Dencio v Dencio in her capacity as Administrator of the; Estate of the late Brian Gordon Dencio, Deceased (No 2)

[2020] ACTSC 340

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased (No 2)
Citation:	[2020] ACTSC 340
Hearing Date:	20 November 2020
Decision Date:	16 December 2020
Before:	Burns J
Decision:	See [13]-[14]
Catchwords:	EQUITY – TRUSTS – parties given an opportunity to lead further evidence and/or provide further submissions – whether evidence of property valuation should be received – consideration of
appropriate relief that should be granted
Legislation Cited:	Administration and Probate Act 1929 (ACT)
Parties:	Christine Margaret Dencio (Plaintiff)
Danielle Kristy Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, deceased (Defendant)
Representation:	Counsel
Dr D Hassall with J Harris (Plaintiff) G Blank with T Morton (Defendant)
Solicitors
O’Connor Harris & Co (Plaintiff)
Farrar Gesini Dunn (Defendant)
File Number:	SC 309 of 2019
BURNS J:

1.       On 18 September 2020, I delivered judgment in this matter confined to determining the facts and whether the defendant is entitled to a legal interest in a half-share of a property at Kaleen in the ACT previously held by her deceased father. The deceased, Brian Dencio, died intestate on 7 March 2012 and his daughter, the defendant, became

entitled to inherit the whole of her father’s estate by virtue of the provisions of the

Administration and Probate Act 1929 (ACT). The plaintiff, who holds the other half-share, claimed that the defendant holds her half-share, or a proportion of it, in trust for the plaintiff.

2. Before the death of Brian Dencio, the property was owned by him and his mother, the plaintiff, as tenants in common in equal shares. The circumstances in which that came about are set out in my earlier judgment: [2020] ACTSC 250. It is sufficient for present purposes to state that I was satisfied that the plaintiff gave and Brian Dencio took a half-share in the property as part of an arrangement the object of which was to ensure that the property would be retained so that the plaintiff would be able to continue to reside in the family home during her lifetime. I was satisfied that it was the common intention of the plaintiff and Brian Dencio that their beneficial interests in the property

were to be in proportion to their respective contributions to the “purchase” (or perhaps,

more accurately, the retention) of the property. To achieve the intended result, Brian Dencio took a half-share in the property in exchange for taking over repayments on the outstanding encumbrance on the property, which at that time amounted to approximately 50 per cent of the value of the property. In 1997 the plaintiff conveyed a half-share in the property to Brian Dencio, and he took over repayment of the mortgage over the property.

3.       This well-meaning arrangement continued until Brian Dencio died in March 2012. After

Brian Dencio’s death his brother, Colin Dencio, continued to pay the mortgage by way

of gift to the plaintiff. Eventually all the monies owing under the mortgage were repaid.

4.       I was satisfied that the plaintiff was entitled to relief in her claim, but the evidence did not allow me to formulate the appropriate form of that relief. As I said in my judgment of 18 September 2020, my inclination was to impose a constructive trust based on the proportion of beneficial ownership of the property which each party should be held to possess by reason of the respective contributions of the plaintiff and Brian Dencio. I gave the parties an opportunity to lead further evidence and/or provide further submissions on the appropriate relief that should be granted. The plaintiff obtained valuations of the property for 1997, 2002, 2012, 2017 and 2020. The defendant submitted that it was unnecessary for me to receive the valuations, but did not dispute the accuracy of the valuations if I chose to receive them.

5.       By reference to selected portions of my earlier decision, the defendant submitted that further evidence was unnecessary. The submission was based principally on what I said at [108] of my earlier judgment:

The plaintiff has paid, by way of gift from Colin Dencio, a total of $116,379.00 between 2012 and 2017 in discharging the NAB mortgage. It would be appropriate to reduce that sum by $25,000.00, or 50 per cent of the sum borrowed in 2002, to reflect that this sum was borrowed for the benefit of both Brian Dencio and the plaintiff and was not a borrowing that was in the contemplation of the parties in forming their common intention in 1997. This would leave a sum of $91,379.00 as representing the overpayment by the plaintiff. In the absence of evidence of the present value of the property, it is not possible for me to determine the

proportion of the defendant’s half share that this sum represents. It appears to me that two

alternatives are available. The defendant may be ordered to pay the plaintiff compensation in the sum of $91,379.00, or the parties may agree on (or call evidence of) the proportion of

the defendant’s half share that this sum represents.

