Atwell v Atwell
[2002] TASSC 119
•20 December 2002
[2002] TASSC 119
CITATION: Atwell v Atwell [2002] TASSC 119
PARTIES: ATWELL, Sally Anne
v
ATWELL, Betty Merle
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 584/2000
DELIVERED ON: 20 December 2002
DELIVERED AT: Hobart
HEARING DATES: 26, 27, 30 September, 1 - 4, 8 October 2002
JUDGMENT OF: Slicer J
CATCHWORDS:
Estoppel - Estoppel in pais - Equitable estoppel - General principles - Contribution to property - Entitlement to equitable compensation.
Aust Dig Estoppel [32]
Equity - Trusts and trustees - Constitution and classification of trusts generally - Classification of trusts in general - Implied trusts - Constructive trusts independent of intention - General principles.
Aust Dig Equity [102]
Equity - Trusts and trustees - Express trusts constituted inter vivos - Declaration of trust - Necessity of intention - Discharge of mortgage by trustee - Declaration upon transfer of property title.
Gissing v Gissing [1971] AC 886, followed.
Giumelli v Giumelli (1999) 73 ALJR 547, applied.
Aust Dig Equity [111]
REPRESENTATION:
Counsel:
Plaintiff: C M Schokman
Defendant: D J Gunson SC and A I Gaggin
Solicitors:
Plaintiff: Piggott Wood & Baker
Defendant: Murdoch Clarke
Judgment Number: [2002] TASSC 119
Number of Paragraphs: 71
Serial No 119/2002
File No 584/2000
SALLY ANNE ATWELL v BETTY MERLE ATWELL
REASONS FOR JUDGMENT SLICER J
20 December 2002
The plaintiff seeks equitable relief in relation to her former matrimonial home, the registered owner of which is the mother of her former husband. The unfortunate series of events giving rise to her claim and its outcome remain the responsibility of that husband. In this case, equity is incapable of accommodating the moral rights or interests of both parties.
General Background
Sally Anne Atwell, the plaintiff ("the plaintiff"), married Lindsay Atwell ("Lindsay"), the eldest son of the defendant, Betty Merle Atwell ("the defendant"). Lindsay had previously been married twice and had a child from each relationship. The couple had previously cohabited since February 1988 and on 23 June that year, jointly purchased a home at Suncrest Avenue, Lenah Valley for $98,000 which is the subject of these proceedings. Lindsay conducted a computer retail business operated through his company. The plaintiff had some savings which, together with the proceeds of sale of her motor vehicle totalling some $18,000, were used as a deposit on the home. The balance of the purchase price was paid through a mortgage to the Commonwealth Bank. Following purchase, the plaintiff and Lindsay expended money and labour in improving the home. The arrival of the first born child in January 1990 resulted in a reduction in the plaintiff's involvement in the business.
Lindsay continued to operate the business with his wife as a director and the person responsible for day to day office work. A concurrent and second mortgage had been taken out which provided security for the company overdraft. Mortgage repayments were made from a joint account operated by the couple. In August 1998, Lindsay borrowed $40,000 through the business in order to effect a family law settlement with his former wife.
By 1990/1991, the business was trading at a loss, eventually having an accumulated debt of over $400,000. During the latter part of 1991, the Commonwealth Bank was threatening foreclosure on its security with the mortgage and secured overdraft debt exceeding $100,000. The loss of the family home was imminent.
Max Atwell ("Max"), the husband of the defendant, had been successful in commerce for many years. Although retired as a senior officer of a large insurance company, he had retained some business interests which included advice and co-operation with Lindsay. He had invested his superannuation, intending to provide future security for his wife and patrimony for his four children. In mid to late 1990, he became aware of Lindsay's business problems and offered assistance. The circumstances surrounding that offer and its effect is a significant and contested issue in these proceedings.
Max purchased the property from Lindsay and the plaintiff by a transfer which followed his payment of $110,000 to the Commonwealth Bank which, in turn, accepted the sum in discharge of its securities held over the family home.
While the basis on which Max held title requires separate consideration, there is no doubt that he intended to look after the interests of his own wife and all of his children.
During this period, Max provided some financial support for his other children, Debra, Anita and Samuel. There is evidence that he was planning to alter his financial arrangements, including alterations to his testamentary disposition after his purchase of Suncrest Avenue, a process prevented by his untimely death in February 1992. By his will made in November 1964, Max left a valuable library to Lindsay and the residue of his estate to the defendant, but in the event she predeceased him upon trust with powers of advancement for such of his children as attained the age of 21 years. His estate, valued at $350,000, comprised his family home (valued at $115,000), Suncrest Avenue (valued at $92,500), with the balance (including the library undervalued at $5,000) consisting of investments and other personalty.
The plaintiff and her husband continued to live at Suncrest Avenue and in harmony with the defendant and other members of the family. Lindsay arranged for the sale of the library, receiving an offer for the sum of $60,000 payable by instalments. It is said that he diverted the payment to his mother as a re-payment for his father's largesse but, as will be seen later, he used her as a subterfuge to avoid the money being taken by unsatisfied creditors.
Following the death of Max, there were some family discussions concerning the future disposition of the family property, designed to take into account the defendant's needs, accommodate the money paid to retain Suncrest Avenue, and maintain equity for the children. The terms of these discussions and the agreement reached is a matter of disputation.
