Deodes and Deodes and Ors
[2019] FamCAFC 97
•11 June 2019
FAMILY COURT OF AUSTRALIA
| DEODES & DEODES AND ORS | [2019] FamCAFC 97 |
| FAMILY LAW – APPEAL – PROPERTY – Where at the time of the parties’ marriage the husband transferred ownership of a residential property to his sister and brother in law – Where the husband and the transferees gave evidence that the transfer was for good consideration – Where the wife sought a declaration that the property was held on trust for the husband – Where the trial Magistrate dismissed the application – Where the relevant findings of fact were open on the evidence at trial – Where those findings of fact could lead only to the conclusion reached – Appeal dismissed. |
| Family Law Act 1975 (Cth) Property Law Act 1969 (WA), s 34(1)(b) Residential Tenancies Act 1987 (WA) |
| ALDI Foods Pty Ltd v Morroccanoil Israel (2018) 358 ALR 683; [2018] FCAFC 93 Allen & Snyder (1979) FLC 90-656 Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550; [2016] HCA 22 |
| APPELLANT: | Ms Deodes |
| FIRST RESPONDENT: | Mr Deodes |
| SECOND RESPONDENT: | Ms Danca |
| THIRD RESPONDENT: | Mr Danca |
| FILE NUMBER: | PTW | 645 | of | 2015 |
| APPEAL NUMBER: | WEA | 37 | of | 2018 |
| DATE DELIVERED: | 11 June 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Strickland, Kent & O’Brien JJ |
| HEARING DATE: | 9 May 2019 |
| LOWER COURT JURISDICTION: | Magistrates Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 26 September 2018 |
| LOWER COURT MNC: | [2018] FCWAM 126 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr F Castiglione QC |
| SOLICITOR FOR THE APPELLANT: | Elizabeth Wiese & Associates |
| THE FIRST RESPONDENT: | In person |
| COUNSEL FOR THE SECOND & THIRD RESPONDENTS: | Mr R Hooper SC |
| SOLICITOR FOR THE SECOND & THIRD RESPONDENTS: | Frichot & Frichot Lawyers |
Orders
The appeal be dismissed.
There be no order as to costs.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Deodes & Deodes and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WEA 37 of 2018
File Number: PTW 645 of 2015
| Ms Deodes |
Appellant
And
| Mr Deodes |
First Respondent
And
| Ms Danca |
Second Respondent
And
| Mr Danca |
Third Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 26 September 2018, Magistrate Walter pronounced orders between the appellant wife and the first respondent husband (“the parties”) altering their interests in property pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”). The division of the property legally owned by the parties was not contentious.
The matter requiring determination at trial was the wife’s application for a declaration that Property A (“the home”), in which the parties lived for the duration of their relationship, was held by the husband’s sister and brother-in-law (the second and third respondents respectively) on trust for the husband. The home had earlier been owned by the husband, but was transferred by him to the second and third respondents shortly prior to the parties’ marriage.
That application was dismissed. That order, and consequential orders supporting it, are appealed by the wife.
The wife’s central contention at trial, and again on appeal, was that at the time of the transfer there was no intention on the part of the husband to relinquish his beneficial ownership of the home. Primarily, the wife contended that the second and third respondents held the whole of their interest in the home subject to an express oral trust in favour of the husband. Alternatively, the wife argued that the home was the subject of a resulting trust in the same terms. In the event that the court determined there was no express or resulting trust, she maintained that a remedial constructive trust should be imposed to the same effect.
For the reasons which follow, the appeal must fail.
Factual background
While the lengthy grounds of appeal purported to assert errors of law on the part of the trial Magistrate, the appeal properly understood is based entirely on challenges to her Honour’s findings of fact. It is convenient to set out the relevant factual background to put those challenges in context.
The husband purchased the home with his first wife no later than 1985, and it was transferred into his sole name in December 1992 after their separation.
The parties began living together in January 2001. It was common ground that at some point, likely in 2003, there was some discussion between them about the husband’s wish for a “prenuptial agreement” to be executed, and that the wife did not agree.
