Americana Leadership College v Coll

[2003] NSWSC 295

CITATION:	Americana Leadership College v Coll [2003] NSWSC 295
HEARING DATE(S):	13/02/03, 14/02/03
JUDGMENT DATE:	15 April 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Plaintiff's claims based on resulting and constructive trust dismissed. Plaintiff entitled to reimbursement of certain outgoings and to charge over property therefor. Defendant entitled to order for possession and mesne profits.
CATCHWORDS:	TRUSTS AND TRUSTEES - property purchased in names of joint tenants in 1976 - whether company subsequently incorporated entitled pursuant to resulting trust as real purchaser - whether constructive trust should be imposed - "title by estoppel" - whether charge for outgoings incurred should be imposed - CORPORATIONS - promoters - whether purchasers of property in breach of duties as promoters so that property held on constructive trust - REAL PROPERTY - possessory title claim by company - periodic occupation by one co-owner - not shown to be traceable to right derived from claimant to title by adverse possession
LEGISLATION CITED:	Business Names Act 1962 Conveyancing Act 1919, ss.23 and 54A Real Property Act 1900, s.45D
CASES CITED:	Aequitas Ltd v Sparad No 100 Ltd (2001) 19 ACLC 1006 Americana Leadership College Pty Ltd v Coll [2003] NSWSC 59 Big River Timbers Pty Ltd v Stewart (1998) 9 BPR 16,599 Calverley v Green (1984) 155 CLR 243 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Dillwyn v Llewelyn (1862) 4 DeGF&J 517 (45 ER 1285) Gissing v Gissing [1971] AC 886 Giumelli v Giumelli (1999) 196 CLR 101 Muschinski v Dodds (1985) 160 CLR 583 Ramsden v Dyson (1866) LR 1 HL 129 Sugden v Lord St Leonards (1876) 1 PD 154 Tracy v Mandalay Pty Ltd (1953) 88 CLR 215
PARTIES :	Americana Leadership College Pty Limited - Plaintiff Mary Annette Coll - Defendant
FILE NUMBER(S):	SC 5217/01
COUNSEL:	Mr M J Neil QC/Mr M R J Ellicott - Plaintiff Mr S Y Reuben - Defendant
SOLICITORS:	John R Quinn & Co - Plaintiff Gary Cassim & Associates - Defendant

- 24 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

TUESDAY, 15 APRIL 2003

5217/01 – AMERICANA LEADERSHIP COLLEGE PTY LIMITED v MARY ANNETTE COLL

JUDGMENT

1 In these proceedings, the plaintiff claims an entitlement to be recognised as the true owner of a home unit in Onslow Avenue Elizabeth Bay, being Lot 1 in Strata Plan 9561 (“the Elizabeth Bay unit”). The registered proprietors of that property, as recorded on the relevant folio of the register maintained under the Real Property Act 1900, are the defendant and Francisco Coll (“Dr Coll), now deceased. They are registered as joint tenants.

2 The plaintiff’s principal claim is that the Elizabeth Bay unit was, from the time of the plaintiff’s incorporation on 2 February 1977, held by the defendant and Dr Coll upon trust for the plaintiff. A trust is said to arise on two alternative bases: first, that the plaintiff effectively paid the purchase price so that a resulting trust arose; and second, that a constructive trust must be imposed as it would be unconscionable for the defendant, as surviving joint tenant, to deny the plaintiff’s ownership. There are several aspects to the latter claim, including an assertion that the defendant and Dr Coll, as promoters of the plaintiff, owed duties not to obtain for themselves benefits intended to belong to the company to be formed, so that again the court will imposes a constructive trust to avoid breach of those duties.

3 The plaintiff also makes a claim to title by adverse possession based on Part 6A of the Real Property Act.

4 It is convenient to deal with these various claims before turning to other issues arising from both the plaintiff’s summons and the defendant’s cross claim. Those other claims depend upon the outcome in relation to the principal question, namely, whether the plaintiff is to be recognised as the beneficial owner of the Elizabeth Bay unit.

5 I begin by examining the evidence under several headings. In addressing factual matters, particularly those relevant to the circumstances existing at the time of the purchase of the property, I must record that, apart from documentary material, the only first hand evidence available is that of the defendant. I also have, however, an account of some relevant matters given by Dr Coll in an affidavit sworn by him on 2 September 1996 in proceedings in this court entailing claims for relief substantially similar to those now pursued by the plaintiff. Those proceedings were initiated by three parties, namely, the present plaintiff, Americana Leadership College Inc and Dr Coll. They were discontinued. Dr Coll later died. In the course of the trial, I allowed Dr Coll’s 1996 affidavit to be tendered so that there might be admitted into evidence pursuant to s.63 of the Evidence Act 1995 such of the previous representations contained in it as would otherwise have been excluded by the hearsay rule: see Americana Leadership College Pty Ltd v Coll [2003] NSWSC 59. I also noted that the unavailability of Dr Coll to be cross-examined would mean that his untested statements should be treated with considerable care – particularly since, in the earlier proceedings, Dr Coll was a proponent of the case the then plaintiffs were pursuing, being a case substantially the same as the present plaintiff’s case here.

Relevant activities of the defendant and Dr Coll

6 The defendant and Dr Coll met in 1960. He was at that time aged about 33 and she was about 24. He was a window dresser in a department store. They married in 1961. At all material times, their principal residence was in the United States. The marriage was dissolved in 1986 under the laws of Florida. Dr Coll died in 1999.

7 At some time in or before the 1960’s, Dr Coll devised a spiritual philosophy or way of life akin, in concept, to a religion which offered people opportunities for greater self-awareness and to be better prepared to help their fellow man. Dr Coll and the defendant made this “program” the basis of a business which offered courses and training to interested persons on a fee paying basis. They both devoted considerable effort to the business which they built up together. At some unspecified time before the purchase of the Elizabeth Bay unit, a corporation by the name of “Americana Leadership College Inc” was established in the United States for the purposes of the business.

8 At some time before May 1975, the program was introduced into Australia by a team of leaders located in Sydney. Dr Coll and the defendant came to Sydney in May 1975 and became involved in further development of the program in Australia. At the time of their arrival, the persons operating the program in Sydney occupied an office at Bexley.

The purchase of the Elizabeth Bay unit

9 In 1976, the defendant and Dr Coll became the registered proprietors of the Elizabeth Bay unit. They took title as joint tenants pursuant to transfer P35639 dated 1 March 1976 lodged by R.L. Kremnizer & Co, solicitors. The transferor was Vanlow Investments Pty Ltd. The consideration stated in the transfer is $49,000.

10 The contract under which the defendant and Dr Coll purchased the property is not in evidence. An estate agent’s letter of 2 October 1975 refers to contracts already having been exchanged and there is in evidence a cheque butt No 968211 dated 1 September 1975 for $4,900 bearing the notation “Baker et al 10% down on exchange of contracts” from which I infer that the contract for sale was made some time between 1 September 1975 and 2 October 1975.

11 A cheque butt No 0869816 dated 27 February 1976 is for $47,300 in favour of R.L. Kremnizer & Co and bears the notation “bank cheque 686117 for house”. Transfer P635639 is dated 1 March 1976. It is the contention of the plaintiff that this cheque butt relates to the provision of the settlement moneys paid on completion. Two factors tend, at first glance, against any such finding: first, the reference to “house” when the property concerned was a flat or home unit; and, second, the fact that the amount of the cheque ($47,300), when aggregated with the 10% deposit of $4,900 previously paid, represents a total of $52,200 which is $3,200 more than the purchase price. Against this, however, I note that certain apparently contemporary accounting records in evidence refer to the payment of $47,300 as referable to “apartment house” and treat the aggregate of the $4,900 and the $47,300 as “purchase of apartment at 10 Onslow Ave NSW”. These contrary indications, plus the fact that the defendant and Dr Coll, as Americans, might well have not used the words “flat” and “home unit” lead me to infer that the $47,300 cheque was in truth the source of the balance of the purchase moneys for the Elizabeth Bay unit.

