Byrne v Plasztan
[2023] VCC 2189
•29 November 2023
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-22-00912
| STEPHEN MICHAEL JOHN BYRNE (IN HIS REPRESENTATIVE CAPACITY AS EXECUTOR OF THE WILL AND TRUSTEE OF THE ESTATE OF SUSANNE MARTA CORNES, DECEASED) | Plaintiff |
| v | |
| KAREN JEANETTE PLASZTAN | Defendant |
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JUDGE: | His Honour Judge Rozen | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9, 10, 11 October 2023 (final submissions filed 15 November 2023) | |
DATE OF JUDGMENT: | 29 November 2023 | |
CASE MAY BE CITED AS: | Byrne v Plasztan | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 2189 | |
REASONS FOR JUDGMENT
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Subject:Equity and Trusts
Catchwords: Common Intention Constructive Trust – Disputed terms of agreement about land between two sisters – Disputes about who made payments for expenses related to the property – Minimal records of transactions – Claim for contribution to expenses
Legislation Cited: Evidence Act 2008 (Vic); Transfer of Land Act 1958 (Vic.); Civil Procedure Act 2010 (Vic)
Cases Cited:Watson v Foxman (1995) 49 NSWLR 315; Fox v Percy (2003) 214 CLR 118; Shepherd v Doolan [2005] NSWSC 42; Calverly v Green (1984) 155 CLR 242; Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413; Abdi v Abdi [2022] NSWSC 423; Merrett v Mackay [2022] VSC 220; 3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd [2023] VSC 21; Sharpe v Goodhew [1992] FCA 1011; Mulherin v Quinn Villages Pty Ltd [2007] QSC 231; Nastas Investments Pty Ltd v Think Partitions Pty Ltd [2020] VSC 653; Forgeard v Shanahan (1994) 35 NSWLR 206; Coulton v Holcombe (1986) 162 CLR 1
Judgment: Plaintiff’s case dismissed
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T. Messer | Elit Lawyers |
| For the Defendant | Mr V. Murano | Jessop & Komesaroff Lawyers |
HIS HONOUR:
In this proceeding, the plaintiff, Stephen Byrne (Stephen) sues the defendant Karen Plazstan (Karen) in his capacity as trustee and executor of the estate of the late Susanne Cornes (nee Plazstan) (Susanne). Susanne and Karen were sisters. They had a third sister, Jennifer Plazstan (Jennifer) who was called as a witness by Karen. Stephen was Susanne’s domestic partner at the time of her death in 2021.
During the course of the hearing, the parties and the other two Plazstan sisters were referred to by their first names. I will maintain that convention without meaning any disrespect to anyone involved.
What is the Case About?
In the first half of 2003, Susanne and Karen reached an agreement about what would happen to a residential property at 3 Bluebell Court, Hoppers Crossing (the property) that Susanne had jointly owned with her former husband Troy Cornes (the 2003 agreement). The case concerns the disputed terms of that agreement, which, as is often the case in bitter family disputes, were not documented.
Susanne died on 10 July 2021. In her will, she identified Stephen as her sole executor. Stephen commenced the proceeding in that capacity on 16 March 2022.
Stephen’s case about the disputed agreement was set out at paragraph [18] of his Amended Statement of Claim (ASOC):
A short time before 1 November 2003, Susanne and the defendant agreed:
a. That the defendant would become registered as a co-owner of the property.
b. That the defendant would become so registered to ensure that the ANZ would advance the mortgage loan to Susanne.
c. That the defendant would not be responsible for repayment of the mortgage loan and payment of the interest thereon, and any other expenses incurred in respect of the property.
d. That the defendant would not acquire a beneficial interest in the property.[1]
[1] Amended Statement of Claim dated 26 August 2022, [18].
Stephen’s pleaded case was, in summary that, based on the 2003 agreement, Karen became the registered co-owner of the property in 2003 but her beneficial interest in the property was held on a resulting trust for Susanne and, since Susanne’s death, her estate.[2] Paragraph A of the Prayer for Relief in the ASOC sought a declaration in those terms. There was also an alternative case in the event that the resulting trust argument failed. The alternative case was a claim for contribution to expenses.
[2] Amended Statement of Claim dated 26 August 2022, [20].
At trial, Stephen advanced a different case. He contended that, by virtue of the same 2003 agreement between Karen and her sister Susanne, Karen became the registered co-owner of the property in 2003 but her beneficial interest in the property was held on a common intention constructive trust for Susanne and, since Susanne’s death, her estate.
This change in the plaintiff’s case from one based on a resulting trust to one based on a constructive trust first became apparent in his Outline of Submissions filed on the eve of the trial.[3] The change was confirmed in his counsel Mr Messer’s opening statement when the trial commenced on 9 October 2023.[4] Mr Messer asked the court to refer to the Opening and Outline to the extent that they conflicted with the pleadings.[5] I have proceeded on that basis for the following reasons.
[3] Outline of Submissions on Behalf of the Plaintiff dated 6 October 2023 – see [31]-[32].
[4] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 5 [17-20].
[5] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 18 [22-29].
Apart from noting that the plaintiff’s case had changed at the last minute, and summarising the legal differences between the two types of trust, counsel for the defendant, Mr Murano, did not point in opening his client’s case to any prejudice arising from the change.[6] The factual case that the plaintiff sought to make did not change, merely its legal characterisation.
[6] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 42 [3-21].
10. Karen’s defence to this part of the case did not change. She maintained in her Amended Defence and throughout the proceeding that the terms of the 2003 agreement were that she would become both the co-owner of the property and would be entitled to 50% of the beneficial interest in accordance with s 42 of the Transfer of Land Act 1958 (Vic).[7] Karen rejected the plaintiff’s contention that she held her interest in the property on trust for Susanne.
[7] Amended Defence to Amended Statement of Claim dated 14 April 2023 (AD), [18].
11. Karen also pleaded that Stephen is precluded by the doctrine of laches and/or estoppel from asserting that she holds her interest in the property on resulting trust for him for the reasons articulated at paragraph 20 of her AD. By her final submissions, Karen also relies on these defences in respect of the constructive trust case.[8]
[8] Defendant’s Outline of Closing Submissions dated 8 November 2023, [148]-[159].
12. As noted, Stephen also made an alternative claim. He pleaded that if the Court rejected his resulting/constructive trust case, he is entitled to set-off and Karen is liable to account for:
a.$72,067.97 being the reduction in the principal amount of the mortgage; and
b.$54,000 being 50% of the moneys which Susanne expended on maintaining the property.[9]
[9] Amended Statement of Claim dated 26 August 2022, [36].
13. Karen’s defence to this alternative claim is a denial. She denies that Stephen is entitled to any contribution.
The Structure of these Reasons
14. The issues in the case are somewhat complex and these reasons are necessarily lengthy. The reasons are structured as follows:
a.Section A consists of a discussion about the evidence generally;
b.Section B summarises the relevant legal principles that apply to common intention constructive trusts;
c.In section C, some uncontroversial background facts are identified;
d.Section D is concerned with the 2003 agreement. In this part of the judgment, the oral evidence about the agreement is summarised;
e.In section E, I examine the largely uncontroversial series of events subsequent to the date of the agreement;
f.The circumstances in which Stephen met Susanne are considered in section F including the falling out between Susanne and Karen.
g.In section G, I examine the disputed evidence about who paid the expenses associated with the property;
h.Section H is concerned with the significance of certain letters that were sent to Karen shortly before the proceedings were commenced;
i.My conclusions about the terms of the 2003 agreement are explained in section I;
j.In section J, I consider Stephen’s alternative claim for contribution to expenses.
A The Evidence Generally
15. The evidence consists of an agreed Court Book of 57 documents and the oral evidence of three witnesses.
16. The plaintiff Stephen Byrne was the only witness called in his case. Karen Plazstan, the defendant, gave evidence in her case and she called her younger sister Jennifer Plazstan.
17. Before examining their evidence it is necessary to make some general observations about the approach I have taken to evaluating the evidence in this case, including that given in court by these witnesses.
18. The case concerns conflicting testimony about what was orally agreed in a single informal meeting attended by two sisters and another person twenty years ago. One of the parties to the key conversation, Susanne, has since died. The other sister, Karen, who is the defendant, gave evidence about the conversation. The third party was not called.
19. The plaintiff, Stephen, was not present when the key conversation took place. He had not met either Susanne or Karen in 2003. He gave evidence about what he said Susanne had told him about the agreement that resulted from the conversation.[10]
[10] This evidence was admissible despite the rule against hearsay pursuant to s 63 of the Evidence Act 2008 (Vic). This aspect of the case is discussed in more detail later in these reasons.
20. A judge called upon to make findings about what was said by people in such circumstances will bear in mind what McLelland CJ in Equity said in the case of Watson v Foxman[11] about the significant challenges presented:
… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience[12]
[11] (1995) 49 NSWLR 315.
[12] Ibid, 319.
21. In assessing the credibility of those witnesses, I have taken into account the manner in which they gave their evidence and what is sometimes referred to as their demeanour or appearance. In so doing, I have also followed the observation by three members of the High Court in 2003 that Judges should ‘… limit their reliance on the appearances of witnesses and… reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events’.[13]
[13] Fox v Percy (2003) 214 CLR 118, [31] (Gleeson CJ, Gummow and Kirby JJ).