On 8 April 2004, without the wife’s knowledge, the husband executed the necessary document to transfer the home to the second and third respondents. The parties were married on 1 May 2004, and the transfer of the home was registered on 24 May 2004. Transfer duty of $8,800 was assessed, and the settlement statement reflected a purchase price of $232,000, including the payment of a deposit of $80,000. Despite the transfer, the husband and wife continued to occupy the home and made regular monthly cash payments of rent to the second and third respondents.
It was common ground that at the time of the transfer the value of the home was $232,000, and the debt secured by mortgage against it was $109,898. On the husband’s case, at the time of the transfer he owed the second respondent a significant amount of money, and accepted her calculation of that debt at $80,000. On settlement, he received $30,000 and his mortgage liability was discharged. The reference in the settlement statement to a “deposit” of $80,000 reflected the forgiveness of his asserted debt to the second respondent in that amount.
The second and third respondents’ case throughout the proceedings was that the transaction took place on the terms just outlined.
Initially at least, the husband’s case was that, while the transfer was completed, there was an understanding between him and the second and third respondents that, if he found himself in the financial position to do so at some time in the future, he would buy the home back for $232,000, regardless of the market value of the home at that time. That was not disputed by the second and third respondents.
The wife, as already noted, was unaware of the transfer of the home at the time it took place. She professed no knowledge of any liability by the husband to the second respondent, whether in the amount of $80,000 or otherwise.
On becoming aware of the transfer, the wife initially pressed the husband to seek the transfer of the home into their joint names. Nothing came of that. Subsequently, the wife made declarations to Centrelink describing herself as a “tenant”. In July 2008 she sought to assert rights against the second and third respondents under the Residential Tenancies Act 1987 (WA). Later in 2008, she lodged a caveat against the property, asserting that she had made contributions to the “improvement, conservation and maintenance” of the property, expressing an intention to commence proceedings against the husband in the Family Court of Western Australia in the “immediate future” and claiming an interest in the property as “equitable co-owner” by virtue of a constructive trust. That caveat lapsed when the appropriate notice was filed by the second respondent, and the wife did not respond.
No further disputes arose in relation to the property until late 2011, when the husband approached the second respondent, seeking that the property be transferred back to him. There were then protracted negotiations and correspondence between solicitors. The second and third respondents offered to transfer the home to the husband and wife upon the payment of $232,000 within 60 days, notwithstanding the existence of a market appraisal indicating a very significant increase in its value since the original transfer. The wife purported to accept the offer on behalf of the parties subject to obtaining the necessary finance, describing the proposed transaction as the “repurchase” of the home.
Subsequently, the wife wrote to the solicitors for the second and third respondents seeking to alter the terms of the transaction. Over the course of subsequent negotiations, the dispute centred on the issue of the husband’s asserted debt to the second respondent in the sum of $80,000 at the time of the initial transfer. The parties began to dispute the existence of that debt, and accordingly proposed to buy the home back for $152,000 only.
No agreement was reached. The second and third respondents then commenced an action to evict the husband and wife from the home. Concurrently, there were further negotiations for the repurchase of the home. At one point at least, it appeared that agreement had again been reached for the transaction to be completed on the payment of $232,000. Further correspondence took place, in which the parties referred to the home being “sold back” to them, and to themselves as “the buyers”.
In October 2012, the husband lodged a caveat against the property, claiming an interest as a “person having the option to purchase”, pursuant to a constructive trust. In his statutory declaration in support of the caveat, he deposed to a verbal agreement with the second respondent to the effect that the home would be held in trust for him, and would not be sold to any third party. He went on to say that the second respondent was to purchase the property at a consideration of $232,000, but only paid $152,000. He deposed that he was “willing to buy the house back at $152,000”.
In November 2012, at a hearing of the application by the second and third respondents to evict the parties from the home, the husband said that he was willing to buy back the property for $232,000, but that the wife did not want to pay that much. During that hearing, the wife also referred to “buy[ing] the property back”.
Subsequently, the wife sent the husband a message saying that they might have no choice but to litigate to “force [the second respondent] to sell [the home] back to [the parties] for the amazing price she paid … which was $232,000”.
The parties subsequently separated. They negotiated as to the alteration of their property interests. An application for consent orders was filed in the Family Court of Western Australia, which referred to the husband having an equitable interest in the home. After a requisition was issued against that application, a separate application for consent orders was filed, referring to the property being held on trust for the husband by the second and third respondents. Requisitions were also issued against that application. Both applications were prepared by solicitors acting for the wife; the husband was unrepresented.