Lindsay resumed his involvement in business, this time in property development. By this time, two more children had been born into the family in February 1991 and March 1992. The family continued to live at Suncrest Avenue and at some stage, the time and circumstance of which are central to these proceedings, the defendant signed an incomplete transfer document relating to the property, and gave it to Lindsay, together with the title deeds to the premises. Lindsay and the defendant did not pay rent for the home, but remained responsible for the payment of rates, land tax and insurance. During the period 1992 - 1998, considerable work and labour was expended in improving the property.
In 1997, Lindsay arranged for the purchase of an investment property with the plaintiff, himself and the defendant as beneficial owners. The purchase was funded, at least in part, by some moneys raised by the security of a property purchased for the security of the defendant. Lindsay had previously attempted to pressure the plaintiff to mortgage Suncrest Avenue so as to raise capital, requests which she refused. The conduct of Lindsay at this time can be charitably described as one of betrayal of his wife, children, mother and the memory of his father, and an abuse of his mother's trust.
The business activities of Lindsay caused tension between himself and the plaintiff and, more importantly, between the plaintiff and the defendant. At one stage, a draft will was prepared for the defendant to sign which provided for the devolution of Suncrest Avenue and another property to Lindsay, whilst accommodating the interests of other family members and securing the property against the claims of Lindsay's creditors. The defendant understandably declined to attest to the proposed document.
In January 1999, the plaintiff and Lindsay separated. Consistent with his previous conduct, he had become involved with a person through the Internet. Lindsay attempted to take possession of the title deeds and transfer, following which moves and counter-moves were made by a restraint order obtained by the plaintiff and caveat lodged by the defendant at Lindsay's behest. Family members became involved, following which an attempt, resisted by the plaintiff, was made to sell the home.
The inevitable family law proceedings were commenced by the plaintiff who claimed an interest in the family home and an order or declaration as against the defendant. During the course of those proceedings, the High Court held in Re Wakim; Ex parte McNally (1999) 198 CLR 511 cross-vesting legislation to be invalid and the proceedings aborted. The plaintiff, on legal advice, attempted to register the transfer document earlier obtained, but was unsuccessful in her endeavours.
The plaintiff, understandably, is attempting in these proceedings to preserve her family home and the security of her children. The defendant, similarly bereft, is attempting to protect her own deserved means of retirement and the interests of her own children. Equity might protect the weak against the strong, but cannot achieve its desired ends as between those equally disadvantaged by the conduct of another. (See Sexually Transmitted Debt - Family Law and Bankruptcy, Wilson, Australian Bar Review August 2002, Vol 22, par225; Till Debt Us Do Part, Duggan, 1997 Sydney Law Review, Vol 19, par220.)
Issues
The plaintiff through her pleadings claims equitable relief, such as to entitle her to:
(1)a declaration that the defendant holds Suncrest Avenue upon trust for her and her husband;
and, in the alternative:
(2)a declaration as to the extent of her entitlement to the property or a charge over the property to the extent of her property;
(3)equitable compensation.
The following distinct issues are raised by the pleadings:
(1)whether Max, upon transfer of the title to him, held the property upon trust for the plaintiff and her husband;
(2)whether the defendant, by her delivery of the incomplete memorandum of transfer and title deeds, held or acknowledged that she held the property upon trust for the plaintiff and her husband;
(3)whether, in the event that no express trust was created, the conduct of the parties itself resulted in its creation;
(4)whether the plaintiff has an equitable interest in the property by means of contribution;
(5)whether the plaintiff by means of contribution has a right to equitable compensation.
The issues are those of mixed fact and law. The first three can be considered together and the latter separately.
Motive and credibility
Much of the evidence is consistent and the differences reflect recollection, reconstruction and interpretation, rather than mendacity. It was suggested that motive afforded a basis for distinguishing between the credibility of various witnesses and their accounts. That aid to assessment will not be employed. All significant witnesses have an interest in these proceedings and the outcome will cause harm to the unsuccessful party. There remain discrete areas of conflict where the accounts cannot be reconciled and these reasons for judgment will attempt to resolve those differences as confined issues and, apart from one witness, not attempt to rely on wider findings of integrity or accuracy. Much has occurred in the period 1989 until 2001 which would shape the respective perspectives of the parties and their significant witnesses.
Lindsay is not accepted as a credible witness. His general conduct in relation to his mother's property, the raising of further money in the security of her home, his dealings with the plaintiff in the latter part of the 1990s, and his conduct subsequent to separation, show absence of character generally. His dealings in relation to the "cricket library" demonstrate a willingness to deceive and his account given at trial of the nature of that transaction is inherently unbelievable. He is a person who does not accept responsibility for his conduct, is unwilling to be frank with his creditors and is prepared to do and say things which enhance his own position. His evidence will not be relied upon unless corroborated by other reliable evidence.
Express trust
The plaintiff, by her statement of claim, claims that Max created a trust in favour of the plaintiff and her husband in that:
"Between about November 1990 and February 1992 Max Atwell, in the presence and hearing of the defendant, represented to the plaintiff and Lindsay Atwell:
(a)That he would pay the said sum of $100,000.00 to the Commonwealth Bank on behalf of the plaintiff and Lindsay Atwell to repay the mortgage over the property and other debts.
(b)That the said sum of $100,000.00 was a gift which would never have to be repaid and was to be treated by the plaintiff and Lindsay Atwell as Lindsay Atwell's inheritance 'paid early'.
(c)That he would transfer the property back to the plaintiff and Lindsay Atwell once they were free of debt.
