March 1992. He used part of his retirement package to pay out the mortgage.
The wife resigned her paid employment in December 1992.
The Adams separated on a second and final occasion on 6 March 1993.
On 20 July 1993 the wife commenced family law property proceedings. The husband and wife both claimed the property as comprising part of their joint matrimonial assets. The Moores did not intervene in these proceedings.
After separation the husband moved to Rockhampton nearby to his adult children by his first marriage.
On 8 December 2002 a Decree Nisi was ordered which became absolute one month later.
On 28 May 2003 the husband commenced these proceedings. After the husband commenced the proceedings the wife retrieved the Nelson Bay property certificate of title from her parents.
On 7 July 2003 the proceedings were transferred from the Federal Magistrates Court at Brisbane to this court.
In late 2003 M P M moved into a nursing home at Nelson Bay, where she will reside permanently. M P M has lung cancer and was too ill to participate in this hearing.
The wife works as a shift worker at the Star Casino in Sydney. She has not re-partnered. Her financial circumstances are as set out in her financial statement filed 1 April 2004.
After separation, the husband received $37,000 from his late mother’s estate. He has used those monies on general living expenses. His sole income is from a pension and his financial circumstances as are identified in his updated financial statement filed 14 April 2004.
Mr Moore lives in the Nelson Bay property with M I A. Mr Moore is legally blind and in poor health. His only income is a pension.

Do the Moores have an interest in the Nelson Bay property?

All parties agree that the Nelson Bay property is worth $422,500.
The Moores and the wife allege that either by resulting or constructive trust they have an interest in the Nelson Bay property. The Moores concede that they do not entirely own the property and assert a significantly larger than half interest in the property. Having abandoned their claim to one hundred per cent of the property the relief sought is as follows:
·Declaration that the real property comprising Certificate of Title … or alternatively a designated portion thereof, does not constitute an asset of the applicant and/or respondent for the purposes of application of s.79 of the Family Law Act 1975.
·Order that within 7 days of the submission thereof to them, each of the applicant and respondent shall do all such things and sign all such documents as may be necessary to transfer to the Interveners as joint tenants all, or alternatively the portion designated in orders 2 and 3 hereof, of their right, title and interest in the real property comprising Certificate of Title Lot….
In Calverly v Green (1984) 155 CLR 242 at 246 Gibbs CJ delivered the oft-quoted statement of principle concerning resulting trusts. His Honour said “Similarly, if the purchase price is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in its character as such – e.g. not as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money: Robinson v Preston, at p213; Ingram v Ingram, and Crisp v Mullings (a decision of the English Court of Appeal).”
The effect of this is that a resulting trust arises where, for example, the legal owner of a property has provided less than the full purchase price of that property and another party has paid the remainder. A trust is deemed to have formed to acknowledge the equitable interest of the other person who contributed to the purchase price. The presumption of a resulting trust is one which seeks to give effect to the parties intention, by making a presumption about what the intention was. Unless rebutted there is a presumed intention that the party having contributed to the purchase price did not mean to part with his or her interest in that property even though someone else has legal title. The trust is therefore automatically created whereby the legal owner holds the property in trust for the equitable owner, in an amount proportional to the contribution the equitable owner has made. See Allen v Snyder [1977] 2 NSWLR 685; Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 160.
Central to the Moore’s claim of a resulting trust is the source of funds, excluding the mortgage needed to complete the purchase. One of the contentious issues is whether the Moores advanced those monies or whether the Adams paid the shortfall.
Until these proceedings the husband understood that the Moores paid the shortfall. However, he now knows that the bank account from whence the shortfall was drawn was the wife’s Commonwealth Bank account. The husband attended the loan interview accompanied by Mr Moore. As far as the husband was concerned Mr Moore attended to assist him because the husband is partially deaf and was concerned about his capacity to communicate with the bank manager. At the mortgage loan interview Mr Moore showed the bank manager a bank passbook in order to demonstrate that the husband and wife had sufficient funds to complete the purchase. He manoeuvred the passbook in such a fashion that the husband was unable to see its contents. The husband understood from his wife and father in law that this passbook belonged to Mr Moore. It was actually the wife’s CSB account. The wife and her father claim that the monies deposited into the wife’s CSB account were Mr Moore’s monies. Mr Moore retired in 1976 and has not worked in paid employment since. There is no evidence that he had savings on his retirement. Or any other income until he became eligible for a pension upon his wife’s retirement. Mrs Moore remained in the paid workforce until the Moores moved into the Nelson Bay property in about 1981. From the time of Mr Moore’s retirement and until Mrs Moore retired, hers was the Moore’s only income. The Moore’s claim that Mrs Moore gave her husband $40-$60 each week spending money which he spent on personal expenses and backing horses.