22. That approach, and the concerns expressed by McLelland CJ, are all the more important where, as was the case here, the crucial oral evidence concerned conversations that took place up to twenty years ago between the witnesses and the late Susanne Cornes. Great care will be exercised by a court when it considers evidence of conversations with a deceased person.[14] That is especially so when the witness who is giving evidence of the conversation has an interest in the litigation as was the case with both Stephen and Karen in this case.
The Witnesses
[14] Webb & Ors v Ryan & Anor [2012] VSC 377, [22] (Whelan J).
23. Stephen did his best to remember events and conversations from many years ago. I accept that he was a witness of truth. He did not purport to recall conversations in a verbatim manner. The only topic in which his evidence was evasive concerned the incident on 29 December 2004 in which a report of him assaulting Karen was made to police. As with all witnesses in this case, where Stephen’s evidence conflicted with contemporaneous documents, I approach it with some caution.
24. Karen generally impressed me as a witness. She recalled events and conversations in a moderate amount of detail without purporting to recall anything verbatim. She was prepared to make appropriate concessions. For example, she accepted that she had made a mistake when she did not read the loan application more carefully.[15] As with all witnesses in this case, where Karen’s evidence conflicted with contemporaneous documents, I approach it with some caution.
[15] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 191 [21].
25. Jennifer was a compelling witness. She answered questions without prevarication and was prepared to concede that there were matters of which she was unaware.
26. Jennifer was the only non-party witness in this case. She has no interest in the outcome. Further, she remained close to both of her sisters and her father throughout the entire twenty years.
27. For these reasons, I have ascribed considerable weight to Jennifer’s evidence.
28. Before examining the evidence in detail it is necessarily to explain the relevant legal principles to be applied in a case such as the present.
B Common Intention Constructive Trusts – Legal Principles
29. As noted, the case ultimately pursued by Stephen at trial was premised on the existence of a ‘common intention constructive trust’. In one sense, such a trust should perhaps not be described as ‘constructive’ because its existence depends on the actual intention of the parties involved. However, this is not the place to have that debate.[16]
[16] Cf Shepherd v Doolan [2005] NSWSC 42, [35] (‘Doolan’).
30. The parties agreed that the judgment of White J in the case of Shepherd v Doolan[17] provides a comprehensive statement of the applicable legal principles in cases concerning common intention constructive trusts. His Honour’s explanation has been referred to and followed on numerous subsequent occasions.[18]
[17] Ibid.
[18] See, for example, Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413; Abdi v Abdi [2022] NSWSC 423; Merrett v Mackay [2022] VSC 220, [231]-[233].
31. Based on Doolan, I consider that the applicable principles may be summarised as follows:
a)A class of case where equity will intervene to prevent the unconscientious denial by the legal owner of another party’s rights, is where the parties agreed, or it was their common intention, that the claimant should have an interest in the property owned by the other, and the claimant acted to his or her detriment on the basis of that agreement or common intention.
b)Where such a constructive trust is imposed by a court, based upon the parties’ common intention as to the ownership of property upon which the claimant has acted to his or her detriment, the inquiry is as to the actual intention of the parties.
c)The law does not impute a presumed intention to the parties based upon what the Court considers fair and reasonable that persons in the position of the parties would have intended had they turned their minds to the issue.
d)The relevant and shared intention may be established in various ways. There may be an agreement between the parties as to how the property should be held. There may be express statements as to their intention. Their intention may be inferred from their conduct. The question of what acts demonstrate an agreement or common intention referable to the beneficial enjoyment of the property is one of evidence, not law.
e)The intention may be inferred from financial contributions, direct or indirect, to the acquisition of property, including the paying off of mortgages, or the payment of expenses which free up funds for that purpose.
f)Other evidence from which conclusions may be drawn about intentions of the parties include declarations of the parties before or at the time of the transaction or so close in time after the transaction as to constitute part of it.
g)Subsequent declarations of intention are only admissible against interest.
h)For a common intention constructive trust, a contribution, direct or indirect, to the costs of acquisition of the property is a matter from which an intention that the claimant will have a beneficial interest in the property might be inferred.
The plaintiff must also show that she acted to her detriment in a way referable to the agreement or intention that she have an interest in the property. Conduct may be both the evidence from which an intention that the plaintiff have a beneficial interest can be inferred and the act of detrimental reliance. To qualify as acting on the common intention, the conduct must be such that the plaintiff could not reasonably have been expected to embark upon it unless she were to have an interest in the property.
j)While there are inevitably some similarities between a resulting trust, under which a presumption is made about the parties’ intentions according to their contributions to the purchase price, and a constructive trust, based upon what is inferred about the parties’ intentions from their contributions to the acquisition of the property, there is an important difference – there are no presumptions to be applied in cases involving common intention constructive trusts – the task of the court is to discern the actual common intention of the parties.[19]
[19] Doolan, [30]-[40] (citations omitted).
32. In summary, and applying these principles to the present case, Stephen must establish on the balance of probabilities that:
a.Susanne Cornes and Karen Plasztan reached an agreement regarding their respective beneficial interests in the property;
b.The common intention was that Karen would hold her beneficial interest in the property on trust for Susanne;
c.Susanne acted in reliance on this common intention to her detriment; and
d.It would now be an equitable fraud on Susanne’s estate for Karen to assert that Susanne’s estate holds less than the full beneficial interest in the property.
C Undisputed Background Facts
33. It is not in dispute that on 7 September 1998, Susanne and her then husband Troy Cornes were registered as joint proprietors of a fee simple estate in the property.
34. There were two children born of their marriage – Jordon and Isabelle.
35. The marriage broke down and the couple were divorced in 2002. In the divorce settlement, Susanne retained custody of the children who by that time were eight and three years old respectively.
36. The Family Court made orders on 24 October 2002 dividing the matrimonial property. Troy’s interest was transferred to Susanne. That transfer was registered on 18 December 2002.
37. During 2003, in the aftermath of the Family Court proceedings, Susanne was talking to her sisters Karen and Jennifer about their respective futures and especially the futures of Susanne’s young children Jordon and Isabelle. The evidence is that both Karen and Jennifer were very fond of the niece and nephew they shared.
38. Ultimately, Susanne and Karen reached an agreement about this. What they ultimately agreed is the controversy at the heart of this litigation. There are also disputes about what happened in the aftermath of the agreement. Jennifer becomes important at that stage of the narrative. In particular, there is a dispute about who paid the expenses associated with the property including repaying the bank loan used to purchase the property.
D An Agreement between two Sisters over Lunch at a Chinese Restaurant
39. It is common ground that the two sisters reached an agreement about the property during the first half of 2003. It is also common ground that, as a result of the agreement, Karen and Susan became joint tenants in common of the property and they jointly took out a loan of more than $200,000 in respect of the property.
40. Beyond that, there is a dispute about what was agreed.
41. On his pleaded case, Stephen contends that Karen and Susanne agreed that:
a.Karen would become registered as a co-owner of the property;
b.This was to ensure that the ANZ Bank would advance the mortgage loan to Susanne;
c.Karen would not be responsible for repayment of the mortgage loan and payment of the interest thereon, and any other expenses incurred in respect of the property; and
d.Karen would not acquire a beneficial interest in the property.[20]
[20] Amended Statement of Claim dated 26 August 2022, [18].
42. Stephen’s case is that this arrangement created a common intention constructive trust. That is, as explained by the authorities examined earlier in these reasons, Karen and Susanne expressly agreed with each other in respect of the four pleaded matters.
43. Further, Stephen’s case is that the trust came into existence in November 2003. From that time on, on Stephen’s case, Karen held her half share of the property on trust for her sister Susanne until the latter died on 10 July 2021. From that time onwards, Karen has held her half share of the property on trust for Susanne’s estate. Stephen asks that the court declare this to be so.
44. In her defence, Karen argues that she and Susanne agreed that each of them would have a beneficial interest that corresponded with their respective legal interests.
45. The resolution of this dispute is central to the court’s determination of the proceeding.
46. The 2003 agreement was oral; no records were made of its terms. A further difficulty is that the agreement was made 20 years ago. Finally, Susanne died in 2021. The only witness who can give a first hand account of what was agreed is Karen.
47. Because Susanne is deceased, she is obviously ‘unavailable’ to give evidence as that expression is used in law.[21] However, witnesses were allowed by the court to give evidence about what Susanne had said to them about matters relevant to what was agreed. It is necessary to explain briefly why this was allowed to occur.
[21] Evidence Act 2008 (Vic), Dictionary.
48. As Stephen’s lawyers served a notice pursuant to s 67 of the Evidence Act 2008 (Vic) (Evidence Act) on Karen, the hearsay rule was inapplicable to evidence given by Stephen of any ‘previous representations’ made to him by Susanne.[22] For present purposes, a ‘previous representation’ includes what Susanne said in Stephen’s presence. What the expression is concerned with is a statement about ‘the existence of a fact or a state of facts’.[23]
[22] Evidence Act 2008 (Vic), s 63(2)(a).
[23] R v Dolding [2018] NSWCCA 127, [45] (Simpson AJA, with whom Johnson and Harrison JJ agreed); see also Lee v The Queen (1998) 195 CLR 594, [21]-[22].