(d)That he wanted to protect the property from other creditors of the plaintiff and Lindsay Atwell and to ensure that the plaintiff, Lindsay Atwell and their children had 'a roof over their head'.
(e)That the plaintiff and Lindsay Atwell would not be required to pay rent on the property, but would be responsible for payment of rates and land tax.
(f)That he would make arrangements to change his will so as to leave the property to Lindsay Atwell.
(g)That upon his death and the property being left to Lindsay Atwell his wish was that Lindsay Atwell give one half of the property to the plaintiff.
…
8 Max Atwell died on the 11th February 1992 prior to changing his will in accordance with the representation set out in paragraph 4(f) hereof.
9 On the 28th April 1992 the defendant became the registered proprietor of the property by assent."
The second claim is more accurately one of acknowledgement by the defendant that she was a trustee by succession, although the evidence is also suggestive of the creation of a separate express trust. The relevant pleadings are:
"11 In or about 1992 the defendant represented to the plaintiff and Lindsay Atwell that she would transfer the property to the plaintiff and Lindsay Atwell whenever they so requested.
12 In or about 1992 the defendant gave to the plaintiff and Lindsay Atwell the certificate of title to the property.
13 In or about 1992 the defendant executed a transfer of the property to the plaintiff and Lindsay Atwell."
"further and better particulars
5 (a) The representations were made at about Easter 1992.
(b) 14 Suncrest Avenue, Lenah Valley and 4 Franklin Street, West Hobart.
(c)The plaintiff cannot recall the defendant's precise words but they were in spoken [sic] in the context of her family discussion as to whether Max Atwell's existing will should be proved or whether probate attaching his instructions for a new will should be sought. The defendant stated that she was aware that the house at 14 Suncrest Avenue belonged to the plaintiff and Lindsay Atwell and she would ensure that they received the house from her estate or she would transfer it to them if they were ready in the meantime."
The defendant in her pleadings admits that Max wanted to ensure that his family members had somewhere to live (par4(d)) and that they could "continue to reside on the property free of rent for the time being, but that they were required to pay the property's rates, land tax and insurance and ensure the property was properly maintained" (par4(e)).
It is not necessary here to consider the distinction, if any, between an express or resulting trust (Re Vandervell's Trusts [1974] 1 All ER 47; Allen v Snyder [1977] 2 NSWLR 685; Gissing v Gissing [1971] AC 886). The plaintiff's case is that Max, upon assignment of the title, expressly declared that he would hold the property specifically for Lindsay and his family and, once financial circumstances had altered, would give effect to the trust by re-assignment. This was not an executory trust where the plaintiff and her husband defined the terms of their assignment as transferors. A valid express trust must contain three elements:
(1)certainty by being completely constructed or supported by consideration and relevant statutory compliance;
(2)vesting of equitable interest, in this case by declaration;
(3)absence of vitiating factors (incapacity, illegality).
In this case, the trust is said to be one inter vivos. Mere intention to benefit another is insufficient to create such a trust and a future wish to "put things in order" is inadequate. That is because an express trust, once created, cannot be revoked and remains enforceable by the beneficiary. In order to find certainty of intention, there must be strict compliance with its form of creation (Milroy v Lord (1862) 4 De G F & J 264; Anning v Anning (1907) 4 CLR 1049). In determining that issue, it is first necessary to discern, from all the surrounding circumstances, an actual intention to create a trust relationship with respect to identified property. In family situations, the surrounding circumstances are usually more complex. The approach is as stated by Lord Diplock in Gissing v Gissing (supra) at 906:
"As in so many branches of the English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct. It is in this sense that in the branch of English law relating to constructive, implied or resulting trusts effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw from their words or conduct and not to any subjective intention or absence of intention which was not made manifest at the time of the transaction itself. It is for the court to determine what those inferences are.
In drawing such an inference, what spouses said and did which let up to the acquisition of a matrimonial home and what they said and did while the acquisition was being carried through is on a different footing from what they said and did after the acquisition was completed. Unless it is alleged that there was some subsequent fresh agreement, acted upon by the parties, to vary the original beneficial interests created when the matrimonial home was acquired, what they said and did after the acquisition was completed is relevant if it is explicable only upon the basis of their having manifested to one another at the time of the acquisition some particular common intention as to how the beneficial interests should be held. But it would in my view be unreasonably legalistic to treat the relevant transaction involved in the acquisition of a matrimonial home as restricted to the actual conveyance of the fee simple into the name of one or other spouse. Their common intention is more likely to have been concerned with the economic realities of the transaction than with the unfamiliar technicalities of the English law of legal and equitable interests in land."
The circumstances said to give rise to transfer are:
(1)the husband of the plaintiff was in serious financial difficulties through his business activities;
(2)there was a strong likelihood that the home of the plaintiff would be sold by the Commonwealth Bank;
(3)Max was a family man, committed to the well being of Lindsay, the plaintiff and his grandchildren;
(4)Max had a wife and children to whom he was equally committed and for whom he had and intended to make provision;
(5)Max had already made special provision in his will for Lindsay through the intended specific bequest of his library collection;
(6)the threat to the family home was imminent and did not permit other than an expensive and "hurried" solution;
(7)the payment of over $100,000 to the Commonwealth Bank relating to both the "home mortgage" and an agreement securing business loans or advances, prevented the bank's realisation of a secured interest;
(8)transfer of title by the payment of "market based" consideration protected the property from potential claims by unsecured creditors;
(9)Max had at about the same time, paid a further sum of $50,000 in respect of a guarantee he had previously provided for Lindsay;
(10)the expense of the solution substantially impacted on the resources of Max and his capacity to provide for the future well being of himself and immediate family.