B A A and Mr Moore claimed that Mr Moore regularly gave Mrs Adams cash sums that she held for him. Moore claimed that nobody else in the home owned a bank account which is why he gave his daughter his money. However the Adams’ also had a joint bank account. It is clear that at some stage they had a joint account. He has never had a bank account in his sole name, being a self-confessed, “lazy banker” and has written five cheques in his life. He says it had been his habit to keep such money as he had in cash. B A A says that she deposited his cash monies into her CSB account. In his oral evidence Mr Moore claimed that Mrs Moore would take the cash up and deposit it into the wife’s account. Later he claimed that the bank knew him because he would visit the bank and deposit the money into his daughter’s account. If the Moores were making deposits this flies in the face of their evidence that the sole reason Mr Moore used the wife’s account is because he was a lazy banker. I do not accept that if Mr Moore had spare cash he paid it into the wife’s account. He and the wife agreed that they kept the account secret from the husband and that he had no idea that B A A had thousands of dollars from her father. This is notwithstanding that all parties agree that the husband and Mr Moore were as close as it is possible for two people to be. Neither explained why against this background they thought it necessary to keep this arrangement secret from the husband.
The parties agree that the shortfall of funds primarily came from the wife’s CSB account. Although it is unclear precisely how much was in the bank account immediately prior to settlement, there was approximately an additional $3,000 needed for settlement. The Moores and the wife claim that Mr Moore had cash at home that was used for settlement. In her oral testimony the wife described this amount as a loan to them. Mr Moore did not explain why if he paid his spare cash into the wife’s account he had $3,000 in cash at home. However in the absence of evidence to the contrary I am satisfied that Mr Moore did contribute $3,000 towards the purchase price. Because it was advanced as a loan, even though it has never been repaid the advance does not constitute a contribution to the purchase in the sense needed to establish a resulting trust. This payment may however be significant when considering the constructive trust claim.
At the time of the purchase the wife completed an application for home savings grant on the Adams behalf. The form requires applicants to complete details of home savings claimed. The wife showed that the parties’ relevant home savings account was held in her sole name with the Commonwealth Bank (CSB) at Ermington. She declared that the bank balance six months prior to settlement was $6,811, twelve months prior to settlement $5,087, eighteen months prior to settlement $2,862, twenty four months prior to settlement $2,072 and thirty months prior to settlement $1,184. Relevantly, thirty-six months prior to settlement the account had a nil balance and there is a nil balance identified for 31 May 1976. The effect of this is that as at the end of 1976 the account either had not been established or had a nil balance. All monies paid into the account were paid after Mr Moore retired. The majority of funds paid into the account were paid after the wife returned to the paid workforce in July 1978. It appears more probable than not that the entire funds paid into this CSB bank account were paid by the wife from monies she earned directly, by child endowment or savings from her housekeeping. I am not satisfied that Mr Moore paid any of the monies deposited into the CSB account. Thus, the claim made by Mr Moore and the wife to the husband and bank manager was a ruse to keep from the husband that the wife had a secret bank account.

