Australian Building & Technical Solutions Pty Ltd v Boumelhem

[2009] NSWSC 460

CITATION:	Australian Building & Technical Solutions Pty Limited v Boumelhem; Boral Australia Limited v Boumelhem; Boumelhem v Jones & Ors [2009] NSWSC 460
HEARING DATE(S):	7, 8 and 14 May 2009
JUDGMENT DATE :	29 May 2009
JURISDICTION:	Equity Division
JUDGMENT OF:	Ward J
DECISION:	Resulting trust and equitable lien declared in favour of plaintiffs in 4401/08 ranking in priority to equitable charges of plaintiffs in 1648/08 and 4017/08
CATCHWORDS:	EQUITY – trusts and trustees – resulting trusts – plaintiffs provided part of purchase price for property in son’s name – whether presumption of advancement rebutted – whether presumption of resulting trust rebutted – held that presumption of advancement rebutted – presumption of resulting trust not rebutted – property held on resulting trust for plaintiffs to the extent of their contribution to the purchase price. - EQUITY – trusts and trustees – constructive trusts – whether plaintiffs entitled to relief applying Baumgartner v Baumgartner: whether parties engaged in joint venture - whether joint venture failed without attributable blame - whether unconscionable to deny entitlement of parents – alternatively, whether plaintiffs entitled to relief by reason of proprietary estoppel: whether plaintiffs, in making contributions to property, acted in detrimental reliance upon assumptions induced by legal owner of property – held entitled to relief on both bases - consideration of appropriate relief – whether other relief available – whether constructive trust would grant plaintiffs unfair priority over third party creditors – held appropriate relief provided by declaration of resulting trust in respect of contribution to purchase price and equitable lien securing additional contributions.
LEGISLATION CITED:	Defence Service Homes Act 1918 (Cth) Evidence Act 1995
CATEGORY:	Principal judgment
CASES CITED:	Ampolex Limited v Perpetual Trustee Company (Canberra) Limited (1995) 37 NSWLR 405 Austin v Keele (1987) 10 NSWLR 283 Bathurst City Council v PWC Properties Pty Limited (1998) 195 CLR 566 Baumgartner v Baumgartner (1987) 164 CLR 137 Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 Bridge Wholesale Acceptance Corporation (Australia) Limited v Burnard (1992) 27 NSWLR 415 Buffrey v Buffrey & Anor [2006] NSWSC 1349 Calverley v Green (1984) 155 CLR 242 Cadorange Pty Limited (In Liq) v Tanga Holdings Pty Limited (1990) 20 NSWLR 26 Cetojevic v Cetojevic [2006] NSWSC 432 Cetojevic v Cetojevic [2007] NSWCA 33 Charles Marshall Pty Limited v Grimsley (1956) 95 CLR 353 Damberg v Damberg [2001] NSWCA 87 Disctronics Ltd v Edmonds [2002] VSC 454 Draper v Official Trustee in Bankruptcy (2006) 236 ALR 499 Drever v Drever [1936] ALR 446 Flack v Chairperson, National Crime Authority (1997) 80 FCR 137 Friend v Brooker & Anor [2008] HCATrans 344 Friend v Brooker [2009] HCA 21 Gazzola v Gazzola (1990) 92 ALR 45 Gissing v Gissing [1971] AC 886 Giumelli v Giumelli (1999) 196 CLR 101 Grant v Edwards [1986] Ch 638 Green v Green (1989) 17 NSWLR 343 Grey v Grey (1677) 2 Swans 594 at 598; 36 ER 742 In Re Kerrigan; ex p Jones (1946) 47 SR (NSW) 76 Henderson v Miles (No 2) (2005) 12 BPR 23,579 Jones v Dunkel (1969) 101 CLR 298 La Housse v Counsel [2008] WASCA 207 Martin v Martin (1959) 110 CLR 297 Morris v Morris [1982] 1 NSWLR 61 Muschinski v Dodds (1985) 160 CLR 583 Nelson v Nelson (1995) 184 CLR 538 Parianos v Melluish [2003] FCA 190 Parsons v McBain (2001) 109 FCR 120 Payne v Parker [1976] 1 NSWLR 191 Re Jonton Pty Limited [1992] 2 Qd R 105 Re Osborn (1989) 25 FCR 547 Re Sharpe (a bankrupt); Ex parte Trustee of the Bankrupt’s Property v The Bankrupt [1980] 1 WLR 219 Re: Sabri; Ex parte Brien v Sabri (1996) 137 FLR 165 Ryan v Dries [2002] NSWCA 3 Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 Shephard v Cartwright [1955] AC 431 Shepherd v Doolan [2005] NSWSC 42 Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 Sui Mei Huen v Official Receiver (2008) 248 CLR 1 Victoria University of Technology v Wilson [2004] VSC 33 Watson v Foxman & Ors (2000) 49 NSWLR 315 Wentworth v Lloyd (1864) 33 LJ (Eq) NS 688 (HL) West v Mead, [2003] NSWSC 161
TEXTS CITED:	A W Scott and W L Fratcher, The Law of Trusts (4th ed) vol V Cross on Evidence G E Dal Pont, Equity’s Chameleon – Unmasking the Constructive Trust (1997) 16 Aust Bar Review 46 J D Heydon and M Leeming Jacob’s Law of Trusts in Australia 7th ed K R Handley, Estoppel by Conduct and Election 2006 Patrick Parkinson, Doing Equity between de facto spouses: From Calverley v Green to Baumgartner (1988) 11 Adelaide Law Review 370
PARTIES:	Australian Building & Technical Solutions Pty Limited (Plaintiff in 1648/08 and Second Defendant in 4401/08) John Boumelhem (Defendant in 1648/08 and 4017/08 and Fourth Defendant in 4401/08) Boral Australia Limited (Plaintiff in 4017/08 and Third Defendant in 4401/08) Michael Boumelhem (First Plaintiff in 4401/08) Elane Boumelhem (Second Plaintiff in 4401/08) Michael Jones as the Official Trustee in Bankruptcy) (First Defendant in 4401/08)
FILE NUMBER(S):	SC 1648 of 2008; 4017 of 2008; 4401 of 2008
COUNSEL:	M S Willmott SC (Boumelhem in all matters) S B Loughnan (Australian Building & Technical Solutions Pty Limited) P Walsh (Boral Limited)
SOLICITORS:	Uther Webster & Evans (Boumelhem in all matters) Drake & Associates (Australian Building & Technical Solutions Pty Limited) Sally Nash & Co (Boral Limited) Gilles Delaney (Official Trustee in Bankruptcy - submitting appearance)

- 61 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WARD J

FRIDAY 29 MAY 2009

1648/08 AUSTRALIAN BUILDING & TECHNICAL SOLUTIONS PTY LIMITED V JOHN BOUMELHEM
4017/08 BORAL AUSTRALIA LIMITED V JOHN BOUMELHEM
4401/08 MICHAEL BOUMELHEM V MICHAEL JONES & ORS

JUDGMENT

1 These matters were before me for hearing on an expedited basis, orders having earlier been made by the Registrar for the three matters to be heard together and for evidence in each proceeding to be evidence in the other proceedings.