The solution was practical and fair. Max had secured a family home, protected Lindsay, the plaintiff and his grandchildren, and prevented attachment by creditors and future claimants.
The direct evidence said to establish the express trust ought be considered in the above context. The defendant played little part in the financial affairs of her husband. She was unaware of guarantees provided by Max to assist Lindsay in his business affairs. In late 1990, she was told by her husband that Lindsay was in financial difficulties, was at risk of being declared bankrupt, and that Suncrest Avenue might be lost. He did not consult with her, but said that he intended to help them out. Nothing further was disclosed until, in late 1990, he said that "we" are now the owners of another property, meaning Suncrest Avenue, as he did not want to see Lindsay and his family without a "roof over their heads". He did not disclose how much he had paid for the property, nor how long the arrangement would last, but that the family could live there so long as they paid the rates and taxes. Lindsay gave evidence about his conversations held and arrangements made with his father at that time, but, given that he is not accepted as a credible witness, his version has little import. However, his statement to his father as to how he would "make it up" and the claimed response of "don't worry about it, so long as you have a roof over your heads", accords with the general character and conduct of Max and consistent with the circumstances outlined above.
The plaintiff's account is more complex. Her general account of her husband's financial affairs and her own lack of full knowledge of their complexity, including the existence or significance of a second mortgage, is accepted. That she had general discussions with her father-in-law about his guarantee, the possibility of bankruptcy and loss of the family home, is likewise accepted. It is possible that some of those general conversations involved the defendant, but not the detail. In evidence-in-chief, the plaintiff stated:
"The business had got into financial troubles and Max approached Lindsay and myself at Suncrest Avenue and-
And when was that? … In November 1990. He approached us and asked - mentioned that he had superannuation monies coming to him and asked if we would like him to purchase Suncrest Avenue for us. He said that he'd need to put it in his name otherwise.
…Max came to us at our home, Lindsey and myself and Max were present, and he asked - he knew the company was in financial trouble, he asked if Lindsey and myself would like him to purchase Suncrest for us. He said that the home would still be ours but he'd need to put it - put the title in his name in case all the creditors of the business weren't satisfied and he wanted a roof over the head - over, you know, I had one child and another on the way, he wanted to ensure the children had a roof over their head and he just expressed that I had enough with a child and one on the way and he wanted to ensure that I wasn't unduly stressed about that. He also said that the house would be ours to - and just treat it as we always had and he wasn't expecting any rental monies for it; we could just continue on on the same basis and pay rates and taxes, insurance and things and he said that it could be transferred back to us when we were free of debt from our creditors.
What was your attitude to this proposal? … I'd always - from early on meeting Lindsay and Max, looking after and adopting Lindsay's first son, Sam, I knew that he was obviously a family man and his family morals were high and for me to - he'd obviously included me as part of his family and we were both extremely - well me more so, appreciative that he'd accepted me as part of his family and done such a - such a wonderful thing for us all."
The account is accepted in its general terms. The Court does not accept that details of re-assignment were discussed, but that there was an understanding that at some future time arrangements would be made for the home to again be vested in the plaintiff and her husband. Unspoken was whether Lindsay would be obliged to repay some money to his father or when or how the status of "free of debt" could be determined. Lindsay's bankruptcy might still have been a possibility and there was no clear statement of an unconditional right of re-transfer, even if there was no risk from creditors. There might be terms on re-transfer which allowed for the interests of the other family members. That in turn might depend on the financial strength or otherwise of Lindsay or Max at some future time. Another factor might be the unlikely event that one of Lindsay's "ships came home", a matter which could impact on the redistribution of the family assets so as to provide protection for the defendant and equity for all of the children.
The evidence establishes that Max had purchased the home effectively from a stranger, the Commonwealth Bank, in order to help his son and the family. He regarded the purchase as a possible advancement in lieu of an inheritance, in terms subject to an adjustment recalculation which might depend on the future financial position of Lindsay. The fact that the plaintiff and her family could continue to live in the home rent free, did not make the final arrangement certain or the intention of the "settlor" unequivocal and irrevocable.
The statement, given a meaning most advantageous to the plaintiff, did not create an express trust. Nor can the existence of a trust be implied or constructed by the confirmation of the declaration or statement with conduct and the surrounding circumstances. The statement and conduct fall short of the creation to a right of re-assignment (Bahr v Nicolay (1987) 164 CLR 604).
Post-transfer events
Statements and conduct subsequent to the date of a claimed trust do not themselves add to its creation. But they provide an evidentiary basis for an original conclusion or finding by way of consistency or otherwise. Following the transfer of the property, the business of Lindsay was wound up. Max took steps to alter his testamentary disposition and sought advice as to how he could best do so to accommodate the payment made for Suncrest Avenue. Before that purchase, he had discussed his future disposition with the defendant, indicating that, subject to provision for her, he wished to provide equally for his four children. Following the sale, he stated to the plaintiff and others, that he intended to alter his will so as to provide for the retention of Suncrest Avenue by Lindsay (and, by inference, the plaintiff) and allow for an adjustment for the other family members. However the statements must be seen in context. Future disposition was complicated by the presence of creditors, the financial means of Lindsay, the state of his assets and the need for equality of disposition. The plaintiff may well have understood that the arrangements would secure ownership of the home for herself and family, but such was an expectation that things would "come right", as well they might, in the end. The Court accepts that the plaintiff had good reason to believe that Max would attempt to preserve her family home and provide for his grandchildren. But Max did so in a context that the interests of others would likewise be taken into account. The untimely death of Max prevented a considered alteration of future disposition which, in any event, was complex and contingent on other matters, including the existence of creditors, the value of his assets, and adjustment to afford equality. In the meantime, his fair solution was to preserve the status quo. His conduct does not permit a finding that it was other than consistent with the findings as to the events of November 1990 and that conduct is relevant to matters of contention which occurred after his death.