1. The defendant relied on the above as a “finding” that only one of two alternative forms

   of relief were appropriate, either that the defendant pay the plaintiff compensation of $91,379.00 (and retain her full half-share in the property) or that a constructive trust be imposed based upon the proportion of the present value of the property represented by the sum of $91,379.00. The defendant submitted that I should adopt the first course, which would make it unnecessary to consider evidence of valuation. This submission by the defendant misunderstands the intent of my earlier judgment.

2. The word “overpayment” in my earlier judgment was perhaps not well chosen. What I

   sought to convey was that by reason of the death of Brian Dencio the arrangement which had existed between him and the plaintiff was brought to an end, resulting in the plaintiff having to assume the burden of repaying the mortgage. As I have observed in my earlier judgment, in the absence of valuations of the property at the relevant times I was unable to determine what proportions of the property the plaintiff and defendant should be found to hold. It may, or may not, have been of assistance to the parties in making further submissions on the nature of relief to be granted, or in settling the claim.

8.       The common intention of the plaintiff and Brian Dencio did not entirely fail. By payment of the mortgage instalments between 1997 and his death in 2012, Brian Dencio enabled the plaintiff to retain her share of the property and continue to reside in it. It would be

unconscionable to ignore Brian Dencio’s contribution to the retention of the property in

the absence of an express trust or a finding that Brian Dencio held the entirety of his
share of the property for the benefit of the plaintiff by way of a constructive trust.

9.       The property increased in value over the period from 1997 to 2012. It would be unconscionable for the plaintiff to claim the entirety of that increase in value because the common intention of the parties was frustrated by the death of Brian Dencio. The common intention of the plaintiff and Brian Dencio that each should take a half-share in the property based on an equal contribution towards the retention of the property came to an end in 2012. From that point on, the plaintiff was left to her own devices in

retaining the property. The obvious point in time at which Brian Dencio’s beneficial

entitlement in the property should be fixed is at the time of his death in 2012.

10.    The market value of the property in 2012 was assessed as $490,000.00. When Brian Dencio died, the balance of mortgage over the property was about $98,000.00. From this sum it is appropriate to deduct $20,000.00, as an estimate of the half-share of the 2002 loan which should be the responsibility of the plaintiff. This leaves a sum of $78,000.00. This equates to approximately 16 per cent of the value of the property as at 2012. The beneficial interest of Brian Dencio as at the time of his death was therefore 50 per cent of the property less 16 per cent, or 34 per cent. This fixes the entitlement of the defendant, as she cannot stand in any better position than Brian Dencio.

11.     The plaintiff submits that any final order should include provision for the plaintiff to continue to reside in the premises free of charge during her lifetime. She submits that this was the intention of Brian Dencio at the time he and she entered into the relevant arrangement in 1997. The defendant opposes any such provision. While I have no doubt that it was the intention of Brian Dencio in 1997 when he entered into the relevant arrangement with the plaintiff that she should continue to reside in the property during her lifetime, that arrangement came to an end in 2012 when Brian Dencio died. In addition, a claim by the plaintiff to such an entitlement was not pleaded. The plaintiff has not pleaded any claim that it would be inequitable to allow the defendant to depart from the representations made by Brian Dencio about ensuring that the plaintiff could continue to reside in the property during her lifetime. It is difficult to see how it could be characterised as inequitable. The plaintiff did not change her position based on those representations; indeed, she continued to reside in the premises for a further 23 years, which she probably could not have done but for the arrangement with Brian Dencio.

12.    The plaintiff submitted that allowance should be made for the fact that she has maintained the property and paid all outgoings from 1997 to date. She submitted that this should warrant an increase in the proportion of her beneficial ownership and a corresponding decrease in that of the defendant. This submission should be rejected. The plaintiff maintained the property and paid outgoings between 1997 and 2012 as part of the arrangement with Brian Dencio. That could not have affected the proportion of beneficial ownership between herself and Brian Dencio. The plaintiff has maintained the property and paid outgoings since 2012, but she has also had exclusive occupancy of the property. The failure of the plaintiff to take steps to do anything regarding the estate of Brian Dencio prior to 2018 meant that she remained in sole occupation of the property from 2012 to date.

13.     I make the following orders:

(a)	a declaration that Brian Dencio held his 50 per cent share of the property as at March 2012 upon a constructive trust for the benefit of the plaintiff as to 16 per cent, with Brian Dencio being the beneficial owner of the remaining 34 per cent; and
(b)	a declaration that the defendant holds her interest in the property upon a constructive trust for the benefit of the plaintiff as to 16 per cent, with the defendant being the beneficial owner of the remaining 34 per cent.

14.     The plaintiff is to file and serve submissions as to costs by 5 February 2021, and the defendant by 19 February 2021.

I certify that the preceding fourteen [14] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Burns.

Associate:

Date: