Brasher v O'Hehir and 2 Ors

[2005] NSWSC 1194

CITATION:	Brasher & Anor v O'Hehir & 2 Ors [2005] NSWSC 1194
HEARING DATE(S):	26/10/05; 01/11/05
JUDGMENT DATE :	25 November 2005
JUDGMENT OF:	Brereton J

CATCHWORDS:	EQUITY - equitable estates and interests - equitable mortgage - agreement that loan be "put against" home - RESTITUTION - recovery of money paid to discharge another's debt - when incontrovertible benefit - when obligation to reimburse arises - at law - in equity - COSTS - where party has measure of success but fails on issues left open to better position in related proceedings
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) Family Law Act 1975 (Cth)
CASES CITED:	Baloglow v Konstantinidis (2001) 11 BPR 20 Belshaw v Bush (1851) 11 CB 191 Birmingham & District Land Company v London & North Western Railway Company (1886) 34 Ch D 261 Eastern Shipping Company Ltd v Quah Beng Kee [1924] AC 177 Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 Khouri v Khoury [2004] NSWSC 770 Owen v Tate [1976] QB 402 Re Cleadon Trust Ltd [1939] Ch D 286 Stokes v Lewis (1785) 1 Term Rep 20; 99 ER 949
PARTIES:	Peter Leslie Brasher (first plaintiff) Frances Brasher (second plaintiff) Jo-Anne O'Hehir (first defendant) David O'Hehir (second defendant)
FILE NUMBER(S):	SC 2950/05
COUNSEL:	M Sneddon (plaintiffs) G Gersbach (first defendant)
SOLICITORS:	DTA Lawyers (plaintiffs) Harman & Co (first defendant) CPC Lawyers (second defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Brereton J

Friday 25 November 2005

2950/05 Peter Leslie Brasher & anor v Jo-Anne O'Hehir & anor

JUDGMENT (ex tempore – revised 22 December 2005)

1 HIS HONOUR: The plaintiffs Peter Leslie Brasher and Frances Ann Brasher are husband and wife. The defendants Joanne O'Hehir and David O'Hehir were married in 1992; they are now estranged. Mrs Brasher is the mother and Mr Brasher the stepfather of Mr O'Hehir. On 8 January 1999, the Brashers paid $28,700 into the O'Hehirs’ joint account. On 24 June 1999, following some earlier payments of instalments, the Brashers paid to St George Partnership Finance Ltd the balance owing by the O'Hehirs on a motor vehicle hire purchase contract, being $11,736.15; the total which the Brashers paid off that contract, including the earlier instalments, was $14,281.15. The O'Hehirs separated on 23 February 2004 and there are proceedings between them pending in the Family Court of Australia in respect of financial matters under Family Law Act 1975 (Cth), Pt VIII.

2 In the present proceedings, the Brashers seek to recover from the O'Hehirs the outstanding balance of the two advances, some repayments having been made in the meantime, and claim a declaration that those advances are secured on the O’Hehirs’ home. Mr O'Hehir does not oppose the Brashers' claims, and has given evidence in their case; but Ms O'Hehir does oppose them. She does not admit that the advances were repayable loans, and she denies that, if they were, she was a party to them. She does not admit that the advances were secured on the O'Hehirs' home, and she denies that, if they were at all, they were secured against her interest in it. Her original cross-claim sought, in the alternative the dismissal of the claim and orders to the effect that Mr O’Hehir alone was liable.

3 Ms O'Hehir also sought leave to file an amended cross-claim, claiming indemnity from Mr O’Hehir, but as such cross-claim would have been a matrimonial cause, and as the parties were not prepared to proceed before me with the entirety of the family property dispute of which that claim would have formed part, I refused that leave; such questions may be litigated in the Family Law proceedings.

4 It is not in doubt that the sum of $28,700 was advanced by the Brashers, nor that it was deposited in the joint account of the O'Hehirs. So much was conceded, albeit belatedly, on behalf of Ms O'Hehir, during the hearing. On the documentary evidence it was, in any event, abundantly clear. What is in dispute is how that advance is to be characterised and, in particular, whether it was a loan or a gift; if it was a loan, whether Ms O'Hehir was a party to the loan contract; and, if it was a loan, whether it was secured on the O'Hehirs' home.