Max died unexpectedly in February 1992, before he was able to complete the re-arrangement to his intended disposition. The plaintiff and defendant maintained close contact following his death and it is reasonable to conclude that the defendant had discussions with the plaintiff and other members of the family as to whether effect could be given to the wishes of one who had served his family well. There was dispute at trial as to whether there was a family conference which arrived at a consensus as to the future or whether there were a number of discussions, sometimes between individuals, and sometimes in company. Both versions are probable. Certainly a combination produced a general consensus that effect ought be given to the intentions of the late father and husband. The problem was in the form of that intended outcome. Recollection and reconstruction of the witnesses render it impossible to determine the precise nature of the conclusions reached, other than that the payment for Suncrest Avenue by Max, his desire that the plaintiff, Lindsay and their children remain living at Suncrest Avenue, and the need that they retain that right of continued residence was recognised. Concurrently, the desire of Max that his wife and children share in the estate was acknowledged and the problem of reconciling those competing demands on available capital, whilst protecting a wife and mother in her advancing age, were matters considered. A likely solution was that the defendant would continue to live in her family home and have the benefit of income generated from the invested capital, the plaintiff and Lindsay would continue to occupy Suncrest Avenue rent free and upon the death of the defendant, her estate would be divided, with a possible capital contribution by Lindsay, equally between the four children. Such was feasible, although its possibility subsequently destroyed by the conduct of Lindsay.
The nett value of the estate of Max of $350,000 comprised:
Family home Franklin Street $115,000
Suncrest Avenue $92,500
Deposit Commonwealth Life $90,078
Bonds and bank account $11,401
Library $5,000
Motor Vehicles $37,500$351,479
The Estate Cash Account shows that the amount invested had increased to $105,116, a payment of $18,000 made to the Commonwealth Bank in satisfaction of a guarantee relating to Lindsay Atwell and Associates Ltd and an interim distribution of $82,000 to the defendant. An investment property at Lochner Street was purchased for $107,000, the intention being to provide a rental income for the benefit of the defendant. The library was sold for the sum of $60,000, payable by three equal instalments. When the first instalment was paid, an attempt was made by creditors to recover debt. Lindsay contended during the course of legal proceedings concerning the payment of the proceeds that either the library or the proceeds of sale belonged to the defendant since they constituted the repayment of a debt to the estate. In this he was supported by the defendant. The plaintiff refused to have any part in the matter. The fact that some of the proceeds were paid to D W Tapping Pty Ltd, a business entity with which Lindsay had subsequent dealings, and the fact that some of the proceeds were paid into a bank account held by the defendant, shows no more than that they were put out of the reach of creditors. The Court does not accept the claim, repeated here, that the money was paid to the defendant in part satisfaction of an advance made by Max. Evidence of the actual disposition of the money was scant. The defendant claimed that some had been lodged with D W Tapping Pty Ltd, of which some $20,000 was used in 1997 for the purchase of units at Montagu Street. Other evidence suggests that she was required to make no contribution.
Further transfer
Following the death of her husband, the defendant remained in close contact with the plaintiff and her children. The plaintiff did much of the driving for the defendant, who regularly visited her home. Lindsay commenced fresh business interests. He attempted to persuade the plaintiff to co-operate in using the equity in the family home in order to provide capital for his business operations, a course firmly resisted. At some stage the title deeds for Suncrest Avenue came into the possession of Lindsay and were kept with other papers at the home. At some stage the defendant signed a blank memorandum of transfer in relation to the property. The time of, and the circumstances giving rise to, its signing, was a matter of contention between the parties. There had been family discussions concerning the future equitable disposition of property which took into account the moneys already advanced and protection from creditors. The plaintiff maintained that the title deeds had been delivered in 1992 at the time when the defendant indicated that she was prepared to transfer the property whenever requested. She further maintained that the transfer was signed on 9 December 1994, the day on which the defendant had visited her solicitor and prepared her will. The terms of the will are inconsistent with the contention that following its making, she gifted the property to the plaintiff and Lindsay by signing a memorandum of transfer in return for no consideration. The will distinguishes between Suncrest Avenue and the other property of the defendant. The residue was to be divided equally between Debra, Anita and Samuel. In relation to Suncrest Avenue, she established trusts in the following terms:
"(a)Until the Distribution Date to allow all or such one or more exclusive of the other or others of my Non Residuary Beneficiaries to occupy, reside in or rent and derive the income therefrom in such proportions and in such manner as my Trustees shall in their sole and absolute discretion determine; and
(b)Upon the Distribution Date to distribute the said property to such one or more exclusive of the other or others of my Non Residuary Beneficiaries in such proportions as my Trustees shall in their sole and absolute discretion determine."