49. To establish the agreement pleaded at paragraph 18 of his Amended Statement of Claim, Stephen relies on the evidence he gave of a representation he says Susanne made to him on a date and at a place that were not identified. It is necessary to scrutinise that evidence carefully for the reasons discussed above.
D.1 Stephen’s Account of the Agreement
50. Stephen’s evidence in chief relevant to the terms of the 2003 agreement was that he became aware that, after her marriage to Troy ended, Susanne took over the mortgage and had to pay some money to Troy.[24] In cross-examination he clarified that this topic first came up during his ‘courtship’ with Susanne which lasted from the middle of 2003 until the end of that year.[25]
[24] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 69 [2-6].
[25] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 91 [27] – 92 [4].
51. Stephen gave evidence that he now knows that Karen is a co-owner of the property. He was asked by his counsel what he could ‘tell the court about what Susanne told you about that situation, how Karen came to be a co-owner of the property’. He responded:
From conversations Susanne and I had, Susanne, was, I don't know, struggled to the point where she was able to maintain the mortgage by herself. So she's obviously approached her sisters to help her and Karen's the one that agreed to help her, and subsequent either [sic.] they've taken this mortgage out together
52. His evidence continued:
How do you know that?---Because that's what Susanne told me. When she left Troy she couldn't afford to keep the house by herself and she approached her sisters to help her and Karen's the one that agreed to help her, she was in a better position to help her
Did she say what form the help took?---That she'd - well not in any great detail, that they helped her take out a loan, get a loan to keep the house.[26]
[26] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 69 [7-24].
53. Stephen explained that Susanne had told him that she was paying the mortgage on the property.[27] Stephen also gave evidence that as far as he knew Karen was not paying anything towards the mortgage.[28] His evidence was that Susanne had never told him that Karen was contributing to the mortgage and he added: ‘She only ever said that her sisters helped her keep the house’.[29]
[27] Ibid, 69 [25-29].
[28] Ibid, 69 [30-31].
[29] Ibid, 70 [2-3].
54. Stephen was asked how often he and Susanne discussed keeping the house and ‘the arrangement whereby she was able to pay Troy out to keep the house’. His response was:
Well it's not something you would discuss on daily or even weekly basis. It came up when we first met that she had a house and when we were in the courtship stage of our relationship when we were talking about our pasts and where we ended up being where we were when we met, and that's when she said, you know - I'd been married before, I told her about that, she told me that she'd been married twice before and, yeah, that's how it all came about. When the first husband left and why he left or how he left and then the same thing with Troy, and that when he left she said, 'I couldn't keep the house to myself' and her sisters helped her keep it.[30]
[30] Ibid, 70 [7-18].
55. Stephen was asked by his counsel about what he knew about Karen making contributions to the mortgage and rates and insurance on the property. His counsel explained that Karen had said that she made cash payments to her father, who gave them to her sister Jennifer who in turn gave them to Susanne. Stephen described this as ‘ridiculous’.[31]
[31] Ibid, 75 [13].
56. He gave evidence that Susanne had never told him that she was receiving cash from Jennifer and said that he was unaware that Karen had made any contributions to property expenses.[32] He repeated that Susanne had never told him that Karen was making payments for the mortgage.[33] His evidence on this point continued as follows:
Is there any reason why Susanne would not have told you that that was happening?---No. It wasn't happening. Why tell me if it wasn't happening.
Let me put it another way. Would you have expected Susanne to tell you if it was happening?---Possibly not because it was Susanne- when I met Susanne I had my own properties, my own investment properties in and around Queensland and Susanne never had, never got involved, I guess, in that, my personal investments, I guess, because that was what I had before I met her. As her house had really nothing to do with me, that was her house.[34]
[32] Ibid, 75 [26-28].
[33] Ibid, 75 [29-30].
[34] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 75 [31] – 76 [10].
57. Stephen acknowledged in cross-examination that he did not know Susan or Karen when they reached the arrangement in the first half of 2003. He did not meet Susanne until the second half of 2003. He also accepted that Susanne ‘might have arrangements in place with Karen’ that he didn’t know about.[35] Stephen also said that Susanne ‘never once mentioned an agreement or anything like that’.[36]
[35] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 89 [21-24]; 91 [24-26].
[36] Ibid, 92 [9-10].
58. No objection was taken to Stephen giving evidence in the form he did. Provided certain notice requirements are met, section 63 of the Evidence Act creates an exception to the rule against hearsay in a civil case and allows a person to give first hand hearsay evidence about representations made to them by a witness who is ‘unavailable’.[37]
[37] Both parties gave notice pursuant to s 67 of the Evidence Act.
59. While I do not conclude that Stephen was dishonest in his evidence, I consider that his evidence lacked specificity, possibly because of the passage of time both between the date the agreement was made and the date that Susanne told him about it and, more importantly, between then and now. There is also the reality that Stephen could not have known, when he was having conversations with Susanne about these matters, that he would be called upon to recount the detail many years later in the unfamiliar environment of a court room.
60. There are three aspects of Stephen’s evidence that cause me to be cautious about it. First, Stephen did not identify when the various ‘conversations’ with Susanne took place. It is unclear whether they occurred during the ‘courting’ period of the relationship or after Susanne and her children moved to Queensland shortly before Christmas in 2003. If it was after that time, it is unclear how much after.
61. Secondly, Stephen did not say how many conversations there were or where the conversations took place. In fairness to him, he was not asked about these details.
62. I note that, despite the requirements of s 63 of the Evidence Act, some of the evidence he gave was not so much relating to the court specific ‘representations’ made by Susanne to him but was more in the nature of conclusions he had reached about what Susanne had told him. Stephen did not purport to give an account of what Susanne said to him. As noted, he would have had no particular reason to pay careful attention in 2003 to what he was being told.
63. Thirdly and most importantly, Stephen said very little about any agreement or arrangement between Susanne and Karen along the lines of the case he pleaded. He gave no evidence of being told that the agreement was to the effect that Karen would become a registered co-owner of the property ‘to ensure that the ANZ would advance the mortgage loan to Susan’ as pleaded at paragraph 18(b) of the ASOC. His evidence did not cover this issue at all other than to say in a general sense that Susanne’s sisters had helped her to keep the house. That evidence is neutral on the question of the form of that help. It is equally consistent with Karen taking a beneficial interest in Bluebell Court as the quid pro quo for her help.
64. Nor did Stephen give evidence that Karen and Susanne agreed that Karen ‘would not be responsible for repayment of the mortgage loan and payment of the interest thereon, and any other expenses incurred in respect of the property’ as pleaded at paragraph 18(c) of the ASOC. His evidence in this regard was limited to stating that he had been told by Susanne that she (Susanne) was paying the mortgage.[38] As noted, when asked by his counsel if Karen was paying ‘anything towards the mortgage’, Stephen replied ‘not to my knowledge’.[39]
[38] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 69 [25-29].
[39] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023) 69 [30-31].
65. Finally, Stephen gave no evidence on the crucial question about what had been agreed in relation to Karen acquiring a beneficial interest in the property. His pleaded case is that there was an express agreement to the effect that Karen would not acquire a beneficial interest.[40]
[40] Amended Statement of Claim dated 26 August 2022, [18](d).
66. On Stephen’s evidence, and without even considering the evidence of Karen, his case about the 2003 agreement is not made out. He of course has the onus to prove his case on the balance of probabilities.
67. Stephen’s counsel submitted correctly that, while Stephen is required to prove all of the elements of his case, it is ‘not necessary for Stephen to prove each fact on the balance of probabilities’.[41] He submitted that Stephen’s evidence is only one part of the evidence upon which he relies and that his case about the common intention constructive trust should be assessed having regard to all of the evidence before the court.
[41] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [15].
68. I accept this submission and now turn to consider the remainder of the evidence starting with the evidence of the only live witness who was present when the agreement in question was made - Karen.
D.2 Karen’s Account of the Agreement
69. Karen’s evidence was she is the middle of the three sisters – Susanne was older; Jennifer is younger.
70. Karen told the court that ‘after Susanne split up with Troy’, Karen and her domestic partner Grant had lunch with Susanne at a Chinese restaurant in Hoppers Crossing.[42] I infer that the lunch must have taken place before 11 June 2003 because that was the date Karen and Susanne met with a banker to apply for a housing loan.
[42] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 136 [16-18].
71. At the lunch, Susanne told Karen and Grant[43] that she could not afford to keep the home she and Troy had lived in with their two children.[44] At the time, Jordan was eight and Isabelle was three. Karen gave evidence that Susanne told Karen and Grant that ‘she wanted to make sure that there was a nest-egg for the children in the future’.[45]
[43] Stephen’s counsel did not submit that I should draw any inference against Karen due to the absence of Grant from these proceedings.
[44] Karen’s evidence about what she was told by Susanne was also admitted pursuant to s 63 of the Evidence Act. It is therefore evidence of the truth of the representations Karen said Susanne made in her presence.
[45] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 136 [25-27].
72. Karen’s evidence was that Susanne proposed to Karen and Grant that they go in with her and ‘keep the house like as an investment and eventually rent it out’.[46] Susanne told them that she planned to live with her other sister Jennifer ‘and then eventually we’d sell it and we’d all … once the house had some equity in it, we’d have a profit each’.[47]
[46] Ibid, 136 [27-29].