5 In 1998, Mr and Ms O'Hehir purchased land at 19 Milford Drive, Rouse Hill. Simultaneously, Ms O'Hehir's parents, Mr and Mrs Seton, purchased adjoining land at 21 Milford Drive. The purchase price of the O'Hehirs' lot was $158,685. Having purchased it, they contracted to erect a house on it, for a price which, according to Ms O’Hehir’s affidavit, was $149,000. In her oral evidence she sought to resile from that figure and to substitute $139,000. Her father Mr Seton also said that the contract price was $139,000. But Ms O'Hehir remembered that at the time of the transaction she had been told by her father that there was a shortfall of $70,000, and in her oral evidence she confirmed that that remained her recollection. The O'Hehirs obtained a loan from the Permanent Trustee Company Ltd of $239,000. When that loan of $239,000 is deducted from the sum of the purchase price of $158,685 and the building contract price initially proposed by Ms O'Hehir of $149,000, the difference is $68,685. It was common ground that $40,000 was advanced to the O'Hehirs by Ms O'Hehir's father, Mr Seton, leaving $28,685 to be found. That shortfall so closely corresponds with the amount advanced by the Brashers of $28,700 that it is unlikely to be a matter of coincidence.

6 I do not need to resolve, ultimately, whether the contract price was $139,000 or $149,000. It may be that there was stamp duty, costs associated with the purchase, or other associated expenses which explain the difference. What remains quite clear is that the shortfall in Ms O'Hehir's mind was approximately $70,000, and that is supportive of there being a need to raise a futher $28,685, after the $40,000 was obtained from her father.

7 The funds obtained from Ms O'Hehir's father were characterised by her as a loan, albeit with some diffidence, although she does not disclose it as a liability in her financial statement sworn in the Family Law proceedings. Mr Seton says that it was a gift, and that he was required to make a declaration that it was a gift in order that the O'Hehirs be able to borrow the funds which they did from the Permanent Trustee Company. Based on the absence of reference to it in her financial statement and Mr Seton's version, it is more probable than not that the advance from Mr Seton is not repayable. But for present purposes, what is more important is the circumstances in which it was obtained. Mr Seton does not recollect who on behalf of the O'Hehirs approached him for the $40,000, and although he supposes that both of them did, that was obviously a matter of supposition and not recollection. Ms O'Hehir says that she did not approach him, and accepts that she must have left it to Mr O'Hehir to do so. Thus, someone, apparently Mr Seton, told her there was a $70,000 shortfall, and she apparently left it to Mr O'Hehir to arrange for that shortfall to be found.

8 Mr Seton, and to some extent Ms O'Hehir, suggested that the shortfall remaining, after the $40,000 provided by him, was raised by refinancing an existing loan over property at Glendenning already owned by the O'Hehirs. No documentary evidence was produced in support of this allegation, and it would be surprising if there were none available. It was suggested that this was a consolidated loan from Permanent Trustee Company, yet the only documentary evidence produced shows the amount of the loan from Permanent to be $239,000. Regardless of whether or not a loan over the Glendenning property was refinanced, and regardless of what additional funds were raised in that way, the position remains that the coincidence of the apparent shortfall of $28,685 and the amount of the Brashers' advance of $28,700 is too great to be explained, on the probabilities, by chance; the probable explanation is that the $28,700 was raised to cover an anticipated shortfall in funds of $28,685.

9 Mr Brasher says that in December 1998 a conversation took place at his then home at Kings Langley in the presence of his wife and the O’Hehirs, during which Mr O’Hehir said "We want to build a house on our land next to Jo-Anne's parents' place at 19 Milford Drive, Rouse Hill. We don't have quite enough equity to go through with the whole thing, or we will incur mortgage insurance." Mr Brasher said, "How much are we talking about?" and Mr O’Hehir replied, "$28,700". Mr Brasher said, "How will we get it back?" and Mr O’Hehir said, "We will pay it off. We will pay interest on it as well. You can have a second mortgage on the property. We won't be doing anything with the property without paying you back". Mr Brasher said, "I will need to talk to your mother about it".

10 Mr O'Hehir agrees that there was a conversation at the Brashers' Kings Langley home in December 1998 in which he said, "We want to build a house on the land at Rouse Hill but we don't have quite enough money to do it", Mr Brasher replied, "How much are we talking about?", and Mr O'Hehir responded "$28,700", to which Mr Brasher said, "I will need to check my finances and talk to your mother about it".