12 There is also in evidence a bank statement for the period 9 February 1976 to 8 March 1976 relating to an account No 11-0972 maintained with Bank of New South Wales, Kings Cross branch, in the name “Americana Leadership College”. It includes a debit entry of $47,300 on 27 February 1976 with a reference “816”. I accept this as being a reference to the last three digits of the number 0869816 shown on the cheque butt to which I have referred. I therefore also accept that the cheque for $47,300 was debited to the account with the Bank of New South Wales styled “Americana Leadership College”.

13 There is no corresponding bank statement evidence in relation to the earlier cheque for $4,900. However, the February 1976 bank statement to which I have referred shows not only a series of entries identified by digits 801 to 818 but also entries marked 269 and 275 from which it is reasonable to infer that more than one cheque book was used in operating this one account. Furthermore, cheques with the last three digits 269 and 275 presented and paid in February 1976 may be regarded as sufficiently consistent, as a matter of sequence, with the drawing some five months earlier of a cheque with the last three digits 211 to warrant an inference that cheque No 968211 for $4,900 was drawn on the same account on or about 1 September 1975.

The Reserve Bank letter

14 In connection with the purchase of the Elizabeth Bay unit, it was necessary to seek approval of the Reserve Bank of Australia under the Banking (Foreign Exchange) Regulations then in force. There is in evidence a letter from the Reserve Bank to R.L. Kreminzer & Co dated 14 January 1976 which, omitting introductory and formal parts, reads as follows:

“The Treasurer has now advised that acquisition by Rev. and Mrs Coll of a home unit in Sydney for full time use by the Colls or their associates while conducting their spiritual education business in Australia is not inconsistent with existing Government policy on foreign investment provided the property involved is sold to Australian or other eligible purchasers when it is no longer being used for the approved purpose.
Accordingly, authority under the Banking (Foreign Exchange) Regulations is now given for the vendors, Vanlow Investments Pty Ltd to enter into an agreement with Rev. and Mrs Coll for the sale of a unit at 10 Onslow Avenue, Elizabeth Bay for $A49,000.
As stated in our letter of 24 October 1975, current Exchange Control policy precludes the borrowing in Australia by overseas residents and the above authority is given on the distinct understanding that the total settlement monies are provided from overseas and our being furnished with bank confirmation of the receipt of the funds in Australia.”

15 Three aspects of this letter should be noted. First, there is the description of the use of the property, that is, “use by the Colls or their associates while conducting their spiritual education business in Australia”. This, of course, does not represent any restriction on use but may safely be taken to be the proposed use notified by the solicitors to the Reserve Bank. Second, the authority conveyed by the letter was expressed to be authority for the vendor to enter into an agreement for sale with Dr Coll and the defendant. Third, the letter refers to the “distinct understanding” that the total settlement moneys would be provided from overseas. It is not disputed, as I understand it, that this requirement was satisfied by remittance of funds from overseas sources into the Bank of New South Wales account of “Americana Leadership College”.

The origin of the money

16 It is necessary at this point to record the evidence about the origin of the money used for the purchase. In his 1996 affidavit, Dr Coll said that the Bank of New South Wales account was an account of the American company, Americana Leadership College Inc. As to the movement of funds into Australia, Dr Coll said:

“I caused the moneys to be brought from America to Australia and deposited in the Westpac Bank Account (ie, account no 11-0972 at the Kings Cross branch] which were subsequently used for the purchase of the property. Those moneys were advanced by the American company.”

17 By leave, oral evidence in chief on this subject was adduced from the defendant. The following evidence was given as to the purchase of the Elizabeth Bay unit and the financing of that purchase:

“Q. You are aware that these proceedings relate to the property at unit 1, 10 Onslow Avenue, Elizabeth Bay or Potts Point in Sydney?
A. Right, I am aware of that.

Q. The first question I want to ask you is where did the money come from to purchase that unit?”

18 There was an objection at that point but the question was allowed and the following answer given:

“A. Okay. The money came from the United States that my husband and I had earned through the years and we used it to purchase this condo or unit so that he and I could live in it whenever we visited Australia, which was fairly often.”

19 Examination of the defendant continued:

“REUBEN: Q. Do you have any records that go back in respect of the period 1975, relating to the provision of those moneys?
A. Sorry?

Q. Do you have any records in the form of documentary evidence that go back to 1975 in relation to the provision of those moneys?
A. No, I don't.”

20 And subsequently:

“Q. Are you aware that the money which you referred to came to Australia?
A. To my recollection, it did.

Q. What did you do with that money when it came to Australia?
A. We put it in a bank.

Q. Which bank, do you recall?
A. I do not recall which bank. It was a long time ago.

Q. Do you recall the circumstances in relation to opening any account at a bank?
A. It was an account opened by myself and my husband under the name of Francisco and Maria Coll, to my knowledge.

Q. If the account was in another name, such as Americana Leadership College, what do you say to that?
A. Well, when he and I were in business in the United States, we often used the name of Americana Leadership College. In the States they call it DBA, "Doing Business As." In other words, the Americana Leadership College was just another name for Francisco and Maria Coll.”

Business name and company registrations

21 On or about 28 June 1976, R.L. Kremnizer & Co lodged with the Corporate Affairs Commission at Sydney an application for registration of “Americana Leadership College” as a business name under the Business Names Act 1962. The Elizabeth Bay unit was shown as the sole business address. Against “Date or Proposed Date of Commencement” appeared the date 26 May 1976. The persons identified as those to be registered as carrying on business under the name were Dr Coll, the defendant and Alexander Vreeland. The “usual place of residence” of each was given as the Elizabeth Bay unit.

22 R.L. Kremnizer & Co subsequently lodged notice that business had ceased to be carried on in New South Wales under the business name “Americana Leadership College”. The notice was dated 25 January 1977. On 2 February 1977, there was incorporated under the Companies Act 1961 a company called “American Leadership College Pty Limited”. Dr Coll and the defendant were the first shareholders, taking up one share each. The first directors were Dr Coll, the defendant, Alexander Vreeland and Geoffrey Caine. The address of the first three is shown in the initial return of directors, managers and secretaries as the address of the Elizabeth Bay unit.

23 It is the company thus incorporated on 2 February 1977 that is the present plaintiff.

Use and occupation of the Elizabeth Bay unit

24 The next aspect to be mentioned in this recitation concerns occupation and use of the Elizabeth Bay unit since 1976 as testified to by Mr Fehlmann, a current director of the plaintiff who has been based in Sydney since 1976. I am conscious of the fact that Mr Fehlmann is unable to testify from his own knowledge about all these matters. His account must be approached with care and bearing in mind that he has been in Australia and associated with the Elizabeth Bay property only since 1996. According to Mr Fehlmann’s account:

(a) the Elizabeth Bay unit was used as the Americana Leadership College office in the period 1975 to 1978;

(b) from the beginning of 1979 to May 1984, it was occupied by Alexander Vreeland, who was involved in the Australian operations until 1984, and Halina Oleskowski, who managed the Australian operation’s accounting until 1984;

(c) from October 1984 to September 1985, the occupant was Diana Visco who came from the United States to work for the enterprises of Dr Coll;

(d) Anne Paul, manager of the Australian office in 1987-8 was the occupant between April and July 1987 and again from March 1988 to September 1988;

(e) Diana Visco was again the occupant in the periods August 1989 to June 1990, February to August 1992 and January to July 1993;

(f) Cherie Buchanan, an international representative of Dr Coll’s enterprises, occupied the unit from May to July 1995;

(g) persons identified by Mr Fehlmann as only “Americana Leadership College (Australia) staff” were occupants from October 2001 to March 2002;

(h) the unit was rented out to tenants between September 2000 and September 2001;

(i) Dr Coll himself was the occupier in the periods October 1987 to February 1988, November and December 1988, July to September 1991, September and October 1992, October and November 1993, December 1995, June 1997, September 1997, June 1999 and October 1999.

