Alabaster v Alabaster
[2017] VCC 370
•11 April 2017
2
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
FAMILY PROPERTY LIST
Case No. CI-15-02521
| JUDIE ANNE ALABASTER | Plaintiff |
| v | |
| CASEY ANNE ALABASTER | First Defendant |
| NEAL COLLIN | Second Defendant |
| PAUL WANIS | Third Defendant |
| and | |
| MELISSA WANIS | Fourth Defendant |
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JUDGE: | HER HONOUR JUDGE KINGS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 March 2017 | |
DATE OF JUDGMENT: | 11 April 2017 | |
CASE MAY BE CITED AS: | Alabaster v Alabaster & Ors | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 370 | |
REASONS FOR JUDGMENT
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Subject: TRUST
Catchwords: Constructive trust – acquisition of property – failure of joint venture between mother and daughter – contributions
Legislation Cited: Transfer of Land Act 1958, s77
Cases Cited:Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137; Bennett & Anor v Horgan & Anor (unreported, NSWSC, Bryson J, No 4056 of 1991, 3 June 1994); Lawrence v Branch [2002] WASCA 292; Swettenham v Wild [2005] QCA 264
Judgment: First defendant holds the net proceeds of the sale of the Cranbourne property on constructive trust for the plaintiff and the first defendant in proportion to each party’s contributions to the purchase price and improvements to the property. Plaintiff entitled to balance of the money held by the Supreme Court as at the trial date in the amount of $28,223.20.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J D Catlin | Stephen Peter Byrne |
| For the Defendants | No appearance | - |
HER HONOUR:
Preliminary
1 By Writ and Statement of Claim dated 25 May 2015, the plaintiff alleges that her daughter, the first defendant, holds the net balance of the sale proceeds of 174 Mountainview Boulevard, Cranbourne North (“the Cranbourne property”) on a constructive trust for the plaintiff based on their failed joint property venture.
2 The first defendant filed and served a Defence and Counterclaim dated 26 June 2015 where she, amongst other things, denied the plaintiff’s claim.
3 By Summons dated 15 January 2016, the plaintiff sought leave from the Court to join Mr Neal Collins, Mr Paul Wanis and Ms Melissa Wanis as second, third and fourth defendants respectively to the proceeding. I granted the plaintiff leave to join the other parties and made the following Order:
“1 Subject to the determination of the trial judge, the claim between the plaintiff and the first defendant be determined as a preliminary issue and, upon determination of that issue, the claim against the second, third and fourth defendants be heard and determined at a date to be fixed by the trial judge.”[1]
[1]Alabaster v Alabaster & Ors (Ruling No 2) [2016] VCC 950
4 Accordingly, this trial deals with the preliminary issue only.
5 On 2 August 2016, Mr Neal Collins filed and served a Notice to Cease to Act for the first defendant, which listed the address of the first defendant as 4 Athlone Court, Endeavour Hills, Victoria, 3977 (“the first defendant’s address”). On this basis, Judicial Registrar Gurry made an Order dated 6 December 2016 for substituted service of an Amended Statement of Claim upon the first defendant by leaving it, together with an Order I made on 26 September 2016 fixing the proceeding for trial on 16 March 2017, on the first defendant’s address. I am satisfied that service was effected in accordance with my Order in reliance on Mr Byrne’s affidavit of substituted service dated 13 December 2016.
6 Notwithstanding, the first defendant did not make an appearance at trial.
The evidence
7 The main issue for determination is whether the Court should declare that the first defendant holds the net proceeds of the sale of the Cranbourne property on constructive trust for the plaintiff.
8 The only witness to give evidence was the plaintiff.
9 Briefly, the relevant facts are set out as follows.
10 In 2010, the plaintiff lived at 88 Cooper Road, Rowville, Victoria, 3178 (“the Rowville property”) with the first defendant. The Rowville property was registered in the plaintiff’s name and was subject to a mortgage. The plaintiff’s evidence was that she was unemployed and could not maintain the mortgage re-payments.[2] As a result, she sold the Rowville property and received net proceeds of sale in the amount of approximately $100,000.[3] Subsequently, the plaintiff and the first defendant rented a property together at Mantung Avenue, Rowville, Victoria, 3178 and then at Gilda Court, Rowville, Victoria, 3178.