2 The application for expedition was made by the plaintiffs in proceedings 4401/08 on the basis that judgment had been obtained by Perpetual Trustees Australia Limited (“Perpetual”) as mortgagee in possession of property the subject of these proceedings (“the Dundas property”) and that Perpetual had indicated that it was not prepared to defer exercising its rights in relation to the Dundas property until such time as the proceedings might otherwise be heard and determined in the ordinary course.

3 Of the three matters, the proceeding which logically needs to be determined first is 4401/08 - a claim brought by Michael and Elane Boumelhem (“the Boumelhems”), by statement of claim filed 15 December 2008, seeking relief by way of the declaration of a constructive trust as to a half share in the Dundas property (said to arise under the principles outlined in Baumgartner v Baumgartner (1987) 164 CLR 137 or alternatively on the basis of an equitable estoppel founded in a common intention or assumption as to the future acquisition of ownership of the Dundas property); or alternatively a claim for a declaration that the Dundas property is held on a resulting trust (on the principles set out in Calverley v Green (1984) 155 CLR 242 at 246, 258-259 and summarised in Buffrey v Buffrey [2006] NSWSC 1349 at [14]), by reference to the Boumelhems’ contribution towards the acquisition of the Dundas property by the fourth defendant, their son John Boumelhem.

4 On 25 August 2008, John Boumelhem having filed a debtor’s petition, the first defendant was appointed Trustee in Bankruptcy in respect of his bankrupt estate. Orders were obtained shortly prior to this hearing by the respective plaintiffs in each of the three proceedings (see Exs E, D2/1 and D3/2 respectively) from the Federal Court granting leave for these applications to be brought for orders against the Trustee in Bankruptcy. The Trustee in Bankruptcy has filed a submitting appearance in these proceedings.

5 Amongst John Boumelhem’s creditors are the second defendant (Australian Building and Technology Solutions Pty Limited (“ABTS”)) and the third defendant (Boral Australian Gypsum Limited (“Boral”)), each of whom seeks a declaration that it has an equitable interest, inter alia, in the Dundas property, by way of equitable charge to secure debts arising under personal guarantees given by John Boumelhem in his capacity as director of Jayvue Pty Limited and Jayvue (Qld) Pty Limited, respectively.

6 The second and third sets of proceedings (proceedings 1648/08 and 4017/08) were instituted by ABTS and Boral, respectively, against John Boumelhem before he became bankrupt. In those proceedings the relief originally claimed included orders to enforce contracts entered into by John Boumelhem to execute mortgages in favour of ABTS and Boral, respectively. Given the bankruptcy of John Boumelhem, orders for specific performance are no longer sought. As between themselves, the priority of ABTS and Boral’s respective claimed equitable interests has been agreed. Each properly concedes that the interest it claims under its unregistered equitable charge or charges, ranks in priority after that of Perpetual.

Facts

7 The Boumelhems live in a property at Concord (“the Concord property”), which is, and has been for over 30 years, their family home.

8 The Boumelhems have seven children. They are pensioners.

9 In about December 1997, the fourth of their children, John Boumelhem, sought assistance from the Boumelhems to obtain a loan in order to acquire or carry on a café business. At that stage, the Concord property was subject to a mortgage of approximately $16,000. The Boumelhems agreed to assist their son by increasing the mortgage over their Concord property. Michael Boumelhem, in cross-examination, said he agreed so to assist his son because his son was 17 and he did not want his son to be on the street (T 26).

10 To satisfy the lender’s requirements, the Boumelhems transferred a 1% interest in the Concord property to John Boumelhem and, together with their son, they granted a mortgage over the Concord property to St George Bank securing a loan of $55,000 which John Boumelhem used for the purpose of the café business. It is said that no consideration for the transfer of the 1% interest was in fact paid by John Boumelhem, although the transfer (Ex A to Michael Boumelhem’s affidavit of 25 August 2008) nominated the consideration for the transfer as being $5,500.

11 John Boumelhem’s café business was not a success and in about 2002 the Boumelhems consented to an increased mortgage over the Concord property presumably to cover his losses. In her affidavit, Elane Boumelhem said that the family all helped to pay off the increased mortgage. As at 2004, it appears that the St George Bank mortgage over the Concord property secured an outstanding loan of approximately $153,359.00.

12 In April 2004, John Boumelhem commenced a plaster boarding business. He incorporated both Jayvue Pty Limited and Jayvue (Qld) Pty Limited for the purposes of carrying on that business in both New South Wales and Queensland. He says that this business was successful in the first few years (and certainly it would seem that the business was regarded by ABTS/Boral as sufficiently creditworthy as at 2005/2006 for them to allow considerable trading debts to accrue). John Boumelhem said in cross-examination that he had been ordering supplies from Boral since 2000.

13 On 11 October 2004, John Boumelhem entered into a Contract for the Sale of Land pursuant to which he purchased in his name, as sole registered proprietor, the Dundas property for the sum of $425,000.

14 The circumstances in which John Boumelhem acquired the Dundas property are critical to the Boumelhems’ claim.

15 John Boumelhem says that in 2004 he entered into an arrangement or agreement with his parents pursuant to which they would refinance the existing St George Bank loan over the Concord property; he would borrow the funds necessary to acquire the Dundas property (to be secured over the Dundas property); and his parents would assist him in the development of two duplexes on the Dundas property, on completion of which the land would be subdivided and title to one of the properties would be transferred into his parents’ name, so that they would then be in a position to move into one duplex as their family home and sell the Concord property (and in so doing discharge the refinanced St George Bank loan over that property) and he would move into the other. In the meantime, John Boumelhem was to have the responsibility of meeting the repayments due on both loans.