25 The Elizabeth Bay unit was apparently unoccupied for a total of 131 months in the overall period of 28 years (336 months) from 1975 to 2002 covered by Mr Fehlmann’s account of occupants. It is also relevant to observe that his account begins in January 1975, whereas the purchase of the unit by Dr Coll and the defendant was not completed until 1 March 1976. The evidence does not suggest that anyone relevant to these proceedings had possession of the unit before that date.

26 Apart from these details of persons in occupation at various times during the 28 year period, there is evidence about use and occupation of the Elizabeth Bay unit both in Dr Coll’s 1996 affidavit and from the defendant.

27 Dr Coll’s 1996 affidavit contains the following statement:

“Since the time of its purchase the property was used as offices and as accommodation for employees of the Australian company and of the American company who were concerned in the operation of the program in Australia.”

28 In the course of cross-examination, the defendant was taken to the letter of 14 January 1976 from the Reserve Bank of Australia:

“Q. You see the second paragraph refers to ‘Acquisition by Reverend and Mrs Coll for a home unit in Sydney for full-time use by the Colls and all their associates for conducting their spiritual education business in Australia’; do you see that phrase?
A. Yes, I do.

Q. Did you and your husband represent to the Reserve Bank that it was intended that the property should be for full-time use by you and your husband or your associates while conducting the spiritual education business in Australia?

A. We weren't there full-time. We were there whenever we were in Australia and we often travelled to Australia. That's why we bought it, so we could have a place to stay, but it was considered our home when we were in Australia.

Q. But it was the place where the spiritual education business was to be conducted, isn't that right?
A. Well, we didn't conduct it in that it's just a small condo. We would program in a hotel or private home. There was no business going on in that condo. There were just beds and a kitchen. We lived there. It was just a small--

Q. You knew it was to be the headquarters of the business, didn't you?
A. Not really. It wasn't the headquarters of the business. There were no headquarters of the business.

Q. You knew that books and records of the Australian business were kept there, didn't you?
A. I don't know. I don't recollect, but it wasn't an office. There were not typewriters or files or things like that. There were beds. We used to live there.

Q. It was to be available at least for the accommodation of the teachers and staff and staff of the Australian branch of the movement, isn't that right?
A. No, that's not correct. He never allowed, when I was there at least, the other leaders to stay there. They would have to stay somewhere else. There wasn't any room.

Q. But they stayed there when you and Dr Coll were not in Australia; isn't that right?
A. No. The only people that stayed there was the person who was managing that, who was managing and keeping an eye on it to make sure nobody broke in.
Q. There were three bedrooms in the property, correct?
A. I believe so.

Q. Surely you would agree that between times when you and Dr Coll were in Australia, you knew that members of the Australian branch of the movement were at least accommodated in that premises, do you agree?
A. That was probably true.
Q. And that records and books of the Australian branch of the movement were kept in those premises; do you agree?
A. Not to my knowledge.”

Evidence of intentions

29 I turn next to the evidence of the intentions of Dr Coll and the defendants at the time they became the transferees of the Elizabeth Bay unit. Dr Coll’s 1996 affidavit states:

“3. An Australian office was initially established in Bexley, New South Wales. In May 1975 I came to Australia with the Defendant, my then wife. I was involved in the further introduction of the program in various of the major Australia cities. It became apparent to me that a larger and more centrally located office was required. I instructed officers of the American company to look for suitable premises. It was my then intention to incorporate an Australian company to conduct the further activities of the American company in Australia.
4. In or about late 1975 I was informed by company officers of the American that suitable premises had been located at 1/10 Onslow Avenue, Elizabeth Bay (‘the property’). I decided to purchase the property so that it could be used for the Australian operations of the American company and as the premises of the Australian company when it was incorporated.
5. At that time the property was located the Australian company had not been incorporated. I instructed the Australian officers of the American company to purchase the property in the name of myself and my then wife. We were at that time directors of the American company and it was my intention that we both become directors of the Australian company when incorporated.
6. Annexed hereto and marked with the letter ‘A’ is a true copy of a letter from Gow Jones Realty dated 2 October 1975 confirming the purchase of the property. It is addressed to officers of the American company at the Bexley office.
……
17. It was always my intention that the property be purchased as the Australian offices of the Australian company and the American company. It was always my intention that the property be owned by the Australian company once it was incorporated.”

30 The defendant’s evidence on the question of formation of an Australian company, given in the course of cross-examination, was as follows:

“Q. At the time you purchased the home unit you expected that the American procedure would be repeated in Australia and there would be an Australian company formed, isn't that right?
A. I don't think that's true because you never know how successful it is going to be. We had gone there a number of times and it seemed successful and rather than spend the money on hotels, we wanted to buy a condo, invest in a condo to live in, but I don't think at that time we knew where it was going because you never know. You take it a step at a time.

Q. And if successful, there would be a company formed, correct?
A. That's correct.

Q. It took some time to get the Reserve Bank approval, didn't it?
A. I don't recall how long it took.

Q. If I take you back to page 14, please?
A. Okay, I got it.

Q. If you have a look at the second paragraph, you understood, did you not, as of January 1976, that if the movement was successful in Australia, a company would be formed to conduct the business. Isn't that right?
A. You know, I think you are trying to put words in my mouth. That's not necessarily true. I just told you a minute ago we took it a step at a time. We had a place to live so we wouldn't have to put the money in a hotel, but who knows how it was going to go?

Q. Who were the associates referred to in the third line of the second paragraph of that letter?
A. Okay, there were, I know Alexander Vreeland was there at that time. He was someone who was active in the programme. I do not remember who the other active leaders were at that time.

Q. You, in your own mind, understood that associates might well include a future company; isn't that right?
A. There you go again trying to put words in my mouth.

Q. Do you agree with that or not?
A. No, because I wasn't thinking company. I was just thinking I want a place to live. I want to come to Australia, see the people and we want to set up our programme. Who knows what's going to happen?”

Other real property owned by the defendant and Dr Coll

31 There is in evidence a copy of a judgment of Judge Richard S Fuller in the Family Division of the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, in proceedings between the present defendant as petitioner and Dr Coll as respondent. After referring to the establishment of the business interests of the defendant and Dr Coll, the judge said:

“6. The Wife, Mary Annette Coll, wrote all the books, pamphlets, programs, etc., and attended to the administration of the business. The Husband, Francisco Coll, attended to the spiritualistic aspects of the business and performed most of the public speaking engagements. Between the years 1968 and 1977, the yearly income of the Colls amounted to approximately $750,000. During this time period, the parties also acquired equities in their jointly-owned properties, both in and outside the United States, the equity in which amounts to approximately $2.1 to $2.7 million dollars. Thereafter, there was a decline in the business income due to Francisco Coll’s failure to keep up with his duties and responsibilities in the business.
7. The joint properties owned by Petitioner and Respondent are located in: New Braunfels, Texas; Freedom, California; Salsibury, Pennsylvania; Washington, D.C.; Santurce and Guaynabo, Puerto Rico; Altamonte Springs, Florida; Miami Lakes, Florida; Pugwash, Nova Scotia; Warrenton, Virginia and Osceola, Iowa (including 624 North Main Street, Osceola, Iowa; 431 N. Main Street, Osceola, Iowa; 216 South Fillmore, Osceola, Iowa; 40 acre farm at Route 5, Box 10, Osceola, Iowa; 85 acre farm, Route 5, Box 10, Osceola, Iowa and hotel at 702 North Main Street, Osceola, Iowa). Additionally, Respondent owns a 4,000-acre parcel in Australia, the value of which has not been disclosed.”