[47] Ibid, 136 [29] – 137 [1]; see also Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 182 [16-20].
73. Karen explained that Grant was not interested in this idea and tried to convince Karen not to buy into the property. However, Karen considered it to be a good idea. She explained to the court that she was motivated in this regard partly by her love for her nephew and niece, partly to help out her sister who was ‘very upset’ and ‘devastated’ and partly because ‘it sounded like a good idea at the time to make some money’.[48]
[48] Ibid, 137 [21-28].
74. Karen expanded on this when cross-examined by Stephen’s counsel:
It wasn't just about me making money. She sold it to me like - and actually I guess she talked me into it, you know, she wanted to have some money for the kids for the future. She wanted to have - she was very money orientated. She wanted some money and the way she sold it to Grant and I, she wanted the three of us to go in. We'd go in together. When we sell it we'd all end up with cash because once the equity, you know, increased in the house.[49]
[49] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 192 [10-17].
75. Counsel for Stephen put to Karen that the arrangement she had reached with Susanne was that she would ‘go on the mortgage so that [Susanne] didn’t lose her home’. Her response was ‘with all due respect, you can suggest that, but that wasn’t the case’.[50]
[50] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 183 [28-31].
76. It was also put to Karen by Mr Messer that she ‘helped [Susanne] out by going on the mortgage because she couldn’t get a loan by herself?’. She responded that that was not correct.[51]
[51] Ibid, 184 [14-17].
77. In his final submissions, Stephen’s counsel made no real attack on Karen’s evidence other than to submit that her evidence about the cash payments ‘should be rejected as glaringly improbable’.[52] This aspect of the evidence is discussed later in these reasons.
[52] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [53](g).
78. Mr Messer submitted that Karen’s evidence about the arrangement with Susanne having an investment component should be rejected. That is because, it was submitted, ‘it is most unlikely that Susanne would have been concerned to acquire an investment property; it is much more likely that she wanted to keep the children secure in the family home’.[53] This is said to be the result of the application of ‘ordinary human experience’ to the position of a ‘mother of two young children, about to be divorced’.
[53] Ibid, [53](a).
79. I can see no reason, whether based on ‘ordinary human experience’ or otherwise, to reject Karen’s evidence that Susanne proposed an investment opportunity to Karen and Grant. While Susanne may well have been concerned about the future welfare of her two young children, that does not exclude the possibility of a future capital gain. Retention of the property was clearly in the long term interests of Susanne’s children. Karen’s unchallenged evidence was that Susanne was ‘very money oriented’ and ‘wanted to have some money for the kids for the future’.[54]
[54] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 192 [12-14].
80. In summary, Karen’s evidence was unshaken by cross-examination. I found her evidence on the agreement to be plausible and credible.
D.3 Jennifer’s Evidence about the Agreement
81. Jennifer was not a party to the 2003 agreement; nor was she present at the restaurant. However, her evidence was that she had spoken to both Susanne and Karen about what the two of them had agreed.[55]
[55] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 226 [3-5]; 228 [1-2].
82. In summary, Jennifer’s evidence about what she had been told by her sisters was consistent with Karen’s evidence. Jennifer’s evidence was that ‘they both said that they owned the house half and half’.[56]
[56] Ibid, 228 [1-2].
83. Jennifer said that Susanne had told her that ‘Karen and I own the property and she’s my guardian angel she said actually’.[57] Jennifer also explained that Susanne planned to come and live with her and that ‘they were going to rent the house out and then they’ll sell it down the track and make some money and Susanne said then she’ll probably have some money to get a unit or something’.[58]
[57] Ibid, 226 [16-17].
[58] Ibid, 226 [20-26].
84. Jennifer explained that Susanne did not in fact move in with her ‘because she met Stephen and then she was going up to Queensland, so it was just a complete turnaround’.[59]
[59] Ibid, 227 [5-8].
85. In accordance with the authorities discussed earlier, the oral evidence of the three witnesses must be examined against the background of objective facts and contemporaneous documents of which there are a considerable number. It is to that aspect of the evidence that I now turn.
E The ANZ Bank Lends Money to Karen and Susan
86. On 11 June 2002, after reaching their agreement, Karen and Susanne applied to the ANZ Bank for a home loan when they co-signed an ‘Originator Services Loan Application’.[60] The Application was witnessed by Nicolette Houston, head licensee.
[60] Court Book, 268.
87. The Application form included a number of different types of loan. The one selected was a ‘Money Saver Home Loan’ in the amount of $200,000 with the Bluebell Court property as security.[61]
[61] Court Book, 271.
88. In response to the question: ‘Are there any Guarantors?’, the box headed ‘No’ was crossed.
89. Ms Houston interview Karen and Susanne on 11 June 2002 and recorded the following ‘pertinent information’ on the form:
The house is currently in the names of Susanne Cornes and her ex-husband. Susanne is paying out her husband $12,000… and finalising the Aussie Home loan they currently have, and also wants to pay out and close all credit cards … Both Susanne and her sister Karen wish to buy the property at Bluebell Court and a contract of sale is currently being drawn up. This will be done by a solicitor so a valuation will be required.
…
Karen is currently residing at her property in Aspendale Gardens. She has a mortgage of $53,000 …[62]
[62] Court Book, 275 (emphasis added).
90. Karen was asked about this form. She thought that the reference in it to the type of loan was ‘a mistake’ as she and her sister ‘went into it as an investment loan’.[63] There is no evidence before the court about how that box came to be ticked. Ms Houston was not called as a witness. However, it seems unlikely that the ticking of the box was a mistake given the additional details included alongside.
[63] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 142 [19-24]; see also Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 187-8.
91. There was a delay of several months before a pre-Christmas 2002 flurry of activity by all involved.
92. On 12 December 2002, Julie Earl of Harwood Andrews Lawyers faxed Ms Houston asking that she submit certain documents to the lender ‘with the explanation that there is no actual sale between the parties’.[64] The fax went on: ‘Plazstan is taking half the property as she is taking half the liability for the mortgage.’[65] The fax stated that ‘stamp duty should be assessed on $122,500…’.
[64] CB 282.
[65] Court Book, 282 (emphasis added). Karen’s evidence was that this is ‘consistent with [her] understanding of what was going on’: Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 143 [18-19].
93. It is unclear how this figure was calculated as it is not 50% of the value of the property which, as discussed below, was $235,000. I note that the valuation in the Court Book post-dates this fax so it is possible that there was a different valuation of $245,000 which might explain the basis of the figure for the stamp duty assessment. Alternatively, Ms Earl, who was also not called, may have made a mathematical error.
94. What I consider is significant about Ms Earl’s fax is that she records that Karen was becoming the registered proprietor of one half of the property ‘because she is taking half the liability for the mortgage’. This is a contemporaneous record prepared by an independent person that is inconsistent with Stephen’s case and is consistent with Karen’s case.
95. As anticipated in the Loan Application form, a valuation of the Bluebell Court property was completed by David Cox, valuer, on 17 December 2002.[66] Mr Cox valued the property for mortgage purpose at $235,000 and estimated a weekly rental of $280.
[66] Court Book, 283
96. On 18 December 2002, Ms Houston wrote to Dawn Leicester of the ANZ Bank enclosing the documents she had received from Ms Earl the day before including the valuation of $235,000.[67] Ms Houston inquired if her clients could have a loan of $200,000 given that was more than 80% of the valuation. She suggested that Lenders’ Mortgage Insurance could be added to the loan.
[67] Court Book, 284.
97. If Ms Leicester responded to this fax, her response was not included in the evidence.
98. On 30 January 2003, Ms Houston again faxed the ANZ Bank informing that her clients ‘have decided to use this property as a rental now, with both ladies residing at Karen’s home at Aspendale Gardens …’.[68] Ms Houston stated that her clients ‘would like the loan to be assessed on Easystart residential investment loan’.
[68] Court Book, 289.
99. Counsel for Stephen places a great deal of reliance on the word ‘now’ in Ms Houston’s fax of 30 January 2003. He submits that it is ‘telling’ as it ‘strongly implies that a different use for Bluebell Court had been in contemplation previously’.[69] He further submits that the plan agreed between Karen and Susanne was ‘for Susanne to secure the family home for herself and her children’. The switch to an investment property was merely ‘a device to secure the loan’.[70]
[69] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [53](d).
[70] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [53](f).
Karen was asked about this in cross-examination. She denied that the arrangement changed. She denied that any change was a device ‘to get the loan over the line’.[71]
[71] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023) 191-2.
On 14 February 2003, Karen and Susanne signed a mortgage in favour of the ANZ Bank.
On 18 March 2003, Karen and Susanne accepted the ANZ’s offer of a home loan in the sum of $201,882.44. They agreed to make fortnightly repayments, initially of $512.16, which then increased to $589.44, for a period of 30 years. The terms and conditions of the loan are set out in document 52 in the CB.[72] Both Karen and Susanne were thereafter ‘liable individually for the full amount of the loan’.[73]
[72] Court Book, 301-337.
[73] Clause 12 (Court Book, 309).
On 1 April 2003, Karen and Susanne became accountholders of a Residential Investment Loan Account with the ANZ Bank. On that day, the Bank advanced $201,882.44 to Karen and Susanne. Thereafter, the loan was repaid in fortnightly amounts from this account.[74]
[74] The bank statement recording the payments into and out of this account between 1 April 2003 and 31 January 2004 are in evidence – Court Book, 366-7.
