Clementi v Rossi

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2017 01593

ANTONIO FRANK CLEMENTI	Plaintiff
-and-
CARLA TERESA ROSSI	Defendant

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	3, 4 December 2018
DATE OF JUDGMENT:	7 November 2019
CASE MAY BE CITED AS:	Clementi v Rossi
MEDIUM NEUTRAL CITATION:	[2019] VSC 725

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TRUSTS — Whether the defendant holds interest in a real property on resulting trust for the plaintiff — Whether the defendant must account to the plaintiff for rental received from the property — Where the plaintiff submits transfer to the defendant was to avoid future claim from wife — Where the defendant submits transactions formed part of a ‘family joint venture’ — Credibility of witnesses.

RESULTING TRUSTS — Whether the defendant holds interest in the property on resulting trust for the plaintiff — Whether presumption of resulting trust applies — Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd [2015] VSCA 150 — Anderson v McPherson (No 2) [2012] WASC 19 — Vlahos Pty Ltd v Vlahos [2017] VSCA 166 — Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 — Whether presumption of advancement applies —Calverley v Green (1984) CLR 242 — Xiao v Perpetual [2015] VSCA 124.

CONSTRUCTIVE TRUSTS — Whether the defendant holds interest in the property on constructive trust for the plaintiff —‘Joint endeavour’ constructive trusts — Muschinski v Dodds (1985) 160 CLR 583 — Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 — ‘Common intention’ constructive trusts — McNab v Graham (2017) 53 VR 311 — Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413.

PROPRIETARY ESTOPPEL — Whether the defendant is estopped from denying the plaintiff’s joint beneficial interest the property — Sidhu v Van Dyke (2014) 251 CLR 505.

LIMITATIONS — Whether the plaintiff is estopped from contending that he has an interest in the property, or is otherwise barred from relief — Limitations of Action Act 1958 (Vic) ss 5, 11 and 21 — Doctrine of laches – Orr v Ford (1989) 167 CLR 316 — CSR Ltd v Amaca Pty Ltd [2016] VSCA 320 — Waiver of rights to bring claim — RW Health Partnership Pty Ltd v Lendlease Building Contractors Pty Ltd [2019] VSC 353.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr SW Stuckey QC with Mr SL Freire	Leonidas Lawyers
For the Defendant	Mr AK Panna QC with Mr WHC Forrester	Kingston Lawyers

HER HONOUR:

Introduction

The plaintiff and the defendant are the adult children of Domenico Clementi (‘Domenico’) and Orsola Clementi (‘Orsola’). The plaintiff and defendant previously held title to a property at 129 Brewer Road, Bentleigh (‘Brewer Road’) as joint tenants. In October 2002, the plaintiff transferred his interest in Brewer Road to the defendant.

By his amended statement of claim, the plaintiff claims a beneficial interest in Brewer Road on three alternate grounds — namely, proprietary estoppel, constructive trust and resulting trust — and an account for the income derived from Brewer Road since 2 May 2011.

The defendant denies the plaintiff’s claims, asserting that it was never the intention of the parties that the plaintiff would retain a beneficial interest in Brewer Road. She also pleads that the plaintiff is estopped from bringing the claims or should be barred from bringing his claims on account of delay and the Limitations of Actions Act 1958 (Vic).

The Court has determined that the defendant holds a 50 per cent interest in Brewer Road on resulting trust, or otherwise constructive trust, for the plaintiff and that she is to account to the plaintiff for 50 per cent of the profit that she has received from Brewer Road since 2 May 2011.

Procedural history

On 2 May 2017, the plaintiff filed a writ and statement of claim. The defendant filed her defence on 9 June 2017.

On 18 September 2017, the parties filed affidavits of documents, with the defendant’s affidavit listing 188 discoverable items. On 16 October 2017, the defendant filed a supplementary affidavit of documents, listing a further 17 categories of documents, including a loan receipt from 1985 and a cheque book from 1999. On 19 October 2017, consent orders were made extending the period in which mediation was to occur to allow the plaintiff to review the defendant’s ‘considerable’ discoverable material. On 1 December 2017, the defendant filed a second supplementary affidavit of documents. That affidavit lists documents from 2010 to 2016 relating to Brewer Road.

A mediation between the parties took place on 1 February 2018.

By consent, the statement of claim and defence were amended in February 2018 to allow for an additional paragraph in the plaintiff’s resulting trust claim and a narrowing of the period over which an account was claimed. On 11 April 2018, the plaintiff filed his reply.

At the request of the parties, the period for discovery was extended twice. On 2 July 2018, the defendant deposed that, whilst cleaning the home of Domenico and Orsola in the months leading up to July 2017, she discovered records of the family’s financial affairs. She also deposed that she was not aware of any other records of the family’s financial affairs that were retained at the home.

In July 2018, the parties filed five subpoenas seeking production of documents from various persons and entities.

On 6 August 2018, the defendant filed a third supplementary affidavit of documents, listing an additional 91 items.

Written opening submissions were filed on 28 November 2018. On 30 November 2018, three days before the trial, the defendant filed a fourth supplementary affidavit, listing another 17 documents dating from 1984 to 1995.

The evidence

Domenico and Orsola immigrated to Australia from Italy. They lived with the plaintiff and defendant in their property at 22 Marrbridge Road, Moorabbin (’22 Marrbridge Road’). Domenico worked as a truck driver and Orsola as a process worker.

In January 1979, Domenico and Orsola became the registered proprietors of a property at 208 Patterson Road, Bentleigh (‘Patterson Road’).

The plaintiff completed year 11 at school and then completed a business course at Holmesglen College. When the plaintiff was aged 16, he worked as a part-time cleaner. By the time he was 17 years, he also worked part-time at a bakery. The part-time jobs were undertaken while he completed his studies. The plaintiff asserted that he worked ‘two full shifts’, Friday and Saturday night at the bakery, earning $70 a night.

In 1984, the plaintiff was 19 years old and living with his parents. Although in evidence-in-chief he referred to a year’s employment cleaning warehouses full-time until he commenced work at Vic Clay Pipes, in cross-examination he stated that he commenced working full-time in November 1984 at Vic Clay Pipes. His wages were paid into a State Bank bank account in his name (‘the State Bank account’), which was controlled by his parents. The plaintiff handed his wages over to his parents and they banked them into the State Bank account. He did not draw money out of the State Bank account on a regular basis, although he conceded that he used the funds for his own entertainment. In total, with the two part-time jobs, he estimated that his wages were ‘around $300 a week’.

Purchase of Brewer Road

The plaintiff stated that in 1984 there was a discussion at 22 Marrbridge Road about the plaintiff and defendant entering into a contract to buy a piece of land.

According to the plaintiff, Domenico and Orsola would keep an eye out on properties and when they came across something they thought was a sound investment, ‘we’d look at the property, evaluate the location and have a conversation about whether or not it would be a sound investment’, and the parties would be asked if they wanted to partake in the investment.

Domenico usually made most of the decisions about financial matters in the family. The plaintiff never disagreed with him on such matters.

According to the plaintiff, Domenico and Orsola spoke about Brewer Road as a lucrative investment for the future and that the parties should consider buying it. The plaintiff believed that his parents said that if the parties were to ‘tip in some deposit’, his parents would assist with making the purchase. He stated that, at the time that the purchase of Brewer Road was discussed, ‘it was going to be an investment’ for the defendant and himself.

Counsel for the defendant suggested to the plaintiff that, when Brewer Road was purchased, the plaintiff understood that it was to be a property development for his parents. The plaintiff denied this, stating that Brewer Road was always an investment property, a future prospect for himself and the defendant.

According to the defendant, Domenico and Orsola said to her that Brewer Road was going to be bought as a family investment and it was said to be in the names of the parties as ‘we were all going to benefit down the track’.

On 24 November 1984, the plaintiff and defendant jointly purchased Brewer Road. In cross-examination, the plaintiff stated that he was there when the contract was signed. The consideration for the transfer of Brewer Road was $66,000. Although the plaintiff pleads that he and the defendant contributed approximately $10,000 each to the purchase price, in his evidence-in-chief, he estimated that he contributed ‘around $3,000’ from his earnings associated with his part-time role and full-time employment. When cross-examined, the plaintiff stated that he and the defendant would have ‘come up with’ the deposit. When pressed as to how he had funds for the deposit, when he was only earning $140 per week from his part-time work, the plaintiff stated that he would have accumulated money to pay roughly $3,000. He conceded that, when this proceeding was commenced and during an earlier proceeding at VCAT, he asserted that he had paid $10,000 of the deposit for Brewer Road. Although he initially suggested during cross-examination that $10,000 was the total that he and the defendant would have paid, he acknowledged that this was inconsistent with what he had pleaded. The plaintiff then conceded that he reached the $3,000 as an approximate figure once he ‘worked it back’ from the purchase price. He accepted that it was in November 2018 that he realised that $10,000 was incorrect, and that he came up with $3,000 as a guess.

At the suggestion that the defendant may not have contributed $3,000, and that he may not have contributed the same sum, the plaintiff replied: ‘No. I definitely put $3,000. [The defendant] may not have contributed’.

In her amended defence, the defendant pleads that she contributed money towards the purchase price but was unable to recall how much. In evidence-in-chief, she agreed that she did not pay any part of the deposit. She accepted during cross-examination that she contributed money to the purchase price of Brewer Road once the deposit was down. Her parents asked her and the defendant ‘to put some money in’, associated with which the defendant says she contributed $100 per fortnight until the property was rented.

The plaintiff stated that he organised the finance for the purchase with the State Bank, albeit his parents would have been present at the time he attended the bank.A loan was advanced, secured by a registered mortgage (‘Brewer Road State Bank mortgage’), and the balance of the purchase price was said to be a gift from Domenico and Orsola. This sum was accepted by the plaintiff to be approximately $46,900 paid from their own funds.

According to the defendant, it was Orsola who organised the finance for the purchase of Brewer Road. The defendant agreed in cross-examination, however, that the plaintiff signed the loan agreement. While she was ‘not one hundred per cent sure’, she thought that he was the sole signatory on the document.

The defendant denies that there was a gift from Domenico and Orsola towards the purchase and stated that the funds were advanced according to an agreement between the family members.

A letter by a solicitor to Orsola dated 3 December 1984 confirms instructions for the purchase of Brewer Road by the parties. It refers to a contract of $71,000, part payment of a deposit of $1,000 with a balance of $6,100, and an application for a bank loan of $17,000. In cross-examination, the plaintiff agreed that finance of about $17,000 was obtained.

On 10 December 1984, the same solicitor wrote to the parties regarding the purchase of Brewer Road, confirming instructions that the property was to be held as joint tenants. Reference was also made to $5,000 on account of chattels passing with the property and the transfer showing consideration of $66,000.

According to the plaintiff, when Brewer Road was purchased there was talk that ‘maybe at a later stage we would … look at putting units on it’.

The parties were registered as joint proprietors of Brewer Road on 1 February 1985. The transfer of land records the transferees as the plaintiff and defendant, both of 22 Marrbridge Road.

In evidence-in-chief, the defendant stated that she contributed towards the repayment of the mortgage. She stated that Orsola requested that she and the plaintiff ‘put money in every fortnight’, and that she was contributing about $100 per fortnight from her wages. The contributions were only for a short time, until Brewer Road was rented. After the purchase, the plaintiff did not have anything to do with the management of Brewer Road, it being managed and controlled by Domenico.

The defendant also stated that she was not involved in the management of Brewer Road. The property was managed by Domenico and Orsola. She did not have control of the bank accounts used in relation to the property, and she did not see the relevant bank statements or write any cheques. The defendant confirmed that the cheques were in the plaintiff’s name.