32 I also quote another part of the Florida Court’s judgment:

“12. The evidence was established that numerous of the properties owned by Petitioner and Respondent are only used periodically, if at all, each year. Among such properties is the Altamonte Springs house located at 809 Underoaks Drive, Altamonte Springs, Florida, 32701, and is more fully described as follows: ………
The facts have established that this property is not essential to Francisco Coll’s current business. This house is only used once or twice a year, if that, to hold seminars. The number of persons in attendance at these seminars are generally 12 or less. Therefore, these seminars could easily be held at another location for little or no expense.”

33 The Elizabeth Bay unit is not mentioned in the judgment of the Florida court. That became the subject of cross-examination of the defendant as follows:

“Q. Isn't it the fact that you, in your divorce proceedings, did not nominate or make a claim over unit 1, 10 Onslow Avenue?
A. I do not recall.

Q. I suggest to you, you didn't make a claim because you knew it was really for the benefit of the Australian company and in reality was the Australian company's; do you agree or not?
A. No, I don't agree.

Q. Have you got any explanation for leaving it out of your claim?
A. No, I don't.

Q. You and your husband--
A. Can I say something? Let me say something here.

HIS HONOUR: Just a moment, Mrs Coll.”

34 The following occurred in re-examination:

“REUBEN: Q. In an answer to a question by Mr Neil, he asked you the question saying that you have no explanation of leaving the subject property out of the divorce proceedings. Do you recall that question being asked of you?
A. Yeah.

Q. You said you wanted to say something?
A. Yeah. I was under tremendous pressure with this divorce. I was estranged from my son and working with attorneys, which I was not accustomed to, and the attorneys asked me to list all the property and we had so many in the United States, there was this and this and this and this and this, and I recall I said to the attorneys "and we have a number of properties in Australia", but I was not, and I think it was a lack of my thinking clear.

I didn't have any files, any records with addresses or anything like that, but I told the attorneys there was apartments and acreage and other, some offices and things like that, but I wasn't specific with them about, well, there's, you know, this address and that address, etc, and I guess it was the lack of thought on my part.

I was emotionally pretty upset with the whole divorce and dragging on and going to court hearings and all that, and I think if I had been more in control of myself and been a more detailed person I would have had a listing which would include that number 1 Onslow Court, but I just remember saying to my attorneys, and there were many attorneys, "well, there was a bunch of properties in Australia too", and I don't recall what means of litigation was done to try to resolve or divide those properties.

My emphasis was trying to get enough money to survive with the division of property in the United States. I didn't think real clear at that time.”

The plaintiff’s financial statements

35 The first financial statements prepared by the plaintiff consisted of a balance sheet as at 30 June 1977 and a profit and loss account expressed to be for the “year” which ended on that date, although as the defendant had come into existence only on 2 February 1977, the profit and loss account must be taken to cover the period 2 February 1977 to 30 June 1977. The accounts are unaudited. They were prepared by a firm of accountants “from the books and records of Americana Leadership College Pty Limited and other information provided by officers of the company”. The accountants expressly offered “no opinion on whether they present a true and fair view of the position or of the year’s trading”.

36 The balance sheet showed fixed assets consisting of the Elizabeth Bay unit, office machines and furnishings and a motor vehicle. The unit was recorded at a book value of $55,000 said to be its cost. Fixed assets as a whole were recorded at $63,385.24 (after depreciation). Recorded as a “deferred liability” was “shareholders loans” of $74,482.87.

37 This treatment of the Elizabeth Bay unit was maintained in the plaintiff’s financial statements for later years. There are in evidence some such statements bearing the signature of the defendant. She did not specifically recall having signed these documents but did not dispute that the signature was hers. She said, in essence, that she did not take much interst in the financial side of the business, at least as to matters of procedure and detail, and often signed business documents when asked by her husband to do so, without any real knowledge or appreciation of what she was signing.

Findings as to purchasers’ intentions

38 I proceed now to findings of fact. It is clear and uncontroversial that the defendant and Dr Coll became the registered proprietors of the Elizabeth Bay unit as joint tenants in March 1976 and that this was in consequence of a purchase from Vanlow Investments Pty Ltd for $49,000 under a contract made in September 1975. In light of the evidence discussed at paragraphs 10 to 13 above, I find that the purchase money came from the account No 11-0972 maintained in the name “Americana Leadership College” with Bank of New South Wales, Kings Cross, having been transferred into that account from the United States. Ownership of the bank account and of the moneys transferred into it are matters to which I shall return.

39 First, it is appropriate to address the question whether incorporation of the plaintiff was in reality in contemplation when the Elizabeth Bay unit was purchased and the purchase moneys were imported from the United States.

40 Dr Coll’s 1996 affidavit contains definite statements which cannot be tested or elaborated. In paragraph 3 of that affidavit, he stated that it was “my” (singular) intention in 1975 to incorporate an Australian company “to conduct the further activities of the American company in Australia”, while in paragraph 4, in a sentence starting with the singular “I decided”, he refers to a decision to buy the Elizabeth Bay unit “so that it could be used for the Australian operations of the American company and as the premises of the Australian company when it was incorporated”. In paragraph 17, after referring to his intention regarding the use of the property, he said that it was “always” his (singular) intention “that the property be owned by the Australian company once it was incorporated.

41 The defendant disavowed any such intention. She said in her evidence that she and Dr Coll came to Australia but did not know at the beginning how successful they would be. Rather than spend money on hotels, they decided to buy the unit. The judgment of the Florida court refers to their having had an annual income of some US$750,000 at that time, so that they were presumably able themselves to fund A$49,000 to effect the purchase. There is no suggestion that the money was borrowed. The defendant says that they paid cash. They then “took one step at a time”. In the early part of 1976, the defendant says, she “wasn’t thinking company”.

42 The statements of Dr Coll and those of the defendant to which I have referred are statements made, in each case, 20 years or more after the relevant events and for the purpose of advocating a particular position regarding entitlement to the Elizabeth Bay unit. In cases where it is relevant to prove a person’s intention, proof of what the person said is useful: see the often quoted passage in the judgment of Mellish LJ in Sugden v Lord St Leonards (1876) 1 PD 154 at 251. But this is so of contemporary statements, that is, statements made at or about the time of the acts to which the intention is relevant. Statements made today by a person about his or her intentions in relation to the person’s acts of more than 20 years ago are of no evidentiary value when the statements are made in furtherance of the person’s attempt to show the past events in a light that will be advantageous to him or her today: Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365. I therefore attach minimal weight to the statements of Dr Coll and the defendant and proceed to examine the evidence of contemporary facts that are indicative of the intentions of the transferees of the Elizabeth Bay unit at the time of the acquisition in 1975/6.

43 The contract for the purchase of the unit was made in September 1975 and completion took place in early March 1976. Some delay may have been caused by the need to obtain approval from the Reserve Bank. The Bank’s letter is dated 14 January 1976. The Business Names Act application was lodged on or about 28 June 1976. It disclosed 26 May 1976 as the date on which the defendant, Dr Coll and Mr Vreeland had begun to carry on business under the name “Americana Leadership College”. That position, according to the business names register, pertained for a period of some eight months, that is, until the lodgment of a notice that the business had ceased to be carried on under the business name on 25 January 1977. Incorporation of the plaintiff occurred a few days later, on 2 February 1977.

44 There was thus a period of some seventeen months between the making of the purchase contract and incorporation of the plaintiff and a period of eleven months between completion of the purchase and incorporation of the plaintiff. Had any intention of forming a company existed on the part of the defendant and Dr Coll (or either) when the contract was made or when it was completed, it would not have been by any means an intention that involved speed or urgency. Then, as now, companies could be formed simply by lodgment of relatively simple documents. R L Kremnizer & Co could have formed a company with ease and at little cost at any time. Yet the incorporation did not occur until almost a year after the purchase of the Elizabeth Bay unit had been completed and almost a year and a half after the decision to buy manifested itself in a concluded contract.