The non-residuary beneficiaries referred to were "my son the said Lindsay Max Atwell and the children of my son the said Lindsay Max Atwell who are living at the date of my death", while the distribution date was to be:
"(i)The date of the death of my son Lindsay Max Atwell; or
(ii)Such date earlier than that referred to in paragraph (i) of this clause as my Trustees shall in their sole and absolute discretion decide;"
The omission of the plaintiff as a residuary beneficiary is consistent with the terms of the defendant's intended bequests to her other children in that their terms provided for inheritance "per stirpes", but did not include the spouses or partners of her children. The will provided wide discretionary powers of advancement, even for the non-residuary beneficiaries.
The terms of the will are consistent with the earlier discussions to give effect to the wishes of Max, and inconsistent with a gift or transfer of the property to the plaintiff and Lindsay with immediate effect. The memorandum was undated and its current date entered by the plaintiff in 2000 when an attempt was made to register the transfer. The defendant stated that she had signed the transfer and delivered the title deeds a few months after the death of her husband and did so at Lindsay's insistence, he claiming that the plaintiff was requesting security for her family home. She received no legal advice before signing the form and her act was one of preservation of family harmony done in an expectation that her son and his family would continue living at Suncrest Avenue and eventually that things would be put right. The Court accepts her account that the document was signed sometime in 1992.
The plaintiff claimed to have recalled the date of its signing by reference to the making of the 1994 will. It may be that she believed such to be the case and certainly her general account that, prior to her separation from Lindsay, all parties sought and expected that Suncrest Avenue would remain her family home, is supported by the evidence. But those endeavours and expectations did not create or revive a trust or gift.
At about the time of the making of the will of 9 December, Lindsay had drafted a different will, devising Suncrest Avenue and the defendant's interest in the Montagu Street property to himself or, in the event he predeceased the defendant, that Suncrest Avenue be bequested to the plaintiff. The terms of that draft were not acceptable to the defendant and/or her legal advisers, but its existence and terms support the conclusion that the transfer was neither contemporaneous with the will nor constituted an acknowledgement that Suncrest Avenue was simply held on trust for the plaintiff and her husband. The plaintiff was entitled to expect that she would continue in residence, free of rent, and would eventually resume ownership, but such expectation neither created an estoppel or an unconditional trust. (Baumgartner v Baumgartner (1987) 164 CLR 137; Bahr v Nicolay (supra).)
Continued occupation
The plaintiff and her family continued to live at Suncrest Avenue rent free. The plaintiff had some independent income and had received a modest inheritance and assistance from her own family. The home was maintained and improved over the years, with the plaintiff providing much of the organisation, some labour and a high proportion of the cost. The defendant, in her pleadings, denied the extent or cost of the improvements, and further claimed that:
"(a)between 1997 and 1999 the Plaintiff and Lindsay Atwell were provided by the Defendant with funds exceeding $100,000.00. The Defendant says that such funds were used to finance some of the improvements made to the property;"
Following the death of Max, an investment property was purchased at Lochner Street intended to provide a source of income for the defendant. Lindsay, still involved in business dealings, had attempted to persuade the plaintiff to permit the mortgaging of Suncrest Avenue for capital. It is likely that had she agreed, the defendant would have permitted the transaction. The plaintiff's refusal protected the property, but not the extended family assets. Lindsay persuaded his mother to mortgage the Lochner Street property. In April 1998, the Bass and Equitable Building Society advanced the sum of $70,000 secured by the Lochner Street property. The loan was extended by an additional advance of $35,000 made in August of the same year. The money is that stated in the pleadings. It would appear that a substantial portion of that money was used for the refurbishment of the Montagu Street units. It was advanced at the instigation of Lindsay for business purposes, and not for Suncrest Avenue.
The use of that money has impoverished the defendant and rendered futile the expectations of both the plaintiff and the defendant that Suncrest Avenue could be retained and a future equitable disposition of property made for the children and/or grandchildren of Max and Betty Atwell.
The extent of the detriment caused to both the plaintiff and defendant became apparent after the plaintiff and her husband separated, and the family members became aware of the financial circumstances of the defendant. The Court accepts the account given in general terms by a daughter, Debra, and her husband, of both the history of the defendant's attempts to preserve her husband's intentions and events occurring after the separation.
Following the separation, the defendant sought possession of the property. She was entitled to do so.
Contribution, detriment and equity
The plaintiff's case on this claim was advanced in two ways. The first was that the plaintiff had acted to her detriment by carrying out improvements as a consequence of representations made by Max in 1990. The findings already made preclude the creation of a trust or basis for equitable interest in the manner advanced. Any claim for the existence of an "equity" through Lindsay has been long extinguished if one existed. A claim for an equity in her own right has not been created by a trust or its acceptance, nor by estoppel. The evidence does not establish the entitlement to a charge over the property to the extent of her equity. The second basis was that the overall conduct of Max and the defendant caused her to expend money entitling her to equitable compensation. There is a distinction between an equitable right and an equitable interest (Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liquidation) (1965) 113 CLR 265), later developed further by the High Court in Giumelli v Giumelli (1999) 73 ALJR 547 (see also Dillwyn v Llewelyn (1862) 4 De G F & J 517; 45 ER 1285). In their joint judgment, Gleeson CJ, McHugh, Gummow and Callinan JJ determined that a finding upheld by the Full Court of the Supreme Court of Western Australia of an order of transfer based on equitable interest failed to sufficiently take into account all of the relevant circumstances, which, included a pending partnership action, improvements to the property by others, continued residency and the breakdown in family relationships. It upheld a finding that a particular promise should be upheld, but determined error in the measure of relief. Their Honours concluded at 556:
"This is a case for the fixing of a money sum to represent the value of the equitable claim of the respondent to the Promised Lot. It will be necessary for the matter to be remitted to a judge of the Supreme Court to take that step. The amount so ascertained, with interest, should be charged upon the whole of the Dwellingup property. There will be no requirement of a subdivision of the Promised Lot as part of the remedy.
