Bank of Queensland Ltd v Mansfield

[2010] WASC 336

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BANK OF QUEENSLAND LTD -v- MANSFIELD [2010] WASC 336

CORAM:   ACTING MASTER CHAPMAN

HEARD:   23 SEPTEMBER 2010

DELIVERED          :   26 NOVEMBER 2010

FILE NO/S:   TRU 6 of 2010

BETWEEN:   BANK OF QUEENSLAND LTD

Plaintiff

AND

GAYELENE THELMA MANSFIELD
CHRISTOPHER LEE MANSFIELD
First Defendants

LEON MORGAN MANSFIELD
BEVERLY DAWN MANSFIELD
Second Defendants

ANTHONY JONATHON BRAAM
MARCELLA RUTH BRAAM
Third Defendants

Catchwords:

Trust - Resulting trust - Constructive trust - Equitable charge - Debt - Turns on own facts

Legislation:

Nil

Result:

Second defendants' application dismissed
Third defendants' application successful

Category:    B

Representation:

Counsel:

Plaintiff:     No appearance

First Defendants           :     No appearance

Second Defendants       :     Mr B W Ashdown

Third Defendants          :     Mr G R Dean

Solicitors:

Plaintiff:     No appearance

First Defendants           :     No appearance

Second Defendants       :     Paynes

Third Defendants          :     HHG Legal Group

Case(s) referred to in judgment(s):

Calverley v Green (1984) CLR 242

Mushinski v Dodds (1985) 160 CLR 582

Riches v Hogben [1985] 2 Qd R 292

ACTING MASTER CHAPMAN: 

Applications

1. I have two applications before me.  The first was filed by the third defendants seeking orders that the sum of $49,159 paid into court by the plaintiff be paid out of court to the third defendants and that the second defendants pay the costs of the application and the action to be taxed.

2. The second defendants filed a summons on 11 August 2010 seeking:

   1.There be a declaration that the Second Defendants are legally and beneficially entitled to the entire funds held by the Court pursuant to the payment into the Court by the Plaintiff in action TRU 6 of 2010 ('the Funds');

   2.The entirety of the Funds be paid out of Court, together with all interest accruing on such Funds, to the Second Defendants;

   3.The Third Defendants do pay to the Second Defendants interest on the sum constituting the Funds;

   4.Such further or other orders as this Honourable Court deems fit; and

   5.The Third Defendants pay the Second Defendants' cost of this action.

Background

1. The second defendants are the parents of the second‑named first defendant and the first defendants were, at all material times, husband and wife.  On 2 July 2004, the first defendants entered into a written contract to purchase Lot 524 Albany Drive, Dawesville (the property).  The second defendants paid the whole of the purchase price for the land as well as the stamp duty.  Since the purchase of the property, the first defendants borrowed money from the plaintiff to build a house on the property.  The property was sold pursuant to a mortgagee sale, settlement occurring on 12 February 2010.  The funds advanced by the second defendants have not been repaid.

2. On 24 December 2009, the third defendants obtained judgment in the sum of $75,000 plus interest from 24 February 2009 to 19 November 2009, and costs against the second‑named first defendant. 

3. Subsequent to the sale of the property, the plaintiff paid the balance of the sale proceeds into court.  The third defendants' claim is for one half of that sum and the second defendants claim is for the whole of that sum.  The third defendants accept that they are generally unsecured creditors.

The issues

1. The second defendants claim an interest in equity in the money paid into court on the basis that the second defendants paid the entire original purchase price of the property inclusive of stamp duty.  They submit that they were prepared to make the payment to purchase the vacant block of land for the purpose of enabling the first defendants who were then married to borrow the money to build upon it.  It is contended that the payment was made on the basis that they were to be repaid at the latest when the property was sold.  It is clear on the evidence that the money advanced by the second defendants is greater than the money paid into court.  

2. Counsel for the second defendants submits the purchase of the vacant land and the payment by the second defendants for the land was done for the express purpose and with the express intention of the joint endeavour of the second defendants with the first defendants to provide a home for the first defendants as husband and wife and their family. 

3. Counsel for the second defendants submits there was no intention on behalf of the second defendants to gift the money to the first defendants.  It is argued that an equitable presumption of trust arises because of the unequal contribution of the purchase price:  see Calverley v Green (1984) CLR 242, 258.

4. The second defendants further argue that in the alternative a constructive trust arises as it would be unjust for the first defendants to retain the balance due from the sale of the property.  A further alternative put forward by the second defendants is that the second defendants have an equitable charge.  See Mushinski v Dodds (1985) 160 CLR 582, 598 and Riches v Hogben [1985] 2 Qd R 292.

5. It is said the second defendants have an interest in the proceeds before the first‑named first defendant and as a result, have priority over the third defendants' interest as an unsecured judgement creditor.

6. The third defendants argue that the issue of priority only arises if the second defendants have an equitable interest.  Counsel for the third defendants argues that the important question was the intention of the parties at the time the property was purchased.  It is said the moneys were a loan to be repaid.  It is said the only evidence as to intention was that the moneys were advanced and they were not gifted as they were required to be repaid at the latest on the sale of the property.  See Calverley v Green (243, 246, 247). 

7. Counsel for the third defendants submits there are two important facts here.  One, the second defendants did not provide the funds as purchasers.  Secondly, it is clear from the evidence of the second‑named second defendant that the moneys were provided by way of a loan therefore it is said there is no presumption of a resulting trust.  The intention was that the first defendants would take the property beneficially.

8. Counsel for the third defendants contends there is nothing in the evidence which supports any basis for a constructive trust.  It is said the court will only impose a constructive trust where there has been elements of conduct on behalf of one party that has induced the other party to assume a certain state of affairs and act to their detriment.  It is said there is no evidence that the first defendants conducted themselves in a way which induced the second defendants to advance the money on the basis that the second defendants believed they had a beneficial interest in the property. 

9. In the affidavit of the first‑named second defendant, sworn on 6 August 2010 and filed on 11 August 2010, at pars 11 and 12 he deposes as follows:

   11.After this I telephoned Chris and spoke to him about the basis on which Beverley and I would pay for a block of land for he and Gayelene.

   12.I told Chris that Beverley and I were prepared to pay for the cost of the purchase of a block, so he and Gayelene then could borrow money to build a house on it, and that he could repay the funds we advanced, when they were able to do so or at the latest if they sold the property.

10. I agree the first defendants were not to obtain the property free of an obligation they were to repay the funds advanced to them.  I accept that the second defendants advanced to the first defendants the moneys to purchase the block and that those moneys were to be repaid when they were able or at the latest if they sold the property.  On the evidence, I am not satisfied that there was a joint endeavour nor that the second defendants had an interest in the property by whatever means.  I accept on the evidence that the moneys were not a gift.

11. The third defendants have a judgment against the second‑named first defendant.  It is against his half interest of the proceeds the third defendants say they are entitled.  It is submitted that the third defendants' application should be granted and that the second‑named first defendant's half share of the money paid into court be paid out to the third defendants together with the costs of the application and the second defendants' application should be dismissed.

Conclusion

1. In my view, the relationship between the first and second defendants were that of lender and borrower and the second defendants did not acquire any interest in the property.  The third defendants have a judgment against the second‑named first defendant and are entitled to be paid his share of the funds which were paid into court, namely half that amount.

2. Having reached that conclusion the second defendants' application should be dismissed.  I will hear further from the parties on the question of costs.