After Brewer Road was cleaned, Domenico and Orsola appointed a real estate agent. According to the plaintiff, the real estate agent would ‘collect on our behalf and then post the cheques’ to Domenico and Orsola. The cheques were then banked into the State Bank account. This practice was said to continue right up until ‘the separation of the properties’.

The plaintiff pleads that the repayments associated with the Brewer Road State Bank mortgage were met by application of funds from a bank account where rental income from Brewer Road, the plaintiff’s wages, and, after 27 July 1987, the rental income from 33 Barrani Street, Bentleigh East (‘Barrani Street’) were deposited.

What appears to be a receipt for a State Bank loan repayment dated 1985 displays both parties’ names under ‘loan name’ and a figure of $5,162.20. According to the plaintiff, Domenico and Orsola would have been responsible for deciding to make that repayment.

Similarly, the plaintiff accepted in cross-examination that, although a letter in relation to mortgage repayments was addressed to the parties, he left it to his parents to deal with it. The letter identifies quarterly repayments of $812. When it was put to the plaintiff that he had no involvement in 1984, 1985 or 1986 with the management of mortgage repayments or other payments concerning Brewer Road, the plaintiff responded that ‘all the money was going into the one account, which incorporated the rentals and that was being drawn down by Mum and Dad to pay the repayments back’.

The monthly rent for Brewer Road in about June 1985, as indicated in a rental statement, was $520 per month. The plaintiff accepted that on a quarterly basis the rent would have been $2,080, which would have been more than enough to cover the mortgage repayments.

When it was put to the plaintiff in cross-examination that it was unnecessary for any part of his salary to be used to repay any part of the Brewer Road mortgage, he replied that his money was ‘still going into the same account’.

The defendant pleads that she contributed wages to the maintenance of Brewer Road.

In approximately 1987, the plaintiff ceased work at Vic Clay. He subsequently worked at the Sun Herald as a sales consultant and at Wormald Security.[1] At the Sun Herald he met Jodie Phipps (‘Jodie’). Throughout this period, his income went into the State Bank account, the deposits and withdrawals associated with which were handled by Domenico.
[1]There is some uncertainty as to the sequence of these roles.

Patterson Road was rented by Domenico and Orsola during the 1980s. The plaintiff stated that the rental funds from that property went into a separate account from the State Bank account, as he and the defendant were not part of the Patterson Road acquisition. He suggested that the account would have been under his parents’ names, stating: ‘I’m pretty sure there was a separate account which handled the Patterson Road moneys. It wasn’t part of this same account.’ When pressed, he denied that he was guessing.

Records from 1985 to 1986 indicate that estate agents, Schulz and Bond, collected the rent for Brewer Road. The records were addressed to the parties at 22 Marrbridge Road. Similarly, Schulz and Bond appear to have managed Patterson Road from 1983 to 1984 and 1987 to 1988. Those statements are addressed to ‘D & O Clementi’.

Purchase of Barrani Street

According to the plaintiff, his godfather saw Barrani Street and mentioned the property to Orsola as a great investment for the plaintiff. Domenico and Orsola discussed the property. The plaintiff also asserted that he and his parents visited Barrani Street.

On 27 July 1987, the plaintiff became the sole registered proprietor of Barrani Street. He was 22 years old at the time. The transfer of land identifies consideration of $90,000.

The plaintiff recalled that a 10 per cent deposit came from the State Bank account. The plaintiff stated that, at that time, his money was still being pooled into the State Bank account from which the $9,000 was drawn.In cross-examination, he stated that he paid the $9,000, denying that it was Domenico or Orsola who paid the deposit.

Finance for the purchase was said to be organised by Domenico.A State Bank mortgage was registered over Barrani Street on 27 July 1987 (‘the Barrani Street State Bank mortgage’) in order to obtain a loan of about $68,000. The plaintiff stated that the remaining $13,000 for the purchase came from the State Bank account. According to the plaintiff, mortgage repayments were paid from the State Bank account.

The defendant agreed that she was not present at the auction when Barrani Street was purchased. She also agreed that she was not part of the conversations between the plaintiff and his parents about buying Barrani Street and that she did not have access to the bank accounts and finances associated with Barrani Street. She also accepted that there was even less reason for her to know anything about Barrani Street, as it was a property that had been bought by the plaintiff. As far as she was aware, the plaintiff had signed the loan agreement.

Barrani Street was then cleaned and rented. The rent received, via an agent, was addressed to 22 Marrbridge Road and deposited into the State Bank account. A rental statement dated 22 November 1988 shows an amount of $650 over a period of one month.In cross-examination, the plaintiff recalled the figure as $350 or $400 per week, or month. Cheques were received by Orsola and they were then deposited into the State Bank account by either Orsola or Domenico.

The plaintiff agreed that in 1988 Domenico sold a house in Italy and received about $80,000 from the sale. The plaintiff was not sure, however, as to whether those funds were deposited into the State Bank account.

The Brewer Road State Bank mortgage was discharged on 4 February 1988. The plaintiff pleads that the balance of the loan of approximately $24,000 was paid out using funds that he advanced as a result of drawing down on a loan facility secured by the Barrani Street State Bank mortgage.

In cross-examination, however, he stated that the funds came from ‘the pool of the account’, as that was where the money was drawn from when he and Domenico went to the bank to pay the mortgage out. The plaintiff also conceded that there was not $24,000 left owing on the Brewer Road State Bank mortgage because, logically, the mortgage began at $17,000 and with quarterly repayments it is unlikely that the sum increased to $24,000 in three years.He did suggest that Domenico may have taken out extra funding, but he was not aware of any funds that were re-drawn on the mortgage.

A State Bank cheque book for the period December 1989 to September 1990, bearing the plaintiff’s name, contains a number of entries said to be in the plaintiff’s handwriting. According to the plaintiff, Orsola would phone him, and he would go to 22 Marrbridge Street and sign cheques for Domenico. When he was there, the plaintiff would ‘marry up’ the cheque butts to the details in the cheque book. The cheque itself would have been filled in by Domenico.

A State Bank credit book from 1991 shows multiple entries from ‘Schultz and Bond’ for $664.08.

Purchase of 41 Marrbridge Road

In 1989, the defendant married Peter Rossi. In March 1989, they purchased and moved into 41 Marrbridge Road. The transfer of land dated 24 April 1989 shows consideration of $157,800.

According to the plaintiff, Orsola had seen 41 Marrbridge Road come on to the market and thought that it would be a great place for the defendant to live close to her parents. The plaintiff was not party to any financial discussions about the purchase of 41 Marrbridge Road. He did not consider that to be unusual as his parents were ‘pretty private’ and only had discussions with the person with whom they were doing the financing.

During cross-examination, the defendant denied that her parents helped pay the deposit on 41 Marrbridge Road. She said that the deposit came from Mr Rossi’s mother. She also denied that her parents lent her and Mr Rossi the amount of the deposit. The defendant was then taken to copies of the cheque book for the State Bank account, which show an entry dated 25 February 1989 for a sum of $15,780 with the payee identified as ‘Real Estate People Stockdale & Leggo’. In response to the suggestion that the amount was paid as a deposit on 41 Marrbridge Road, the defendant stated:

We went to auction and we bought … the property, and my dad said, ‘I’ve got the chequebook’ and paid the amount. And he paid the cheque, obviously. He paid the depositor [sic].

The defendant then accepted that her parents paid the deposit for 41 Marrbridge Road, stating that she did not remember them signing a cheque until she saw the copy of the cheque book. She went on to state that she and Mr Rossi would have paid the deposit back, although she had no recollection of doing so.

A State Bank mortgage was registered over 41 Marrbridge Road on 3 May 1989.

In around 1990, Domenico was diagnosed with cancer.

A State Bank deposit book in the plaintiff’s name shows entries in his handwriting over the period March 1990 to December 1990. This account was operated by the Commonwealth Bank of Australia in the 1990s (‘the CBA account’).

Development of Patterson Road

During the 1990s, two dwellings were constructed on Patterson Road, each with a separate title. The original title for Patterson Road was cancelled on 22 March 1991, and titles for ‘Lot 1 Patterson Road’ and ‘Lot 2 Patterson Road’ were created in the names of Domenico and Orsola.

On 8 April 1991, Lot 2 Patterson Road was transferred to the plaintiff and Lot 1 Patterson Road was transferred to the defendant. The consideration listed on each was ‘natural love and affection’. Domenico and Orsola did not tell the plaintiff why they transferred Lot 2 Patterson Road into his name, nor did they tell the defendant why the transfer of Lot 1 was to her.

According to the plaintiff, the rental cheques from Patterson Road would have been used to service any bills or repairs.

In 1992, the plaintiff stopped paying his wages into the CBA account. He stated that, by that time, there were sufficient funds in the CBA account to sustain the payments for Barrani Street. He opened a separate account with Westpac.

In around 1993, Domenico and Orsola purchased a property at 14 Marcus Street, Dromana.

On 4 June 1993, a CBA account was opened in the names of the plaintiff and defendant (‘the joint CBA account’) with an initial deposit of $36,000. The plaintiff said that his parents would have opened the account. According to the plaintiff, the account would have been for the funding of Brewer Road and Barrani Street, although he admitted that he was not sure. A number of sums were deposited into the account in the subsequent months and, by 1 September 1993, the balance was $40,091. On 30 September 1993, approximately $37,691 was withdrawn. A sum of $13,804 was deposited on 17 December 1993, before $16,000 was withdrawn the following January.

In around 1993 to 1994, the defendant separated from Mr Rossi. Up until that time, she worked full-time as an underwriter.

After a period of maternity leave, the defendant returned to work on a full-time basis in December 1993. She was unable to recall her income at that time, although she did state that she received approximately $800 or $900 per month in spousal maintenance. The defendant continued to work full-time for the balance of the 1990s.

In response to the suggestion that she found ‘times tough’ bringing up her daughter, supporting the mortgage and covering her general expenses, the defendant said that she managed with what she had, that she also worked as a part-time cleaner on weekends, but that there was not a lot of spare cash left over at the end of the month.

Development of Brewer Road

The plaintiff pleads that, in or about 1994, Domenico proposed to the parties that the existing dwelling at Brewer Road be demolished and the site be redeveloped as a two-lot development with a new unit on each lot (‘the development’). In his evidence-in-chief, he stated that his parents would have discussed the development, ‘saying it had great potential’. The decision to build the two units was that of Domenico and Orsola.

The construction was organised by Domenico and he called on friends to keep costs down. Construction finance was obtained for the development from the CBA. The plaintiff pleads that he advanced $84,400 of the construction finance by drawing down on a loan facility secured by the Barrani Street State Bank mortgage. In evidence-in-chief, he stated that his parents thought that it would ‘be great to piggy back off the loan to have a reduced interest rate’.

Construction finance was also said to be obtained from Domenico and Orsola by way of a gift. The defendant denies that the money advanced by Domenico and Orsola was a gift.

In cross-examination, the plaintiff agreed that it was his parents who funded the construction of the two units. He stated that the construction began in late 1993 and ended in 1994.

A cheque book for a second CBA account in the plaintiff’s name (’the second CBA account’) for the period October 1993 to February 1994 shows entries in the handwriting of both the defendant and plaintiff. According to the plaintiff, the entries, which refer to roofing tiles, trusses and carpentry, were for the Brewer Road construction costs.

A CBA mortgage was registered over Brewer Road on 19 April 1994, securing the sum of $84,400 (‘the Brewer Road CBA mortgage’). The plaintiff is identified as the debtor and the monthly mortgage repayment specified is $1,000.