16 Michael Boumelhem swore an affidavit (on 25 August 2008) in which he gave a similar account to that of his son (affidavit sworn 11 March 2009) of the conversation said to have given rise to the alleged arrangement. He was adamant in the witness box that the agreement was that he (and his wife) would give his son money and his son was to build two houses and transfer one to the Boumelhems. However, it was apparent from his evidence in cross-examination that Michael Boumelhem has little, if any, present recollection of the actual conversations he had with his son at the time; all he now being able do was to assert what he understood was the outcome of those conversations.

17 Elane Boumelhem deposed to a conversation with her husband in late 2004 in which he spoke of giving their son the money to build two houses at a property in Dundas and said that their son would give one of the houses to them (para 15, affidavit 17 December 2008). Mrs Boumelhem seemed to feel she had no real choice but to accede to her husband’s and son’s wishes in this regard. Reliance is placed by the defendants on Mrs Boumelhem’s description of events. She said, “I agreed to lend John some money” (paragraph 17 of her affidavit). I doubt that much (if any) weight can be placed on Mrs Boumelhem’s description of the basis on which she agreed to provide money to her son, as there is nothing to suggest she had an understanding of its legal characterisation. Her description of the relevant events is consistent with an understanding that money would be advanced or provided to her son and that she and her husband would in due course move into a duplex to be built on the land (and that her son would take care of any interest payments on the money so provided) as opposed to an arrangement whereby the Boumelhems would make a loan to their son or make an outright gift of the money.

18 It is not disputed that, in connection with the purchase of the Dundas property, John Boumelhem borrowed the sum of $340,000 from Perpetual, which loan was secured by a mortgage registered on the title of the Dundas property. John Boumelhem says that he paid the deposit on the Contract for Sale of Land (that being, not 10%, as stated on the cover page of the contract, but 5% of the purchase price - $21,250) (but that he later reimbursed himself for that amount out of a loan redraw facility made available to him by his parents) and that he advanced the sum of $319,359.77 out of the moneys obtained from Perpetual in order to complete the purchase. Stamp duty and conveyancing costs associated with the purchase (totalling $18,495.23) were also apparently paid by John Boumelhem from the moneys advanced by Perpetual. Settlement occurred on 6 December 2004.

19 The balance of the purchase moneys due on the settlement of the Dundas property ($84,140.23) appears to have been paid from moneys obtained from the refinancing of the St George Bank loan. Prior to completion of the purchase of the Dundas property, the sum of $450,000 was borrowed from Adelaide Bank Limited and, as security for those moneys, a mortgage was given to Adelaide Bank Limited (by the Boumelhem and their son) over the Concord property. Of that $450,000, the sum of $153,359 was applied to discharge the indebtedness to St George Bank (which held the then existing mortgage over the Concord property); the sum of $84,140.23 was paid (as would appear from the purchase settlement sheet) to or at the direction of the vendors of the Dundas property (by way of a direction to pay “Mobius 01”); and the remainder of approximately $209,090 was held in a loan redraw facility account with the Adelaide Bank to which John Boumelhem had access.

20 The loan agreement with Adelaide Bank was not in evidence but there were in evidence various Australia First Mortgage loan account statements addressed to John Boumelhem and Michael Boumelhem, at a different Dundas address at which John Boumelhem was then living (Ex A pp 52-56). The accounts at pp 54-56 of Exhibit A, include under the heading “Loan Details” the notation “Account Title Mr John Boumelhem, Michael and Elane Boumelhem”, the Mortgage Property Address as the Concord property, and the statement “Credit and administration provided by Adelaide Bank Limited”. From this, I infer that the $450,000 loan was one made jointly to the Boumelhems and their son. It was secured by a mortgage over the Concord property, title to which was held as to 99% by the Boumelhems as between themselves by way of joint tenancy and as to 1% by John Boumelhem, as tenant in common in unequal shares with his parents. This becomes relevant when determining (if that be necessary) the precise monetary contribution made by the Boumelhems to the purchase price for the Dundas property.

21 As noted earlier, the Dundas property was acquired by John Boumelhem as sole registered proprietor. His evidence in the witness box was that it was done this way to protect his father’s pension entitlements and because this was better when seeking finance for the loans (T 41). Michael Boumelhem’s evidence was that he did not put the property in his name “because we thought after we build the two duplexes we will get [sic] go to the council to get them approved and then I will take one under my name” (T 24). When pressed as to why he did not take one in his name straight away (leaving aside the difficulty inherent in such a suggestion given that the land at that time, as now, was not subdivided), his response was: “Because that’s what, I didn’t know this would happen. That is what we talked about. Just after it’s finished we will just take one each” (T 25).

22 No caveat was lodged by the Boumelhems in respect of any claimed equitable interest of the kind now asserted (and, when asked, Michael Boumelhem’s evidence was that he did not know what a caveat was – although he said he knew through his son that “they”, presumably the defendants, had a caveat on the properties (T 25)).

23 John Boumelhem obtained development approval from Parramatta City Council on 20 May 2005 to demolish the existing dwelling on the Dundas property and to construct two duplexes. This is one of two critical facts relied upon by Senior Counsel for the Boumelhems (Mr Willmott SC) as evidencing the arrangements which were in place with their son at the time of acquisition of the Dundas property; the other being the source of the funds for the acquisition and construction of the works.

24 Michael Boumelhem is a retired builder. In his affidavit he deposed to the supervision by him, on an almost daily basis, of the construction work on the Dundas property which commenced in April 2006. There was no challenge to this evidence on cross-examination. John Boumelhem (and his family) moved into one of the duplexes in February 2007, though the building work had not been completed at that time.

25 John Boumelhem deposes to the payment by him of construction costs for the duplexes in the order of $360,000 out of sums provided by him both by way credit card finance and by way of withdrawal from his parents’ loan redraw facility (the latter withdrawals totalling $129,000 as identified by John Boumelhem by reference to the bank statements). Exhibit JB-6 to John Boumelhem’s affidavit was tendered as an aide memoire of the drawdowns he asserts were made from the Adelaide Bank loan. As to the drawdowns from January 2005 totalling $129,000, these seem consistent with the steps likely to have been required to be taken in early 2005 for the commencement of preparation of the development application (lodged in early 2005 and approved in May 2005)) (being drawdowns of $10,000 on 21 January 2005, $15,000 on 8 February 2005 and $24,000 on 30 March 2005) and later towards the costs of commencement of construction in June 2006 (being the drawdowns of $50,000 in April 2006 and $30,000 in May 2006).

