Ball v Ball (No 2)

[2019] NSWSC 1242

Supreme Court

New South Wales

Medium Neutral Citation:

Ball v Ball (No 2) [2019] NSWSC 1242

Hearing dates:

13 September 2019

Date of orders:

13 September 2019

Decision date:

13 September 2019

Jurisdiction:

Equity

Before:

Parker J

Decision:

Judgment for the plaintiff against the first defendant in the sum of $297,500 plus interest in the sum of $119,100.87.
Liberty granted to the plaintiff to file a garnishee order directed to the second defendant in respect of funds, including any interest accrued thereon, held on trust for the benefit of the first defendant.
The first defendant to pay the plaintiff’s costs of the application for judgment.
The proceedings otherwise be dismissed with no order as to costs.

Catchwords:

ESTOPPEL — Proprietary estoppel — equitable compensation – where defendant required finance to fund his share of jointly acquired property and represented to mother that financier required both names on loan documentation – defendant changed locks and home subsequently sold by forced sale
– appropriate time to determine measure of relief – expectation disappointed when locks changed
depriving mother opportunity to continue live as co-owner – where no evidence adduced of value of property at that time – equitable compensation awarded in sum of half eventual net proceeds.

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), r 39.36

Cases Cited:

Evans v Evans [2011] NSWCA 92

Texts Cited:

Nil.

Category:

Principal judgment

Parties:

Gloria Ruth Ball (Plaintiff)
Darren Mark Ball (First Defendant)
East Coast Law Pty Ltd trading as East Coast Conveyancing (Second Defendant)

Representation:

Counsel:
JRB Pearson (Plaintiff)

 

Solicitors:
Fowler Predny Solicitors (Plaintiff)

  No appearance for defendant

File Number(s):

2017/386138

Publication restriction:

Nil

Judgment – EX TEMPORE

Revised and reissued 23 September 2019

1. These proceedings concern a property at Morisset Park near Newcastle. In June this year, Henry J ordered that there be default judgment for the plaintiff against the first defendant with damages to be assessed: Ball v Ball (unpublished, 12 June 2019).    

2. The plaintiff is the mother of the first defendant. The property in question was acquired by them as tenants in common in equal shares in 2007. The acquisition was undertaken with the assistance of a mortgage from GE Money. Repayments under the mortgage were not made in accordance with the lender's terms and the property was sold in November 2015.

3. After payment of expenses and of the debt owed to GE Money, the net proceeds were $159,000. Those moneys are held by the second defendant, a conveyancing firm, pending the outcome of these proceedings.

4. The plaintiff's claim is one of proprietary estoppel. Her evidence is that the property was acquired so that both she and the first defendant could live there.

5. At the time of the acquisition, the plaintiff owned a property of her own at Bonnells Bay. According to the plaintiff, it was agreed between her and the first defendant that she would sell that property and put the proceeds towards the property to be acquired in Morisset Park.

6. The first defendant also had a property of his own, but it was encumbered, and the first defendant needed finance to make up the balance of the moneys required to complete the purchase. The plaintiff says that she was told by the first defendant that the financier required both her name and the first defendant's name to be on the loan agreement and the mortgage, but that he, the first defendant, would pay off the mortgage.

7. The purchase was completed on this basis: the total purchase price was approximately $661,000. Of this the plaintiff contributed approximately $346,000 and approximately $315,000 was borrowed.    

8. The plaintiff and the first defendant lived together at the house until the end of October 2012 when the plaintiff was hospitalised for a period of several months. Apparently, the first defendant's partner did not get on with the plaintiff. The plaintiff was discharged from hospital on 15 January 2013. When she returned to the house, the first defendant had changed the locks.

9. Thereafter, the plaintiff has had to live with her other son. The first defendant did not keep up the mortgage payments and, as I have already described, there was, in effect, a forced sale of the property in November 2015. The property fetched, a net of sale expenses, $595,000.

10. These proceedings were commenced in December 2017. The first defendant failed to comply with the provisions of the rules relating to his defence. It was in these circumstances that Henry J made the order for judgment with damages to be assessed.

11. As her Honour demonstrated in her reasons, the Court's power under the Rules to enter judgment with "damages to be assessed" is wide enough to encompass a claim for equitable compensation. The task for me is to determine what amount should be awarded. Generally, in a proprietary estoppel case the Court will seek in granting relief to make good the expectation or promise which has led the plaintiff to expend money on the property in question. The relevant time for determining what the appropriate measure of relief is the date when that expectation has been disappointed: Evans v Evans [2011] NSWCA 92 at [107].

12. In the present case it seems to me that, as a matter of substance, the parties' understanding was that the plaintiff and the first defendant would be co-owners of the property; the plaintiff would contribute approximately half the cost and the first defendant would contribute the other half by borrowing, albeit that, as a matter of form, the loan and the mortgage was to be put in the names of the two of them.

13. Against this background, the promise or expectation engendered by the defendant's conduct and, indeed on the plaintiff's evidence, by express statements, was that he would make the mortgage repayments out of his own resources. This would have allowed a plaintiff as a co-owner of the property to continue to live there. By excluding the plaintiff in January 2013 the first defendant deprived her of this entitlement and this is the point at which the appropriate form of relief is to be determined.

14. Had the plaintiff approached the Court in 2013, the Court would have decreed that she was entitled to exercise her right as a co-owner to continue to live in the property without interference by the first defendant, and also that the first defendant was obliged to meet all of the mortgage repayments. The grant of such relief is no longer possible because of the sale of the property as a result of the first defendant's default in complying with his obligations.

15. Accordingly, it seems to me that the appropriate measure of equitable compensation is a half share of the value of the property as at January 2013. Unfortunately, there is no evidence before the Court of what that value was.

16. It cannot simply be assumed that the property was then worth what originally had been paid for it; as we have seen, the ultimate sale of the price of the property was somewhat less than the purchase price. In the absence of any evidence as to the actual value of the property in January 2013, I do not think I should award equitable compensation of any more than half the eventual net sale proceeds.

17. The plaintiff should, therefore, be entitled to equitable compensation in the sum of $297,500. This amount should carry interest at court rates from 15 January 2013.

18. The orders of the Court are:

1.   Order that there be judgment for the plaintiff against the first defendant in the sum of $297,500 plus interest in the sum of $119,100.87.

2.   Grant liberty to the plaintiff to file a garnishee order directed to the second defendant in respect of funds, including any interest accrued thereon, held on trust for the benefit of the first defendant in accordance with the Uniform Civil Procedure Rules 2005 (NSW), r 39.36.

3.   Order that the first defendant pay the plaintiff’s costs of the application for judgment.

4.   The proceedings otherwise be dismissed with no order as to costs.

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Decision last updated: 23 September 2019