In evidence-in-chief, in response to the question ‘who borrowed the money’, the plaintiff replied ‘I did’. He stated that the loan was serviced by funds from the CBA account, which would have contained his past wages, the rent from Barrani Street and whatever funds were still in the account from the Brewer Road rent. During cross-examination, the plaintiff denied that the rent from Patterson Road would also have been used to make the mortgage repayments.

The plaintiff agreed that he was content to allow his parents to manage Barrani Street, Brewer Road and Patterson Road. When it was suggested that he did not care how the mortgages were repaid, as long as they were repaid, he responded:

Mum and Dad were looking after the properties so it was in our interest to make sure that rentals were paid on time and mortgages were being paid. And that’s where Mum and Dad came in to control … the finances. So it’s not that we didn’t care.

Once the construction of two townhouses on Brewer Road was complete, the properties were placed back on the rental market.

In 1994, the plaintiff was living with Jodie, but said all of his finances were still directed back to 22 Marrbridge Road.

A deposit and withdrawal book for the CBA account for the period January 1995 to February 1995 shows entries in the handwriting of both Domenico and Orsola. One entry refers to an amount that was received for Unit 1, Brewer Road and another refers to payments for ‘water’ and ‘1 Patterson’.

The defendant’s final separation from Mr Rossi occurred in 1995 or 1996. At that time, she assumed the obligations owing for the existing mortgage over 41 Marrbridge Road and refinanced it in relation to about $35,000, which remained owing on the loan. Her refinancing application dated 28 June 1996 noted that 41 Marrbridge Road was purchased on 29 May 1989 for $158,000.

The defendant agreed that things were ‘reasonably tight’ financially in the 1990s when she was filing for divorce, with no money for ‘luxuries’. However, the refinancing application indicates that the bank nominated repayments of $340 per month, but an amendment states ‘$400 per month at clients request’. She denied that her parents or the ‘rental accounts’ were helping her to make the mortgage repayments. She explained that she was able to make the additional repayment as she was ‘getting a good maintenance’. The defendant denied that she was reconstructing her evidence to deal with the material being placed before her.

The plaintiff agreed that, in the 1990s, he and the defendant were in partnership in renting out the ‘various properties’. In evidence-in-chief, he stated that the partnership was formed upon the advice of an accountant. During cross-examination, he also stated that his parents wanted the partnership to be formed on the advice of an accountant.

When questioned in relation to why he would go into a partnership with the defendant if he believed that Barrani Street was his alone, the plaintiff stated that the defendant was not sharing in the income. According to the plaintiff, he had a discussion with her about lowering the ‘tax category’ for both of them. The money was said to be pooled in the ‘one account’ and the partnership agreement came about for accounting purposes.

Records of the joint CBA account in April and May of 1994 show deposits of $624.96 and $564.51. The sums match rental statements for the Patterson Road properties in November 1993 and September 1994. The deposits and withdrawal book for the second CBA account identifies the same sums in September and October 1994 as associated with the Patterson Road properties.

Deposit slips indicate that, in 1995, sums associated with both Patterson Road and Brewer Road were being deposited into the second CBA account. Two slips also appear to refer to ‘Barrani’.

The defendant confirmed that, during the 1990s, she and the plaintiff operated a partnership in relation to the rental of Brewer Road, Barrani Street and Patterson Road. A family friend who was an accountant was said to have done the ‘taxes’.

The defendant said she believed that the tax returns associated with the partnership accurately reflected the business relationship that she and the plaintiff maintained, however, she also said she was not receiving any income from the partnership and Domenico was ‘controlling the account’.

A tax return for the partnership in 1999 noted ‘gross rent’ of $43,173 and a ‘special building write off’ of $6,343.

In the early 1990s, the plaintiff did not tell Jodie about his property arrangements. He agreed with the statement that the properties ‘were part of the family assets’.

Dromana purchase

On 2 November 1998, Domenico, Orsola and the plaintiff became the registered proprietors of a property at 7 Marcus Street, Dromana (‘Dromana’). The consideration for the transfer is identified as $140,000. According to the plaintiff, they had seen the property sell once before and missed out on the purchase, so they decided to buy it the second time. In evidence-in-chief, the plaintiff stated:

[W]e had conversations with Mum and Dad about buying the property and Dad made mention to myself if I would be interested in putting some equity up or some money into the property, that he would write me into the … purchase of the house.

The plaintiff then confirmed that he was ‘more than interested’ to partake in the venture.

In cross-examination, the plaintiff agreed that, in a subsequent VCAT dispute, he asserted that he contributed $10,000 to the purchase of Dromana. He accepted, however, that the figure that he contributed was under $10,000. He also agreed that the funds that went to acquire Dromana came from the account with the pooled funds, rather than his Bank of Melbourne account.

Sale of Patterson Road

In 1999, the properties on Patterson Road were sold. Lot 2 Patterson Road was in the name of the plaintiff and the settlement occurred on 18 June 1999. It appears that, of the proceeds of sale, approximately $20,000 was paid into an account of Domenico’s and $134,497 was paid into the second CBA account. Similarly, in relation to the sale of Lot 1 Patterson Road, on 10 September 1999, the sum of $20,000 was deposited into an account in the name of Domenico and $123,630 was deposited into the second CBA account.

According to the plaintiff, it was Domenico’s decision to sell the properties and the sales ‘came about’ when Domenico had a relapse of cancer. The plaintiff stated that Domenico explained to him that he had limited time to live and he wanted to ‘spend the money’. The plaintiff also stated that, at this time, Domenico’s outlook on life significantly changed.

The plaintiff confirmed that he did not receive any of the proceeds of sale. He had no objection to Domenico selling the properties and spending the money because, although Lot 2 Patterson Road was in his name, it was not his property — ‘it was always managed and controlled by [Domenico and Orsola] to do what they chose fit to do with it’. When asked whether this was the same in relation to the other properties in his name, the plaintiff replied ‘only Brewer Road’. In his view, his interest in Brewer Road was held by the defendant and himself and Barrani Street belonged to him alone.

In cross-examination, the plaintiff denied that he complained to his parents about not receiving any money from the Patterson Road sales or the rent from Barrani Street, or that he was having regular disputes with his father in this regard. He also denied that he said to the defendant after the Patterson Road sales that she should be ‘arcing up and asking for money from the sales’.

The defendant gave evidence that she did not receive any of the proceeds of the sale of Lot 1 Patterson Road. She also stated regarding the proceeds from Lot 2 Patterson Road that the ‘accounts were split, some went into an account in [the plaintiff’s] name and some went into my parents’ account’.

The defendant also sought to give evidence that, after 1999, the plaintiff was having arguments with Domenico and Orsola. The defendant was not present during those alleged arguments and further evidence in relation to what was said was not permitted.

According to the defendant, she and the plaintiff had a discussion surrounding the lack of rent that they were receiving from Brewer Road. The defendant stated:

My brother was saying that I should be speaking to my parents; arcing up to the fact that I wasn’t receiving any rent. At the time I was a single mum. Because everything was in my name and my brother’s name, I wasn’t entitled to receive any type of pension.

In response, the defendant said that she stated: ‘I’m not going to arc up’.

According to the defendant, the plaintiff was quite upset that he was not receiving any rent from Brewer Road or Barrani Street.

Transfer of Dromana interest — November 2001

In 2000, the plaintiff spoke to his parents about marrying Jodie. According to the plaintiff, while Domenico and Orsola were perhaps initially not as accepting of Jodie, as she did not come from an Italian background, they became accepting of her and her son once she and the plaintiff were together for a long period. Upon being told that the plaintiff intended to marry Jodie, Domenico and Orsola were said to be excited. In March 2001, the plaintiff and Jodie were formally engaged.

On 26 October 2001, the defendant opened a CBA account in her own name. She stated that she opened the account because she was asked to do this by her parents.

The plaintiff pleads that, in or around November 2001, Domenico and Orsola told him to transfer back his interest in Dromana to Domenico and Orsola. According to the plaintiff, a conversation took place at 22 Marrbridge Road when the defendant, Domenico, Orsola and himself were there. The meeting had been specifically arranged and the conversation was said to surround retaining the property in ‘the family name’. The plaintiff recounted that Orsola said to him that

they wanted to protect the family asset, which was the beach house. They thought it’d be best if I would transfer … my quarter stake of the asset back to them [so that] there’d be no claim later on in life from my future wife, Jodie.

In his evidence-in-chief, the plaintiff had some difficulty in recalling what Domenico said, only stating how the conversation ‘would have’ gone. He also stated that the defendant said ‘something to the effect of that [it] would be in the best interests to transfer everything back to protect the assets’. According to the plaintiff, a conversation took place, in which it was said that Dromana would be held for him at a later date — that is, if the marriage went well, the property would come back to him at a later date.

In cross-examination, the plaintiff agreed that it was his parents who raised the concern about Jodie making a claim. He also stated that, according to Domenico, the property was going to be held in trust and it would come back to him later on in life. The plaintiff said that he was making the assumption that ‘later on in life’ referred to upon Domenico’s death — that is, the interest would be left to the plaintiff as part of Domenico’s will.

The plaintiff denied that what Domenico was saying during the conversation was that he wanted to separate out everybody’s interest in the properties. He stated that there was one conversation about ‘separating the title’ of Dromana. Brewer Road was not discussed in the same conversation.

In response to the proposition that the concern of Domenico and Orsola was to protect their asset rather than the plaintiff’s interests, the plaintiff agreed that as his parents had put ‘just about the full amounts of the money into the property … it was their concern — that it was their money’.

The plaintiff stated that at first he was not sure whether he should go along with his parents’ request. As he came from quite a disciplined family though, he stated that it was in the best interests to do as his parents requested. The transfer of land dated 19 November 2001 identifies the consideration as ‘natural love and affection’.

The defendant pleads that, in or around November 2001, Domenico and Orsola also told the plaintiff to transfer his interest or share in Brewer Road to the defendant. This is denied by the plaintiff.

The defendant also pleads that:

(a) in or around November 2001, Domenico and Orsola told her that the plaintiff had benefitted more than her by way of financial assistance, which allowed him to hold interests in Brewer Road, Barrani Street and Dromana;

(b) in or around November 2001, Domenico and Orsola told the plaintiff to transfer his interest in Dromana to Domenico and Orsola;

(c) in or around November 2001, and again in or around October 2002, Domenico and Orsola told the plaintiff to transfer his interest in Brewer Road to the defendant;

(d) Domenico and Orsola told the defendant that the main purpose of the transfer of the plaintiff’s share in Brewer Road and Dromana was to equalise the position between the parties as well as Domenico and Orsola, such that each of the parties would have absolute title to a property in their name, and Domenico and Orsola would have absolute title to Dromana;

(e) Domenico and Orsola told the defendant that they were concerned that, as the plaintiff had interests in Brewer Road and Dromana, there was a risk of those assets being acquired by Jodie in any ‘family law dispute’; and

(f) Domenico and Orsola told the defendant that the further purpose of the transfers was to terminate any interest that the plaintiff had and prevent the plaintiff and Jodie from having any further or other interest in Brewer Road or Dromana and thereby protect the defendant’s interest in the former, and Domenico and Orsola’s interest in the latter.

The defendant agreed that she was present during the discussion regarding the transfer of the plaintiff’s interest in Dromana. She gave evidence that she was telephoned by Domenico, who was quite upset as a consequence of quite a few arguments that he and Orsola had had with the plaintiff. According to the defendant, Domenico wanted to call a family meeting.