26 There was some cross-examination of John Boumelhem as to a payment or payments made by him in late 2006 to discharge a debt then owing to Boral (as a consequence of which an earlier Boral caveat was said to have been withdrawn). However, none of the drawdowns on the loan redraw facility claimed to have been by way of contribution to the costs of construction appears to have been made at the time of repayment of the Boral debt as at late 2006 and there is nothing to suggest any of these drawdowns were otherwise referable to John Boumelhem’s plasterboard business or a payment to either of the defendants.

27 The actual construction costs to date are estimated by John Boumelhem as being $360,000, some $150,000 more than he says had originally been anticipated.

28 I did not understand there to be any sustained challenge to the assertion by John Boumelhem that the $129,000 in redrawn loan funds represented contributions to the development/construction costs for the Dundas property.

29 John Boumelhem also says that he reimbursed himself for the payment of the deposit out of the redraw facility, although there is no direct evidence of this. There was a loan redraw under the facility of $29,000 on 22 December 2004. It is this drawdown which John Boumelhem says related to reimbursement of the lesser deposit.

30 The evidence of both John Boumelhem and his father was that the arrangement between them was that each would contribute $450,000 to the joint endeavour or project, that being comprised of the acquisition and subsequent development of the Dundas property. However, the balancing exercise only comes to a 50:50 contribution if the sum of approximately $153,000 initially paid to discharge the St George Bank loan (which largely, if not wholly, represented John Boumelhem’s indebtedness in respect of the unsuccessful café venture) is treated as part of the overall Dundas property project costs. If this sum were to be excluded, then on the figures as calculated by Counsel for ABTS (Mr Loughnan) the respective contributions of the parties to the project or venture (at their highest) would be in the ratio of about 70:30 (John:his parents).

31 In September 2007, John Boumelhem procured the refinancing of the Adelaide Bank loan by AMP Bank Limited. At the same time he increased the indebtedness secured by the mortgage over the Concord property by some $350,000 to $800,000. The money so obtained was, according to John Boumelhem, put into his companies (which by then were in some financial difficulty) (paragraph 32 of affidavit of 11 March 2009 and Ex B p 22). John Boumelhem admits that he arranged the increase in the Concord mortgage by the fraudulent application of his father’s signature on the AMP documentation. (On the application of John Boumelhem, I gave a certificate under s 128 of the Evidence Act 1995 in relation to his evidence in this regard.)

32 The AMP loan documentation was admittedly signed by Elane Boumelhem. However, it is not disputed that Mrs Boumelhem does not read or speak English. By her affidavit she has sworn that she did not understand at the time that she was doing anything more than signing documents for there to be a change of lender in respect of the loan. Mrs Boumelhem was not cross-examined and I accept her evidence in this regard. Michael Boumelhem also does not read English. He says he speaks broken English. He required the assistance of an interpreter throughout the course of his cross-examination. On the face of the AMP mortgage documentation his purported signature bears no resemblance to the signature appearing on the documents which he admittedly did sign. I accept Michael Boumelhem’s evidence that he did not know anything at all about the increase in the mortgage documentation (or that his son had actually changed lenders, although he was aware of his son’s proposal to do the latter), until some time about six months after this had occurred.

33 By March 2008, it was apparent to John Boumelhem that he was in serious financial difficulty. His evidence is that at this stage he told his parents that they should take steps to make sure that they protected the money they had put into the Dundas property (or, as Michael Boumelhem says he said, “to confirm” they had put money into the Dundas property). However, at this stage it appears that neither Mr nor Mrs Boumelhem was aware of the additional sum of about $350,000 which John Boumelhem had (admittedly fraudulently) procured under the AMP mortgage.

34 On 27 March 2008, a Deed of Charge was executed by the Boumelhems and others (including John Boumelhem and his brother-in-law, Mr John Touma). It appears that John Boumelhem arranged the meeting with solicitors (Consolidated Lawyers) at which the Deed was signed. At the same time, one or more caveats was signed by members of the Boumelhem family and relations.

35 The Deed of Charge recites the assistance of the “Lenders” (including the Boumelhems) in the business of the “Borrower” (John Boumelhem) by the provision of a loan in the sum of $400,000 collectively. It recites specific loans made by Michael Boumelhem of $200,000 and by Elane Boumelhem of $100,000. It records an intention by the Borrower to grant a charge over the Dundas property to secure those loans. The “business” of the Borrower is not defined.

36 Mr and Mrs Boumelhem say that they did not understand the documents they had signed and that the Deed was not translated or explained to them, although in cross-examination Michael Boumelhem accepted that he had been told something about the documents (he could not remember what) in Arabic by a woman who was present on that occasion. According to John Boumelhem this woman was a solicitor, but Michael Boumelhem says he does not know whether she was a solicitor. It was Michael Boumelhem’s understanding that the document was to protect his and his wife’s “interest in Dundas”. As noted earlier, the Boumelhems say, and I accept, that at the time they signed the Deed they were unaware of the increase in the mortgage over the Concord property.

37 The Deed of Charge is a curious document in a number of respects. It is inconsistent with the initial financial arrangements (even assuming for the moment that they were by way of a loan) since there is no suggestion on the evidence before me that there was any separate division in respect of the overall amount provided by the parents. Nor is it easy to see where the figure of $300,000 comes from if it relates to those initial finance arrangements (given that the Adelaide Bank loan was for $450,000) unless the $300,000 is a rounding up of the sum of $84,000 plus the redraw facility of $209,000. It seems to be John Boumelhem’s evidence (I say “seems” because it was somewhat confusing) that the $300,000 referred to in the Deed of Charge related to the amount by which the mortgage had (unbeknownst to his parents) been increased in 2007 (though even then the sum of $300,000 does not accord with the actual additional borrowing of $350,000 and in any event there is no suggestion that this additional money was in any way put “into” the Dundas property). If the Deed was intended to confirm the basis on which the original $450,000 loan was applied, it failed dismally.

38 I consider later the submissions made in relation to the significance I should draw from the fact that the parties were willing to sign the Deed of Charge.