Fixing of the amount will require the making of valuations and allowances for a range of matters, some of which have been indicated above. It is neither possible nor appropriate now to fix any closed list of matters properly to be taken into account when the matter is remitted."
A similar approach is taken here.
There can be no doubt that Max attempted to safeguard the interests of his family which included the plaintiff and his grandchildren. There can be no doubt that the defendant attempted to give effect to his wishes. There can be no doubt that the plaintiff and her family were promised continued residency and given an expectation that with improved and stable financial circumstances on the part of Lindsay, the property would return to the family unit. There can be no doubt that attempts were made to protect the property from creditors and preserve the family home. But expectation was contingent on fair treatment for the other children and based on an acceptance that the defendant would be adequately provided for. There can be no doubt that the plaintiff acted in accordance with that initial promise and an expectation was created by conduct. There can be no doubt that she has suffered detriment.
The plaintiff's claim for equitable compensation is based on her contribution. Her claim is based on expenditure made during the period 1992 - 1997. The defendant challenges the amount spent. The further claim that the moneys were provided through the moneys raised by the mortgage on Lochner Street has already been dealt with.
The plaintiff relied on evidence of the cost of improvements as provided by the relevant contractors. Their evidence is accepted. The evidence of the plaintiff's mother established that a significant portion of the moneys expended had been provided, independently, to Lindsay. Mrs Pamela Shade and Michelle Hill, the plaintiff's mother and sister respectively, gave evidence of the provision of some $12,000 from an inheritance and a superannuation payment. Their evidence is accepted. The Court also accepts that during the relevant period, the plaintiff earned an independent income, some of which was used for home improvement and maintenance.
The claim as particularised has, with some exceptions, been made out. In addition, much of the work on improvements was performed by the plaintiff. Two methods of assessment are used.
The direct evidence of the contractors enables identification of particular sums expended and that evidence accepted by the Court establishes:
| (1) | Plumbing and roofing work by Matthew Fahey in June 1997 | $1,800 |
| (2) | Painting by Darren Fenton in October 1997 | $1,400 |
| (3) | Electrical work by Kevin Medhurst 1990 - 2001 | $3,000 |
| (4) | Concreting work by Ken Fitzgerald in approximately 1996 | $944 |
| (5) | Decking and doors by Brendan Lucas, July - September 1997 | $12,750 |
| $19,894 |
The Court does not conclude that every payment was made by the plaintiff. But the figures do not take into account work performed by the plaintiff in those improvements.
The second method employed concerns matters claimed but not supported by the evidence of the relevant contractors. Those items particularised in the pleadings and supported, in part, by the evidence of the plaintiff are:
| (1) | Construction of boundary fence (particular 3(a)) | $800 |
| (2) | Plastering and flooring to downstairs 1995, window, less allowance for electrical work (see 3 above at par53) (particular 3(c)) | $2,000 |
| (3) | Purchase of heater 1996 (particular 3(e)) | $600 |
| (4) | Curtains 1994 (particular 3(f)) | $3,000 |
| (5) | Purchase of light fittings and replacement 1995, less allowance for installation (see 3 above at par53) (particular 3(g)) | $3,000 |
| (6) | Upstairs bathroom 1992 (particular 3(h)) | $4,000 |
| (7) | Lead light window - material only (particular 3(i)) | $500 |
| (8) | Wardrobes 1996 (particular 3(k)) | $1,500 |
| (9) | Paving 1996, less concreting, (see particular 4 above at par53) (particular 3(1)) | $3,000 |
| (10) | Front fence (particular 3(m)) | $3,000 |
| (11) | Hot house and garden improvements 1990 - 2001 (particular 3(q)) (estimate in addition to decking) | $6,000 |
| $27,400 |
The total claimed of $27,400 is but an approximate, given the basis of the eventual calculation, but differences have little impact. The sums might have been exaggerated but in turn did not take into account labour performed by the plaintiff.
Maintenance and improvements do not pecunarily equate with increased value. The plaintiff and her husband purchased the property in June 1988 for a price of $98,000. In 1989, a valuer assessed its value at $115,000. A property manager assessed the rental value of the property, as of 2002, at between $200 and $250 per week and gave the opinion that there had been a significant increase in values, and hence rental assessment, in recent times. A valuation report prepared in August 2000 assessed the then market value as $155,000. Making allowance for matters within common knowledge, the present value is somewhat higher (Woods v Multi-Sport Holdings Pty Ltd [2002] HCA 9, especially McHugh J at pars62 - 70). It cannot be said that the enhanced value is solely a consequence of improvements, nor that expenditure made in 1995 - 1998 ought be subject to an interest component. Both exercises require mathematical improbability. But comparison of valuations permits assessment both of detriment and advantage.
The sum identified by the plaintiff as expenditure, without her labour, amounts to approximately $45,000. The enhanced value is some $57,000. This Court, as one of equity, is not attempting to determine commercial interest, but the respective entitlement to and detriments of good and ordinary persons in a limited resource.