Karen’s evidence was that the three sisters discussed renting out the property. Susanne was to move in with Jennifer and there were to be some improvements to the property before it was rented out.[75] At some point Susanne decided to move to Queensland instead and Karen arranged with a work colleague called Julian to do some painting and other work at the property in preparation for it being rented out. Karen and her partner Grant helped out by painting fences. Karen thinks her contribution was ‘around two and a half thousand’.[76] She gave that money to Susanne who gave it to Julian.
[75] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 142 [25-29].
[76] Ibid, 144 [26].
Once that work was completed, Susanne organised a tenant who was a friend of hers.[77]
[77] Ibid, 145 [10-13].
It is common ground that the property was rented out to a tenant commencing in January 2004. The tenant, Robert Clephane paid rent of $200 per week. There was a shortfall between the monthly rent of a little over $800 and the monthly repayments of the loan which were $ 1,032.32.
Conclusions About the Documents
In accordance with authority, I consider that the best sources of evidence about this contested issue are the objective facts and the documents. I have also considered the motives of the witnesses and the overall probabilities.[78]
[78] 3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd [2023] VSC 21, [144]-[145].
On balance, I consider that the undisputed facts as revealed in the documents are more consistent with Karen’s evidence about the agreement she reached with her sister than Stephen’s evidence about that agreement. In other words, the sisters agreed that Karen would own half of the property absolutely. She did not hold her share on trust for Susanne.
I reach this conclusion for the following reasons.
First, the documents prepared by the mortgage broker are a reliable record of the shared intent of the sisters.
It is apparent that Suzanne’s Centrelink income alone was not going to be sufficient for the ANZ bank to provide the loan. Ms Houston’s fax of 30 January 2003 to the ANZ bank states that the repayments will be made from the rent (assessed as $280 per week) and Karen’s income. Ms Houston referred to Karen having recently received a pay increase.
Karen’s unchallenged evidence was that Susanne agreed to rent the property out to a friend of hers for a ‘discounted’ rent of $200 per week.[79] This meant that Karen’s income was going to be all the more important for the loan to be repaid.
[79] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023) 146 [20-21].
It will be recalled that the High Court in Fox v Percy[80] held that one source upon which Judges should reason to their conclusions on disputed questions of fact is the ‘apparent logic of events’.
[80] (2003) 214 CLR 118.
Applying that approach, if Karen was motivated only to assist her older sister to retain her family home as Stephen contends, one may ask why she would have contracted with the ANZ Bank to be individually liable for a loan that exceeded $200,000 when she could have merely agreed to guarantee the repayments as a guarantor.[81] On Stephen’s case, Karen exposed herself to a very significant liability with no personal gain. In fact, if I was to grant the relief that Stephen seeks, Karen would remain saddled with that liability but have no beneficial ownership in the asset that secures the loan. It is inherently unlikely, in my view, that Karen would have agreed to such an outcome.
[81] Stephen rejects this in his written submissions in reply dated 15 November 2023 at [3]. He submits that ‘the difficulties caused for lenders by third party guarantees are notorious’. The submission is made by reference to the case of CBA vAmadio (1983) 151 CLR 447. However, that was a very different case involving as it did guarantors who had been misinformed about the nature of the mortgage concerned.
F Susanne meets Stephen
During 2003 Susanne was exploring possible relationships on an internet dating site. It was through that site that some time in the middle of 2003, she met Stephen Byrne who lived in Queensland. Susanne travelled to Queensland to meet Stephen and then he travelled to Melbourne to meet Jordan and Isabelle. He stayed at the Bluebell Court property in Hoppers Crossing with them.
It was after that meeting that Stephen and Susanne agreed that Susanne and her children would move to Queensland to live with Stephen. They moved during the Christmas holidays at the end of 2003.[82] The conversation(s) with Susanne which Stephen gave evidence can only have been during 2003 at the earliest.
[82] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023), 68 [4-18], Stephen’s evidence was that he met Susanne in 2000 but this was clarified to be 2003 when he was cross-examined – see Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 88 [28] and 90 [25].
The evidence of Karen and Jennifer was that, perhaps unsurprisingly, they were shocked by what they considered to be Susanne’s sudden decision to move her children to live in Queensland with a man she had only just met.
The Falling Out Between Karen and Susanne
Between 2004 and 2009 Susanne travelled from Queensland to Melbourne from time to time for cancer treatment and to visit her family. On most occasions, she stayed with Jennifer. There were two occasions when she intended to stay at Karen’s house in Aspendale Gardens. On the first occasion this occurred without incident.
However, on 29 December 2004, there was an incident that led to the police being called to Karen’s house. The police report records that Karen complained that Stephen had assaulted her.[83] Karen’s evidence was that Stephen grabbed her around the throat and ‘was strangling me’.[84] No charges were laid and Stephen denies the allegations.
[83] Court Book, 341.
[84] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 153 [25-27].
It is unnecessary for this court to reach any conclusions about this matter for the purposes of this proceeding. What is significant however is that this incident led to a fundamental falling out between Karen on the one hand and Susanne and Stephen on the other hand. It also caused a falling out between Susanne and her father. Subsequent events need to be understood against that background.
G Did Karen Contribute to the Mortgage and Property Expenses?
The authorities about common intention constructive trusts discussed earlier enable a court to infer the common intention of the parties from ‘financial contributions, direct or indirect, to the acquisition of the property, including paying off of mortgages, or the payment of expenses which free up funds for that purpose’.
It is therefore necessary to examine the evidence about who made the loan repayments after the ANZ bank advanced the loan funds to the sisters on 1 April 2003 and who paid for electricity, rates, etc. For reasons that will become clear, this is conveniently done in three time periods:
a.1 April 2003 – January 2004;
b.January 2004 until approximately 2009; and
c.2009 – 2021.
G.1 1 April 2003 – January 2004
Stephen concedes by his Amended Reply to Karen’s Amended Defence that, between around 1 April 2003 and around January 2004, Karen made financial contributions:
a.to repayments required under the Loan; and
b.in respect of property outgoings including the cost of electricity and telephone services.[85]
[85] Amended Reply dated 9 June 2022, [18A].
The evidence about the respective earnings and outgoings of the sisters clearly establishes that Susanne could not afford to pay the entire amount by herself. According to the loan application dated 11 June 2002, Susanne’s monthly income was $1,751 and Karen’s was $2,491. The repayments were $1,024 per month. Susanne was a single mother responsible for two children. Karen had no children.
Significantly, and as submitted by Karen, Stephen’s concession is inconsistent with his pleaded case that, under the mutually agreed trust, Karen ‘would not be responsible for repayment of the mortgage loan and payment of the interest thereon’.[86] Stephen’s submissions do not grapple with this inconsistency. The obvious question is: why would Karen immediately start making these payments if she had agreed not to? The only answers can be that she was obliged to do so by her contract with the ANZ bank and that she knew that Susanne could not afford to make the payments herself without Karen’s help.[87] They are both circumstances that are consistent with Karen’s case about what she agreed with Susanne.
[86] Amended Statement of Claim dated 26 August 2022, [18](c).
[87] During this first period, Sussanne’s income from Centrelink was $1,751 per month (Court Book, 268).
They certainly don’t help Stephen’s case. As Karen’s final submissions put it, if the agreement was as Stephen contends, ‘Karen would have agreed to put at risk all her personal assets by becoming jointly and severally liable for a loan and a mortgage that she knew would not be serviced by anyone’.[88] This is improbable.
[88] Defendant’s Outline of Closing Submissions dated 8 November 2023, [46].
G.2 January 2004 until approximately 2009
Stephen’s case is that, after 1 January 2004, Karen made ‘no contribution’ to ‘the Mortgage or to property expenses’.[89] This aspect of the case was strongly disputed.
The Rent
[89] Outline of Closing Submissions on Behalf of the Plaintiff, [53](g).
It is common ground that the property was rented out to Robert Clephane in early 2004. He lived there until 2009. As noted above, it is common ground that, between 2004 and 2009, Mr Clepthane paid his rent of $200 per week into the joint bank account maintained by Karen and Susanne. This left a shortfall of a little over $200 per month.
The Loan repayments were made directly from that account. By this arrangement, Karen and Susanne’s tenant was helping the sisters pay the bulk of the loan repayments and meet their joint liability to the bank. In this sense, Karen was paying part of the loan off at least between 2004 and 2009. However, Stephen’s submissions resist this conclusion.
As I understand Stephen’s submissions about this matter, they are that if the court accepts his version of the agreement and declares the existence of the constructive trust he argues came into existence, then Karen had no entitlement to the rent and all of the rent was paid to Susanne. That is because, in accordance with the authorities discussed earlier, the trust came into existence in 2003 at the time the agreement was made between the sisters. It was therefore in effect in early 2004 when the tenant started paying rent. There is a degree of circularity about this argument. It requires a finding to be made about the existence of the trust before considering whether the rental payment arrangements support Karen’s argument that there was no trust.
The ‘Shortfall’ Between the Income from the Rent and the Liability under the Loan Agreement
Karen’s evidence is that she was also contributing to the shortfall between the rent and what was needed by way of regular loan repayments between 2004 and 2009 after Susanne went to Queensland to live with Stephen. Karen explained that she had agreed with Susanne that they would both pay the shortfall of the rent ‘50/50 with the house and the land rates, the water rates and the insurance’.[90]
[90] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 150 [11-19].