11 Both these witnesses assert that Ms O'Hehir was present at this conversation, but neither attributes a single word to her, and there is no evidence that she played any participatory role in the conversation. Ms O'Hehir denies that she was present at any such conversation.

12 Mr O'Hehir says that in or about late December 1998 or early January 1999 a telephone conversation took place between him and Mr Brasher in which Mr Brasher said, "We can lend you the money. Why don't you and Jo-Anne come over for dinner and we will sort out the details".

13 Shortly afterwards, a further conversation took place at the Kings Langley home of the Brashers in which, according to Mr Brasher, he said, "We can lend you the money", and Mr O'Hehir said, "We will pay it off. We will pay interest on it as well. You can have a second mortgage on the property. We won't be doing anything with the property without paying you back". Mr Brasher says that he added, "You can pay us interest at the rate of 5.5 percent and pay the loan back over five years. The repayments work out to be about $200 per week. We will take money from my Colonial State Bank term deposits and we will adjust the interest as we go according to the rate on my term deposit", to which Mr O'Hehir responded, "Okay".

14 Mr O'Hehir's version of that conversation was that Mr Brasher said, "We can lend you the money provided you pay us interest at 5.5 percent and pay the loan back over five years at $100 per week. We should have a second mortgage on the property”, to which he replied: “Thank you, we will pay it off and the interest as well. You can have the second mortgage. We won't be doing anything with the property without paying you back". In the course of his cross-examination, Mr O'Hehir did not maintain that he had used words to the effect, "You can have the second mortgage", but said that his response to Mr Brasher's inquiry as to how the loan was going to be repaid was to the effect, "We can put it against the house". I accept that words to that effect, which are much more likely and plausible than the reference to "second mortgage" which appears in the affidavit evidence, were used.

15 While both assert that Ms O’Hehir was present, again neither deponent attributes a word to her, nor suggests that she played any participatory role. Ms O'Hehir denies that she participated in any such conversation.

16 In cross-examination it became apparent that Mr Brasher's recollection of the specifics of the conversations is vague in the extreme, and that his evidence was largely a matter of reconstruction and not recollection. In particular, he reconstructed where the conversations took place, in what room the parties to it were, and how their seating was arranged. To my mind, the evidence of those conversations, in so far as they asserted that Ms O’Hehir was present, was not impressive. I have not referred to the evidence of Mrs Brasher concerning those conversations, because it became quite apparent in her cross-examination that she had no real recollection of them at all.

17 Mr O'Hehir says that it was Ms O'Hehir who ordinarily attended to their finances during the marriage. He says that, in early January 1999, Ms O'Hehir said to him, "I gave your Mum our account details and she's putting the money in today."

18 According to Mr Brasher, on about 8 January 1999, in response to his request, "Have you paid the loan money to David and Jo-Anne?", Mrs Brasher answered, "Yes, I spoke to Jo-Anne and she gave me their account number and I have made the deposit". Amongst the documentary evidence is a handwritten note made by Mrs Brasher which records "St. Geo. 114 907 381 Savings D and J O'Hehir". That number is the account number of the O’Hehirs’ joint savings account. Mrs Brasher says she wrote this prior to making the deposit as a result of the information she was given by Ms O'Hehir.

19 Although Ms O'Hehir denies any recollection of it, I accept that Ms O'Hehir did provide to Mrs Brasher details of the account for the deposit. Accordingly, I accept that from about 8 January at least Ms O'Hehir knew that funds were being advanced for the benefit of the O'Hehirs by the Brashers.

20 At about the time of these transactions, and probably on 28 February 1999 (which is the date which the document bears), Mr Brasher prepared a loss amortisation schedule which calculated repayments of principal and interest on an advance of $28,700 made with effect 15 February 1999. There is no reason to doubt the authenticity or contemporaneity of this calculation. It makes clear that it was the intention, at least of Mr Brasher, that the advance was a loan repayable with interest.

21 Moreover, repayments were made. Mrs Brasher maintained a contemporaneous record of them, which lists repayments totalling $6,900 between 13 February 1999 and 28 November 1999, usually in instalments of $400.