45 It is significant that the registration under the Business Names Act preceded the formation of the company and remained in place for eight months. The clear implication of that registration is that the defendant, Dr Coll and Mr Vreeland had, however informally, become associated together as individuals in a business venture being conducted in New South Wales. It may be that the registration was motivated by a desire to protect the name since, as the law then stood, registration of a particular name under the Business Names Act involved the consequence that no one else could register that or a deceptively similar name under that Act or obtain the incorporation of a company with that or a deceptively similar name. But the fact remains that the registration is evidence of an unincorporated business combination having existed among individuals.

46 The objective matters to which I have just referred are more consistent with the defendant’s “one step at a time” explanation than they are with Dr Coll’s statement that there was “always” an intention of forming an Australian company, with “always” comprehending at least the time of the decision to buy the Elizabeth Bay unit and the ensuing period of effecting the purchase. Had that intention existed from inception, it would logically have been implemented much earlier. There is no objective reason why the company should not have been formed at the beginning. If the intention of company formation had existed as described by Dr Coll, the Business Names Act registration would not have been needed. Nor would there have been a need for the business association among the defendant, Dr Coll and Mr Vreeland. Any concern about name protection would have been resolved by immediate formation of the company without any prior Business Names Act registration.

47 The plaintiff sought to extract from the Reserve Bank letter an indication of intention that the property should be held for the benefit of the plaintiff. It points to the words “for full time use by the Colls or their associates while conducting their spiritual education business in Australia”. This, it is said, is apt to include a company to be formed by them, so that the letter (as a reflection of what was put to the Reserve Bank in the application to which it responds) acknowledges the possibility of use of the property by such a company. I do not draw any such inference. The letter refers to “a home unit … for full time use” by the persons described, being “the Colls or their associates”. A “home unit” is, of its nature, used for living. Use of a “home unit” may therefore be taken to be use for living purposes, being purposes incompatible with use by a company.

48 Having regard to the matters referred to in paragraphs 40 to 47 above, I find that there did not exist, on the part of Dr Coll and the defendant (or either of them), in either September 1975 or March 1976 an intention to form the company that they eventually caused to be incorporated in February 1977 under the name “Americana Leadership College Pty Limited”. I further find that their intention, at each of those times, with respect to the establishment and method of organisation of their business interests in Australia was to test the market (as the defendant said, “Who knows what’s going to happen?”), do their best to obtain customers and revenues and, if and when some measure of success was achieved, to consider whether some formal business organisation should be put in place. A range of considerations would have had a bearing on such an assessment. Registration of the United States corporation as a foreign company in relevant Australian jurisdictions so that it was itself qualified to carry on business direct was a possibility to which the defendant and Dr Coll would logically have given thought. The extent of the revenues and the respective tax treatments of a foreign corporation carrying on a branch business in Australia, as distinct from a separate Australian company owned by overseas residents and paying dividends to them would have been relevant considerations in the choice of business organisation. Such decisions could best be made once the likely extent of revenues was indicated; and that would entail a period of testing and assessment consistent with the defendant’s “one step at a time” explanation rather than Dr Coll’s statement that formation of an Australian company was “always” intended.

49 My findings as to the intentions of the defendant and Dr Coll at the time of the purchase of the Elizabeth Bay unit are reinforced by what was said in the Florida judgment about properties owned by the defendant and Dr Coll. There is reference there to their having “acquired equities in their jointly owned properties, both in and outside the United States” in the period 1968 to 1977. It was also said that “numerous of the properties owned by Petitioner and Respondent are used only periodically, if at all, each year”. This is some indication of a course of acquisition of properties by the two individuals on a basis that involved ownership and many such properties being used only as occasion demanded. Bearing in mind that the business of the defendant and Dr Coll was being carried on in the countries where the other properties were situated, as well as in Australia, there was an apparent pattern of periodic use of jointly owned properties by the two of them consistent with the defendant’s evidence that the Elizabeth Bay unit was bought as their Australian home, to be occupied by them as and when they visited.

50 It is true that the Elizabeth Bay unit was not included in the list of properties referred to in the Florida judgment. This, the defendant says, is because she forgot about it in the stress of the divorce. Having listed no less than sixteen properties in North America and a 4,000 acre property in New South Wales, it may be accepted that she might overlook a relatively small home unit which she had not visited for several years before the divorce. It would be drawing altogether too long a bow to infer from the omission that she regarded the Elizabeth Bay unit as owned by the plaintiff.

Findings relevant to the content of the financial statements

51 I consider next the content of the plaintiff’s financial statements for the period ended 30 June 1977. The Elizabeth Bay unit was recorded in the balance sheet as at 30 June 1977 as an asset of the plaintiff at a “cost” of $55,000. This balance sheet item implies that the property was acquired by the plaintiff for a consideration of $55,000, inclusive of incidental expenses. How a purchase price of $49000 would translate to a cost of $55,000 (or, more precisely, what the additional $6,000 of acquisition costs would have been, even allowing for stamp duty and legal fees) is not clear and probably does not matter. Recorded as a “deferred liability” are “shareholders loans” of $74,482.87. Since Dr Coll and the defendant were the only persons who could have been regarded as “shareholders”, this must be taken to represent a loan from them. The conclusion coming from the accounts, viewed in isolation from other evidence, would be that the plaintiff had acquired the property by applying funds borrowed by it from the defendant and Dr Coll.

52 In view of my finding that there was no intention on the part of Dr Coll and the defendant at the time of the purchase to form the defendant, such a characterisation could only be consistent with decisions made by them after the purchase, being a decision to transfer the property to the plaintiff for a consideration and a decision to leave that consideration outstanding as “shareholders loan”. But any such disposition, to be effective, would have required writing (Conveyancing Act 1919, ss.23C and 54A) and there is no evidence of any writing, from which it must be concluded that any attempt at subsequent disposition of the property by the defendant and Dr Coll to the plaintiff was unsuccessful, despite what was recorded in the plaintiff’s financial statements.

53 Above all, however, there is no documentary evidence and no evidence from Dr Coll or the defendant to suggest that there was any attempt at subsequent transfer in return for a promise to pay. The accounts themselves are expressed to be compiled from information given to the accountants, without audit or verification. It may be presumed that Dr Coll instructed that the accounts be prepared in the way they were. The defendant’s evidence that she took no real interest in the accounts suggests that she was not party to any such instruction and did not actively consent to a presentation suggesting ownership of the property by the plaintiff. In any event, the content of company accounts cannot make real things that are unreal. The evidence constituted by the plaintiff’s financial statements therefore does not warrant any finding that the plaintiff came to occupy any ownership position in relation to the Elizabeth Bay unit after the plaintiff’s incorporation.

Findings on possession and occupation of the property

54 On the question of possession and occupation, I find that the Elizabeth Bay property was the home of Dr Coll and the defendant when they were in Australia and that it was not, during those times, occupied by anyone else. It was also left unoccupied for substantial periods. Both these findings are consistent with the pattern in relation to other jointly owned properties referred to in the Florida judgment.

55 It is not safe to place much credence on Mr Fehlmann’s evidence of past occupation since he is not in any position to give first hand information, except in relation to the most recent years. The defendant acknowledged that persons associated with the program sometimes occupied the property when Dr Coll and the defendant were not in Australia. It may be accepted that it was Dr Coll who permitted such occupation.