39 As to the position of ABTS and Boral, each had entered into credit supply agreements with companies associated with John Boumelhem. In each case, John Boumelhem signed a personal guarantee (with ABTS on 19 June 2006 and with Boral on 10 August 2008) pursuant to which he agreed to create an equitable charge in respect of any obligations arising under the guarantee. Both ABTS and Boral lodged caveats over the Dundas property: AD 635197 (Ex JB10 to John Boumelhem’s affidavit of 11 March 2009) and AD 604 044k (Ex JB16 to John Boumelhem’s affidavit of 11 March 2009)) the caveats were lodged by ABTS on or about 19 April 2007 and by Boral on or about 29 November 2007. (I understand it is now agreed between ABTS and Boral that, in fact, Boral had earlier lodged a caveat in respect of a prior charge in respect of which it now also claims an equitable interest.)

40 Mr Willmott submits that on a true construction of the respective Application for Credit and the Guarantee and Indemnity agreements, these operate to charge only that part of John Boumelhem’s equitable interest in the Dundas property and not any part of the property that he holds on a constructive or resulting trust for his parents.

41 On 25 August 2008, four days before the proceedings brought by ABTS and Boral were respectively listed for hearing (on their application to perfect their respective securities), John Boumelhem voluntarily entered into bankruptcy.

42 The building of the duplexes remains unfinished and no subdivision has been effected of the Dundas property. John Boumelhem has estimated another $80,000 to $100,000 would be necessary to complete construction. As noted earlier, Perpetual has obtained judgment as mortgagee and I was informed it proposes shortly to exercise its power of sale as first mortgagee in respect of the Dundas property.

43 It is submitted for the Boumelhems that their equity prevails over the unregistered equitable interests of ABTS and Boral, respectively.

44 The defendants accept that there is some evidence that the registered proprietors of the Concord property (including John Boumelhem as a 1% holder of an interest in the property) advanced moneys towards the purchase price of the Dundas property. However, they submit that the highest the evidence rises is that 99% of the sum of $84,140.23 was advanced by the Boumelhems for the acquisition of the Dundas property (being, on my calculations, approximately 18.78% of the purchase price including stamp duty and conveyancing costs), or if the court accepts that John Boumelhem reimbursed himself for the deposit and that that sum should stand to the credit of the Boumelhems as a contribution to the acquisition, rather than as a loan advanced to John Boumelhem or something else, that the Boumelhems’ actual contribution to the purchase price, at its highest, was $105,390.23.

Boumelhem Proceedings - 4401/08
Constructive Trust

45 The primary relief claimed is a constructive trust either on an application of the so-called “pooling” principles in Baumgartner v Baumgartner or alternatively a “common intention” constructive trust arising on the basis of an estoppel by encouragement (to use the terminology adopted by Handley JA in Estoppel by Conduct and Election). There is an alternative claim (expressed by Mr Willmott as the fall-back claim) on the basis of the principles relating to the resulting trusts.

· Baumgartner Constructive Trust

46 In Baumgartner, the majority (Mason CJ, Wilson and Deane JJ) referred to the result reached by Deane J in Muschinski v Dodds (1985) 160 CLR 583 as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. Their Honours cited what Deane J had said in Muschinski (at 620):

… the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do : cf Atwood v Maude [1858] LR 3 Ch App 369 at pp 374-375 and per Jessel MR, Lyon v Tweddell (1881) 17 Ch D 529 at 531). (my emphasis)

47 Although followed in a number of cases since then, the reasoning in Baumgartner has not been free from academic criticism or debate.

48 In Jacob’s Law of Trusts in Australia 7th ed, J D Heydon and M Leeming, the authors note that:

… the reasoning in Baumgartner v Baumgartner , while purporting to be rooted in basic equity, gives no more predicability or consistency in result than that which follows from the English decisions espousing the ‘new model’ constructive trust. It remains unclear as to when and why the interposition of equity to prevent unconscientious reliance on legal rights in the Australian cases will give rise in equity to a proprietary rather than a personal right, and a proprietary right which is a constructive trust ‘fashioned’ by the court. (para 1353)

49 (See also the caution advocated by Gummow J during the special leave application in relation to Friend v Brooker [2009] HCA 21 - [2008] HCATrans 344.)

50 In West v Mead, [2003] NSWSC 161 Campbell J (as his Honour then was) considered what was to be established before such a trust could be imposed.

51 First, it is necessary that there be both a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired. The scope of the joint venture in which the parties were engaging may be of relevance and as Deane J in Muschinski considered, may change from time to time.

52 Secondly, the substratum of that joint relationship or endeavour, must have been removed or the joint endeavour prematurely terminated “without attributable blame”.

53 Thirdly, there must be the requisite element of unconscionability - it would be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.

(i) Was there a joint endeavour?

54 The first question to be addressed is whether there was a joint endeavour between the Boumelhems and their son, pursuant to which the Boumelhems made monetary or non-monetary contributions in connection with the acquisition of the Dundas property.

55 The defendants contend that the proper characterisation of the relationship between the Boumelhems and their son, in relation to the Dundas property, is that of debtor/creditor.

56 First, it is said that the evidence demonstrates that there was a history of lending by the Boumelhems to their son and of increasing indebtedness by him, pointing to the initial loan in about 1998 for his café business, followed by their willingness in 2002 to take an increased mortgage (almost triple the original amount) to cover their son’s increasing indebtedness on the failure of his café business.

57 Secondly, reliance is placed on Mrs Boumelhem’s statement (relied on as an admission) in her affidavit that she “agreed to lend” her son the money in 2004 and on Michael Boumelhem’s acceptance that it was John Boumelhem who was to have the responsibility of meeting the minimum repayments due on the Adelaide Bank loan until the Dundas property was complete (para 3, affidavit 11 March 2009).

58 Thirdly, the defendants point to the fact that both the Boumelhems and their son signed the Deed of Charge, which in its terms acknowledged certain loans to have been made to assist John Boumelhem in his business (though not, I note, to assist him in the acquisition/development of the Dundas property). Although no estoppel by deed is or could be invoked by the defendants, it is said that the execution of this Deed is a matter which has evidentiary weight and that I should not readily infer that solicitors of this Court (or third parties not before this Court during the hearing) would improperly or dishonestly have participated in the documentation of a transaction which did not have some factual basis.

59 Finally, it is submitted that I should put no weight on John Boumelhem’s evidence and should heavily discount the evidence of his parents given their clear self-interest in the outcome of the proceedings and in the case of Mr Boumelhem, his poor recollection in the witness box of the relevant conversations.