Karen explained that, after she fell out with Susanne as a result of the police incident in late 2004, a complex arrangement was put in place so that she could contribute to the expenses. Under that arrangement, Jennifer (who remained in contact with both of her sisters) would tell Karen from time to time how much money Susanne had told her (Jennifer) that she (Susanne) needed for this purpose.[91] Karen would then provide the money in cash to her father who in turn gave it to Jennifer so that it could be given to Susanne when she came to Melbourne. Karen explained that it was practical for her to leave the money with her father as she saw him more often than she saw Jennifer while Jennifer frequently saw him as she was his carer.[92]
[91] Ibid, 151 [9-14].
[92] Ibid, 150 [25] – 151 [8].
Karen withdrew the cash from her bank account but could not recall how often she left cash in envelopes with her father under this arrangement. She trusted Jennifer ‘unequivocally’ to pass the money on to Susanne.[93]
[93] Ibid, 152 [5].
Counsel for Stephen challenged Karen vigorously about this evidence in cross-examination. It was put to her that she could have transferred the money to Susanne electronically. Her reply was that Susanne did not want that. She wanted cash as she was concerned about Centrelink.[94] It was put to Karen that the arrangement she had described was ‘nonsensical’. She responded ‘that‘s the way we roll in our family’.[95]
[94] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 201 [15].
[95] Ibid, 208 [28-31].
Karen was unmoved by this cross-examination and maintained her evidence.
Jennifer’s evidence corroborated that of Karen’s on the cash arrangement as it had done in relation to the 2003 agreement. Jennifer explained that she asked Susanne if she wanted her to send the cash to her and Susanne responded ‘no, just keep it there’.[96] Susanne collected the money when she came to Melbourne for medical treatment or to visit family.
[96] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 231 [23].
I accept that between 2004 and 2009 Karen contributed to the expenses associated with the property in the manner explained by Karen and Jennifer. The precise amount of the contribution is not possible to calculate on the evidence before the court. I will return to this question later in these reasons.
G.3 October 2009 – January 2020
It is common ground that Stephen, Susanne and her two children returned to live in Melbourne in approximately October 2009. The four of them lived at the property.
Karen’s evidence was that she assisted Susanne to pay the loan off between October 2009 and January 2020 in the same manner as described earlier.[97] She recalled that the last payment she made was in late January 2021 when her father was seriously ill. Because of the impact of the pandemic-caused lockdowns, she was unable to travel to her father’s house to leave the money for Jennifer.[98] Relations between Karen and Susanne were very strained.
[97] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 159 [10-12].
[98] Ibid, 161 [2].
Once again, this evidence was corroborated by Jennifer who was seeing Susanne regularly during this time. Jennifer gave Susanne cash she had received from Karen ‘about ten times a year’.[99] She explained that this went on for a long time – ‘fourteen, 15 years’.[100]
[99] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 235 [17].
[100] Ibid, 235 [19].
Stephen’s evidence relevant to this topic was that Susanne never told him that Karen was contributing towards the mortgage during this period.[101] When he was asked by his counsel whether he ‘would have expected Susanne to tell [him] if that was happening’, he replied:
Possibly not because it was Susanne- when I met Susanne I had my own properties, my own investment properties in and around Queensland and Susanne never had, never got involved, I guess, in that, my personal investments, I guess, because that was what I had before I met her. As her house had really nothing to do with me, that was her house[102]
[101] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023), 70 [1-2]; see also 75 [29-30].
[102] Ibid, 76 [4-10].
In those circumstances, I attach little weight to the evidence Stephen gave about not being aware whether Karen was making any contributions to the payment of the loan in my determination of whether Karen in fact made such contributions.
Conclusions about Karen’s Contributions
Stephen submitted that I should find that the cash payment arrangement was not implemented and that Karen’s evidence should be ‘rejected as being glaringly improbable or contrary to compelling inferences’. He submitted that ‘it is not credible that such an arrangement would exist without a single record being kept’.[103]
[103] Outline of Closing Submissions on Behalf of the Plaintiff, [53](g).
Contrary to the submissions of Stephen, I accept that there was an arrangement along the lines described by Karen and Jennifer under which Karen made regular cash contributions to the payment of the shortfall and other expenses associated with the property. Both Karen and Jennifer impressed me as honest witnesses. Their evidence on this issue is uncontradicted.
It may be accepted that the arrangement was an unusual one and there may have been more straightforward ways of Karen assisting Susanne to pay the various bills. Karen’s evidence that Susanne was concerned about Centrelink is consistent with the objective evidence about Susanne’s legal troubles with Centrelink.[104]
[104] According to Jennifer, Susanne faced criminal charges associated with abuse of Centrelink - Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 236 [6-18].
Further, the family was beset by conflict at numerous levels – sisters not talking to each other; a father who was estranged from his eldest daughter. Against that background, what may appear at first glance to be a highly unusual arrangement, is more understandable.
It is also important in my view to recall that electronic banking was far less prevalent between 2004 and 2009 than it is now and cash transactions were far more common than they now are.
Finally, it is no more surprising that there are no records of these payments than that there are no records of the arrangement between Karen and Susanne in 2003. Financial matters within families are often attended with little formality.
The contributions by Karen to the expenses associated with the property are consistent with her case and inconsistent with that of Stephen. The relevance of this evidence to Stephen’s alternative claim is discussed below.
Susanne’s Contribution to Expenses
Stephen gave evidence about the amounts that he said Susanne had paid to improve and maintain the property. This evidence is principally relevant to the alternative claim for contribution which is discussed later in these reasons.
Stephen was asked to look at a bundle of documents at Court Book 154-224.[105] He identified the handwriting on page 154 as Susanne’s. That document is heads ‘2004’ and includes the following:
Land rates $1090 [divided by] 2 = $545
Insurance 12 months @ $42 = 505 [divided by] 2 = $252
Water rates $146 [divided by] 2 = $73 x 4 quarters = $292
Mortgage $115 fortnightly x 26 weeks = $2990[105] Document 27.
The document then lists a number of other expenditures for December 2003. The last entry on the page is:
Total $5889
There are similar handwritten records in the bundle for the years 2005-2019.[106] When Stephen was shown one for 2006 (Court Book 159) he was less certain that it was Susanne’s handwriting and thought it ‘could very well have been the tenant’s’.[107]
[106] Court Book 156, 159, 161, 162, 164, 178, 181, 183, 186, 191-2, 198, 201, 205, 211, 217, 219 and 222.
[107] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023), 77 [29] – 78 [1].
The bundle also contains copies of a number of invoices and receipts.
Stephen was asked about one of those invoices at CB 155. It is from ‘Jacuzzi, the Spa Professionals’ and refers to work involving a cover for a spa. There is no address. The invoice is addressed to Stephen Byrne and seeks payment of $235. In his evidence Stephen said there was a spa at the property and he recalled a cover being constructed for it. When asked who paid this bill, Stephen said that, if he ‘remembered correctly’, he did.[108]
[108] Ibid, 77 [9].
Stephen said that the handwritten summaries relate to expenditure at 3 Bluebell Court, Hoppers Crossing.[109]
[109] Ibid, 79 [28-31].
Stephen was cross-examined about this issue on the following day of the trial. He said that ‘going over [the documents] last night, I’m [sic] dare saying a lot of the receipts were written by the tenant’.[110]
[110] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 101 [14-15].
Stephen also agreed that he would have paid for a lot of the things listed in these documents ‘because we run a household together. It was our family home’.[111] Stephen also agreed that a number of the expenditures listed in the handwritten records were not supported by invoices. Nor could he provide any evidence that the expenditures improved the value of the property.[112] Stephen was asked about other invoices and, perhaps because of the passage of time, was uncertain about the connection between a number of the expenses and the property.[113]
[111] Ibid, 101 [24-26].
[112] Ibid, 102 [2-9].
[113] Ibid, 104-116.
Stephen was specifically challenged on the claim he made in his Amended Statement of Claim for the sum of $10,000. It was pointed out to him that it was illogical to say on the one hand he had paid this money back to Karen and on the other that she owed that money for upkeep of the property. The claim was expressly disclaimed by his counsel during his evidence.[114]
[114] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 103 [18] – 104 [10].
H Three Letters Sent to Karen in Recent Times
In his closing submissions, Stephen’s counsel relies on Karen’s failure to respond to one letter and her responses to two others. These letters were written in 2021 and 2022. They are therefore not declarations of the parties ‘so close in time after the [agreement] as to constitute part of it’.[115]
[115] Doolan, [39]; see also Calverly v Green (1984) 155 CLR 242, 269.
In accordance with the authorities discussed above, evidence of these declarations by or on behalf of Susanne are ‘only admissible against interest’.[116] However, as no objection to the admissibility of this evidence was made during the trial, it is part of the evidence to be considered.
[116] Ibid.
These letters are not against the plaintiff’s interest at all. In fact they can only be described as self-serving on the part of Susanne and, in the case of the third letter, the plaintiff.
Because it is not the letters but Karen’s response (or lack of response) to them that is said by the plaintiff to have evidentiary significance, I will consider each in turn.