[2]Transcript (“T”) 5
[3]T5
11 In examination-in-chief, the plaintiff informed the Court that, in late 2010 or early 2011, she had a discussion with the first defendant in the lounge room of the Gilda Court property as to the expense of paying rent and benefits of purchasing a house together. She said that she and the first defendant agreed to purchase a property together, live there together and both be responsible for half of the ongoing mortgage payments. The plaintiff said that she agreed to contribute $100,000 towards the purchase of the property and the first defendant agreed to apply for the first home owner’s grant, which was $20,000.00, and borrow the balance from the bank.[4] The plaintiff said they did not discuss how long they would live together in this property. In her Defence and Counterclaim, the first defendant denied the agreement and making the representation to purchase the Cranbourne property as alleged by the plaintiff.[5]
[4]Statement of Claim, Court Book (“CB”) 7
[5]CB 23
12 The plaintiff told the Court that she identified and inspected a suitable property, which was the Cranbourne property. A Contract of Sale was prepared whereby the first defendant agreed to purchase the Cranbourne property from Chesapeake Properties (Victoria) Pty Ltd (“the vendors”) for the purchase price of $429,900.[6] In her Defence and Counterclaim, the first defendant said the purchase price was $429,000, which appears to be incorrect.[7]
[6]CB 247
[7]CB24
13 A deposit of $5,000 was payable upon the signing of the contract, which the plaintiff said she paid in full.[8] Counsel for the plaintiff tendered in evidence the plaintiff’s Police Association Credit Cooperative Limited bank statements for the periods of 29 February 2012 to 31 March 2012 and 31 March 2012 to 30 April 2012 to support the plaintiff’s evidence that she paid the $5,000 deposit. The statements show that the plaintiff obtained personal cheques in the amounts of $1,000 on 29 March 2012[9] and $4,000 on 12 April 2012.[10]
[8]T7
[9]CB 64
[10]CB 67
14 Pursuant to the Contract of Sale, the settlement date was 18 April 2012. The plaintiff said that she drew a cheque from her bank account in the amount of $90,070.39, which was her contribution to the purchase price of the Cranbourne property at settlement.[11] Counsel for the plaintiff referred me to the Police Association Credit Cooperative Limited bank statement for the period of 31 March 2012 to 30 April 2012, which showed the plaintiff drew a cheque in the amount of $90,070.39 made payable to the vendors dated 19 April 2012.[12]
[11]T9
[12]CB 69
15 It was not in dispute between the parties that the first defendant obtained a loan in the amount of $321,845.07 from the Australia and New Zealand Banking Group (“the ANZ Bank”) secured by a registered mortgage over the Cranbourne property and that she applied for and received the first home owner’s grant in the amount of $20,000, which she contributed to the purchase price.[13] In her Defence and Counterclaim, the first defendant also said she borrowed $25,000 from her paternal grandparents that she contributed to the purchase price.
[13]CB 24
16 Further, in her Defence, the first defendant alleged the plaintiff gave her approximately $100,000 as a gift. She referred to a Memorandum signed by the plaintiff dated 21 March 2012, which states:
“I, Judie Alabaster confirm that I am giving a non-refundable gift of $100,000 to my daughter Casey Alabaster to assist purchase of residential home at Lot 258 Mountainview Boulevard, Cranbourne North.”[14]
(sic)
[14]Plaintiff’s Case Outline at paragraph [6]
17 In Court, counsel for the plaintiff said the Memorandum was required to facilitate a loan from the ANZ Bank to provide a mortgage to the first defendant. Further, that it does not set out the nature of the relationship between the plaintiff and the first defendant as to the nature of the advance, which was that it was paid to provide a residence for the foreseeable future for the plaintiff and the first defendant.[15]
[15]See Plaintiff’s Case Outline at paragraphs [7]-[8]
18 On 20 April 2012, settlement of the Cranbourne property occurred. It was not in dispute that the Cranbourne property was registered in the name of the first defendant on the Certificate of Title.