60 As to the first, I do not infer from the fact that the Boumelhems agreed to make a relatively small loan in 1997 or 1998 to assist their son in the setting up of his café business, and then later agreed to a more substantial mortgage when that business failed, that two years later again (by which time their son was older and had set up an independent business that was apparently doing well) they would have been likely to have agreed to triple yet again the size of their mortgage, had there not been an expectation that they would share in the benefit from the development of the Dundas property.

61 The Boumelhems are pensioners. A $450,000 loan would have been impossible for them to repay over the term of their lives without assistance from the family. Michael Boumelhem, who gave the rest of his evidence quietly and unemotionally through the interpreter, was visibly taken aback by the suggestion that he might have agreed to make a loan of such an amount to one only of his seven children. His response seemed to me to be genuine in that regard.

62 Mr Boumelhem was adamant that he did not lend his son the money made available by means of the refinanced mortgage over the Concord property:

How would I give him such a big amount when I have seven other [sic] children. How would I give him a loan of $400,000 (T 26).

Rather, Mr Boumelhem consistently said that “I gave him money to build the properties for him and for myself” (T 25). In other words, that he gave his son the money towards the purchase of the Dundas property, with a view to his son then building two duplexes on the land (one for himself and one for his parents) and that “we paid for it half half, 50/50” (T 24). Although, as I discuss later, I do not accept the way in which it is put that each in fact paid a half share of the overall costs, I do accept that broadly Mr Boumelhem understood that he was putting up his home as security for a loan the proceeds of which were to be used by his son in the acquisition and development of the Dundas property and which was to result, in due course, in him obtaining one of the two duplexes to be built on the Dundas land.

63 As to the particular wording of Mrs Boumelhem’s affidavit, it seems to me unlikely that Mrs Boumelhem, in saying she “agreed to lend” the money, was intending to convey any particular legal meaning as to the basis on which the money was provided. She was not cross-examined and hence I do not know her understanding of what was meant by this. Given Mrs Boumelhem’s inability to speak and read English, I cannot place great significance on the use of one particular verb in a general account of what occurred some five years ago.

64 As for John Boumelhem being responsible for the loan repayments to Adelaide Bank, this is hardly surprising since Mr and Mrs Boumelhem were both pensioners and presumably not in a position to service such a loan.

65 Accordingly, I place no weight on the last two factors considered above.

66 As to the third matter, it is conceded by all parties that the Deed of Charge was inaccurate on its face to a greater or lesser extent. It is said by the defendants that it is inconceivable that there would have been no explanation given to the Boumelhems of the documents they were signing (which, in broad terms, I accept) and that, if so, then (since it is accepted that the parents at that stage did not know of the additional borrowings obtained by their son) they must have understood any acknowledgement of a loan to their son to relate back to the initial borrowing from Adelaide Bank of $450,000. The difficulty I have with this submission is that it assumes not only that a fairly careful explanation was given of the details of the loans referred to in the Deed but also that the Boumelhems would have readily understood the implications of such explanation (the likelihood of which is seriously diminished if, as it is said to have been, this took place in the presence of about nine or ten people, with more than one conversation between different members of the group occurring at the one time and more than one document being signed at the time).

67 It is clear that a detailed explanation cannot have been given to (or understood by) the Boumelhems of all aspects of the Deed, since that would presumably have required an explanation of why it was that the loans so recorded as having been made by the Boumelhems were for the sums of $200,000 and $100,000 respectively, when the initial Adelaide Bank loan was for $450,000, and as to why each of the parents was acknowledging an individual or separate loan of particular amounts. A discussion of the figures in the Deed would potentially have led to inquiries which should have alerted the Boumelhems to the misconduct of their son, which does not seem to have been understood by them at the time. Michael Boumelhem’s evidence was simply that his purpose in being at the solicitors was “to save my house … I signed it [the Deed] with the understanding that I have the property in Dundas that I paid $450,000 for and I want to save myself” (T 31).

68 Further, if what the Boumelhems were told was that they needed to sign legal documents to protect or confirm their interest in or the money they had put into the Dundas property (as Michael Boumelhem says) then even if they were told by the solicitor who attended on execution of the Deed that it was to document a loan arrangement by which they would be entitled to a charge or proprietary interest over the property, they may well have understood this as a document intended to put in place arrangements going forward, rather than as an acknowledgement of whatever arrangements had earlier been in place.

69 I should note, since this was put to me in submissions, that insofar as I have commented on the circumstances of execution of the Deed of Charge I make no comment as to the conduct of the solicitors who prepared or assisted in its execution and I note for the record that the solicitors who apparently drafted the Deed of Charge (Consolidated Lawyers) are not the Boumelhems’ solicitors in these proceedings. Other than John Boumelhem’s assertion that he told the solicitors “everything”, and that he told them he took the additional money, there is no evidence as to what precisely they were told by way of instructions leading up to execution of the Deed of Charge – something which at the very least it would be necessary to know in order to form any view as to the propriety of the solicitors’ conduct. John Boumelhem’s evidence in this regard was no more than a generalised assertion: “I’m telling you, I told him the whole time that my parents have got the money, they got the half share, that’s what we had agreed and he goes I cannot do nothing” (T 47).

70 It was noted that no evidence was called from the solicitors responsible for drafting the Deed of Charge or from any others (such as Mr John Touma) who were present when it was executed. However, it is not clear to me that any Jones v Dunkel (1969) 101 CLR 298 inference should be drawn in this regard.

71 As noted in Cross on Evidence the unexplained failure by a party to call witnesses “may, not must” in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party’s case, whether or not that party bears the burden of proof of the particular issue to which the evidence would have relevant [para 1215].

72 What is it, here, to which the rule might apply? In other words, what is it that the Boumelhems are required to explain or contradict, as to which evidence from Mr Bechara (the principal lawyer from Consolidated Lawyers) or Mr Touma might be relevant? The answer can only be that evidence from those persons might have explained the circumstances in which the Deed of Charge was executed and shed light on the understanding of the Boumelhems at the time they signed the Deed of Charge.

73 Insofar as Mr Bechara is concerned (even apart from the fact that apparently it was not he who gave any explanation to the Boumelhems, rather the only explanation apparently being given by an unidentified young female solicitor), the rule in Jones v Dunkel is said not to apply where the uncalled witness is the party’s solicitor and the evidence would be privileged (Cross para 1215, Wentworth v Lloyd (1864) 33 LJ (Eq) NS 688 (HL)).