As can be seen from what is set out above, the second and third respondents at all times prior to the litigation maintained a consistent version of events. The parties did not.
The wife subsequently commenced proceedings in the Family Court of Western Australia on 7 April 2016, and the matter went to trial over six days in July 2018. The evidence of the second and third respondents at trial was consistent with what they had maintained throughout; the evidence of the parties continued to be confused.
The reasons for judgment
The trial Magistrate identified three issues relevantly to be determined (at [30(a)]:
(1)whether, on the transfer of the property in 2004, the second and third respondents held the property in trust for the husband (“the first question”);
(2)if so, whether by the time of trial they still held the property on trust for him (“the second question”); and
(3)if so, whether the second and third respondents should receive any payment on the sale or transfer of the property (“the third question”).
The wife’s primary position was that the property was transferred on the basis of an express oral trust, with the husband retaining the whole of his beneficial interest in it. That was the only position articulated on behalf of the wife in the opening of her case. It remained her primary position at the conclusion of the trial, but by that point her counsel submitted that there was “room also for” a resulting trust, based on the proposition that the rent paid by the parties over the course of their occupancy of the property should in fact be construed as direct payment towards the debt secured by mortgage against it. Having initially eschewed any suggestion of a constructive trust, counsel sought to leave that option open, based on the same argument in relation to the rental payments, coupled with evidence that the husband had undertaken some improvements to the home since the transfer.
The husband did not clearly articulate a position in relation to the first question. The second and third respondents maintained throughout that there was no trust of any nature.
Her Honour answered the first question in the negative. The second and third questions accordingly did not arise.
In considering the first question, her Honour was invited by counsel for the wife to consider all the circumstances surrounding the transfer. In particular, she was invited to consider what, if any, money the husband owed the second respondent prior to the transfer, whether the transfer was designed to defeat any claim the wife might have, and whether there was an agreement as to terms upon which the husband could buy the property back, and if so on what terms.
Her Honour found that the husband owed the second respondent $80,000 at the time of the transfer. She was not persuaded that the transfer was designed to defeat any claim the wife might have. She was satisfied that appropriate market value had been paid, and that the husband benefited from the sale by the discharge of his debt secured by mortgage, the discharge of his debt to the second respondent, and the receipt of cash. She was satisfied also that, at the time of the transfer, it was agreed between the husband and the second and third respondents that he could purchase the property back for $232,000, if and when he could afford to do so. She was, critically, satisfied of the husband’s intention to transfer beneficial ownership of the property to the second and third respondents at the time of the transfer.
The wife’s challenge to those findings of fact formed the basis of her appeal.
Submissions on appeal
The confusion which permeated the wife’s case at trial continued in her prosecution of the appeal.
The wife’s case at trial was that the husband never intended to transfer his beneficial interest in the property to the second and third respondents. She contended that “an express private trust was created orally at the time of the transaction”, or in the alternative, the court “can infer that the husband and/or the third parties intended to create a trust with the husband retaining a beneficial interest” (emphasis added) (wife’s Summary of Argument filed 11 March 2019, p.14). The possibility that different outcomes might result from the asserted intention being held by the husband, by the third parties, or by all three does not appear to have been contemplated.
At trial, and on appeal, the wife’s primary position was that the transfer of the property had occurred subject to an express oral trust. During oral submissions on the appeal, senior counsel for the wife conceded that any such trust in relation to land would, as a matter of law, be unenforceable in the absence of fraud: Property Law Act 1969 (WA), s 34(1)(b); Allen & Snyder (1979) FLC 90-656. That concession, with respect, was both appropriate and unavoidable. Having made that concession, senior counsel abandoned the wife’s primary argument.
The wife’s secondary position both at trial and on the appeal was that, if there was no express trust, it was open to the court to find that there was a relevant resulting trust. As the submission was developed, it became tolerably clear that it was based on the propositions that, at the time of the transfer, the husband had no intention of transferring his beneficial interest, and that no consideration was paid by the second and third respondents.