19 In May 2012, the plaintiff and the first defendant moved into the property. Counsel for the plaintiff prepared a table of mortgage payments made by the plaintiff upon instructions from her. On 5 July 2012, the plaintiff commenced to pay 50 per cent of the mortgage payments. Between the period of 5 July 2012 and 20 November 2014, the plaintiff states that she made fortnightly mortgage payments towards the Cranbourne property in the sum of $7,573.25.[16]
[16]CB 10, T11-12
20 The plaintiff told the Court that she expended money on improvements to the Cranbourne property, which were as follows:
·She arranged with and paid for J H & B Builders P/L to erect a pergola roof and sunshade, and laundry cupboard, at a cost of $6,598.90.[17] Counsel for the plaintiff tendered in evidence an account from J H & B Builders P/L dated 20 December 2012 to show the plaintiff paid the account;[18]
·She arranged for WindowFrosting to replace the glass in the front door with window frosting at a cost of $547.[19] Counsel for the plaintiff tendered in evidence an account from WindowFrosting dated 2 July 2012 and an EFTPOS receipt from WindowFrosting in the amount of $547 as evidence that she paid that account on 2 July 2012;[20]
·She arranged for the installation of a digital antenna at a cost of $270. Counsel for the plaintiff tendered in evidence an invoice from Jim’s Antenna’s, which was addressed to the plaintiff at the Cranbourne property. The plaintiff said that she paid that amount owed;[21] and
·She purchased plants and mulch for the garden, which expenditure she identified from her bank statements and was included in an aide memoire, which she said accurately reflects the payments she made. The total amount claimed is $1,012.50.[22]
[17]CB 241, T12
[18]CB241
[19]CB 239
[20]CB 240, T13
[21]CB 237, T13
[22]Exhibit 7, T13-14
21 The plaintiff said that that the living arrangements between herself and the first defendant were initially satisfactory.[23] In about February 2014, the first defendant’s girlfriend, Ms Gillian Godfrey, moved into the Cranbourne property. The plaintiff said that Ms Godfrey paid her $100 a fortnight, which was referrable to shopping expenses, food and electricity.[24] The plaintiff’s evidence was that they all lived satisfactorily in the Cranbourne property for a period of time.
[23]T14
[24]T14
22 The plaintiff told the Court that she eventually moved out of the Cranbourne property because the first defendant and Ms Godfrey had told her that they wanted to live alone. In about September 2014, the first defendant informed the plaintiff that she intended to sell the Cranbourne property and that, as it was in her name, there was nothing that the plaintiff could do to stop the sale.[25]
[25]T15
23 In October 2014, the plaintiff engaged All Points Conveyancing Pty Ltd to draft an Authority to Disburse Proceeds of Sale, which was entered into between the plaintiff and the first defendant on 14 October 2014. Essentially, it stated that the first defendant would:
(a)pay the sum of $1,651.00 to the Residential Tenancies Bond Authority in respect of the plaintiff’s bond for a Residential Tenancy Agreement for a property at 13 Prosperity Avenue, Cranbourne North.
(b) and, thereafter, to disburse the balance as follows:
·pay to the plaintiff the sum of $100,000; and
·pay the balance to the first defendant.[26]
[26]CB 249
24 Notwithstanding, the first defendant subsequently told the plaintiff that she would not receive any funds from the sale.[27] The plaintiff said that she engaged a solicitor to lodge a caveat over the Cranbourne property.
[27]T16-17
25 Subsequently, the plaintiff said that she was telephoned by the first defendant, who offered to pay the plaintiff over a five-year period if she withdrew the caveat. This was because the first defendant had put a deposit on the purchase of another property, 5 Mudlark Court, Carrum, Victoria, 3197,[28] and she required the sale proceeds from the Cranbourne property to complete the purchase.[29]
[28]Defendant’s Defence and Counterclaim at paragraph [21]
[29]T17
26 On 5 June 2015, the plaintiff agreed to withdraw the caveat on the basis that the balance of the proceeds of sale of the Cranbourne property, which totalled $88,578.72, be paid into the Supreme Court of Victoria pursuant to s77 of the Transfer of Land Act 1958. On 15 June 2015, the sum of $88,578.72 was paid into the first defendant’s solicitor’s trust account. Subsequently, the funds were transferred to the Supreme Court on 15 July 2016. I was informed by the plaintiff’s solicitors from their enquiries with the Supreme Court that the balance of the funds as at the trial date was $28,223.20.