56 There is no reason to doubt that Dr Coll himself occupied the property alone during various periods when he was in Sydney after he and the defendant had separated. Mr Fehlmann took up his position with the plaintiff in 1996 and I am satisfied that he can give reliable evidence regarding occupation after that year. I therefore find that Dr Coll was in occupation at least in June 1997, September 1997, June 1999 and October 1999 as deposed to by Mr Fehlmann.

Findings on source of the purchase moneys

57 I return now to the funds transferred from the United States to Australia, whether by the United States company (as Dr Coll’s 1996 affidavit maintains) or from the personal cash resources of the Defendant and Dr Coll (as the defendant testified). I have already found that the purchase moneys for the Elizabeth Bay unit came from the account with the Bank of New South Wales, Kings Cross.

58 There are two possibilities as to the origin of the moneys transferred from the United States into that account: that they came from Americana Leadership College Inc, or that they were the property of the defendant and Dr Coll. When I say that the moneys may have come from the American company, I am referring to the bare (and, of course, untested and unelaborated) statement in Dr Coll’s 1996 affidavit that the moneys “were advanced by the American company”. The intended meaning of “advanced” here is not clear. It may mean “lent”. Or it may mean “paid for the benefit of another”. If it means “lent”, it must follow that the borrowers were the defendant and Dr Coll as there was at the time no Australian company which could have borrowed. If “paid for the benefit of another” is the intended meaning of “advanced”, it could mean that the company to be formed was the person for whose benefit the payment by the American company was made. That could have been the case, however, only if there then existed some intention of creating an Australian company, which, on my finding, there did not. Again, therefore, Dr Coll and the defendant could have been the only beneficial recipients of the “advance”.

59 The defendant’s evidence as to the source of the funds is clear. She says that it was money belonging to herself and Dr Coll (money “that my husband and I had earned through the years”) and that the Kings Cross bank account into which it was paid was an account of the defendant and Dr Coll.

60 The evidence does not permit any firm finding that the owner of the remitted funds was Americana Leadership College Inc or Dr Coll and the defendant. It can, however, be said, by way of firm finding, that it was one or the other and not anyone else. As to the ownership of the Kings Cross Bank account, I am mindful of the fact that the account was designated “Americana Leadership College”. The abbreviation “Inc” was not added, from which I infer that the account was not an account of the American company. There is also the point that any Australian bank is most unlikely to have opened an account for a foreign company unless that company was registered in New South Wales to enable it lawfully to carry on business or maintain a place of business in the State. Mr Fehlmann says quite clearly in his affidavit that it was not an account of the American company, although I attach no real weight to that evidence as he is in no position to know. Of course, it could not have been an account of the plaintiff since the plaintiff did not exist. The evidence of the defendant is that she and Dr Coll used “Americana Leadership College” as a “DBA” – “doing business as” – separately from the American company and that the purchase moneys paid for the Elizabeth Bay unit belonged to Dr Coll and the defendant.

61 These factors, plus the concept of “advance” referred to in Dr Coll’s 1996 affidavit, lead me to find that, even if the funds remitted from the United States were funds of American Leadership College Inc, they became, in the Kings Cross bank account, funds owned by Dr Coll and the defendant.

Mortgages

62 There are in evidence three mortgages of the Elizabeth Bay unit ostensibly signed by Dr Coll and the defendant (or, in one case, their attorney, Mr Vreeland) as mortgagors. The defendant says that she did not give any power of attorney and that she did not participate in the creation of any mortgages. She was unaware of them until they were shown to her in the course of her giving evidence by video link. She testified that the signatures on them purporting to be hers were not placed there by her or, I infer, with her consent. In the course of her evidence, she identified signatures on other documents as hers. Those on the mortgage documents did not resemble these. From all of this I readily conclude that her signature was forged on the mortgage documents purporting to bear her signature.

63 The fact that what purports to be Dr Coll’s signature appears on each mortgage and that it has not been questioned, coupled with the familiarity he must have had with the defendant’s signature, causes me to conclude that he was party to the transactions by which money was raised on the security of the Elizabeth Bay unit.

64 The first of the mortgages is a mortgage dated 14 November 1978 to Keith Vinden securing a loan of $30,000. This is the one purportedly executed by an attorney. The apparent attorney, Mr Vreeland, signed for both Dr Coll and the defendant. There is on the mortgage a declaration of non-revocation which appears to refer to two powers of attorney. The defendant’s evidence is that she does not remember giving any power of attorney to Mr Vreeland. After some 25 years, she may well have forgotten. In any event, the defendant did not actively or knowingly participate in the creation of that mortgage.

65 The other two mortgages are a mortgage dated 16 March 1982 to PAK Nominees Pty Limited and a mortgage dated 19 September 1985 to Eagle Star Nominees Pty Limited. Each of these bears a forged signature of the defendant and what is apparently a genuine signature of Dr Coll. As to these, I find that Dr Coll was party to the mortgage transactions involving the Elizabeth Bay unit by which moneys were raised for his purposes or those of the plaintiff and that, although the defendant ostensibly joined in those transactions, she did not in fact do so, the transactions being undertaken by Dr Coll either for his own sole benefit or for the benefit of the plaintiff and by means of a forged signature of the defendant. According to Mr Fehlmann’s evidence, it was the plaintiff that was the real borrower and I am content to make a finding accordingly.

The resulting trust claim

66 I turn now to the plaintiff’s claims. The plaintiff maintains that the Elizabeth Bay unit is held upon a resulting trust for the plaintiff because of the circumstances as to payment of price that pertained at the time of purchase. Given my findings of fact, that claim cannot be upheld. The purchase moneys were paid in full at the time of purchase, part by deposit upon exchange of contracts and the balance in cash upon completion. The money, on my findings, belonged to Dr Coll and the defendant. The plaintiff did not come into existence until eleven months after completion of the purchase and, as I have found, there was no intention on the part of Dr Coll and the defendant either at the date of contract or at the date of completion that the plaintiff should be brought into existence by them.

67 A resulting trust of the kind for which the plaintiff contends arises from a presumption of equity which, in certain circumstances, cause interests in property to be commensurate with the extent of contributions to the purchase price, regardless of the way in which title is taken. The presumptions are discussed by members of the High Court in Calverley v Green (1984) 155 CLR 243. Because they have regard to contributions to the purchase price, the presumptions cannot assist the present plaintiff in light of my findings as to ownership of the relevant moneys.

68 The plaintiff’s case based upon resulting trust therefore fails.

The constructive trust claim

69 The plaintiff next resorts to principles of equity by which considerations of unconscionability cause a constructive trust to be imposed as a remedial measure. That remedial measure is most often used in cases of married or cohabiting persons where property is ostensibly owned by one but in circumstances where the benefits of ownership have been enhanced by financial or other tangible support on the part of the other. The applicable principle, as elucidated by Deane J in Muschinski v Dodds (1985) 160 CLR 583, is that where a joint relationship or endeavour fails, equity will not permit one party to assert or retain the benefit of property if the retention would be unconscionable. What makes retention inequitable is conduct of the apparent owner that has induced the other party to act to his detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the property. This is the formulation of Lord Diplock in Gissing v Gissing [1971] AC 886.

70 In the present case, the parties – that is, the plaintiff on the one hand and Dr Coll and the defendant on the other – were not engaged in any joint endeavour. The plaintiff was a corporate entity brought into existence by Dr Coll and the defendant to act as a vehicle for certain commercial activities to be pursued in Australia. With the possible exception of payment of outgoings (a matter to which I shall return), there is no basis on which it can be said that the plaintiff was induced by the owners of the property to act to its detriment in the expectation of obtaining a proprietary interest and the species of constructive trust that may be imposed to redress unconscionable retention of benefit by one party at the end of a relationship has no part to play here.