Although the Adams alone contributed to the properties purchase, this differs from the husband’s understanding at the time. Rhetorically I asked myself what does his long held belief tell me in relation to the parties intention when the property was acquired. The Moores and the wife claim that the Moores located the house and that it was purchased in the Adam’s name because Mr Moore believed that at 59 and in failing health he would be unable to borrow the money needed to buy the home. However he agrees that he was eligible for a Department of Veteran’s Affairs loan, however said because time was of the essence he decided against this course. Upon settlement Mr Moore says that he considered “.. the house to be my house from the time I bought it and saw R N A and B A A’s assistance in buying it in their names as normal family help, as we had helped them by providing accommodation for them.” The wife says that she also regarded the home as belonging to her parents and that after its purchase there were no further discussions between the parties about the property during the remaining years of the Adams’ marriage. Excluding title deeds and bank records there are no contemporaneous documents concerning the parties’ intention at the time of purchase. Such evidence as there is, is found in their recent written and oral testimony. This many years after the event it is not surprising that memories have faded and that they have little recall about what conversation passed between them concerning the purchase. Mr Moore and the wife, at best recall impressions, having virtually no recollection of particular conversations or agreements. Even under gentle testing during cross-examination the wife gave as many different accounts of conversations as there were questions. She moved from recalling specific agreements to having no recall. In the end it was plain that she cannot recall any agreement between the four parties the effect of which would be to acknowledge from the outset that the Adams purchased the property on the Moore’s behalf. She believed that she recalled her husband saying before it was purchased that they were going halves in the property. She also agreed with her parents’ evidence that the Adams were owners in name only and that there was no intention that the Adams had even a half share. She said she understood that the Adams would receive a half share on their parent’s death, whether this was in addition to the half share she believed they had on acquisition remained unclear. The same difficulties arose for Mr Moore, at best he could recall a belief. The foundation for his belief remained unclear. As the wife denies any discussion with her father concerning its acquisition, any joint intention and agreement must arise as between the Moores and the husband. There is no evidence that Mrs Moore was involved in any discussions and thus I must consider whether the husband and Mr Moore discussed and reached an agreement on behalf of the two families.
The husband said that he did not reach any agreement with Mr Moore whereby the Adams agreed that the parties owned the property in equal shares. Certainly not that the Moores were its beneficial owners. Mr Moore denies any conversation with either of the Adams to the effect that the property was to be owned in equal shares. Only they know what passed between them and the wife’s hearsay account in the face of both and the only participants to the conversation joint denials of a 50-50 arrangement cannot carry any weight. The husband’s belief that his father in law paid the approximately $11,200 needed to complete the purchase is consistent with the parties having agreed that they would own the property in equal shares. The great difficulty I have is that Mr Moore denies any such agreement. In the face of his and the husband’s positive denial I cannot impose a finding that there was such an agreement. Although the husband’s inability to explain why Mr Moore would pay the shortfall without any benefit to the Moores is troubling, I am unable to resolve it in a way that is consistent with the evidence.
Doing the best I can with the evidence I am satisfied that when the home was purchased the husband intended that the Adams would purchase it for themselves as a weekender and eventually their home on retirement.
Although Mr Moore claimed that he paid half the mortgage from settlement of the purchase it clear that he did not do so. Prior to settlement the Adams discussed between them how they would repay the mortgage, which discussions did not involve the Moores. At the outset all parties treated the mortgage liability as the Adams concern. Thus I am not satisfied that the acquisition of the Nelson Bay property represented a joint endeavour by the Adams and the Moores in any fashion. Later reference in the family describing the Nelson Bay property as “Mum and Dads home” does not enhance the trust argument. This was nothing more than a shorthand description of the property that described who was living there. These discussions occurred within the Adams family and did not include the Moores. They do not comprise any representation to the Moores as to ownership.
There are conflicting accounts as to who found the Nelson Bay property and negotiated its purchase. This is beside the point. The fact is that it was purchased in such a way that the Adams became registered proprietors as joint tenants. Both also became mortgagors to the Commonwealth Savings Bank. The Moores were not included on the title nor were they parties, and hence liable for the mortgage. Thus the loan proceeds, when advanced solely belonged to the Adams and they thereby became liable to the bank. The $3,000 advanced by Mr Moore was a loan, the terms for repayment of which were not discussed. It was basically a matter of honour arranged between the wife and her parents.
As a consequence of these findings I am satisfied that the Adams contributed the entire purchase price for the Nelson Bay property. The conclusion therefore must be that when the Nelson Bay property was purchased the Adams alone obtained a beneficial interest in the property, they alone having contributed the purchase monies. As a consequence the Moores resulting trust claim insofar as it relies upon monies paid towards its purchase, fails. The payment of mortgage instalments and other outgoings after a property has been acquired are rarely treated as a contribution to its purchase for the purpose of a resulting trust. If it is a contribution to the purchase it is in the Baumgartner (1987) 164 CLR 137 type of constructive trust, rather than a resulting trust where it may be relevant. In this case I am satisfied that these payments are not payments that should be treated as contributions to the acquisition of the Nelson Bay property and that the issue should be considered under the Moores alternate argument.