The defendant said that, at the meeting, Domenico said the reason for the meeting was to separate the family assets. The defendant deposed that Domenico said that they were concerned about the family assets, that they wanted to ‘sort it all out’, and they wanted the plaintiff to transfer Dromana back to Domenico and Orsola. Domenico said that he ‘wanted to protect the family assets’. The defendant agreed that her parents wanted to make sure that there could be no claim to the property because it was in the plaintiff’s name.

The defendant stated that Domenico also told the plaintiff to transfer Brewer Road across into the defendant’s name and that Barrani Street would remain his as a fair split. According to the defendant, the plaintiff then said that he was not happy about the decision. He kept saying: ‘Barrani Street is mine anyway. I paid for it’. In response, Domenico was said to have replied: ‘No. We paid for Barrani Street, so you get Barrani Street’. The defendant also stated that Dromana was then transferred back to her parents, because the plaintiff had ‘no shares’ in that property, he ‘never contributed one cent’.

Expert valuations adduced by the plaintiff indicate that, as at 1 November 2001, the properties had the following values: Brewer Road — $515,000; Dromana — $180,000; 22 Marrbridge Road — $280,000; Barrani Street — $350,000; and 41 Marrbridge Road — $300,000.

According to the plaintiff, Domenico and Orsola organised a solicitor and he met his parents at the solicitor’s office. On 8 January 2002, Domenico and Orsola became the registered proprietors of Dromana. The plaintiff did not receive any cash payment for the transfer of his interest.

Plaintiff moves into Barrani Street

The plaintiff planned to move into Barrani Street with Jodie. He stated that, in late 2001, he advised the tenants that the lease would no longer be extended. After he explained to Domenico and Orsola that he and Jodie were getting married, he also informed them that they were moving into Barrani Street. According to the plaintiff, Domenico was not opposed to the plaintiff and Jodie moving into Barrani Street and, at that time, he said to Domenico that he owned Barrani Street.

During cross-examination, it was put to the plaintiff that there was no tenant in Barrani Street from about 2001. The profit and loss statements for the partnership for the year ending 30 June 2001 noted that Barrani Street was available for rent for two months of the financial year and no suitable tenants were found. Records from the real estate agent indicate that rent was paid up to 11 May 2000, and there is reference to the bond being used. The plaintiff, however, explained that while there were no longer registered tenants, there was someone who had an arrangement with his parents who was paying cash. Notice still had to be given because his parents had given the tenants a term of about 12 months. The plaintiff accepted that there are no records of this arrangement and that he did not declare the rent that was derived in tax returns.

It was also put to the plaintiff in cross-examination that, by October or November 2001, there were frequent discussions between the plaintiff and Domenico about money not being paid to the plaintiff in association with the Barrani Street rent or any other rents. The plaintiff denied this assertion. He also denied that, around this time, there was a conversation in which Domenico said to him specifically that he wanted to split the properties between everybody in the family.

Partnership tax returns for the years ending 30 June 2000 and 30 June 2001 note respectively a ‘special building write off’ and ‘capital works deductions’ of $3,751.

In 2002, the plaintiff and Jodie moved into Barrani Street.

Discharge of Barrani Street and Brewer Road mortgages

In or about May 2002, the balance of the loan secured by the Barrani Street State Bank mortgage and the Brewer Road CBA mortgage of approximately $25,000 was paid out. The plaintiff pleads that this was paid using funds advanced to him by Domenico and Orsola by way of a gift. This is denied by the defendant.

In evidence-in-chief, however, the plaintiff could not recall the circumstances that led to the balance of the loan being paid out.

On 2 May 2002, each of the Barrani Street State Bank mortgage and the Brewer Road CBA mortgage was discharged.

During evidence-in-chief, the defendant initially referred to ‘numerous conversations’ between the plaintiff and his parents regarding the transfer of Brewer Road. After a hearsay objection, she then gave evidence that, after the mortgages were paid off in 2002, the transfer of Brewer Road was discussed at another family meeting at 22 Marrbridge Road, with Domenico, Orsola, the plaintiff and the defendant in attendance. According to the defendant, Domenico raised the issue of protecting the family investments. Domenico said that Brewer Road was to be transferred and that the plaintiff was aware that the defendant would receive Brewer Road and that the plaintiff would receive Barrani Street. When questioned as to how the plaintiff responded to Domenico’s statement, the defendant said that ‘[h]e just agreed’, before continuing:

He agreed. He arced up by saying that the properties were in both our names. That we should be collecting the rent and because of the transfers and everything – because I was a single mum at the time, I wasn’t collecting any pension. And he wanted me to say to my mum and dad that I should be getting rent as well.

According to the defendant, Domenico also stated that, once the transfer had occurred, Brewer Road would be hers and the plaintiff got to keep Barrani Street because Domenico and Orsola had paid for both properties.

A partnership statement for the year ended 30 June 2002 notes the total construction costs for Brewer Road as $150,064 and a building write off of $3,751 over 40 years. When the defendant was asked whether she would be claiming those costs if she had not contributed to them, the defendant replied ‘my parents paid for the construction costs’.

Transfer of Brewer Road interest — October 2002

As at October 2002, the plaintiff and Jodie had been cohabiting for 11 years and had been engaged approximately one year.

The plaintiff pleads that, in around October 2002, about one month before the plaintiff and Jodie were to be married, a conversation took place between the parties, during which the defendant told the plaintiff that:

(a) she did not trust Jodie;

(b) Domenico was going to speak to the plaintiff about transferring the title to Brewer Road; and

(c) the plaintiff should not go against Domenico’s wishes.

Jodie had a hen’s night during 2002. According to the plaintiff’s evidence-in-chief, a conversation took place between he and the defendant at 22 Marrbridge Road, in which the defendant said that she did not trust Jodie and that on the hen’s night she had seen Jodie ‘kiss some other guy’. The plaintiff stated that the defendant mentioned that she had spoken to Domenico and Orsola about transferring Brewer Road to them because of the ‘trust issues’. She was said to be concerned that Jodie might ‘come after the title’. According to the plaintiff, the defendant also said that he should not go against Domenico and Orsola’s wishes, otherwise they will write him out of ‘the will’.

In cross-examination, it was put to the plaintiff that there was no discussion in 2002 about an incident at Jodie’s hen’s night. This was denied by the plaintiff. He did not recall an incident said to have occurred in 1996 or 1997 at a different hen’s night. It was also asserted that the defendant never said anything about the plaintiff being written out of Domenico’s will. This was denied by the plaintiff.

In her amended defence, the defendant pleads that conversations took place at this time between her and her parents, as outlined in paragraph [112(c)] above.

During cross-examination, the defendant initially accepted that she spoke to the plaintiff in 2002. She then denied that she spoke to the plaintiff in 2002 about distrusting Jodie, stating that the dates had been misconstrued. According to the defendant, the issues of trust concerned events in the mid-nineties.

She agreed that she had had a conversation with the plaintiff in October 2002 regarding the plaintiff transferring his interest in Brewer Road. In her amended defence and the statement of agreed facts, she had admitted the content of that conversation as pleaded by the plaintiff in paragraph [130] above. In cross-examination, however, she denied that she told the plaintiff that he should not go against Domenico’s wishes. She stated that she did not recall that conversation at all, nor even that it was an agreed fact. The defendant provided no explanation as to why, on two occasions, the conversation had been formally admitted to the Court. Further, she did not know why, if the plaintiff agreed to transfer his interests in both Dromana and Brewer Road, those transfers were not completed at the same time.

The plaintiff stated that within a week of his conversation with the defendant, he received a telephone call from Orsola asking him to attend 22 Marrbridge Road as his parents wanted to talk about some personal matters. He pleads that, in or about October 2002, a conversation took place between Domenico and himself during which Domenico told the plaintiff that:

(a) he and Orsola were concerned that Jodie might one day claim an interest in Brewer Road;

(b) he and Orsola thought it best that the plaintiff’s interest in Brewer Road be transferred out of his name to protect the property from any such future claims;

(c) this was so that Brewer Road would eventually go to the defendant’s and plaintiff’s biological children as their inheritance, rather than to Jodie or Jodie’s son from a previous marriage; and

(d) he had discussed with the defendant that the plaintiff would transfer his interest in Brewer Road out of his name and that that interest would be held for the plaintiff.

The plaintiff pleads that Orsola was also present. When the plaintiff attended the house, Domenico and Orsola ‘sat down and started asking about transferring the property of Brewer Road back to them, because they felt they didn’t trust Jodie’. At first, the plaintiff said ‘no’ in response, but he reported Domenico being ‘pretty determined it was something that had to happen’ and it would ‘protect [the plaintiff’s] interest’, and ‘at a later date’ it would be ‘distributed’ between the plaintiff and defendant.

In cross-examination, the plaintiff stated that his parents had the same concern as with Dromana – that at a later date Jodie may make a claim. The property was to come back to the plaintiff sometime in the future, but there was no discussion about exactly when. The plaintiff stated that he was led to believe that the property would pass back to him in Domenico or Orsola’s will.

The plaintiff denied that it was a ‘secret arrangement’ but rather a ‘family matter’, the purpose of which was to protect a family asset. When pressed regarding whether he accepted that Brewer Road was really a family asset, however, he replied ‘no’. The purpose was to protect his interest so that Jodie could not make a claim. The plaintiff gave evidence that he had no knowledge of a conversation with Domenico in around November 2002 regarding ‘separating out interests’.

It was not put to the plaintiff that the defendant was present at a second family meeting, after the meeting in November 2001.

Domenico and Orsola identified a conveyancer in Rosebud; the plaintiff met them there and signed over the title to Brewer Road. By transfer registered on 29 October 2002, the parties transferred their respective interests in Brewer Road to the defendant as sole proprietor. The transfer of land signed by the parties as transferors and the defendant as transferee has ‘D Clementi’ as the witness. It also shows the consideration as ‘natural love and affection’ and identifies the defendant’s address as Barrani Street.

The plaintiff stated that the first time he saw that the defendant was transferee was when he went to the conveyancer’s office to sign the transfer. The plaintiff recalled that, when he questioned his parents about this, Domenico said the defendant would ‘take ownership of the home and hold it in trust for the plaintiff at a later date’.

The plaintiff stated that he drove home with his parents. During the drive, there were discussions about the transaction and why the transfer was to the defendant. According to the plaintiff, Domenico said that ‘it was going under [the defendant’s] name, purely because it was going to be held in trust, and that later on it [would] come back to [the plaintiff]’. When asked as to his own reason for signing the transfer, he stated: ‘[so that] it would be held in trust for myself at a later stage where it would come back to me’.

In cross-examination, the plaintiff admitted that the conversation in the car that he recalled did not form part of his statement of claim. He disagreed, however, with the suggestion that the conversation never took place. When questioned in relation to whether the word ‘trust’ was used, he recalled that the conversation was in Italian, and that something to that effect would have been used.

In her amended defence, the defendant denies that Domenico told the plaintiff that the transfer of Brewer Road was so that the interest would eventually go to the defendant’s and plaintiff’s biological children, rather than to Jodie or her son, and that Domenico discussed with the plaintiff and defendant that Brewer Road be transferred out of the plaintiff’s name and held for the plaintiff.

The defendant gave evidence that she was not involved in the transfer of Brewer Road and there was no discussion between her and the plaintiff as to the plaintiff having any interest in the property.

During cross-examination, the defendant was questioned in relation to the discussion between Domenico, Orsola and the plaintiff in October 2002. As to whether she was present at the discussion, she initially stated: ‘I don’t remember 2002’. She later responded to the suggestion that she was not present at the October 2002 meeting by saying: ‘I think in 2002 I was. Yes’, before then stating ‘it’s a long time ago. I can’t remember dates sorry’. She then stated that she was present at ‘probably one or two’ meetings when her parents told the plaintiff to transfer Brewer Road to her. The defendant denied that she only remembered being present at a second conversation regarding Brewer Road, after November 2001, to advance her case after the earlier hearsay ruling. Further, she denied that she was reconstructing evidence to advance her case every time she saw a problem.