71 A constructive trust may also be imposed where to do so is necessary to preserve and give effect to the intentions of parties as to ownership or enjoyment that is at odds with the facts of legal ownership. In the present case, however, the intentions of the parties as to ownership of the Elizabeth Bay unit are not at odds with the recorded ownership of Dr Coll and the defendant as joint tenants. Indeed, the pattern of their behaviour in relation to other real property acquisitions in the course of their marriage and my finding of the absence, at the time of both contract and completion, of any intention on their part to form an Australian company fully support the conclusion that ownership by husband and wife as joint tenants with rights of survivorship accorded with their then intentions as to ownership.

72 Another basis for imposing a constructive trust is advanced by the plaintiff in the form of a claim that Dr Coll and the defendant were promoters of the plaintiff and that retention by them (or by the defendant as survivor) of the benefit of ownership of the Elizabeth Bay unit would entail a breach of fiduciary duty therefore be unconscionable. It may be accepted at once that, as Austin J observed in Aequitas Ltd v Sparad No 100 Ltd (2001) 19 ACLC 1006, “promoters of a company are treated as a species of ‘accepted’ fiduciary relationships”, so that “once a person is identified as a promoter according to the legal definition of that term, fiduciary duties automatically attach to the person”. These duties obviously include a duty not to appropriate or retain a benefit that was intended for the corporation.

73 There can be no doubt that Dr Coll and the defendant were promoters of the plaintiff. It was they who were the subscribers to its memorandum of association and who, in that capacity, caused application for its registration to be made and afterwards became two of the four initial directors. To adopt a description used in Tracy v Mandalay Pty Ltd (1953) 88 CLR 215, they were “directly responsible for its incorporation”.

74 The difficulties most commonly encountered by promoters, in terms of allegations of breach of fiduciary duty, are those associated with sales to the newly formed company of property of the promoters or other initial transactions between the company and the promoters. In such cases, the fiduciary duty to which reference has been made focuses attention on the proper balance between the interests of the promoters and those of the company, so that there may be seen to be some competent and impartial judgment, after full disclosure, by appropriate decision makers within the company as to whether the transaction should be undertaken by it. Such a process is necessary to preclude the possibility of avoidance of the transaction at the option of the company and is dictated by the same equitable considerations as are relevant to any sale by a trustee to a person towards whom he stands in a fiduciary relation. These matters and the older cases from which they arise are discussed in the joint judgment of Dixon CJ, Williams J and Taylor J in Tracy v Mandalay Pty Ltd (above), particularly at pp 239 to 242.

75 The present case is not one in which a transaction between promoters and the company comes under examination. Rather, the complaint seems to be that the promoters (Dr Coll and the defendant) failed to enter into a transaction with the company (the plaintiff), by way of transfer to it of the Elizabeth Bay unit. The way in which a duty to effectuate such a transaction might have come to be imposed on Dr Coll and the defendant is not elaborated by the plaintiff. The only conceivable basis would seem to lie in non-adherence to an intention of Dr Coll and the defendant to give to the company the benefit of property they acquired not for themselves and for their own benefit but for the company they intended forming. On the facts as I have found them, there was no such intention at the time of acquisition of the property so that no such species of duty can be maintained.

76 Another basis on which the plaintiff asserts a constructive trust in respect of the Elizabeth Bay unit is what is described as “title by estoppel”. Such a “title” is said to arise in circumstances of equitable estoppel arising from a representation or promise that an interest in property is being created or transferred or will be created or transferred in favour of another person and that person suffers detriment in reliance on the representation.

77 There are two lines of cases which are said to give rise to this aspect of equitable estoppel, namely the line based on Ramsden v Dyson (1866) LR 1 HL 129 where equity binds the owner of property who induces another person to expect that an interest in the property will be conferred upon them; and the Dillwyn v Llewelyn (1862) 4 DeGF&J 517 (45 ER 1285) line of cases where equity binds the donor of property who, after making an imperfect gift, then induces to the donee to act on the assumption that the imperfect gift is effective or will be made effective.

78 According to Meagher, Gummow and Lehane’s “Equity Doctrines and Remedies” (4th edition, 2002, by Meagher, Heydon & Leeming) at paragraph 17-105, these two lines of cases can be reduced to a number of common factors:

(a) an expectation or belief by A as to the property of B, for example that it is the property of A, or that B has given or will give A an interest in it
(b) knowledge by B of this expectation or belief of A
(c) activity of A in reliance upon his expectation or belief whether by expenditure upon the property or giving up or not enforcing other rights he might have in relation thereto
(d) the interest or expectation of A must be one which B could lawfully satisfy
(e) encouragement by B of the activities of A under (c) or at least knowledge of those activities with failure to assert his title to his property when they are adverse to I so that he “dishonestly remains wilfully passive” and therefore it is fraudulent of him to rely on his legal rights to defeat the expectation encouraged by his conduct of lack of it
(f) knowledge by B of his property rights as under his enjoyment control and disposal.

79 In some ways, the facts would point towards a conclusion that the plaintiff believed that it owned the property of which Dr Coll and the defendant were the registered proprietors. The treatment in the financial statements provides the clearest indication. But one element of the evidence undermines any such conclusion. I refer to the events involving the creation of mortgages without the defendant’s knowledge and by means apparently involving forging of her signature. It was the plaintiff that had the benefit of the borrowed moneys and, in my judgment, should be regarded as having initiated and carried through the borrowing transactions. Clandestine actions in procuring apparent concurrence in the mortgages by the defendant are at odds with any genuine belief by the plaintiff that it was the true owner of the property. If it truly believed in its ownership rights, the plaintiff would not have sought to avoid seeking the defendant’s signature in an open and direct way. It would have simply asked her to sign.

80 It may be accepted that, by the time the third of the mortgages was created on 19 September 1985, the defendant and Dr Coll were estranged. But, if the plaintiff genuinely believed that it owned the property of which they were recorded as owners, that should not have deflected it from the obvious course of requiring the defendant to sign, if necessary with the assistance of a court order. It is by no means clear that the estrangement existed in 1982 when the second mortgage transaction occurred. On both these occasions, the forging of the defendant’s signature in order to effectuate without her knowledge mortgages of the property the plaintiff now says was at all material times held by Dr Coll and her upon trust for it is at odds with any genuine belief to that effect on the plaintiff’s part.

81 The claim based on so-called title by estoppel therefore fails because of the lack of a relevant expectation or belief by the plaintiff. I should add that, even if such an expectation or belief by the plaintiff had been shown, the claim would have failed to satisfy those parts of the applicable criteria concerning knowledge by the defendant of any such expectation or belief and encouragement by her.

82 The final matter to be considered under this heading is the circumstance that it is not, as I understand it, contested that certain outgoings and expenses in relation to the Elizabeth Bay unit were paid by the plaintiff, probably from the time of its incorporation. Mr Fehlmann’s affidavit refers to payments which may conveniently be dealt with in two groups. The first group consists of local government rates, water rates and strata scheme levies. The second group covers mortgage payments, phone, electricity, insurance premiums and repairs and maintenance.

83 I have divided the expenses in this way because I consider the items in the first group to be referable to the preservation of ownership of the Elizabeth Bay unit as an item or real property, whereas those in the second group are of a discretionary nature referable only to occupation or to activities of an occupant. If payments of the kind covered by the items in the first group are not made, the real property itself is jeopardised, in that it may be sold through compulsory process. The items in the second group, however, are discretionary and, if not incurred or not paid, do not affect ownership of the property. I include the mortgage payments in the second category rather than the first because the borrowing, on the evidence, was not undertaken by the joint owners for their joint benefit or on any basis that entailed liability to them as property owners, apart from the contingent liability of a third party security provider.

84 There is a question whether the course of conduct involved in the making by the plaintiff of the payments in the first category justifies the imposition of a constructive trust or, as in Giumelli v Giumelli (1999) 196 CLR 101, some form of equitable charge in favour of the plaintiff in respect of first category sums expended by it.