In these circumstances I must consider the alternative constructive trusts claim. Before dealing with the evidence I should refer briefly to the well established principles concerning constructive trusts in circumstances such as these. In Muschinski v Dodds (1985) 160 CLR 583 Justice Dean said: “Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit if 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 part 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 107 (1868) L.R. Ch. App., at pp. 374-375., and per Jessel M.R., Lyon v Tweddell 108 (1881) 17 Ch. D. 529, at p.531.”
The majority of the High Court in Baumgartner adopted his Honour’s conclusion.
It is important not to overlook Justice Deane’s comments in Muschinski v Dodds at page 615: “..The fact that the constructive trust remains predominantly remedial does not, however, mean that it represents a medium for indulgence of idiosyncratic notions of fairness and justice. As an equitable remedy, it is available only when warranted by established legal reasoning, by analogy, induction and deduction, from starting point of a proper understanding of the conceptual foundation of such principles.”
Although the principal operation of the constructive trust has been in the area of fiduciary duty, its flexibility has been recognised in a number of cases. In Green v Green (1989) 17 NSWLR 343 Chief Justice Gleeson as he then was referred to the area as being one where equity is at its most flexible. See Muschinski v Dodds. For example in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 108 Justice Mason (as he then was) quoted with approval Cadozzo J in Beatty v Guggenheim Exploration Co (1919) 22 NY at 389 who said: “ A court of equity in decreeing a constructive trust is bound by no unyielding formula. The equity of the transaction must shape the measure of relief.”
An important difference between resulting and constructive trusts concerns the role which the parties’ intention plays. A 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 that have arisen. This does not mean that intention has no role to play in constructive trusts. Part of the justification for a constructive trust is that the parties have jointly been building up assets for the joint venture of the future. Part of the reason why it can be unconscionable to let the legal title lie where it falls is that the parties knew that the other was contributing to the assets for their joint benefit. Another way intention is relevant is where the parties had formed an express intention about what would happen in the very circumstances which have arisen. If the parties contemplated the very circumstances and agreed how the asset would be distributed it would often be the case that there is nothing unconscionable in holding the parties to their agreement. This list is illustrative and not exhaustive.
I have already dealt with the evidence concerning the parties’ intention when the property was purchased. In short I am satisfied that when the home was purchased the property was purchased by the Adams for their use as a weekender and eventually their retirement home.
A few months after the Adams purchased the Nelson Bay property the parties agreed that the Moores would move there. Mr Moore was keen to do so, however his wife was reluctant. Eventually Mrs Moore agreed and the parties made plans for the Moores to move in. Because the property was run down, the Moores visited it regularly preparing it for occupation. They took up occupation in about February 1981. Until the Moores moved in, the Adams paid all outgoings, including the mortgage. This changed after the Moores occupied the property.
Thereafter the Moore’s claim, “The loan payments were made from my wife and my joint cheque account. B A A deposited money into that account from time to time to contribute to the loan repayments. My wife and I also paid all water and council rates and the costs of any maintenance on the property”. Exhibit C comprises a bundle of bank statement produced by Westpac Banking Corporation. These statements are for the Moore’s joint account established 28 May 1981. The account shows that it was established with a $4,032 deposit transferred in from another account. This account shows frequent deposits of either $200 or $220 per month paid virtually every month by the Adams to the Moores. There are a small number of statements missing. I am satisfied that even though statements for some months are missing, the overall pattern of monthly payments revealed during the ten years covered by exhibit C demonstrates that the Adams paid at least $200 per month to the mortgage. The mortgage repayments that the Moores claimed they personally made are identified in exhibit C. The total mortgage payments there identified are $28,786. Of these periodic payments I am satisfied that the Adams paid $22,100. I do not accept the husband’s contention that deposits made 9 May 1984, 28 August 1985, 20 February 1987, 20 October 1988 are payments made by the Adams. These payments are in an amount significantly greater than the periodic payments usually made and do not accord with the apparent payment cycle. Thus of the $28,786 paid to the mortgagee by way of periodic payments the Moores paid $6,686.