27 I was not informed of the sale price for the Cranbourne property nor was I informed of the amount of monies paid by the first defendant to the ANZ Bank to discharge the mortgage over the Cranbourne property.
The applicable law
28 A constructive trust generally arises independently of the intention of the parties, which is imposed by the court in order to satisfy the demands of justice and good conscience.[30] The onus of proof in this respect is upon the party seeking to establish the constructive trust, which in this case is the plaintiff.
[30]Muschinski v Dodds (1985) 160 CLR 583 at 620
29 Counsel for the plaintiff alleged that the plaintiff and the first defendant were involved in a joint venture, being the acquisition of residential accommodation for themselves, which failed without attributable blame and, accordingly, the property and/or the proceeds of sale of the property are liable to be divided between the first defendant and the plaintiff in accordance with the principles of Muschinski v Dodds.[31] In this case, the High Court expanded the circumstances in which a court will impose a constructive trust in domestic property claims to include situations where it is unconscionable for the legal owner to retain title to property acquired by virtue of the contributions of cohabitants.
[31]Supra
30 In Muschinski v Dodds, the parties to a de facto relationship purchased a property as tenants in common in equal shares with the intention of developing a cottage and erecting a residence to live together. The appellant paid the whole of the purchase price with the intention that the respondent was to make future contributions to develop the property up. The parties separated before the venture was completed and the appellant sought a declaration from the Court that the respondent held his interest in the property on trust for her.
31 Relevantly, Deane J said, at 620:
“… 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.”
32 Further, at 622:
“… In circumstances where the parties neither foresaw nor attempted to provide for the double contingency of the premature collapse of both their personal relationship and their commercial venture, it is simply not to the point to say that the parties had framed that overall arrangement without attaching any condition or providing any safeguard specifically to meet the occurrence of that double contingency. As has been seen, the relevant principle operates upon legal entitlement. It is the assertion by Mr Dodds of his legal entitlement in the unforeseen circumstances which arose on the collapse of their relationship and planned venture which lies at the heart of the characterization of his conduct as unconscionable. Indeed, it is the very absence of any provision for legal defeasance or other specific and effective legal device to meet the particular circumstances which gives rise to the need to call in aid the principle of equity applicable to preclude the unconscionable assertion of legal rights in the particular class of case.”
33 Mason J said, at 599:
“The failure of the projected development of the land, including its subdivision and the sale of part of the land, through no fault of the parties, provides a firm basis for declaring that the parties hold their respective interests in the property as tenants in common on a constructive trust, after payment of any debts incurred in the improvement of the property, to repay to each his or her respective contributions and as to the residue for them both in equal shares. The circumstances of the case, viewed in the light of the common intention that Mr Dodds was to take an immediate and unconditional interest in the property, did not make it inequitable that he should retain that interest, notwithstanding the failure of the projected development. But it would be inequitable for him to retain his interest without crediting to Mrs Muschinski the contributions which she made to the acquisition and improvement of the property. Although Mrs Muschinski intended that he should take an immediate and unconditional half interest, that intention was accompanied by an expectation, shared by Mr Dodds, that the projected development would take place for their mutual benefit and that Mr Dodds would be making substantial contributions to it. I agree with Deane J. that the general principle underlying the proportionate repayment of capital contributions to joint venturers on the failure of a joint venture is wide enough to support this aspect of the constructive trust.”
34 The Court held that a constructive trust had been established with the effect that the parties held their respective legal interests upon trust to repay the parties contributions and to divide the residue between them in equal shares.