The defendant agreed that, in October 2002, her parents were worried about protecting the family assets, wanting to make sure that there could be no claim by Jodie because the property was in the plaintiff’s name. She accepted that both of the transfers, that of Dromana and Brewer Road, ‘went through’ for natural love and affection.

The defendant denied that her parents never intended, just as the plaintiff never intended, that she should enjoy the whole of the interest in Brewer Road. In response to the suggestion that her parents were concerned that Jodie might make a claim on Brewer Road, the defendant said that ‘every parent worries about their family assets’.

The defendant arranged for the rent from Brewer Road to be paid into her CBA account.The plaintiff was not aware of these arrangements.

Events subsequent to the Brewer Road transfer

During cross-examination, the defendant stated that after Brewer Road was transferred in November 2002 she did not receive any money from Brewer Road because Domenico looked after the properties.

The defendant agreed that her parents still took the money from Brewer Road after November 2002, controlled the bank account into which the money was paid, and controlled the way in which the money was disbursed. The defendant also agreed that her parents still applied the money towards their interests, Dromana, and 22 Marrbridge Road, however, she maintained that her claim of obtaining the full benefit of Brewer Road in November 2002 was correct.

In 2002, the partnership between the plaintiff and defendant ended, with a final return identifying the date of dissolution as 29 October 2002.

On 3 November 2002, the plaintiff and Jodie were married. The plaintiff was aware that the defendant was collecting rent for Brewer Road but he did not ask for any of those funds to be transferred to him. According to the plaintiff, this was because of ‘family trust’ — he ‘had a lot of trust in the decision-making’ of his parents, so he ‘had not reason to question it’.

A partnership tax return for 2003 was signed by the defendant.

On 31 July 2004, the opening balance of the CBA account in the defendant’s name was $56,693.11. She does not know where the earlier statements for the account are. The statements are addressed to ‘Mrs C Rossi, 22 Marrbridge Street’. The defendant could only make inferences or guesses as to where the amount of $56,693.11 came from and said she had no control over the account while her father was alive. She agreed with the proposition that the money in the account really belonged to her parents.

The defendant agreed that, since the transfer of Brewer Road into her name, she continued to claim the building write-off in her tax returns. Her 2011 individual tax return shows a claim of $3,751 for ‘capital works deductions’ and the same sum is claimed in her 2012 individual tax return. The defendant agreed that she had been claiming as a deduction the works that she and the plaintiff did in 1993 on Brewer Road.

In 2005 or 2006, Orsola was diagnosed with mild dementia. According to the plaintiff, in around 2006, Domenico’s cancer returned.

The plaintiff described his relationship with his parents during the period 2005 to 2006 as ‘quite good’. He would visit them every couple of weeks and he stated that he did not fight with his parents very often; they had disagreements, but no real arguments.

The plaintiff agreed that it was the defendant who regularly looked after Domenico and Orsola in the period before Domenico’s death, although he did provide some assistance in taking Domenico to chemotherapy sessions.

On 28 February 2006, Domenico and Orsola appointed the defendant attorney under their financial powers of attorney. The same appointments were made on 13 July 2006. On that date, Domenico and Orsola also executed their wills. Domenico’s will devised his interest in Dromana to the parties in equal shares and the remainder of his estate to Orsola.

The plaintiff was unaware of the defendant’s appointment under the financial powers of attorney and denied that in around 2005 to 2006 he was asked to be co-attorney.

The defendant stated that the plaintiff telephoned her requesting that they meet at 22 Marrbridge Road to discuss Orsola. According to the defendant, when she arrived, the plaintiff said that he wanted her to transfer the power of attorney from her name to both of their names. The defendant objected to the request.

By transfer registered on 4 August 2006, Domenico and Orsola severed their joint tenancy in Dromana, converting their interests into a tenancy in common in two equal, undivided shares.

On 30 July 2007, the defendant was registered as having a one-third interest in 22 Marrbridge Road. The transfer of land dated 9 July 2007 shows consideration of $3,750. The plaintiff was not aware of this transfer. When it was suggested to the defendant that this defeated the purported ‘equalisation’ that had been achieved in 2002, the defendant stated:

My parents gave me that share because they saw that in the past I never received as much as what [the plaintiff] got in other ways. [The plaintiff] was given a lot more. He was given money. From what I –what my parents got. I don’t know exactly what amounts or anything, but all I know that [the plaintiff] was looked after more than I was.

Domenico died on 2 February 2008.

The plaintiff pleads that, the day after Domenico’s funeral, he said to the defendant that they needed to do something about Brewer Road and that they needed to put the title back into both their names. The conversation is said to have taken place at 22 Marrbridge Road. The plaintiff asserts that the defendant did not agree with taking such action. In evidence-in-chief, he stated that, when he asked the defendant about transferring half the title back to him, she said that it was not the time or place to discuss it, straight after Domenico’s funeral, and dismissed the conversation. In cross-examination, it was put to the plaintiff that the conversation never occurred. He denied this, stating that Orsola was quite upset because they ‘were having an argument about it’. According to the plaintiff, he asked for the property back and the defendant said: ‘Nothing’s going to happen at this stage. Dad’s just passed away.’

The defendant denies that she discussed Brewer Road with the plaintiff after Domenico’s death. The defendant said she did not make decisions as Orsola’s attorney until after Domenico died. When she did, she did not consult the plaintiff unless she needed his agreement on a matter. According to the defendant, she was not speaking to the plaintiff from 2008 onwards.

On 19 February 2008, the mortgage over 41 Marrbridge Road was discharged. The defendant gave evidence that the funds were paid by her deceased husband, Mr Rossi, who was retrenched in September 2007. She agreed that it was just a coincidence that the mortgage was discharged within weeks of her father’s death.

Within a month of Domenico’s death, the defendant changed the address for the CBA account in her name from 22 Marrbridge Road to 41 Marrbridge Road, and she then ‘ran the account’.

The plaintiff, the defendant and Orsola were the executors of Domenico’s will and his estate. According to the plaintiff, the defendant organised probate of the will. The plaintiff stated that, prior to seeing the solicitor about probate, the defendant told him not to discuss Brewer Road as the solicitor was not aware of the properties.

The defendant did not disclose the funds in the CBA account in her name as one of the assets of Domenico’s estate.

On 17 April 2008, the parties applied for a grant of probate of Domenico’s estate. The assets listed in the application are a half interest in Dromana and a third interest in 22 Marrbridge Road.

It was during the probate process that the plaintiff learnt that the defendant held a third interest in 22 Marrbridge Road.

Domenico’s interest in Dromana was transferred to the parties as legal personal representatives of his estate on 6 June 2008. The interest, held as tenants in common in equal shares, has since been transferred to the parties in accordance with the terms of Domenico’s will.

The plaintiff pleads that, in or about February 2009, in person at 22 Marrbridge Road, he said to the defendant that they needed to talk about Brewer Road. According to the plaintiff, the defendant refused to discuss the subject, stating: ‘That’s not going to happen’.

Bank statements of the defendant from 2 May 2011 to 1 July 2017 show that the defendant received approximately $222,792 in payments from Hocking Stuart. The defendant’s tax returns for the period 1 July 2011 to 30 June 2017 indicate that she received approximately $163,417 in rental income after expenses, and statements from Jellis Craig from 1 July 2011 to 30 June 2016 show rental payments of approximately $178,476, after expenses, to the defendant.

In 2016, the defendant sought to sell Dromana in order to fund Orsola’s move into an aged care facility. The plaintiff did not think that Dromana should be sold and instead suggested the sale of 22 Marrbridge Road. The defendant then commenced a VCAT proceeding in which the plaintiff asserted a 50 per cent interest in Dromana and that he had contributed $10,000 to the purchase price. The VCAT proceeding eventually settled.

In June 2016, Orsola moved into residential care, suffering from advanced dementia.

Discovery of documents at 22 Marrbridge Road

The defendant organised the sale of 22 Marrbridge Road in 2017. When clearing the property ahead of the transfer of ownership, she discovered three bags of financial records at the rear of the garage in a cupboard full of rubbish and plastic bags. The records, some of which now form evidence in this proceeding, included cheque and deposit books dated back to the 1980s.

The defendant looked at all of the documents that she found in the bags in order to determine if they were relevant to the proceeding. She also made notes regarding some of the documents. The defendant then put the documents in a box to hand over to her lawyers. She denied that she grouped or bundled them together according to subject matter. She also denied that there were financial documents in the plastic bags that were not relevant to the proceeding.

One of the documents said to be found in the three plastic bags was the plaintiff’s tax return from 1985. The tax return was handed to the defendant’s lawyers in the week before the trial of the proceeding. When asked why the tax return had not been discovered in the proceeding earlier, the defendant said that it was an ‘oversight’.

Similarly, documents relating to payments towards the Brewer Road State Bank loan and correspondence from the Brewer Road and Barrani Street purchases were handed to the defendant’s lawyers in the week prior to the trial. Again, the defendant explained the late disclosure of the documents as an ‘oversight’. She denied that it was subsequent to her reading the outline of submissions in the week prior to the trial and realising that the documents were relevant to her case, again stating that it was an ‘oversight’.

The defendant assumed that the additional documents went into the box from the three plastic bags.

When it was put to the defendant during cross-examination that it could not be correct that she took the records from the plastic bags, looked at them, and put them all in the box, she replied: ‘Yes, I did put them in the box’. She subsequently admitted that she had regard to the documents when she and a friend were preparing a timeline for her lawyers. It was when her lawyers raised questions about the timeline that the defendant realised her ‘oversight’. She stated that the disclosure of the documents in the week prior to the trial was ‘nothing deliberate’, they were said to be ‘mixed up’ with the paperwork from the VCAT proceeding.

The defendant then admitted that she went through the box again before delivering it to her lawyers. She stated that this was to ‘make sure that everything was there’.

The defendant could not remember whether she had discovered the plastic bags of records prior to swearing her first affidavit of discovery on 18 September 2017.

The defendant swore a further affidavit of discovery on 2 July 2018. She gave evidence that at that time she searched for any additional documents but she did not find anything. She agreed that there were very few bank statements amongst the records that she found in the plastic bags, however, she did not confirm that this was surprising.

Issues in dispute

The key issues in dispute are:

(a) does the defendant hold an interest in Brewer Road on resulting trust for the plaintiff;

(b) does the defendant hold an interest in Brewer Road on constructive trust for the plaintiff;

(c) is the defendant estopped from denying the plaintiff’s joint beneficial interest in Brewer Road;

(d) does the defendant have to account to the plaintiff for rental received from Brewer Road since 2 May 2011; and

(e) is the plaintiff estopped from contending that he has an interest in Brewer Road, or otherwise barred from relief, due to ss 5(2), 11(1) and 21(2) of the Limitations of Action Act 1958, laches, or waiver?

Credibility of the parties

The parties are the only witnesses in the proceeding. Given the time that has passed since the events in question, it is not surprising that they may have had some difficulty recounting acts and conversations in detail. However, it is necessary to consider the credibility of the parties, particularly given the state of the documentary evidence before the Court.