85 I do not think that the events involving the payment of these outgoings can be seen as justifying a finding that a constructive trust should be imposed in respect of the property. The payments by the plaintiff were not referable to some belief of ownership. I have already referred to the events involving the mortgages which show that the plaintiff cannot have believed that it was the owner entitled to require the registered proprietors to execute the mortgages. But the possibility remains that some lesser form of equitable relief in respect of the property may be warranted by the plaintiff’s having made the first category payments. As the majority judgment in Giumelli v Giumelli shows, some such lesser relief will be appropriate if it avoids going beyond what is required for conscientious conduct of the defendant and also avoids injustice to the plaintiff.

86 A person who spends money on the property of another prima facie does not thereby acquire a proprietary interest in the property. But where the payments preserve the property by avoiding or forestalling consequences that would otherwise see the owner deprived of that property, the situation is one where, in a real sense, the owner’s continuation of ownership has been preserved by the person making the payment so that there has been a tangible contribution by that person to maintenance of title to the property. In line with the approach in Giumelli v Giumelli, it is appropriate that the paying party be recognised as entitled to recover accordingly out of the preserved property the amount outlaid and that the property itself be the source of security for that amount. As in Giumelli v Giumelli, it is appropriate that the paying party be recognised as entitled to recover accordingly out of the preserved property the amount outlaid and that the property itself be the source of security for that amount. In words used in Giumelli v Giumelli, the result in this case “points inexorably to relief expressed not in terms of acquisition of title to land but in a money sum”.

87 The court should accordingly declare that the plaintiff is entitled to payment by the defendant of a sum representing the aggregate of the several sums outlaid by it by way of strata levies, local government rates and water rates in respect of the Elizabeth Bay unit, as determined by inquiry to be made by a Master, such aggregate, when ascertained, to be charged upon the Elizabeth Bay unit with interest under s.94 of the Supreme Court Act. In the course of the hearing, there was reference to this eventuality and I said that, if it arose, it should be dealt with on the basis that, upon the inquiry by the Master, each party should have full opportunity to put on further evidence as to quantum. It will be appropriate to incorporate that in the orders; also that the interest component should be determined by the Master. All this assumes, of course, that the plaintiff’s remaining claim to title to the property does not succeed, being the claim to title by possession. It is to this that I now turn.

The possessory title claim

88 The plaintiff’s claim to a title by adverse possession is maintained by reference to Part 6A of the Real Property Act 1900. The Elizabeth Bay unit, being a lot in a registered strata plan, is land held under the provisions of that Act and is a whole parcel of land comprised in an ordinary folio of the register. Two of the conditions of entitlement of a person to apply under s.45D to be recorded as proprietor by adverse possession are therefore satisfied. The third requirement (laid down by s.45D(1)(b)) is that:

“the title of the registered proprietor of an estate or interest in the land would, at or before that time [ie, the time at which the applicant was in possession], have been extinguished as against the person so in possession had the statutes of limitation in force at that time and any earlier time applied while in force, in respect of that land.”

89 Under s.45D(4), there is a requirement that the whole of the period of allegedly adverse possession occur during the proprietorship of the registered proprietor, where that registered proprietor has taken without fraud and for valuable consideration, which is the case here as regards the defendant and Dr Coll.

90 The plaintiff’s case here appears to be that it has had possession of the property since its incorporation on 2 February 1977 or, at least, since recording of the property as an asset of the plaintiff in its balance sheet as at 30 June 1977; and that its possession involved actual dispossession by it of Dr Coll and the defendant. The evidence of the plaintiff’s possession is no more than the statements of Mr Fehlmann as to who was in occupation at various times. How the various occupations are said to amount to possession by the statutory abstraction represented by the plaintiff is not elaborated. Any corporation can possess land only through the actions of persons acting with its actual or implied authority. There is nothing to show that the various occupants were put into occupation by the plaintiff or allowed to remain by the plaintiff in such a way as to cause their physical presence to represent possession of the land by the plaintiff through the medium of agents. Leaving Dr Coll to one side, the various persons listed by Mr Fehlmann appear to have had some connection with the plaintiff or the movement in which the plaintiff played a role. But the authority of such persons in occupation to act for the plaintiff in possessing land is by no means shown. Also, of course, the persons in occupation during Dr Coll’s life were apparently persons having a connection with him. Their occupation is entirely explicable as referable to permission given, expressly or impliedly, by Dr Coll as one of the co-owners and as a manifestation, therefore, of possession by Dr Coll.

91 It is also to be remembered that, on the findings I have made, Dr Coll himself was in occupation at least in June 1997, September 1997, June 1999 and October 1999. In the absence of any evidence that his occupation was attributable to permission granted to him by the plaintiff, I am bound to conclude that he possessed the property during that period as one of the two persons who were its registered proprietors as joint tenants holding per my and per tout the correct transaction of which, according to Young J in Big River Timbers Pty Ltd v Stewart (1998) 9 BPR 16,599, is “for nothing and yet for everything” or “for nothing and for the whole”,

“meaning that each has a right shared with the other for the whole property, but no individual right to any share in it.”

92 Each joint tenant enjoys a right of possession in respect of land held in joint tenancy. The occasions in 1997 and 1999 on which Dr Coll was in occupation cannot, on the evidence, be regarded as attributable to anything but exercise of the right of possession that belonged to him as one of two co-owners. That exercise by him of his right as owner destroys the plaintiff’s claim to have enjoyed throughout the relevant limitation period, as against Dr Coll and the defendant (and, since Dr Coll’s death, as against the defendant alone), a possession adverse to that of the co-owners.

93 The plaintiff’s claim based on title by adverse possession therefore fails.

Conclusion on plaintiff’s ownership claims

94 In light of my findings, the plaintiff has not made out any of the claims which, if established, would see it recognised as entitled to ownership of the Elizabeth Bay unit. It follows that no ownership interest of the plaintiff has been shown that in any way prevails over the registered title of the defendant and Dr Coll or, following the latter’s death, the sole ownership to which the defendant is entitled by survivorship.

95 The plaintiff is, however, entitled to payment by the defendant of a sum representing the aggregate of strata levies, local government rates and water rates paid by the plaintiff in respect of the Elizabeth Bay unit, together with interest under s.94 of the Supreme Court Act. The amount of such aggregate and interest must be determined by inquiry by a Master. Furthermore, the defendant’s title to the Elizabeth Bay unit is charged with the payment of the aggregate and interest so determined.

The defendant’s claims

96 The defendant’s cross-claim asserts, in the eventuality now reached in relation to the plaintiff’s claims, an order that the plaintiff give up vacant possession of the Elizabeth Bay unit to the defendant, an order that the defendant be given possession and grant of leave for the defendant to issue a writ of possession. On the findings I have made, the plaintiff cannot resist the grant of that relief and the several orders should be made.

97 The defendant also makes a claim for mesne profits limited, however, to the period since the filing of the cross-claim on 26 July 2002. In light of my findings, the defendant is entitled to succeed on this claim. The proper measure is an amount equal to the ordinary letting value of the property. It may be that the parties can agree this amount. If they cannot, I shall hear submissions in due course on what it should be.

Conclusion

98 Both the plaintiff and the defendant have enjoyed some measure of success in these proceedings. There is a need for an inquiry by a Master as to the amount for which the plaintiff is entitled to a charge on the property. There is a need for quantification of mesne profits from 26 July 2002 to be agreed or determined. The desirable course, at this point, is that the parties bring in agreed short minutes of orders to give effect to these reasons and to enable the two outstanding matters to be dealt with appropriately.

99 I direct that agreed short minutes be filed by delivery to my Associate within 14 days and, in default of agreement, that my Associate be informed within that period so that further directions may be made. I shall hear the parties on costs after all other matters in the proceedings have been finally disposed of.

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Last Modified: 04/15/2003