35 The approach in Muschinski v Dodds was affirmed by the High Court in Baumgartner v Baumgartner.[32] The imposition of a constructive trust is not confined to the breakdown in relationship between de facto couples, and applies equally to other family relationships.[33]
[32](1987) 164 CLR 137
[33]Bennett & Anor v Horgan & Anor (unreported, Supreme Court of New South Wales, Bryson J, No 4056 of 1991, 3 June 1994); Lawrence v Branch [2002] WASCA 292
36 Counsel for the plaintiff submitted that the recent Queensland Court of Appeal decision of Swettenham v Wild[34] was applicable on the facts before me. In this case, the appellant was a father who contributed virtually all of the monies to purchase a property, which had a granny flat attached. The arrangement was that the father would live in the granny flat and his daughter would live in the property to provide him ongoing care in his advancing years. Later, the father transferred the legal ownership of the property to his daughter. Following a complete breakdown in their relationship, the father moved out of the granny flat and into a retirement village unit. On appeal, counsel argued that, despite the father’s intentions to give legal ownership of the property to his daughter, the parties held their respective legal and equitable interests on a constructive trust pursuant to the principles set out in Muschinski v Dodds.[35]
[34][2005] QCA 264
[35]Supra
37 Atkinson J said, at 42:
“In this case, Mr Swettenham intended that Ms Wild would take the legal title to the property. However in return he was to retain not only a right to reside in the granny flat but also receive the support and comfort of living in a family environment with his daughter and her family as he aged. ... That joint endeavour between the parties was to be for their mutual benefit but failed through no attributable fault of either party. Mr Swettenham contributed a large proportion of the purchase price. In these circumstances it would be unconscionable for Ms Wild to retain the beneficial interest in the whole of the property subject only to Mr Swettenham’s right to reside in the granny flat.”
38 Accordingly, Atkinson J held that a constructive trust should be imposed so that, irrespective of their intentions, the parties are proportionately repaid their respective contributions to the property acquired.
39 These authorities indicate that the Court may exercise its equitable jurisdiction to impose a constructive trust consequent upon a failure, through no attributable fault of either party, of a joint venture for mutual benefit, where it is unconscionable for one party to assert their legal entitlement without recognising the significant contribution of the other party.
40 Similarly, the parties before me engaged in a joint endeavour to purchase the Cranbourne property for their mutual benefit, which was for the first defendant to hold legal title to the Cranbourne property and, in return, the plaintiff to have a right to indefinitely reside in the Cranbourne property with the first defendant. Ultimately, the arrangement failed without the fault of either party.
41 The plaintiff gave evidence that she made the contributions and improvements to the Cranbourne property, which totalled $111,071.64 and were as follows:
·Deposit and purchase price in the sum of $95,070.39;
·Improvements in the sum of $8,428; and
·Mortgage repayments in the sum of $7,573.25
42 In her Defence and Counterclaim, the first defendant alleges contributions to the purchase of the Cranbourne property in the form of obtaining a loan over the property from the ANZ Bank, which was repaid by the first defendant in full, the first home owner’s grant of $20,000 and $25,000, which was borrowed from her paternal grandparents.
43 On the facts before me, it appears that the plaintiff contributed approximately $95,000 and the first defendant contributed approximately $45,000 to the purchase of the Cranbourne property.
44 Applying the High Court’s analysis in Muschinski v Dodds and the reasoning of the Queensland Court of Appeal in Swettenham v Dodds, whilst the plaintiff and first defendant intended the property to be registered in the name of the first defendant, it would be unconscionable for the first defendant to assert her legal entitlement to the Cranbourne property without recognising the contributions of the plaintiff. Similarly, it is unconscionable for the first defendant to assert her legal entitlement to the whole of the proceeds of sale of the Cranbourne property without consideration to the plaintiff. It follows that a constructive trust should be imposed so that the parties are proportionately repaid their respective contributions to the Cranbourne property.
45 Accordingly, I find that the first defendant holds the net proceeds of the sale of the Cranbourne property on constructive trust for the plaintiff and the first defendant in proportion to each party’s contributions to the purchase price and improvements to the property.
46 The balance of the money held by the Supreme Court as at the trial date amounts to $28,223.20. Based on her contributions of approximately $95,000 to the Cranbourne property, the plaintiff is undoubtedly entitled to this amount.
47 I will hear from counsel as to the form of the order I should make and costs.
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