Again properly, senior counsel conceded that, if this Court concluded that it was open to the trial Magistrate to find that the transfer of the property was made for good consideration, we could not find her Honour to be in error in determining that there was no resulting trust.
The final proposition advanced on behalf of the wife was that, in the absence of either an express trust or a resulting trust, the Court should nevertheless determine that a remedial constructive trust should be imposed. Senior counsel initially sought to argue that the husband’s actions in making various improvements to the property after the execution of the transfer justified the imposition of a constructive trust. When challenged, he conceded that those actions could not of themselves have that effect. The proposition accordingly rested again on the wife’s challenge to the trial Magistrate’s findings as to the husband’s intention to transfer his beneficial interest in the home to the second and third respondents, and as to their payment of consideration for that transfer.
The relevant findings of fact
The trial Magistrate found that at the time of the transfer the husband owed the second and third respondents $80,000 ([146]). Her Honour made that finding on the clear evidence of the second respondent to that effect, and the husband’s evidence that he had a significant debt to the second and third respondents, that he did not recall the precise amount of that debt, but accepted the second respondent’s calculation of it.
Her Honour found further that it was agreed between the husband and the second and third respondents that the transfer of the home would extinguish that debt, accepting the clear evidence of the husband and the second respondent to that effect ([149]). Her Honour recorded that the husband was “adamant the reason he transferred the property was to repay [the loan]” ([48]).
Her Honour found also that at the time of the transfer the husband received $30,000 from the second and third respondents ([83]; [150]). Again, her Honour’s finding was based on an acceptance of the clear evidence of the only parties to the transaction, including the husband’s confirmation under cross-examination that he had received that amount.
Her Honour also recorded the agreed position of all parties that the husband’s mortgage debt in the sum of $109,897.96 was discharged by the second and third respondents at the time of the transfer, and that the true market value of the home at that time was as recorded on the transfer document ([26]; [150]).
Her Honour accepted the evidence of the husband and the second respondent that there was an “unwritten understanding” between them that if at some time in the future he could afford to purchase the property back, he could do so at a price of $232,000, and that if he could not afford to do so, or did not seek to do so, the property would simply continue to be owned by the second and third respondents ([152]). Her Honour also noted the later communications between the parties and the second and third respondents consistent with that understanding.
All of the findings of fact referred to were clearly open to the trial Magistrate on the evidence before her. Moreover, none of those findings of fact can be characterised as contrary to incontrovertible evidence, or as “glaringly improbable”, as is the essential precondition to them being liable to be disturbed on appeal: Fox v Percy (2003) 214 CLR 118 (“Fox v Percy”); Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550 (“Robinson Helicopter Co Inc”); Aldi Foods Pty Ltd v Morroccanoil Israel Ltd (2018) 358 ALR 683.
Those findings of fact having been made, her Honour’s conclusions that the husband intended to transfer his beneficial interest in the home to the second and third respondents, and that he did so for good consideration, logically followed. Those conclusions having been reached, her Honour’s dismissal of the propositions advanced by the wife as to the existence or imposition of a trust was inevitable.
That an appeal court should not interfere with findings of fact which were open on the evidence is well-established: Edwards v Noble (1971) 125 CLR 296; Gronow v Gronow (1979) 144 CLR 513. So, too, is the recognition that appellate judges are in a “permanent position of disadvantage as against the trial judge” in assessing the evidence and the credibility of witnesses: Fox v Percy at 142-143.
Conclusion
At the commencement of his oral submissions on the appeal, senior counsel for the wife clearly stated that, notwithstanding the length of the grounds set out in the filed Notice of Appeal, the “only ground of appeal” was the challenge to the trial Magistrate’s findings that no trust was expressly created, or should be implied or imposed. The proposition that a trust was expressly created was, as already noted, abandoned. The propositions that a trust should have been implied or imposed are, for the reasons set out, without merit. The appeal must, accordingly, be dismissed.
Costs
At the hearing of the appeal, senior counsel for the second and third respondents advised that, in the event the appeal was unsuccessful, no order for costs would be sought. The husband was self-represented throughout the primary proceedings and on the appeal, and did not seek costs in any event.
There will accordingly be no orders as to costs.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Kent & O’Brien JJ) delivered on 11 June 2019.
Associate:
Date: 11 June 2019
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