The parties agreed that when the Moores moved into the Nelson Bay property they would pay $100 per month towards the mortgage and pay the rates. Mr Moore denied that the payments were in lieu of rent and said they were no more than his keeping his part of the bargain to repay the mortgage. He struggled to explain why he had so overstated his contribution to the mortgage and why the Adams paid by far the greater share of the repayments. He claimed that they were merely assisting him and his wife in their retirement. However the Adams were people of modest means, living in rented accommodation with no valuable assets other that the Nelson Bay property. While the families were close I do not accept that the Adams would have supported the property unless it was theirs and they intended to have it for their retirement. They supported the property solely because they were investing in their future. Although it may not have been expressed so crudely the Moores agreed to contribute what they could afford. Perhaps not expressed as rent, they agreed to pay an amount of money towards the Adams’ loan and expenses as the price of occupation. At no time was there any agreement that by paying towards the properties outgoings the Moores were building an interest in the property. The Moores were not misled by the Adams about the effect of their contribution towards the properties outgoings. They were simply given the opportunity to live in a place where Mr Moore wanted to live at a very modest cost to the Moores. During their occupation the arrangement has been overwhelmingly to the Moores advantage.
What would have happened if the Moores had not moved in and paid a share of the properties outgoings? Is it unconscionable in the correct sense of the term that the Adams retain the property notwithstanding that the Moores paid part of the outgoings and maintained the property? Before the Moores moved in the Adams paid the mortgage and rates without any assistance. Thereafter they paid the vast majority of the mortgage repayments. The amount paid by the Moores was modest and although the Adams were people of modest means they were able to afford to meet the properties outgoings without contribution from the Moores. This reinforces my satisfaction that the Adams generously agreed that the Moores could live in the Nelson Bay property until the Adams retired and moved there. Until they did so the Moores agreed to make a modest contribution in return for their use of the property. The arrangement was overwhelmingly advantageous to the Moores.
In about March 1992 the husband accepted voluntary redundancy from his employment as a forklift driver at Coles. He received an eligible termination payment of $17,987.50, redundancy payment of $52,006.27, which together with long service leave, holiday pay and leave loading gave a redundancy package of $57,381,89. The husband gave Mr Moore $10,000 which he understood was sufficient to discharge the Commonwealth Bank mortgage on the Nelson Bay property. At his direction Mr Moore paid the $10,000 to the mortgagee. Although the parties understood that the $10,000 was sufficient to pay out the mortgage, there may have been a few hundred dollars Mr Moore contributed in order to fully discharge the loan. This small additional payment was paid without reference to the Adams. On 21 May 1992 the Commonwealth Bank wrote to the Adams at the Nelson Bay property advising that the title deeds were available for collection. The Adams used the Nelson Bay property as their mailing address for their dealing with the bank. At the wife’s direction the title deeds were forwarded to the Nelson Bay branch of the Commonwealth Bank.
On 20 July 1993 the wife commenced property proceedings in the Family Court of Australia at Parramatta. By way of property adjustment, she sought an order that the husband transfers to her his interested in the Nelson Bay property. There is no suggestion that the wife joined the Moores to the proceedings or that they intervened in her application. I infer that they did not. None of the parties to these proceedings made any disclosure to the court that the Moores had any interest in the Nelson Bay property. The husband and wife both identified it as joint matrimonial property solely owned by them. The wife is very close to her parents and I infer that they knew that the parties sought to finalise their financial dealings, including the Nelson Bay property. The wife’s and her parent’s failure to disclose any equitable interest in the Moores favour undermines their claim that there had been any agreement or that the by that time the Moores had somehow acquired an equitable interest in the property. The wife claimed that while at court she said to the husband “why are you trying to get mum and dad’s house for?” to which he responded “I would never take their house away from them”. The husband recalled the conversation and said he responded “You brought this on, you can go to Nelsons Bay and tell your mother and father you are putting them out.” And further “You are shutting them out, not me, you brought this case on.” Once again the difficulties with the wife’s evidence were apparent and in this instance I prefer the husband’s evidence. After the husband paid her $42,000, being approximately half of his total retirement package, without further reference to him the wife withdrew her property application. No Section79 or other orders were made between the parties. Having received the $42,000, the wife gave the entire sum to the C M A. C M A used the funds to purchase a property in Sydenham. The wife has lived in this property since its acquisition and pays her daughter $175 per week for rent and other outgoings.