The plaintiff

The plaintiff’s evidence was generally consistent and he was a truthful witness. At times, it was apparent that there were inconsistencies in his evidence and he had difficulty recalling the details of the events in question. In such instances, however, he made appropriate concessions, for example:

(a) in relation to the question of the sum of money that he contributed to the purchase of Brewer Road. While he initially asserted it was $3,000, he then accepted that he was ‘guessing’, working backwards from the identifiable figures in the documents;

(b) although he pleaded that the Brewer Road mortgage was paid out using funds advanced to him by way of a gift, in his evidence-in-chief, he conceded that he could not recall the circumstances in which the mortgage was paid out;

(c) similarly, regarding funds used to develop Brewer Road, although the plaintiff pleaded that the funds were obtained from Domenico and Orsola by way of a gift, in cross-examination, he agreed that it was his parents who funded the construction;

(d) when asked whether he had fights with his parents, the plaintiff admitted to disagreements, but not arguments; and

(e) when recalling the discussion he had with Domenico and Orsola at 22 Marrbridge Road regarding transferring his interest in Brewer Road, he gave evidence as to what Domenico ‘would have said’, rather than the actual words used. When pushed, he did not attempt to provide the actual words Domenico used.

The last example sits in contrast with the plaintiff’s evidence surrounding the conversation that he had in the car with his parents after the three of them had visited the conveyancer’s office. The plaintiff recalled Domenico saying it ‘was going under the defendant’s name, because it was going to be held on trust’. The conversation was not pleaded and he conceded that, rather than the word ‘trust’ being used, something to that effect in Italian would have been used. He denied, however, that the conversation did not take place. In light of the plaintiff’s case, it is difficult accepting that if Domenico used the words as asserted, the plaintiff would have failed to particularise them in his pleading. Rather, while it can be accepted that a conversation took place in the car from which the plaintiff gained certain impressions, as with the earlier conversation at 22 Marrbridge Road, the plaintiff had difficulty recalling the exact words used by Domenico and Orsola. This point aside, on the whole, the plaintiff was a credible witness.

The defendant

The defendant’s evidence displayed multiple inconsistencies, chiefly:

(a) her denial that Domenico and Orsola helped pay the deposit on 41 Marrbridge Road, until she was shown the documentary evidence. While this was explained as her memory being prompted by the documentary evidence, it was a significant sum of money and purchase, casting doubt on whether the financial assistance was forgotten;

(b) stating that things were ‘reasonably tight’ financially after her separation from her husband, yet, after being shown the refinancing documents for 41 Marrbridge Road, explaining that she was able to make additional payments as she was ‘getting a good maintenance’;

(c) her evidence that she was present at one or two family meetings after November 2001 in which Domenico discussed transferring Brewer Road with the plaintiff. Specifically, the defendant recounted a family meeting after the mortgages were paid. It was not put to the plaintiff that the defendant was at such a meeting, nor was it pleaded, and the first time that the defendant recalled it was after a hearsay ruling. The detail with which the defendant recalled Domenico’s statement, the plaintiff’s response, and the reference to rent is inconsistent with her later statement ‘I don’t remember 2002’. Further, the plaintiff’s purported acceptance of the separation of assets at this meeting is inconsistent with the defendant’s pleading and later acceptance that in October 2002 she said to the plaintiff that Domenico wanted to speak to him about transferring Brewer Road;

(d) her initial acceptance, then denial, of the conversation with the plaintiff in October 2002 surrounding her mistrust of Jodie and the transfer of Brewer Road, even though the conversation was accepted as pleaded and an agreed fact. While the explanation provided was that the conversation had been misconstrued, and the mistrust referred to events in the mid-nineties, it is not apparent why this was not raised earlier in the proceeding;

(e) initially stating that she did not remember being present at a discussion between Domenico, Orsola and the plaintiff in October 2002 regarding the separation of assets, saying, ‘I don’t remember 2002’, before then stating, ‘yes, I think I was’, and ‘probably one or two’; and

(f) initially stating that she simply transferred the financial documents discovered at 22 Marrbridge Road from the plastic bags to a box, although she made notes about them and certain documents were not initially discovered and said to be ‘mixed up’ with the paperwork for the VCAT proceeding.

Overall, the defendant was not a credible witness.

Findings of fact

As outlined in the joint list of agreed issues, the following factual disputes underpin the proceeding.

Contributions to the purchase of Brewer Road

The documentary evidence shows that the contract for sale for Brewer Road was $71,000. Of this, $5,000 was paid for the transfer of chattels and $66,000 was the consideration for the land. The deposit of $7,100 was part paid initially with a sum of $1,000 and further finance of $17,000 was obtained.

The plaintiff claimed that he contributed $3,000 to the deposit, however, admitted that he was guessing this figure. There is no documentary evidence of his income or expenses in 1983 or 1984. Based on the plaintiff’s evidence surrounding Domenico and Orsola’s suggestion that the plaintiff and defendant ‘tip in’ on the purchase as a lucrative investment and the defendant’s evidence that the parties ‘put some money in’, it is likely that the plaintiff contributed at the very least a nominal sum to the purchase of Brewer Road, but otherwise a conclusion cannot be drawn as to the quantum contributed by him. This is particularly so given the lack of documentary evidence regarding the State Bank account.

Similarly, while it can be accepted that Domenico and Orsola sought a contribution from the defendant and, on balance, it may be inferred that she would have followed her parents’ request in the circumstances and contributed funds once the ‘deposit was down’, the exact figure of $100 per fortnight is not otherwise corroborated by any documentary evidence.

Aside from these potentially nominal contributions from the parties and the finance of $17,000, Domenico and Orsola contributed the balance of approximately $49,000 for the consideration for the purchase of the property.

Contributions to the Brewer Road mortgage

The plaintiff stated that he ‘left it up to’ Domenico and Orsola to manage the loan associated with Brewer Road. Of note in this regard is a payment of $5,162 toward the loan said to be funded by his parents. The plaintiff asserted in his statement of claim that the loan repayments came from the State Bank account, however, this is not clear on the documentary evidence. Even if they did, the plaintiff accepted that, by at least June 1985, the rent from Brewer Road would have covered the loan repayments.

The defendant gave evidence that, while she contributed $100 per fortnight to the repayment of the mortgage, this was only for a short time, until the property was rented.

Again, while it can be accepted that, consistent with involving their children in a lucrative investment, Domenico and Orsola sought contributions from the parties toward the loan repayments, no conclusion can be drawn as to the exact amount that each party contributed to the investment. Although the plaintiff’s evidence was that his wages were being deposited into the State Bank account, and in such a way he was contributing to the general ‘pool’ of funds managed by Domenico, this does not establish his direct contributions to repayment of the loan.

Financial contributions to the development of Brewer Road

Brewer Road was developed from late 1993 to 1994. The partnership documents attribute a total construction cost for Brewer Road of $150,064.

The plaintiff gave evidence that the joint CBA account was for ‘the funding of Brewer Road and Barrani Street’, albeit he was not sure. Documents show that, in April and May of 1994, that account was receiving rental from Patterson Road.

It appears that funds for roofing tiles, trusses and carpentry were paid from the second CBA account, which was in the plaintiff’s name. Documents from that account in late 1994 show that it was receiving sums mirroring the rental values of Patterson Road, and later, Barrani Street and Brewer Road. It can be inferred that, from at least late 1994 and in 1995, the second CBA account was being used to pool rental proceeds from Barrani Street, Brewer Road and Patterson Road. Prior to this, it is unclear which funds were being deposited into the second CBA account.

The plaintiff claims that construction finance was obtained from his parents as a gift. While the defendant accepts that her parents paid for the construction costs, she denies that it was by way of a gift.

The Brewer Road CBA mortgage, which was in the plaintiff’s name and secured the sum of $84,000, also appeared to fund the development of Brewer Road. The plaintiff gave evidence that the associated loan repayments would have been made from the CBA account, into which his wage was deposited up until 1992. While it may be accepted that the loan repayments may have been drawn from either the CBA account or the second CBA account, the plaintiff has not established that his income was applied toward the repayments. As with the Brewer Road State Bank mortgage, it was Domenico and Orsola who managed and controlled the repayment of the loan secured by the Brewer Road CBA mortgage.

[63]Sidhu v Van Dyke (2014) 251 CLR 505, 511 (French CJ, Kiefel, Bell and Keane JJ) (citations omitted) (‘Sidhu’), referring to Giumelli v Giumelli (1999) 196 CLR 101. See McNab v Graham (n 40) 327 [66].

Proprietary estoppel was seen to ‘vindicate the expectations of the representee against a party who seeks unconscionably to resile from an expectation he or she has created’.[64] In Donis v Donis, Nettle JA described the underlying principle as follows:

[C]onduct of the promisor in engaging the complainant to change his or her position to their detriment on the footing that the promised property will be theirs, when acted upon by the complainant, creates an equity which binds the promisor to make good the expectation. Hence, the detrimental reliance which supports the estoppel need not constitute consideration in any sense.[65]

[64]Sidhu (n 63) 527, citing Donis v Donis (2007) 19 VR 577, 582–3 (Nettle JA, Maxwell ACJ and Ashley JA agreeing). See also Harrison v Harrison [2011] VSC 459, [369] (Kaye J).

[65](2007) 19 VR 577, 589.

What ‘lies at the heart of the estoppel is the encouragement of an acquisition of an interest in property’.[66] The relevant representation can be inferred from conduct.[67] While it must be in clear terms, in cases of proprietary estoppel, ‘the test is less stringent and the precision of the promise relied on does not need to be proved to the same standard as that required to establish promissory estoppel’.[68] Moreover, in the familial context, the clarity of the representation may be less precise and legalistic than in commercial circumstances.[69]
[66]McNab v Graham (n 40) 340 [97] (Tate JA, Santamaria JA and Keogh AJA agreeing).
[67]Legione v Hateley (1983) 152 CLR 406, 438–9 (Mason and Deane JJ).
[68]McDonald v Dunscombe [2018] VSC 283, [17] (McMillan J).
[69]MacDonald v Frost [2009] EWHC 2276, [20] (Miss Geraldine Andrews QC sitting as a Judge of the High Court). See GE Dal Pont, Equity and Trusts in Australia (Thomson Reuters, 7^th ed, 2019) [10.120].

In McDonald v Dunscombe, this Court followed the approach of Kaye J in determining that, in the circumstances, the plaintiff had to establish that:

(a) a representation was made by the defendant to the plaintiff;

(b) the plaintiff acted in reliance on that representation;

(c) the plaintiff acted reasonably in so relying on the promise made by the defendant;

(d) the defendant knew or intended that the plaintiff would rely on the representation and would thereby act in the manner referred to above; and

(e) that the plaintiff suffered detriment as a consequence of the failure of the defendant to adhere to the representation.[70]

[70]McDonald v Dunscombe (n 68) [20] (McMillan J).

In the present circumstances, the defendant submits that a fundamental flaw in the plaintiff’s case is that there is no suggestion she made a representation to the plaintiff that he would continue to have an equitable interest in Brewer Road. The plaintiff was not induced by the defendant to alter his position detrimentally in the belief that he would obtain or retain an interest in Brewer Road. Rather, the plaintiff’s case is that Domenico told him that he would retain a beneficial interest in Brewer Road. Domenico and Orsola purchased, developed and managed all of the properties, and the parties held the properties on behalf of their parents — the defendant did not induce the plaintiff.

The plaintiff did not appear to make submissions directed specifically towards the elements of proprietary estoppel. Instead, he cited comments of Ward J in Boumelhem, who recognised the similarities between proprietary estoppel and common intention constructive trusts and concluded in the circumstances that the plaintiff had ‘made out the proprietary estoppel or (if there be any sensible difference) a prima facie entitlement to a “common intention constructive trust’’.[71]
[71]Boumelhem (n 3) [118].