22 In or about February 1999, a further conversation took place between Mr Brasher and Mr O'Hehir. Although Mr Brasher asserted initially that it took place at the Kings Langley home, and later that it was at the Milford Drive home, he was ultimately unable to say where it took place, nor to be confident that Ms O'Hehir was present. He says that Mr O'Hehir said, "We are having problems meeting all of our repayments. I have a car loan to pay worth about $700 per month with a total of about $14,000 outstanding”. Mr Brasher replied, "We can loan you some more money to take the pressure off your mortgage repayments. We'll pay your car loan repayments for a few months and then pay it out. We can roll the loan into the loan that we gave you for the house. We will increase the interest rate to 6.49 percent", to which Mr O'Hehir responded, "Okay". Mr O'Hehir's version is that he said, "With the payment to you, we are having problems meeting our other commitments. I have a car loan to pay worth about $700 per month with a total of about $14,000 outstanding". Mr Brasher replied "Okay, we can pay out your car loan. We will consolidate the new one with the loan that we gave you for the house, but we will have to increase the interest rate," to which Mr O'Hehir replied, "Okay".

23 Between 26 February 1999 and 24 June 1999 the Brashers made payments to St George Partnership Finance in respect of the O'Hehirs' motor vehicle hire purchase contract: on 26 February 1999, $700; on 29 March 1999, 22 April and 28 May 1999, $615 each; and on 24 June 1999, an amount of $11,736.15, being the balance of the loan.

24 In her defence filed in these proceedings, Ms O'Hehir said that she recalled a conversation with Mrs Brasher regarding a payout figure for the O'Hehirs' Ford motor vehicle. In her amended defence, she asserted that in about 2000 Mrs Brasher contacted her by telephone and said, "Get a payout figure on the car", and that she thereafter advised Mrs Brasher of the payout figure on the Ford XR 6 motor vehicle.

25 There is no doubt that the Brashers did pay out the O'Hehirs' hire purchase contract, and thereby relieved them of their indebtedness to St George Partnership Finance and removed the encumbrance from their motor vehicle.

26 Subsequently, the O'Hehirs sold their property in Glendenning and purchased a new car. Mr Brasher says that he had a telephone conversation with Ms O'Hehir in which he expressed disappointment that they had sold the Glendenning house and purchased a new car without repaying the loan, to which Ms O'Hehir responded, "We didn't make much money off the sale of the house". He says that he subsequently sent a letter, addressed to them at the Milford Drive address, making a similar complaint. Mr O'Hehir says that his wife drew to his attention a letter from Mr Brasher saying: "He is upset we have bought a new car and have not repaid the loan". There is considerable difficulty in reconciling all the evidence about this letter and, in particular, its timing, some evidence suggesting that it was sent even after Mr and Ms O'Hehir had separated. Nonetheless, on the probabilities, I think some such letter was sent and received by Ms O'Hehir.

27 In the course of his cross-examination, Mr Brasher was asked by Mr Gersbach, who appeared for Ms O’Hehir, whether he remembered a conversation with Ms O'Hehir in recent months, which he did. It was put to him that she had said, "What’s going on. David said the loan was for the car and boat, and I'm not aware of any loan for the house". Mr Brasher answered that Ms O'Hehir had indeed said that, but that it was not true. It was put to him, and he agreed, that he replied "I don't know what he is talking about, it was for the house and car".

28 That the $28,700 advanced was intended to be a loan is apparent not only from the conversations of which both Mr Brasher and Mr O'Hehir give evidence but, more particularly, from the loan repayment schedule and from the fact that repayments were made. It is common ground between them that in the conversations there was reference to a loan, to repayment, and to security - although, as I have said, it is much more likely that the words used about security were to the effect "put it against the house" than "you can have a second mortgage".

29 The interest and repayment calculations are strongly indicative of the intention that the advance be a loan. It is significant that both “principals” – Mr Brasher and Mr O’Hehir - accept this to be the case. I do not overlook the possibility that it might be convenient now, in the context of the family law dispute, for Mr O'Hehir to say that the advance was a loan and not a gift. However, not only the contemporaneous records, but the concession (by the Brashers) that that loan has been reduced by repayments made since, weigh strongly against any view that the evidence to the effect that the advance was a loan is fabricated. The fact that repayments were made, as recorded in the document on which the repayments were listed, was not challenged. Nor was it suggested to Mr Brasher, Mrs Brasher or Mr O'Hehir that those repayments were not made. I am satisfied that the payment of $28,700 was intended and understood, by Mr Brasher and by Mr O'Hehir, to be a loan was to be secured on the Rouse Hill property.