I have no doubt that the wife informed her parents that the husband sought the properties sale and that she made a strategic decision not to pursue this issue any further. From that time on the wife and her parents knew that on any financial adjustment the husband would claim adjustment including by reference to the Nelson Bay property.
The husband visited the Moores in mid-1995 at which time Mr Moore asked the husband to sign paperwork at the local council so that the property would attract lower rates liability. Because Mr Moore was paying the rates he wanted to have the benefit of the husband’s eligibility for reduced pensioner rates and levies. Having agreed to return the following week and complete any necessary forms, the husband failed to do so. He had told Mr Moore that although he was a pensioner, as his wife worked he doubted that he was eligible for a pensioner discount. In his affidavit Mr Moore claimed that this discussion concerned his request that the Adams transfer title to the Moores. During cross examination it became clear that Mr Moore had scant recollection of the discussion. On this issue the husband’s evidence was more certain. Both men agree that they were to attend Raymond Terrace’s Council office. This reinforces the probability that the purport of the attendance was to sign necessary paperwork concerning rates reduction and not title transfer. The only reason attendance at council was needed arose because as the owner, the husband needed to prove his pensioner status.

Between the end of the 1993 family law proceedings and late 2002 the husband made no further claim for the adjustment of property or the sale of the Nelson Bay property. He says he was hoping that the wife would find a way to buy out his interest. Yet he did nothing in order to force the issue. In late 2002 he instructed solicitors to commence negotiations hoping to achieve a settlement with his wife, the central feature of which was their ownership of the Nelson Bay property. His delay requires further consideration of whether retention of the legal estate would be unconscionable. Throughout this period the Moores and the wife knew that the husband asserted ownership of the property. The Moores were elderly and no doubt hoped that the husband would not ask them to leave. They were in a very difficult situation. Although they claimed not to know where he was, C M A knew and locating him would not have been difficult. They had limited means and did not have the capacity to acquire the husband’s interest in the property. Thus it was in their interests to sit tight and do nothing. From their perspective doing nothing meant that they could continue to live in a home rent free and at minimal cost to them. Although they paid rates and completed modest repairs, the overall effect of delay worked to their advantage. Even if I accepted Mr Moore’s evidence concerning the 1995 conversations this only reinforces his knowledge that the husband maintained that he, not the Moores owned the property. Doing nothing worked to the Moore’s advantage in the sense that they continued to have use of the property. If the house were sold to pay out the husband’s share, they would probably have nowhere that they could afford to live. Examined from the husband’s perspective delay was not advantageous to him. Although the property increased in value, by reference to market conditions not improvements to the property, he continued to be deprived of his share of his major asset. He had some cash assets and seems to have been content to live off these until they were exhausted and in the absence of an offer from his wife, he had no choice other than to force the issue.
All parties agree that the Moores have maintained the property during the twenty-three years that they have lived in it. At paragraph 20 of his affidavit Mr Moore identifies the work the Moores have undertaken. These comprise:
·Renewal of water service connection main to house including laying new pipe throughout.
·Sewer connection when a septic tank was in existence previously.
·Painted the exterior and interior several times.
·Tiling of bathroom walls and floor.
·Tiling of toilet and installed new shower heads.
·Spear Point – bore water – 2 new pumps on 2 or 3 occasions.
·Replaced the stove on 2 occasions.
·Installed electricity safety switch.
·Fitted security doors and deadlocks.
·Built a new patio.
·Pest control yearly since 1981.
·Tree removal and tree lopping.
·Fly screens renewal.
·Laid new carpet.
·Installed TV Aerial.
·Repaired and maintained the roof.
·Mowing and gardening.
·Repaired and maintained the guttering.
·Installed and maintained new fencing.
·Installed new blinds.
·Installed smoke alarms.
·Installed new hot water services.
·Attended to sundry maintenance tasks such as tap washers, new toilet seats and extra power points.
In order to minimise costs Mr Moore completed most of these repairs and improvements himself.