In the Court’s view, it is inappropriate to draw conclusions as to whether the defendant is estopped from denying that the plaintiff holds a beneficial interest in Brewer Road in circumstances where it appears that the plaintiff has not made submissions specific to the issue. This is particularly so where nuances may exist delineating the principles of common intention constructive trusts from those of proprietary estoppel and, in the latter context, specific authorities exist concerning the role of inducement. As such, the plaintiff has not established his claim of proprietary estoppel.

Does the defendant have to account?

In The Law of Trusts, Ford and Lee state:

Beneficiaries under a resulting trust enjoy the same proprietary rights to the trust property, and the same personal right to ensure that the trust fund is reconstituted … as beneficiaries under an express trust.[72]

A ‘plaintiff who seeks the remedy of account must prove that the defendant is an accounting party, and that the plaintiff is entitled to some (uncertain) sum from the defendant’.[73] A trustee is an accounting party and it is a fundamental obligation to ‘keep and render to the beneficiaries a full and candid record of their stewardship, including all appropriate financial accounts’.[74] Where an account in common form is sought, it is unnecessary to first establish a breach of trust.[75]

[72]Westlaw AU, Ford and Lee: The Law of Trusts (at 23 January 2018) [21.180], citing Crampton–Smith v Crampton-Smith [2012] 1 NZLR 5.

[73]Hancock v Rinehart (2015) 106 ACSR 207, 291 [338] (Brereton J).

[74]Ibid 291 [339].

[75]Spellson v George (1987) 11 NSWLR 300, 315–16 (Powell J).

Submissions

The plaintiff seeks the taking of an account for the income derived by the defendant from Brewer Road since 2 May 2011. His written submissions include a schedule of the income, to the extent that he has been able to ascertain it, compiled from the defendant’s discovered documents. The plaintiff concedes that, insofar as his claim to account relates to any matter arising prior to 2 May 2011, it is statute-barred. However, after that date, the accrual of the action occurred each time the defendant received income generated from Brewer Road, as the action for account is said to accrue when the accounting party receives the money or property in respect of which he or she is liable to account.[76]
[76]Giacci v Giacci Holdings [2010] WASC 349, [99] (Em Heenan J); Felgin v Aisworth [2011] VSC 454, [12] (Mukhtar AsJ); Jane v Bob Jane [2013] VSC 406, [78] (Sifris J).

Consideration

The defendant, as trustee of a resulting trust that arose in October 2002, is an accounting party. From 2 May 2011, she has collected income from Brewer Road, and the plaintiff is entitled to half of that income. Accordingly, the plaintiff’s claim for account is established.

Is the plaintiff barred by the Limitation of Actions Act 1958 (‘the LAA’)?
Plaintiff’s submissions

The plaintiff submits that s 21 of the LAA provides that there is no limitation period regarding the recovery of trust property from a trustee. He asserts that the expressions ‘trust’ and ‘trustee’ have the same meanings as in the Trustee Act 1958, such that they include implied and constructive trusts. The plaintiff relies upon Lewin on Trusts in submitting that ‘implied trusts’ extend to resulting trusts.[77] Further, in accordance with Nolan v Nolan,[78] it is submitted that s 21(1)(b) of the LAA is engaged in circumstances where the trustee is held to have assumed the position of trustee on behalf of the beneficiary. While the Court of Appeal in McNab v Graham did not embrace the dichotomy between institutional constructive trusts and remedial constructive trusts as discussed in Nolan v Nolan, the reasoning was otherwise accepted.[79] This is said to be consistent with the policy of the LAA that a trustee is never allowed to keep trust property to him or herself.[80] Here, the defendant is to be regarded as a trustee for the purposes of s 21(1)(b) of the LAA.

Defendant’s submissions

[77]L Tucker et al, Lewin on Trusts (Thomson Reuters, 19^th ed, 2015) (‘Lewin on Trusts’).

[78][2004] VSCA 109, [60]–[61] (Ormiston JA).

[79]McNab v Graham (n 40) 351 [123]–[124] (Tate JA, Santamaria JA and Keogh AJA agreeing). See also Linke v Linke [2018] VSC 505, [121] (Keogh J).

[80]Lewin on Trusts (n 77) [44-01].

The defendant asserts that s 21(1)(b) of the LAA contemplates a pre-existing trust under which the claimant is already a beneficiary. Here, there is no evidence that the defendant ever intended or should have intended to hold Brewer Road on behalf of the plaintiff as trustee, nor is there any evidence that the plaintiff spoke to her after the transfer about her holding the property on trust. According to the defendant, in such circumstances, it cannot be said that she acted as trustee.[81]
[81]Feiglin v Ainsworth (No 2) [2014] VSC 376, [35]–[37] (Elliott J); McNab v Graham (n 40).

Insofar as the plaintiff’s claim is based upon a constructive trust, the defendant submits that this should be categorised as a ‘remedial constructive trust’ which does not come into existence until it is declared by the Court. It is to be distinguished from an ‘institutional constructive trust’, which equity recognises as coming into existence from the time of conduct giving rise to the trust. The relevant time is said to be that at which ‘there is reliance on a promise giving rise to the estoppel, that is the time of the reliance which would render departure from the fulfilment of the promise unconscionable’.[82]
[82]Citing McNab v Graham (n 40) [107] (Tate JA, Santamaria JA and Keogh AJA agreeing).

According to the defendant, the constructive trust asserted by the plaintiff does not have an independent existence separate from the alleged facts giving rise to the purely remedial equitable relief sought and s 21(1)(b) does not apply. The plaintiff’s claim on the constructive trust basis, which accrued in October 2002, was statute-barred before the proceeding commenced. This is so even if the cause of action accrued later in 2009.

Regarding the plaintiff’s claim of a resulting trust, the defendant submits that there is no evidence that she ever intended or should have intended to hold Brewer Road on trust for the plaintiff — she never assumed the position of trustee. Section 21(1)(b) does not apply to the plaintiff’s resulting trust claim. There is no pre-existing trust under which he is a beneficiary or the defendant is a trustee. The cause of action must have accrued in October 2002 and, as such, the plaintiff’s claim based on resulting trust is also statute-barred upon the expiry of six years.

Applicable law

Section 21 of the LAA provides:

Limitation of actions in respect of trust property
(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action—
(a)in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b)to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

(2) Subject as aforesaid, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued:
Provided that the right of action shall not be deemed to have accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession.
(3) No beneficiary as against whom there would be a good defence under this Act shall derive any greater or other benefit from a judgment or order obtained by any other beneficiary than he could have obtained if he had brought the action and this Act had been pleaded in defence.

Section 21(1)(b) contemplates a ‘pre-existing trust under which the claimant is a beneficiary and a claim for the recovery of trust property already subjected to a trust from a person who is already a trustee of that trust property’.[83]
[83]Simmons v Ross [2018] VSC 306, [113] (Derham AsJ), affd Ross v Simmons [2018] VSCA 342, citing Nolan v Nolan (n 78) [63] (Ormiston JA).

In accordance with s 3(1), ‘trust’ and ‘trustee’ are given the same meaning as in the Trustee Act 1958, which provides:

[T]he expressions trust and trustee extend to implied and constructive trusts and to cases where the trustee has a beneficial interest in the trust property, and to the duties incident to the office of a personal representative ...[84]

[84]Trustee Act 1958 (Vic) s 3(1).

Section 8 of the LAA specifies that an action to recover land must be brought within 15 years. Subject to s 21(1), s 8 applies to equitable interests as well as legal interests in land.

The case of Nolan v Nolan concerned conversion and at issue was whether Sidney Nolan was an executor de son tort or trustee de son sort and holding certain paintings on constructive trust. The paintings were said to have been converted by Nolan shortly after his wife’s death, and were never given to the executors of her estate. The claim was brought 25 years after the alleged conversion and the question arose whether it was statute-barred or survived, by virtue of s 21(1)(b). Ormiston JA (with whom Chernov and Eames JJA agreed) determined that the claim was statute-barred. In reaching this conclusion, his Honour referred to the distinction between:

the institutional class of constructive trusts and that of remedial ‘constructive trusts’. The first arise (at least in most cases) by reason of a lawful transaction which precedes any alleged breach, but the latter, if properly so described, come into existence only by reason of some act of fraud or other unlawful dealing. Although the first category are properly described as ‘constructive trusts’, the latter have been misdescribed as such and, at the highest, those who have been subjected to remedial relief should be called ‘constructive trustees’ only for convenience' sake to identify the kind of equitable relief available against them.[85]

Ormiston JA reasoned that a ‘remedial constructive trustee’ did not fall within the scope of s 21(1)(b) and that an ‘institutional constructive trust’ arises when a person intends, or should intend, to hold property on trust.[86]

[85]Nolan v Nolan (n 78) [61], referring to Paragon Finance plc v DV Thakerar & Co [1999] 1 All ER 400.

[86]Ibid [60].

In McNab v Graham, which concerned a claim of proprietary estoppel, the Court of Appeal distinguished Nolanv Nolan as relating to conversion and eschewed the ‘institutional’ and ‘remedial’ distinction:

It is noteworthy that neither in Sidhu nor in Giumelli does the High Court make any mention of an ‘institutional constructive trust’ or compare it to a ‘remedial constructive trust’. No mention is made of a ‘common intention constructive trust’. The distinction drawn by Ormiston JA in Nolan is not discussed nor applied. It may be that the distinction is not apposite, or not useful, in the context of proprietary estoppel. It is important to recognise that Nolan is not a case of proprietary estoppel; it is a case in conversion ...
In particular, Ormiston JA’s remarks that a person who ‘intends to act adversely to other persons having a right in the property’ is not a trustee should be interpreted as meaning that that person does not become a trustee de son tort because they are not acting consistently with what it is to be such a trustee (namely, voluntarily assuming fiduciary obligations). In my view, with great respect to his Honour, he should not be interpreted as referring to constructive trusts in general and, in particular, not referring to constructive trusts that arise in accordance with principles of proprietary estoppel.
By contrast, the relevant distinction that is applied in Giumelli is, as noted, that between trustees of a constructive trust which is proprietary in nature, being founded upon an assumption as to future ownership of property being induced by representations upon which there has been detrimental reliance, and those who are loosely labelled ‘constructive trustees’ because they are wrongdoers.
In any event, it is necessary to keep in mind the observations of Deane J in Muschinski v Dodds that all trusts of equity are essentially remedial in origin and that, in a broad sense, the constructive trust is both an institution and a remedy, but ‘any perceived dichotomy between the two notions tends to prove ephemeral upon closer examination’. He said:
At times, disputing factions have tended to polarize the discussion by reference to competing rallying points of ‘remedy’ and ‘institution’. The perceived dichotomy between these two catchwords has, however, largely been the consequence of lack of definition. In a broad sense, the constructive trust is both an institution and a remedy of the law of equity. ... The use or trust of equity, like equity itself, was essentially remedial in its origins.[87]

[87]McNab v Graham (n 40) 350–1 [121]–[123], quoting Muschinski v Dodds (1985) 160 CLR 583, 613.

In the circumstances, the Court of Appeal determined that a constructive trust based upon the principles of proprietary estoppel came into existence at the time of the conduct that gave rise to the trust.[88] As such, the constructive trust arose before the proceedings to recover trust property commenced and s 21(1)(b) applied.
[88]McNab v Graham (n 40) 314 [6].

Consideration

In McNab v Graham, the Court of Appeal emphasised that the comments of Ormiston JA were made in the context of a claim of trustee de son tort. Although McNab v Graham was a case of a constructive trust stemming from proprietary estoppel, of significance to the Court of Appeal in determining whether s 21(1)(b) applied was when the relevant trust arose.