30 The more difficult question is whether Ms O'Hehir is bound as a party to the loan contract, whether as a principal or through the agency of her husband, Mr O'Hehir. In favour of a conclusion that she is bound is, first, that there is evidence of her providing account details for the deposit to be made by Mrs Brasher; secondly, that there is evidence that she knew that the amount of the shortfall was $70,000 and that $28,685 would remain to be found, which corresponds with the amount borrowed; thirdly, that there is evidence that she was content to leave the finding of moneys to fill the shortfall to her husband, who she apparently left to make the arrangements to raise funds from Mr Seton also; fourthly, that the advance was received into the O'Hehirs' joint account; and fifthly, that I accept that there were some later communications between Mr Brasher and Ms O'Hehir, including the letter to which reference has been made, which did not produce a denial by Ms O'Hehir of the debt. These matters have caused me to consider very carefully whether Ms O'Hehir authorised Mr O'Hehir to negotiate a loan on her behalf and to bind her to the terms negotiated, or should be taken by her presence to have assented to those terms.

31 But against such a conclusion are the following matters. First, there is no evidence at all of any prior discussion or authorisation between Mr and Ms O'Hehir, in which she might have authorised him to negotiate terms with his parents. Evidence of any such communication would have been very important, and could have been given by Mr O'Hehir if it had taken place.

32 Secondly, there is no evidence of Ms O'Hehir's participation in the relevant conversations in December 1998 or January 1999. The evidence of her presence is unimpressive, but even if I were to accept she was present, her mere presence does not bind her as a party to the terms negotiated between her husband and Mr Brasher, nor does it cloak her husband with authority to bind her to the terms he negotiates. As I have said, the evidence does not depict her playing any role in the negotiations at all. In those circumstances, I am unable to find either that by her presence she assented in a manner so as to bind herself to the negotiated terms, nor that she had conferred on her husband authority to bind her to such terms as he might negotiate. Even accepting that she then knew, or subsequently became aware, that the funds were being advanced to their joint account, and that Mr Brasher later was dissatisfied that they had not been repaid, that would not make her liable on a contract to which she was not a party when it was negotiated. Indeed, even knowledge that her husband was raising funds for their joint purposes would not be sufficient to make her liable on a loan contract made by him for that purpose.

33 It follows that in respect of the $28,700 advance, I conclude that that sum was advanced pursuant to a loan contract between the Brashers and Mr O'Hehir, to which Ms O'Hehir was not a party even though she benefited from it. That loan is recoverable from Mr O’Hehir, but not from Ms O’Hehir.

34 The loan agreement included a term to the effect that repayment of the loan was to be secured against the O’Hehir’s house. It was accepted that an oral agreement to give a mortgage may be enforced in equity and is not rendered void by the Conveyancing Act 1919 (NSW), ss 23C or 54A [Baloglow v Konstantinidis (2001) 11 BPR 20,721 [162], Khouri v Khoury [2004] NSWSC 770 [46-50]]. However, as Ms O'Hehir was not a party, the security only affects Mr O'Hehir's interest.

35 I turn then to the question of the motor vehicle loan. In this case, a pre-existing joint obligation of the O'Hehirs to St George Partnership Finance was discharged by the Brashers’ advances. The O'Hehirs were joint debtors to St George Partnership Finance. Although there was initially some suggestion that only Mr O'Hehir was liable to St George, the loan contract makes abundantly clear that Ms O'Hehir and he were joint debtors on the hire purchase contract. The Brashers have, by paying out the hire purchase contract, relieved Mr & Ms O'Hehir of their obligations to St George.

36 The payment of another's debt is, for the purposes of the law of restitution and quasi-contract, an incontrovertible benefit only if it discharges the debt, which will be the case if the payment is made on account of the debt at the request of, or is adopted by, the debtor [Belshaw v Bush (1851) 11 CB 191]. In those circumstances, an obligation by the debtor to reimburse the payer arises if the debtor has requested the payer to make the payment, but not otherwise (except where a payment is made under compulsion) [Owen v Tate [1976] QB 402]. This is because a promise to reimburse is implicit in the request to make the payment [Stokes v Lewis (1785) 1 Term Rep 20; 99 ER 949 (Lord Mansfield CJ); Birmingham & District Land Company v London & North Western Railway Company (1886) 34 Ch D 261, 272 (Cotton LJ), 274 (Bowen LJ)). The law imputes, from the circumstances of a request to make a payment to the third party, the common intention of the requestor and the payer, that the payer be indemnified by the requesting party [Eastern Shipping Company Ltd v Quah Beng Kee [1924] AC 177, 182-183 (Lord Westbury)]. For this purpose, it will be enough if the debtor requests or adopts the payment in circumstances that he or she knows that the payer was making the payment in the expectation of being repaid [Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234, 249].