The first was an undated letter from Susanne.[117] While the precise date of the letter is unclear it appears that it was sent before Susanne went to see DeMarco lawyers.[118]
[117] Court Book, 152-153.
[118] Stephen, who saw the letter before Susanne sent it, gathered that this was the case – see Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 9 October 2023), 81 [20-22].
In her letter, Susanne told Karen that as she had again been diagnosed with cancer, she needed to get ‘a lot of things in order’. The third and fourth paragraphs of the letter read:
I know you were angry when you said that you were going to take half my house due to an argument. We both said things we weren’t proud of as people do when they are angry but its time to put this rubbish aside and do the right thing. I need to get my house totally in my name so I can refinance my loan. I have been paying the loan for so long as an investment loan and would have saved $1 000’s if it had been refinanced. I am hoping you will let me take your name from the mortgage and the house title. From what you said I could put your name on the paperwork for the house so I could keep it for the kids as long as you got your $4,000 back. I was so grateful. Family helps family and you were putting your name on paperwork so my kids never lost their house and the only home they knew. You were given back $10,000 in 2005 for the $4,000 you put into the hose and because I was so grateful for your help.
Over the years I have been advised legally to keep records of the money spent on the house whether it be bills, improvements etc and to date this totals $106 719.21 which is your share. This has been kept in yearly records with receipts, payments, etc which you can view any time.
Susanne also stated:
I suppose I am asking you to do the right thing and sign it over please.
Karen agreed that she received this letter.[119] It was one of ‘many, many’ that she received from Susanne often asking for money.[120] Her evidence was that she threw them in the bin because she felt as though Susanne had used her all her life.[121]
[119] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 October 2023), 173 [16].
[120] Ibid, 174 [1-2]
[121] Ibid, 174 [13-22].
Karen did not respond to this letter.
Karen’s silence in this regard is said by Stephen’s counsel to be ‘striking’.[122] It appears that the court is asked to infer that by her silence Karen assented to the contents of the letter.
[122] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [53](g).
The difficulty with this submission is that Karen explained that she never responded to any of Susanne’s letters. As noted, Karen’s unchallenged evidence was that she had received many letters from Susanne over the years but chose not to have any communication with her.[123] I consider this to reflect the breakdown of the relationship between the sisters that resulted from the incident in December 2004 involving Stephen discussed above at [118]-[120].
[123] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 184 [3-6].
Jennifer’s evidence was that Susanne sent her a copy of the letter by phone. She thought it may have been about two years before Susanne passed away.[124] When asked about her reaction to the letter, Jennifer said ‘sometimes I just didn’t know what to say’.[125] When asked to expand, Jennifer said:
Well, some of the stuff in there that she wrote, it was, it was sort of preying on Karen because she knew she had a soft nature and saying that 'my autistic son'. We know Jordan 's autistic and my mum and Karen were very close. She also put that in the letter and
I just thought, well, that's a bit of a low blow because - Yeah[126]
[124] Ibid, 237 [2-13].
[125] Ibid, 237 [15].
[126] Ibid, 237 [16-23].
Jennifer’s evidence continued:
Were the contents of the letter and what it says about the house, is that consistent or inconsistent with your
understanding of the agreement between - - - ?---It's not
right.Okay. How is it not right?---Because they own the house half and half. I was - like why would Karen just hand that over to her?[127][127] Ibid, 237 [24-30].
Jennifer, who maintained a close relationship with Susanne until she passed away, described the contents of the letter as ‘ridiculous’ and ‘untrue’.[128] I have inferred that the basis of Jennifer’s assessment was not just what she had been told by Karen about what was agreed in 2002-3 but what Susanne had told her at that time. As noted earlier, Jennifer’s evidence was that Susanne had told her that Karen owned half the house. Further, Jennifer was well aware from her role in the transfer of the cash, that Karen had contributed to the expenses associated with the property for many years.
[128] Ibid, 238 [5-9].
The second letter upon which Stephen relies was dated 12 April 2021 and was from De Marco Lawyers, Susanne’s solicitors.[129] It was sent shortly before she passed away. I infer that the contents of the letter broadly reflected her instructions as they are similar to the contents of her own letter referred to above.
[129] Court Book, 227
The letter invited Karen to respond in writing if she considered that she had a basis ‘for claiming any interest in the Property’ and invited her to seek independent advice.
Karen did not respond in writing. However, she rang the author on 19 April 2021. His notes recording the conversation are in evidence.[130] Karen told him that she was ‘not opposed to signing the house over to the children’.[131] It was put to Karen in cross-examination that she did not say she was the co-owner. She responded that she told the lawyer about how much money she had put into the property.[132]
[130] Ibid, 228.
[131] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 10 & 11 October 2023), 165 [31]; 214 [25-28].
[132] Ibid, 215 [3-4].
The third letter post-dates Susanne’s death. It was dated 27 August 2021 and was from Elit lawyers, the plaintiff’s solicitors (in his capacity as executor of Susanne’s estate). It is also in evidence.[133] Its contents are fairly similar to the earlier letters but it attached a Deed of Agreement under which Karen and Stephen would ‘acknowledge and agree that the whole of the property be transferred to the Estate of the deceased’. Once again, Karen was invited to respond in writing if she considered that she had a basis ‘to claim an interest in the Property’.
[133] Court Book, 234
Karen did not send a written response; nor did she seek legal advice. She rang the author whose notes of the conversation are in evidence.[134] The notes record Karen stating that she would only transfer her interest if her name came off the mortgage and her interest went to the children.[135]
[134] Ibid, 235.
[135] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 217 [5-9]; Court Book, 235.
In her amended defence, Karen admits that she identified some typographical errors in the Deed.[136] It was put to Karen that she did not say to the lawyer that recital D was not true. Karen responded that she became confused by what was being said to her by the lawyers and never understood what she was being told.[137]
[136] Amended Defence dated 14 April 2023, [28H].
[137] Transcript of Proceedings, Byrne v Plasztan (County Court of Victoria, CI-22-00912, Judge Rozen, 11 October 2023), 220 [15-21].
I accept that a person who was not legally trained or advised may well find such correspondence confusing.
Conclusions about the Letters
In his final submissions, the plaintiff, after referring to each of the three letters and Karen’s responses and non-responses, asks rhetorically:
a.In relation to Susanne’s letter: ‘why would Susanne write to Karen about her (Karen’s) share of “all the money spent on the house” if she knew full well that Karen had been paying along the way?’;[138] and
b.In relation to the De Marco letter: ‘why would Susanne give those instructions?’
[138] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [53](g).
The plaintiff also submits that the De Marco letter ‘demanded a response from Karen’ and that, when given the opportunity to contradict the letter, her ‘silence is striking’.[139]
[139] Ibid.
The plaintiff’s ultimate submission about the letters and Karen’s responses is that, along with other parts of the evidence, they enable the court to infer the agreement between the sisters was as Stephen contends.
Karen’s submissions about the letters are, in summary, that:
a.their contents are ‘inconsistent with the objective facts and surrounding circumstances’; and
b.Susanne waited 18 years to assert an alleged interest against Karen with the logical inference being that for those 18 years she did not consider she had any interest as against Karen.[140]
[140] Defendant’s Outline of Closing Submissions dated 8 November 2023, [81].
Karen submits that the matters raised in the letters ‘should be dismissed as an invention by Susanne’.[141] She submits that her evidence in the hearing should be accepted as demonstrating that in her discussions with both sets of solicitors she consistently asserted her interest in the property. Finally, she points out that once she obtained legal representation she defended the proceeding.
[141] Defendant’s Outline of Closing Submissions dated 8 November 2023, [81].
Susanne was gravely ill with cancer when she wrote the first of the three letters. She passed away shortly after the second letter was sent. I am not prepared to conclude that Susanne ‘invented’ the content of her letter and her instructions to De Marco Lawyers. It is quite possible that she believed what she had written and wished to recall what had been agreed 18 years earlier in the way she described.
In light of this, I consider Karen’s failure to respond to the letter from Susanne to be a neutral part of the evidence.
For slightly different reasons, I also consider the evidence about Karen’s responses to two letters sent to her by solicitors to be essentially neutral.
As noted above, Karen did not seek legal advice before speaking to the lawyers who wrote the letters. I am not prepared to draw an inference against Karen that her failure to take up the invitation should be seen as some kind of admission by her that the contents of the letters were accurate.
In summary, the three essentially self-serving letters, which came into existence 18 years after the date on which the agreement was reached, are of little probative value in the resolution of the issues in this proceeding. In those circumstances, I do not need to infer in favour of Karen that the evidence of the lawyers would not have assisted Stephen.[142]
[142] Karen’s final submissions ([98]) invite the court to draw such an inference based on the case of Jones v Dunkel (1959) 101 CLR 298.
Conclusions about the 2003 Agreement
I noted earlier in these reasons that, on the basis of Stephen’s evidence, he had not established the agreement that he had pleaded in his ASOC. However, that was not the end of the case because any final assessment of that question needs to be made after consideration of all of the evidence in the case.
Having now considered all of the evidence that I view as being relevant to the question, I confirm that I am not satisfied on the balance of probabilities that an agreement with the terms pleaded at paragraph 18 of the ASOC was made between Karen and Susanne.