In the circumstances of this proceeding, the resulting trust in favour of the plaintiff arose in October 2002, at the time of the transfer. By analogy with McNab v Graham, it follows that s 21(1)(b) applies — that is, this proceeding is an action to ‘recover from a trustee trust property’, because the relevant trust arose in 2002.

Is the plaintiff barred by laches?
Defendant’s submissions

The defendant asserts that the key element in the defence of laches is whether in all the circumstances it would be ‘practically unjust’ to give a remedy. Normally, that requires establishing delay and detriment suffered due to the delay.

The starting point is identification of the claim to which laches is said to constitute a bar.[89] Here, the claim is to recover property acquired in the names of the parties for the purposes of the family joint venture. It is said to be abundantly clear that the plaintiff had the requisite degree of knowledge of the alleged ‘wrong’. Further, the delay in bringing the action is significant — that is, 15 years — as is the prejudice against the defendant. Reference is made to Orr v Ford[90] and the question of whether evidence that is now unavailable may have cast a different complexion on the matter.[91] The plaintiff waited to bring his claim in circumstances where Domenico is deceased and Orsola incapacitated. Domenico and Orsola would have been critical witnesses and their evidence would have cast a different complexion on the matter.
[89]Orr v Ford (1989) 167 CLR 316, 342 (Deane J).
[90](1989) 167 CLR 316.
[91]Ibid 330 (Wilson, Toohey and Gaudron JJ).

The defendant also contends that since 2002 she has taken steps in the knowledge that Brewer Road belonged to her. She has been responsible for the property’s maintenance and management, derived income, and paid taxes for the past 15 years. In all of those circumstances, it would be unjust or inequitable to give the plaintiff the relief that he seeks.

Plaintiff’s submissions

The plaintiff submits that, in order for a defence of laches to be successful, it must be demonstrated that there was an unreasonable delay on the part of the plaintiff in prosecuting his claim and that, as a consequence of that delay, the position of the defendant has been so altered that it would be unjust for the Court to grant the relief.[92] The defendant bears the burden of identifying the period of the delay and any prejudice sustained.[93]
[92]CSR Ltd v Amaca Pty Ltd [2016] VSCA 320, [241] (Maxwell P, Beach and Kaye JJA) (‘CSR v Amaca’).
[93]Perpetual Ltd v Myer Pty Ltd [2018] VSC 2, [138] (Croft J), citing CSR v Amaca (n 92) [268]–[269].

According to the plaintiff, time starts to run from a point of no earlier than the 2009 conversation. In considering whether the delay after this point was unreasonable, the plaintiff notes that commencing the proceeding meant suing a family member and the likely permanent rupture between brother and sister. The plaintiff submits that the delay is not unreasonable for the purposes of laches and, even if it is, it was not sufficient to bar the plaintiff’s rights.

It is submitted that it is important to note the nature of the rights in question and, where the relief sought is in the exclusive jurisdiction of equity, there is greater reluctance of the courts to deny all remedies to the plaintiff.[94]
[94]ICF Spry, The principles of equitable remedies: specific performance, injunctions, rectification and equitable damages (Lawbook Co, 9^th ed, 2014) 452.

The defendant does not identify any acts that could amount to a change in position. The only prejudice identified by the defendant is that she has continued to hold and maintain the property, lease it and spend the profits. According to the plaintiff, that is not prejudice as it is generally understood. The prejudice must be so substantial that it is unjust to allow the relief that the plaintiff is otherwise entitled.[95] The defendant has used trust income to maintain the trust property, and she would be entitled in an accounting to credit expenditure against profits to be disgorged, but she has not expended funds other than trust income. Similarly, the payment of income tax is again not prejudice.
[95]Barker v Duke (2005) 91 SASR 167, 184 (Perry J).

In relation to a loss of evidence, Orsola’s evidence is likely to have been lost before the plaintiff knew that his interest was impugned.[96] Additionally, Domenico died in 2008, prior to the defendant disputing the plaintiff’s claim.
[96]Orr v Ford (n 90).

Taken at its highest, the prejudice is insufficient to give rise to laches as it does not make it unjust to give the plaintiff relief. Even if laches defeats the claim to account on the basis that the rental money has been spent, it cannot defeat the claim to a half interest in Brewer Road. Further, although in Orr v Ford an adjustment was made for outgoings or improvements to the relevant property, here there is no evidence of such improvements or outgoings.

Applicable law

In Orr v Ford, Deane J described the doctrine of laches as follows:

[T]he phrase refers to circumstances where inaction or standing by (with knowledge) by [sic] a plaintiff over a substantial period of time assumes an aggravated character in that it will, if the plaintiff is granted the relief which he seeks, give rise to serious and unfair prejudice to the defendant or a third party. … The ultimate test effectively remains that enunciated by Lord Selborne LC … speaking for the Privy Council, in Lindsay Petroleum Co v Hurd, namely, whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable ‘to place him if the remedy were afterwards to be asserted’…[97]

[97](n 90) 341 (citations omitted). See also CSR v Amaca (n 92), [245] (Maxwell P, Beach and Kaye JJA); Crawley v Short (2009) 262 ALR 654.

The defendant ‘must demonstrate, first, that there has been unreasonable delay on the part of the plaintiff in prosecuting the claim’, and secondly, that ‘as a consequence of that delay, the position of the defendant (or, in some cases, a third party) has so altered that it would be unjust for the Court to grant the equitable relief sought by the plaintiff’.[98] In CSR v Amaca, the Court of Appeal noted two additional points:

First, in order that the defence of laches be made out, it must be demonstrated that the unreasonable delay by the plaintiff has resulted in such prejudice to the defendant that, on balance, it would be inequitable to grant the relief sought by the plaintiff. Secondly, the defence of laches is essentially the product of the very principles upon which a court decides whether or not to grant equitable relief in a particular case. As was stated in Fysh, the question whether a plaintiff is defeated by delay ‘must itself be governed by the kind of considerations upon which the principles of equity proceed’.[99]

[98]CSR v Amaca (n 92).

[99]Ibid [246], quoting Fysh v Page (1956) 96 CLR 233, 243 (Dixon CJ, Webb and Kitto JJ).

The Court of Appeal of New South Wales has summarised the elements of laches as follows:

The elements of the defence of laches are: (i) knowledge of the wrong; (ii) delay; and (iii) unconscionable prejudice caused to the opponent by the delay.
The key element is whether, in all the circumstances, ‘it would be practically unjust to give a remedy’. Normally, that means that the defendant must show both delay and detriment suffered by the delay.
…
The authorities show that in considering the defence of laches, all three elements must be taken together and the ultimate question asked as to whether, in all the circumstances, the plaintiff has impliedly, in equity, released the defendant from his or her claim or has so acted as to make it unfair that the claim should now succeed.[100]
[100]Crawley v Short (n 97), 678 (citations omitted).

Consideration

The resulting trust arose in 2002 and it was not until 2017 that this proceeding was commenced. The substantive claim brought by the plaintiff is a declaration of trust and amendment of the Register to record his interest in Brewer Road, in addition to a claim for account.

Between 2002 and 2008, both the plaintiff and defendant allowed Domenico and Orsola to continue to control the income from, and manage, Brewer Road. If the plaintiff commenced his claim in that period, he would have been acting against the purpose underpinning the transfer of his interest in Brewer Road to the defendant in the first place. That is, it is improbable that within the first few years of his marriage to Jodie that Domenico would have accepted the request, given the concerns of Domenico, Orsola and the defendant as to a ‘future claim by Jodie’.

Upon Domenico’s death, the control and management of Brewer Road could no longer be assumed, particularly as by then Orsola had been diagnosed with mild dementia. The Court accepts the plaintiff’s evidence that he raised the issue of Brewer Road with the plaintiff after Domenico’s funeral. It is also comprehensible, though, that in the context of her father’s death, the defendant did not seek to transfer the interest immediately. Twelve months later, however, there was no basis for the defendant to refuse to transfer the title or interest in Brewer Road. It was at that point that the plaintiff acquired knowledge of the wrongdoing of the defendant. Accordingly, the Court accepts the plaintiff’s submission that, in relation to delay, of significance is the period between 2009 and 2017.

At issue is whether that additional period amounts to unreasonable delay, such that the position of the defendant altered and it would be unjust to grant the plaintiff the relief he seeks. The prejudice that the defendant asserts is the loss of evidence from Domenico and Orsola. However, as noted, the plaintiff became aware of the defendant’s refusal to acknowledge his interest in 2009. Domenico died in 2008 and it is not clear, in the context of her dementia, that Orsola was capable of giving evidence in 2009.

The defendant also asserts that since 2002 she has managed and maintained the property, deriving income and paying taxes, since 2002. However, she still holds the title to Brewer Road and the particular detriment that she has incurred in managing the property and treating it as her own is unclear. The evidence does not disclose, for example, how the income from the property has been applied.

Finally, it is of some note that, as the plaintiff submits, commencing the proceeding against his sister was a significant step that the plaintiff was perhaps reluctant to take.

On balance, it is not unjust or unfair for the plaintiff to be granted the equitable relief that he seeks.

Has the plaintiff waived his rights, or is he otherwise estopped from asserting them?

The defendant’s amended defence also pleads that the plaintiff is estopped from bringing his claim, and that he has waived his right to relief. However, the defendant did not appear to make any submissions concerning these defences.

The plaintiff submits, citing On Equity, that the doctrines of laches, estoppel and waiver are not easily distinguished as they are each underpinned by the notion that ‘equity precludes relief in cases where enforcement of rights would be unconscionable’.[101] In the plaintiff’s view, the estoppel defence is not compelling. Silence is a poor basis for an estoppel plea — the defendant needs to be able to point to a deliberate silence that amounts to a representation and on which she relied.[102]
[101]PW Young, CE Croft and ML Smith, On Equity (Lawbook Co, 2009) [17.160].
[102]Ibid.

For completeness, the Court will briefly consider the estoppel and waiver defences.

Applicable law

The principles of waiver were recently reviewed by Riordan J in RW Health Partnership Pty Ltd v Lendlease Building Contractors Pty Ltd.[103] In that case, his Honour noted that ‘waiver was an imprecise term and must often be defined according to its context’,[104] before quoting McHugh J in Commonwealth v Verwayen, who stated that most cases of waiver are ‘really cases of contract, estoppel or election’.[105] Riordan J then noted that, in accordance with Zhang v Shanghai Wool and Jute Textile Co Ltd, an element of waiver by abandonment was ‘an unequivocal representation by X either by words or conduct that it will forgo certain rights’.[106]
[103][2019] VSC 353.
[104]Ibid [57].
[105]Ibid, quoting Commonwealth v Verwayen (1990) 170 CLR 394, 491.
[106]Ibid [65], quoting Zhang v Shanghai Wool and Jute Textile Co Ltd (2006) 201 FLR 178, 186 (Chernov JA).

Consideration

For the reasons provided in relation to the claim of laches, what appears to be of significance is not the plaintiff’s conduct from 2002, but his conduct between 2009 and 2017. In the Court’s view, his conduct during this period cannot be considered an unequivocal representation that he would forgo his claim to an interest in Brewer Road.

As to estoppel, as the plaintiff submits, questions surround the representation made by the plaintiff and the particular detriment suffered by the defendant in continuing to control the property. In the Court’s view the defendant has not addressed these issues and has not established the estoppel alleged.

Conclusions and orders

The defendant holds a 50 per cent interest in Brewer Road on resulting trust, or otherwise constructive trust, for the plaintiff. She is to account to the plaintiff for 50 per cent of the profit that she has received from Brewer Road since 2 May 2011.

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[2019] VSC 725

7 November 2019