74 Evidence of what advice was given at the time the Deed was executed would surely be privileged (unless the evidence would disclose, for example, an intention to commit a fraud on creditors – which itself is something Counsel for the defendant submitted I should not infer in the absence of evidence of the solicitors). While it might perhaps be suggested that, by asserting an understanding or intention contrary to the terms of the Deed, there has been an implied waiver by the Boumelhems of any privilege in advice given as to the terms or effect of the Deed, this would be inconsistent with cases such Ampolex Limited v Perpetual Trustee Company (Canberra) Limited (1995) 37 NSWLR 405 where a statement of belief (or understanding), even proffered immediately following a statement that legal advice had been obtained, did not waive privilege in that advice, provided the substance of that advice was not disclosed.

75 In that vein, although John Boumelhem might be said to have waived privilege in respect of the advice given to him by Mr Bechara at the meeting as to certain matters (as to there being nothing that could be done to “protect” the money initially advanced by his parents but that “This [presumably the Deed and/or the caveats] will just keep it there and I’m going to negotiate on the caveatable interest. That’s what he said to me” (T 47) and “He goes I will fight them on the caveatable interest on the property and that was security of your parents’ 50 percent” (T 50)) and there was no objection on behalf of the Boumelhems to the giving of that evidence, in itself this does not waive any privilege reposed in the Boumelhems in any advice Mr Bechara or a solicitor working with him may have given to them as to the terms and effect of the Deed. Therefore, I think no inference can be drawn from the failure of the Boumelhems to call anyone from Consolidated Lawyers to give evidence.

76 As to Mr Touma, I note that the editors of Cross describe the failure to call non-party witnesses as the sixth and most difficult aspect of the rule in Jones v Dunkel. They refer to the explanation given by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-2, that this condition:

… is also described as existing where it would be natural for one party to produce the witness, or the witness would be expected to be available to one party rather than the other, or where the circumstances excuse one party from calling the witness, but require the other party to call him, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him, or where the witness' knowledge may be regarded as the knowledge of one party rather than the other, or where his absence should be regarded as adverse to the case of one party rather than the other: ibid. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary .

77 While it might well be expected that John Boumelhem’s brother-in-law might be more “available” to the Boumelhems as a witness than to ABTS/Boral, that may not necessarily be so and, in any event, it seems to me that there remains some doubt as to whether the would have been in a position to elucidate the matter. The evidence (which I accept) is that there were nine or ten people in the solicitor’s office and that there were a number of documents (Deed of Charge and two or three caveats) signed by a number of people at or around the same time, with one or more conversations happening at the same time. I do not know whether Mr Touma was privy to any particular conversation in which the Deed was explained to the Boumelhems (nor, for that matter, is there any evidence before me that Mr Touma would have understood an explanation given in what has been described as “broken Arabic”). Glass JA in Payne said:

Under other formulations, the condition is made out when the witness is presumably able to put a true complexion on the facts, might have proved the contrary would have a close knowledge of the facts, or where it appears that he had knowledge. I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him.

78 Accordingly, I do not accept that any Jones v Dunkel inference should be drawn, in relation to the circumstances in which the Deed of Charge was executed, as to the advice given at the time. (And any such inference would have to have been considered in the light of any other evidence, which of itself could justify a finding in relation to the joint venture – the availability of a Jones v Dunkel inference not precluding the making of a favourable finding based on other available evidence or inferences to be drawn therefrom – Flack v Chairperson, National Crime Authority (1997) 80 FCR 137 at 148-0; 150 ALR 153 at 164).

79 Nor do I consider that the Deed of Charge assists in determining whether there was a “joint endeavour” for the purposes of the Baumgartner principles, though I do consider that the circumstance of the execution of the Deed is a factor to consider in weighing the credibility or reliability of John Boumelhem’s evidence.

80 In general, I must say that I could not have any confidence in accepting the evidence given by John Boumelhem. Apart from the fact that he has a clear interest in protecting his parents from the no doubt distressing situation (caused directly, it would seem, by his own wrongdoing) in which they now stand to lose their family home, the evidence he gave as to the Deed of Charge made almost no sense. His evidence was that he took his parents to a solicitor to protect the money they had put into the Dundas property, yet he says he knew at the time that the Deed of Charge was a waste of time because it was incorrect and related only to money which had been put into his companies (ie not the Dundas property). If so, then it makes no sense that he nevertheless proceeded to allow his parents to execute a document which he now says was both false and futile. The only rational explanation is that he was prepared to sign, and to allow his parents to sign, anything that might assist his parents’ ability to resist claims by his creditors, whether that be on a true or false basis. In that circumstance, how can I then have any confidence that his evidence in this Court would not have been similarly affected?

81 Further, the manner in which the alleged equality of contribution was said to arise seems to me to be, at best, artificial. It requires the $153,000 existing indebtedness of John Boumelhem to be factored in as a contribution by his parents to the project (which seems to me contrived) and it assumes that at the outset of the project, John Boumelhem could predict with a surprising degree of accuracy that the project construction costs would end up being $150,000 more than had initially been expected (which is implausible or, at best, highly coincidental). The explanation of the loan redraw withdrawals (or at least of the $29,000 withdrawal) seems to me to be susceptible to the same criticism. This suggests to me that the arrangement at the outset was by no means as precise as that which is now asserted by the Boumelhems and their son.

82 In assessing the parents’ evidence, I was taken to the caution expressed by McLelland J in Watson v Foxman & Ors (2000) 49 NSWLR 315, albeit in the context of a claim of misleading and deceptive conduct, as to the ordinary human process of reconstruction of memory. Emphasis was placed by Counsel for Boral, Mr Walsh, on what his Honour there said as to the need for proof with a degree of precision of words alleged to have been spoken in circumstances where there was no objectively independent evidence. In that case, his Honour went on to say:

Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court “must feel an actual persuasion of its occurrence or existence”. Such satisfaction is “not … attained or established independently of the nature and consequence of the fact or facts to be proved” including the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding”: Helton v Allen (1940) 63 CLR 691 at 712.

83 Here, proof of the precise words spoken between the parties at the time they embarked upon the transactions leading to the acquisition of the Dundas property is not essential for a finding on the balance of probabilities that there was a joint endeavour or as to what it comprised. Indeed (albeit there considering a common intention constructive trust) in Shepherd v Doolan [2005] NSWSC 42 White J accepted (at [42]) that the evidence might not permit a finding as to the precise size, nature or extent of the beneficial interest the parties there intended the claimant to have. Hence, imprecision in the terms of what was discussed is not necessarily determinative against the Boumelhems’ claim.