37 While a voluntary and unrequested payer of a debt has no common law restitutionary claim to reimbursement, equity recognises such a claim arising through subrogation to the creditor’s rights, if the debtor validly applies the money advanced to the discharge of its debt [Re Cleadon Trust Ltd [1939] Ch D 286, 302 (Lord Greene MR), 316 (Scott LJ), 322-324 (Clauson LJ)]. If a debtor adopts the payment by the third party by applying it in discharge of the debt, then the debtor’s conscience is bound by the knowledge that the payer made the payment not as a gift, but with the intention of being repaid, even though unsupported by a promise express or implied, because adoption of the payment with knowledge of the payee's intent creates an equity to reimbursement [Re Cleadon Trust Ltd, and see generally the discussion by IM Jackman in The Varieties of Restitution, Federation Press, 1998, pp 90-95].

38 In this case there was a request, at least by Mr O'Hehir, to make the payment, accompanied by not only an implied but an express promise to reimburse. From the conversation between Mr O'Hehir and Mr Brasher, it is plain that the motor vehicle advance was not intended to be a gift. Ms O'Hehir knew that the obligation to St George was being discharged by the Brashers, because she provided details of the payout figure to Mrs Brasher. Ms O'Hehir did not assert that she believed that this payment was a gift, and Mr Brasher’s version of their recent telephone conversation, in which she said that David had said that the loan was in respect of a car and a boat, but nothing about a house - suggests that she had some knowledge of a loan about a car. Ms O'Hehir, as well as Mr O'Hehir, benefited from this advance, because it relieved her of her obligation jointly with Mr O’Hehir to St George. Moreover, they both unquestionably adopted the payment and applied it to the debt: they did not thereafter maintain payments on their own account to St George, treating their obligation as having been discharged; and they traded in the motor vehicle, free of the hire purchase encumbrance to St George, and purchased a replacement, which replacement Ms O'Hehir retains to this day.

39 In this respect, I am prepared to find that Ms O'Hehir authorised Mr O'Hehir to request the advance from the Brashers. I do so because they were joint debtors, both liable to St George to make repayments; both benefited from the advance; immediately after the request was made, the repayments for which she was jointly liable with Mr O'Hehir ceased to be made; and, regardless whether there was actual authority at the time of the request, Mr O'Hehirs' authority was ratified by Ms O'Hehir's subsequent adoption of the transaction and application of its benefit to discharge her liability.

40 Secondly, I would find that there was at least an implied request by Ms O'Hehir, when she provided the payout details to Mrs Brasher to pay out the joint liability, and, absent any evidence from Ms O'Hehir that she believed that the Brashers were making a gift to the O'Hehirs, implicit in that request is an undertaking to reimburse.

41 Thirdly, I would find that given the adoption by Ms O'Hehir as well as Mr O'Hehir of the payments subsequently, and again in the context of her having provided the payout details and in the absence of evidence that she believed that the transaction was intended to confer a gift upon them, restitution is available in equity if not at common law, she having taken the benefit of the transaction with knowledge that it was offered not as a gift, but with the intention that it be repayable.

42 As against Mr O'Hehir, it was agreed between the Brashers and Mr O'Hehir that the motor vehicle advance would be rolled into the existing $28,700 loan, and thus secured against the house. But, as Ms O’Hehir was not party to the $28,700 loan or the equitable mortgage, I am still unable to find any basis for holding that she ever offered to make her interest in the house available as security for any advance.

43 Accordingly, my conclusions are as follows. First, the Brashers are entitled to recover the total of the outstanding advances, including interest, from Mr O'Hehir, and his interest in the Rouse Hill property is charged with repayment of them. Secondly, the Brashers are entitled to recover only the motor vehicle advance from Ms O'Hehir, and her interest in the property does not secure the payment of either advance. That establishes the legal position; it does not of course preclude the Family Court, exercising jurisdiction under Family Law Act 1975 (Cth), s 79, in the proceedings before it from altering the position as between Mr and Ms O'Hehir if it forms the view that, having regard to the relevant it is just and equitable to do so.