In summary my reasons are:
a.Where there are conflicts between Stephen’s evidence and that of Karen about what was agreed between Karen and Susanne, I have preferred Karen’s evidence, particularly where it is corroborated by the evidence of Jennifer, for the reasons set out at paragraphs [23]-[27], [59]-[66] and [77]-[84];
b.The documentary record of events that occurred after the date of the agreement lends support to Karen’s case and undermines, or at least does not support, Stephen’s for the reasons explained at paragraphs [107]-[114];
c.The evidence about who paid for the expenses associated with the property also lends support to Karen’s case and undermines, or at least does not support, Stephen’s for the reasons explained at paragraphs [143]-[149]; and
d.The letters sent to Karen and her responses upon which Stephen relied are of little significance to resolving the issues in dispute for the reasons explained at paragraphs [181]-[190].
It follows that Stephen has not established that Karen held her share of the property on trust for Susanne and, since her death, for Susanne’s estate. The legal position was that set out in s 42 of the Transfer of Land Act 1958 (Vic): as the registered proprietor, at all relevant times Karen held her interest in the property subject only to ‘such encumbrances as are recorded on the relevant folio of the Register but absolutely free from all other encumbrances’.
J The Alternative Claim - Contribution
In the event that the court rejects his case about the constructive trust, Stephen seeks orders against Karen requiring her to pay the estate a sum of money being a contribution to the expenses incurred by Susanne in respect of the property. Stephen also seeks an account.
Relevant Legal Principles
The circumstances in which a right to contribution or an account will arise as between co-owners of a property were explained in the case of Forgeard v Shanahan[143] by Meagher JA:
If a co-owner, in occupation effects improvements on the co-owned property he may claim an allowance for any improvements in value effected by him. Such an allowance may be claimed in an action for partition. The allowance is not a reimbursement of the amount expended, but an allowance in respect of the amount by which the value of the property has been increased, not exceeding the amount expended, the “value” to be ascertained at the commencement of the action. ...Thus, in summary, a tenant who effects repairs, is entitled to an allowance for the lesser of the value of the enhancement of the property and the cost of effecting the repairs[144]
[143] (1994) 35 NSWLR 206.
[144] (1994) 35 NSWLR 206, 224.
In her final submissions, Karen draws attention to the third sentence in this passage. That is, the allowance that may be claimed is not a reimbursement for the expenditure but is rather an allowance ‘in respect of the amount by which the value of the property has increased’.
In addition to the circumstances identified by Meagher JA, the other circumstances in which a right to contribution or account will arise are an administration action, an action where there is a fund in court or the dissolution of a partnership.[145] Any reimbursement has to await ‘a suit for partition or an order for the sale of the property’.[146]
[145] Carter v Brine [2015] SASC 204, [457].
[146] Re Pavlou (a bankrupt) [1993] 1 All ER 955.
None of those circumstances arises here and therefore Stephen is not entitled to the contribution he seeks as a matter of law. Even if I am wrong about this, Stephen has not established on the balance of probabilities any such entitlement for the reasons I will now explain.
In the ASOC, Stephen sought two sums:
a.$72,067.97 being the reduction in the principal amount of the mortgage which Susanne and since her death the plaintiff paid but to which the defendant made no contribution; and
b.$54,000 being 50% of the moneys which Susanne expended on maintaining the property but to which the defendant made no contribution.[147]
[147] Amended Statement of Claim dated 26 August 2022, [36].
After the close of the evidence, Stephen now seeks $36,033 under the first category, being ‘one half of the amount by which the principal sum was reduced.’[148]
[148] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [61].
As to the second category, Stephen now submits that he is entitled to ‘one half of the holding costs paid to date, being the amounts recorded by Susanne’.[149] Reference is made by Stephen in his final submissions to the evidence of the expenses recorded in the notes made by Susanne and discussed earlier in these reasons.[150]
[149] Ibid.
[150] See paragraphs [151]-[159] above.
In apparent recognition that the evidence about this latter issue casts doubt on what amounts were paid by Susanne, what amounts were paid by Stephen himself and whether Karen made a contribution and if so in what amount, Stephen submits that:
… if the amount of the contribution for holding costs requires further investigation, the Court should make an order for the taking of an account or the making of any inquiry’[151]
[151] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [61].
The two premises upon which this claim is made are:
a.that Karen made no contribution to the re-payment of the home loan or to the ongoing expenses associated with the property such as rates, insurance and utilities; and
b.that the records of expenses incurred produced to the court are reliable sources of evidence of amounts spent by Susanne on the property.
For the reasons set out earlier, I reject Stephen’s argument that Karen did not contribute to the re-payment of the loan or the other expenses. Although it is not possible to be certain about the actual contribution she made other than while the tenant was living at the property, I accept that her contribution was substantial.
As for the second premise, this is the subject of detailed submissions by Karen. In summary, a number of points are made:
a.Stephen was unable to identify which of the expenses were paid by him personally and which were paid by Susanne;[152]
b.Stephen has placed no evidence before the court of how the improvements have increased the value of the property;[153] and
c.Stephen’s evidence about the bundle of documents was ‘vague and incomplete’ and he made a number of concessions which raise serious questions about the accuracy of the documents in the bundle and their applicability to the property.[154]
[152] Defendant’s Outline of Closing Submissions dated 8 November 2023, [173]-[174].
[153] Ibid, [175].
[154] Ibid, [177]-[181].
Karen’s ultimate submission about this evidence is that ‘the Court cannot be satisfied that Karen is required to account for any of the items listed in the Bundle’ which is said to be a ‘wholly unreliable document that does not engage the relevant legal tests’.[155]
[155] Defendant’s Outline of Closing Submissions dated 8 November 2023, [182].
I accept this submission and determine that Stephen has not made out his case for orders against Karen.
Taking of an Account
One final matter must be disposed of. In his written submissions, Stephen submits that, if the amount of the contribution for holding costs ‘requires further investigation’, the court should make an order for the taking of an account or the making of an inquiry pursuant to Rule 52.01 of the County Court Rules Civil Procedure Rules 2018.[156] Such a course is resisted by Karen.
[156] Outline of Closing Submissions on Behalf of the Plaintiff dated 24 October 2023, [61].
Rule 52.01 provides that a court may at any stage of a proceeding make an order for the taking of any account or the making of any inquiry.
The relevant case law establishes the following propositions:
a.The taking of an account is only appropriate once it has been established that the parties involved are in an accounting relationship with each other, that is, only once it has been established that one party is liable to pay to the other anything that is found, on the taking of the account, to be due to that other;[157]
b.The remedy of account is an equitable one which is discretionary;[158] and
c.The remedy of an account ‘will not be ordered if an account will serve no useful purpose’.[159]
[157] Sharpe v Goodhew [1992] FCA 1011, [5].
[158] Mulherin v Quinn Villages Pty Ltd [2007] QSC 231, [20].
[159] Nastas Investments Pty Ltd v Think Partitions Pty Ltd [2020] VSC 653, [90].
I accept Karen’s submission that Stephen is in effect seeking to re-open his case in the absence of seeking leave. There was opportunity for Stephen to have placed more cogent evidence before the court about this issue.
Significantly, Stephen adduced no evidence of any increase in the value of the property attributable to payment of those expenses. As noted earlier this is the basis in law for any such claim.
In light of the evidence Stephen did give, it seems likely that no such evidence exists. This is a further example of the difficulties thrown up by a case where the primary person involved is deceased.
As explained earlier in these reasons, I am not satisfied on the balance of probabilities that the parties are in an accounting relationship. Stephen has done no more than establish that he might be owed some money.
Further, as with any discretion reposed in the Court by the Rules, I must approach the matter having regard to the ‘overarching purpose’ in the Civil Procedure Act 2010 (Vic).[160] Section 7 of that Act states that the purpose, in relation to civil proceedings, to ‘facilitate the just, efficient, timely and cost-effective resolution of the real issue in dispute’.
[160] s 8.
Having regard to the efficient use of judicial resources;[161] the timely determination of the issues concerning as they do events that occurred more than 20 years ago;[162] and the relatively modest amount in dispute;[163] I refuse to exercise the discretion in favour of Stephen. The finality of litigation is a basal principle of our legal system. As explained by the High Court in Coulton v Holcombe,[164] ‘…[i]t is fundamental to the due administration of justice that the substantial issue between the parties are ordinarily settled at trial’.[165]
[161] Ibid, s 9(1)(d).
[162] Ibid, s 9(1)(f).
[163] Ibid, s 9(1)(g)(ii).
[164] (1986) 162 CLR 1.
[165] (1986) 162 CLR 1, 7.
Orders
The proceeding is dismissed.
Subject to order 3, the plaintiff pay the costs of the defendant as agreed or assessed on the usual basis.
If any party wishes to seek a different order as to costs or any other order:
(a) That party is to file written submissions of no more than 5 A4 pages in support of the orders they seek by 6 December 2023;
(b) Each other party may file written submissions in response of no more than 5 A4 pages by 13 December 2023;
(c) The parties have liberty to apply to vary the dates in (a) and (b) above.
Unless the court wishes to hear or receive further submissions, the orders will be finalised on the papers.
---
Certificate
I certify that these 43 pages are a true copy of the ruling of His Honour Judge Rozen delivered on 29 November 2023.
Dated: 29 November 2023
Andrew Morrison
Associate to His Honour Judge Rozen
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