The defendant seeks to meet any claim of equitable compensation by a claim, articulated at trial, and discernible in the pleadings of a claim for rent from at least the date of the demand for possession. Any claim for the offsetting of rent as and from 1991 is rejected. The plaintiff lived in the premises, rent free, with the agreement of the defendant, in accordance with the agreement made by Max. The claim for rent is off-set by any entitlement to interest as and from the date of expenditure or contribution. Her claim for the repayment of rent, as articulated by counsel, is rejected. However the payment of rates and taxes are relevant to any calculation.
The pleadings of the defendant, although directed to the issue of equitable interest, state:
"(a)Since or about January 1991 the Plaintiff has lived in the property, rent free. The value of such rent is at least $200.00 per week;
(b)Since or about January 1999 the Plaintiff has failed to pay for rates, land tax and property insurance on the property. Such has been paid by the Defendant.
(c)Between or about 1997 - 1999 the plaintiff and/or Lindsay Atwell was provided with sums exceeding $100,000.00 by the Defendant.
(d)Accordingly, the value of the assistance provided by the Defendant to the Plaintiff far exceeds any improvements to the property carried out by the Plaintiff."
The evidence establishes that following separation from her husband, the plaintiff refused to pay rates and land tax referable to the property. The Court accepts that the refusal related to the course of the matrimonial proceedings. The plaintiff sought redress by reference to her rights as against her husband. Those rights involved consideration of her own interest in the matrimonial home.
The inability of the Family Court, following the decision in Re Wakim (supra), to resolve the competing interests requires this Court to provide an individual judicial response to the specific circumstances of the matter. The approach approved by the High Court in Giumelli permits resolution, albeit unsatisfactory, to both parties.
The unsatisfactory approach has an additional complication. The parties are entitled to put an issue before the Court for resolution on the basis of material chosen by them. In this case, the Court has not been provided with evidence of the value of equity in the Montagu Street units or the property held by the defendant which might become available for distribution to other family members. The Court is unable to assess the value of competing equities. However, the assessment of equitable compensation is consistent with what is known.
The plaintiff had contributed the sum of $18,000 in the purchase of the family home. She has contributed, through her independent resources of capital and labour, a further amount of approximately $45,000. The interest of the defendant has been depleted by some $200,000 by reason of the original advance and the Lochner Street mortgage. The value of the Suncrest Avenue property has increased by some $60,000. The defendant has been liable for the payment of rates and land tax since January 1999. The plaintiff has had the benefit of "rent free" accommodation in her home. The legitimate demand of the defendant for possession of the property made in February 1999 entitles her to a "rent equivalent". The plaintiff might be entitled to interest on her contributions, or at least an accommodation based on comparable value of money expended. Some of the above competing bases of calculation cancel themselves. Any award of equitable compensation based on detriment and competing interests, is incapable of mathematical precision.
Following separation, the plaintiff refused to pay outstanding rates, maintaining that they were the responsibility of Lindsay and/or the defendant. Doubtless the lodging of the caveat heightened the disputation. The defendant claimed possession, whilst the plaintiff maintained a right of continued occupancy. Each remained obdurate. During the period 1999 - 2002, the Council imposed interest, penalty and court costs referable to the property. A total of $5,329 has been levied as rates between July 1998 and June 2003, and the plaintiff ought remain responsible for the share of rates up until 31 December 2002, such sum amounting to $4,890. The accumulated penalty, interest and costs of $1,262 ought be paid equally.
With acknowledgement to the lack of precision earlier referred to, the following calculation of equitable compensation is made:
| Original contribution | $18,000 |
| Work and moneys provided | $45,000 |
| $63,000 | |
| Less rates, penalties, etc | $5,520 |
| $57,480 |
The calculation does not take into account interest or the altered value of money. Nor does the award take into account rental payable since February 1999.
The assessment can be tested in another manner. In 1988, the plaintiff contributed the sum of $18,000 or approximately 18 per cent of the value of the property. Assuming a current value of $165,000 (see Woods v Multi-Sport Holdings Pty Ltd (supra)), its current proportion would amount to approximately $30,000. Assuming that the plaintiff contributed her own inheritance as a "cash equity" of $12,000 in the mid-90s, it would be reflected in both the increased value by way of improvement and market increase. The percentage of that contribution as to the increased value (assumed at $67,000) is approximately 18 per cent. The sum of those percentage calculations (36 per cent) is approximately $60,000 which, allowing for the deduction for rates, interest and penalty, would result in an award of $54,500. The calculations remain unsatisfactory, but provide for consistency of outcome.
The award neither meets the needs of the plaintiff and her children, nor the entitlement of the defendant. There remain a number of alternative options available to the parties by their consent. Those options include:
(1)continued residence, subject to the payment of rent and outgoings;
(2)the establishment of a trust for the benefit of the plaintiff and/or her children for all or an agreed portion of the property;
(3)purchase of the property for an amount which takes into account the contingent interests or expectations of the defendant and her children, other than Lindsay Atwell.
The parties are invited to further consider their respective positions. Absent consent to the alternative order, the Court will make an award of equitable compensation in the sum of $57,480.
Orders
(1) The application for a declaration of trust is dismissed.
(2)The application for a declaration of equitable interest attaching to the property at 14 Suncrest Avenue is dismissed.
Absent alternative orders by consent, an award of compensation in the sum of $57,480 will be made in favour of the plaintiff.
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