44 As to interest, at the time of the negotiation of the motor vehicle loan it was agreed between Mr O'Hehir and Mr Brasher that the interest rate would be 6.49 percent. As this is significantly below the rate authorised by the Rules of Court and Practice Direction, Ms O'Hehir suffers no detriment from application of that rate of interest, rather than that which the Court would be at liberty to apply under the Rules of Court.

45 This is a liability which arises in the context of the breakdown of a matrimonial relationship. The Brashers took no steps to recover the loan until the relationship broke down. In those circumstances, I fail to see why any interest rate other than the contractually agreed rate should apply, and I propose to apply an interest rate of 6.5 percent.

46 Of the advance of $28,700, $6,900 has been repaid, reducing it to $21,800. That has been the principal balance since November 1999, a period of six years. Interest on that balance at 7.5 percent for six years is $8,502 and total outstanding under the $28,700 loan inclusive of interest is $30,302 as at today.

47 As for the motor vehicle loan, the period since most of it was advanced in June 1999 is approximately 6.4 years. Interest at 6.5 percent for 6.4 years on $14,281.15 is $5,940.95, and the total outstanding on the motor vehicle loan with interest to date is, therefore, $20,222.

48 Subject to any submissions which may be made as to calculations or form, my orders are:

(1) Give judgment that the first and second defendants pay the plaintiffs the sum of $20,222 (inclusive of interest to this date).

(2) Give judgment that the second defendant pay to the plaintiffs the sum of $30,302 (inclusive of interest to date).

(3) Declare that the second defendant's interest in the property situate at and known as 19 Milford Drive, Rouse Hill in the State of New South Wales, being the land comprised in folio identifier 214/884206, is charged with payment to the plaintiffs of $50,524 and interest at the rate of 6.5 percent per annum from this date.

(4) Order that the second defendant execute and deliver to the plaintiffs in registrable form a mortgage in favour of the plaintiffs of his interest in the said property securing payment to the plaintiffs of the sum of $50,524 and interest at the rate of 6.5 percent per annum from this date, such mortgage to be settled by the Registrar if its terms cannot be agreed between the parties.

(5) Order that the exhibits be returned at the expiration of 28 days if there has not been an application for leave to appeal by that date.

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49 While I am conscious that counsel who appeared at the trial for the first defendant is not available today, I am also conscious that adjourning the question of costs for further argument will result only in the incurring of still further costs. Balancing those considerations, I think the interests of the parties are better served if I dispose of the question of costs now.

50 So far as the second defendant is concerned, he filed a submitting appearance, but only shortly before the commencement of the hearing. The plaintiffs were entirely successful against the second defendant. I order that the second defendant pay the plaintiffs' costs up to and including the date upon which the submitting appearance was filed.

51 As against the first defendant, there were essentially four main issues. The first was whether the $28,700 was or was not a loan. The second was whether or not the first defendant was a party to it. The third was whether or not it was secured on the home, including her interest in it, and the fourth was her liability for the motor vehicle loan. As against the first defendant, the plaintiffs have succeeded only on the first and fourth of those issues. Success on the first was immaterial, because it did not result in the first defendant being liable in any way for the $28,700 advance.

52 On the other hand, I cannot overlook that the background to this litigation is the litigation in the Family Court, in which whether or not there was a loan due by Mr O'Hehir to the Brashers, and whether it was secured even on his interest in the house, will be very material in determining what is the divisible pool of the property for the purposes of property adjustment. The first defendant never conceded that there was a loan to Mr O'Hehir, nor that it was secured even on his interest in the house. Ultimately, on those issues, which she left in dispute and on which success would have advantaged her in the Family Court proceedings, she failed.

53 Nonetheless, given the respective measures of success of the parties, I do not think it would be a just result if the first defendant had to bear the whole of the plaintiffs' costs of these proceedings. There are a number of possible ways of addressing that problem. One is to order that she pay only a proportion of the plaintiffs' costs. Another would be to impose a cap on the amount of costs which she has to pay, which might also serve to minimise the need for assessment and the incurring of still further costs.

54 I have come to the conclusion, that, given the relatively small amount ultimately recovered against the first defendant, but given also that the first defendant left in issue unsuccessfully the question whether there was any loan at all and whether it was secured even on the second defendant's interest in its home, that she should bear a share of the costs, but that the total amount of her liability should be capped having regard to the amount that the plaintiffs ultimately recovered against her.

55 I order that the first defendant pay one half of the plaintiffs' costs of the proceedings, provided that her liability under this order is not to exceed $15,000.

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