84 Nor is the lack of an objective record to corroborate the arrangements necessarily fatal in such cases (as noted by White J in Shepherd v Doolan in the context of the lack of a document recording a £100 payment, where there had been a significant lapse of time since the oral arrangements in question; although there the lapse of time was significantly greater than in this case).

85 The two critical facts to which Mr Willmott points in support of the claim that there is a joint endeavour are the manner in which funds were disbursed and the fact that John Boumelhem proceeded with the application for approval to build the duplexes.

86 As to the first of the critical facts relied upon, the evidence does support a finding that the Boumelhems contributed to the acquisition and development of the Dundas property (at least by the contribution of somewhere in the order of $84,000 to the purchase price and by making available to their son funds on which he could draw for the purposes of construction – although I accept there may be some doubt as to precisely how much was drawn down for that purpose).

87 As to the second, the development of the duplexes is consistent with an intention that the Boumelhems should ultimately take a half-share in the Dundas property and, taking into account their personal circumstances, it is less likely that that they were instead entering into a debtor/creditor relationship or some kind of business venture. In this regard it seems to me highly unlikely that, as pensioners, the Boumelhems would have entered into (and risked the security of their family home on) a project development otherwise than for ultimate family use (such as a project intended to be for on-sale to third parties) when they were both retired and there is no suggestion that they had previously been involved in, or were looking at this stage of their lives to enter into, the business of property development.

88 The incredulity expressed by Michael Boumelhem in the witness box at the suggestion that he would have made a loan of this size ($400,000 or $450,000) to one only of his several children in my view weights the balance firmly in favour of this arrangement being more likely to have been a joint endeavour for the purpose of obtaining for himself and his wife title to one of the proposed duplexes in which to live in their old age next door to their son and his family. This is reinforced by the evidence of Michael Boumelhem, not challenged on cross-examination, that his son had taken him to inspect two or thee prospective properties which he did not like before he agreed to the purchase of the Dundas property and the evidence of Elane Boumelhem to like effect that she had been shown the property and told this would be where they would live. This only makes sense if the intention was for the Boumelhems ultimately to live in a duplex on the Dundas property. If this were simply a debtor/creditor relationship, it might be thought that the physical characteristics of the property (unless those characteristics precluded some form of development) would be immaterial to the Boumelhems.

89 Here, there is direct evidence as to the contribution of funds to the purchase of the Dundas property and of assistance by Michael Boumelhem in the supervision of construction of the duplexes on the property. I place no weight on John Boumelhem’s evidence, but that is not where the evidence rests. Both Mr and Mrs Boumelhem have deposed to an intention that they obtain an interest in the property (in the form of title to one of the duplexes) on completion of construction. Accepting that their evidence should be viewed with some caution given that they have a clear self interest in now asserting such an intention (and the assertion of such an intention comes for the first time after they became aware of their son’s financial difficulties and had sought legal advice as to how to protect their position) and given that Mr Boumelhem’s present independent recollection of what was said at the time in order to convey that intention is virtually non-existent, nevertheless I am persuaded on the balance of probabilities that this was not a simple debtor/creditor relationship but rather was one in which the financial assistance rendered by the Boumelhems to their son was part of a joint endeavour (or predicated on a common expectation or intention), that the Boumelhems would obtain a beneficial interest in part of the Dundas property in due course. Of the various scenarios (and having regard, as McLelland J considered appropriate, to the likelihood or unlikelihood of an occurrence of a given description), this seems to me to be by far the most likely.

90 I am therefore satisfied that there was a joint endeavour between the Boumelhems and their son, pursuant to which the parents would advance or make available to their son funds for the acquisition and development of the Dundas property with the intention that on completion of that development the property would be subdivided and the parents would be entitled to one of the duplexes which would become their family home.

(ii) Failure of joint endeavour without attributable blame

91 The next question is whether the joint endeavour failed or was prematurely terminated “without attributable blame”.

92 In Cetojevic v Cetojevic [2006] NSWSC 432, Campbell J applied the principles relevant to what he had explained as the principles relating to the imposition of a Baumgartner constructive trust in West v Mead to the joint relationship there between the parties. His Honour noted (at [43]):

In accordance with the principles set out at paragraph [59] in West v Mead [2003] NSWSC 161 where there is a joint relationship or endeavour, and an asset is acquired for the purpose and in the course of, and the joint endeavour comes to an end without attributable fault on anyone’s part (as clearly happened here ), a starting point for ownership of the asset is that the beneficial interest ought be shared equally. That application of the maxim equity is equality places an onus of attributing any other conclusion on a person who asserts that the title should be held unequally. (my emphasis)

93 The reason that the joint endeavour had come to an end in Cetojevic was the untimely death of the plaintiffs’ son.

94 The defendants submit, however, that here there was no “failure” of the joint endeavour; rather, John Boumelhem simply chose voluntarily to enter bankruptcy. I consider that, voluntary or not, the bankruptcy of John Boumelhem brought the joint endeavour prematurely to an end (just as the sudden death of the defendants’ son in Cetojevic v Cetojevic prematurely brought that joint endeavour to an end). It cannot be disputed that, in the circumstances, any joint endeavour for the development of the Dundas property is no longer capable of completion and has therefore been brought to a premature end.

178 Accordingly, the equitable charges held by ABTS/Boral do not operate in respect of the interest held by John Boumelhem in the Dundas property over which a resulting trust has been declared (approximately 18.78%) but will operate to charge in favour of ABTS/Boral, respectively, the balance of John Boumelhem’s interest in the property (ie 81.22%), those equitable charges nevertheless ranking in priority according to their respective dates with the equitable lien I have declared in respect of the non-monetary contributions. In that regard I note that Boral sought leave to amend it summons to seek relief in relation to a charge granted by John Boumelhem on 17 February 2005. To the extent that Boral’s 2005 equitable interest is prior in time to some of the contributions made by the Boumelhems to costs in respect of which I have imposed an equitable lien, this charge would rank in priority to any lien in respect of those later amounts.

179 I will hear submissions as to the precise form of orders to give effect to the above reasons, bearing in mind the suggestion by Counsel for the defendants that they may wish to seek orders as to the sale of the Dundas property.

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