Paying the rates and maintaining the property was part of the original condition for occupation. It is of no moment that the repairs and modest improvements were undertaken with the Adams’ approval. It does not necessarily follow that completion of these works without the knowledge or consent of the owners means that the Adams regarded the property as belonging to the Moore’s. Or that the Moores could reasonably infer that it did. Maintaining the property was expected and thus implicitly approved. The improvements in a period of over twenty years continuous use are modest. Their completion without authority does not enhance the trust argument. The $3,000 loan paid at settlement remains outstanding. Without the loan the Adams could not have purchased the Nelson Bay property. As an unpaid loan, demand for repayment having not been made, it does not enhance the trust claim. I have already dealt with mortgage and rates payments, which comprise part of the costs of occupation. Equity would not be served. If having had the use of the property, the accepted price of occupation formed the basis of a constructive trust.
This is a sad case in which one must feel for all involved. One would be heartless not to be moved by the position that the Moores are in. Mr Moore is clearly distressed and hopes that his wife will not learn of the outcome of these proceedings if it is unfavourable to them. The husband hopes that the wife can afford to buy out his interest in the property so that his former parents in law are not homeless. However the Moores have failed to persuade me that it would be unconscionable to maintain the Adam’s legal ownership. They have not established that they should have the remedy of a constructive trust declared in their favour. The key findings that contribute to this outcome are:
a)The Adams contributed virtually all money towards the purchase of the property at acquisition.
b)The $3,000 paid by M J M was paid as a loan that remains outstanding.
c)The Adams purchased the property for their use as a weekender and for their retirement.
d)The Adams paid all outgoings until the Moores moved in.
e)The Moores agreed to pay a share of the mortgage, the rates and utilities as the price of their occupation.
f)The price agreed was modest and overwhelmingly worked to Moore’s advantage.
g)The kindness the Moores showed the Adams’ children centres upon their relationship as grandparents and has nothing to do with their ownership or occupation of the property.
h)Irrespective of the Moore’s occupation and sharing expenses the Adams were able to pay all costs associated with the property.
i)In 1993 neither the Moores nor the Adams asserted that the Moores had an interest in the property.
j)The husband paid out the mortgage.
k)Notwithstanding substantial delay all parties knew that the husband maintained his claim to the property.
l)Delay worked to the Moore’s advantage vis a vis inexpensive accommodation far longer than they hoped.

Assets and liabilities as at the date of hearing

The Adams reached agreement as to the assets and liabilities as at the date of hearing.
I find the Adams’ assets, liabilities and financial resources as at the date of hearing are as identified in the table below.

Assets as at the date of hearing	$
Commonwealth Savings Bank account (w) (agreed)	16,400
The Nelson Bay property (h and w) (agreed)	422,500
Commonwealth Savings Bank account (h) (agreed)	300
TAB shares (w) (agreed)	1,828
IAG shares (w) (agreed)	1,352
1992 Ford Festiva (w) (agreed)	2,200
1990 Toyota Lexen (h) (agreed)	2,500
Household contents (w) (agreed)	500
Superannuation (w) (agreed)	11,861
TOTAL ASSETS	459,441
Liabilities as at the date of hearing
Bankcard (w) (agreed)	700
NETT ASSETS	458,741

Conclusion

The effect of my findings is that the parties are the legal and equitable owners of the Nelson Bay property. Thus the interveners application will be dismissed. The husband and wife agreed that in these circumstances the wife would be afforded a reasonable opportunity to pay out the husband’s interest in the property. Justice requires that she be given a reasonable amount of time within which to organise her affairs in order to do so. This must be tempered by the husband’s parlous circumstances and his need to have his entitlement paid in a timely way. I must also consider the position that the Moore’s are now in. With very little money Mr Moore will find it most difficult to rehouse himself. If the wife is able to finance the buy out, given the time of year she should know within eight weeks if this is possible. Thereafter she will have a further six weeks within which to complete settlement. This period strikes a proper balance between the parties competing interests.
The wife will be ordered to pay the husband $211,250 within fourteen weeks. If she does not do so then, regrettably the Nelson Bay property must be sold. The sale provisions will be in accordance with usual practice.
Until the wife has fully complied with these orders, she must pay all rates and taxes upon the Nelson Bay property as and when they fall due. If she defaults, the default must be paid out of her share of the sale proceeds.
For these reasons I make the orders identified at the start of this judgment.

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate: S. Mashman

Date: 25 November 2004