Deves & Deves
[2022] FedCFamC1F 55
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Deves & Deves [2022] FedCFamC1F 55
File number: SYC 2457 of 2020 Judgment of: CHRISTIE J Date of judgment: 11 February 2022 Catchwords: FAMILY LAW – INTERIM PROPERTY ORDERS – Where the asset pool is modest – Where the applicant alleges there was a gift of real property – Where applicant contends in the alternative there is a constructive trust in respect of real property – Where the respondents deny there is a gift or trust – Where it is contended that equitable estoppel might create rights in favour of the husband and wife in property of the third parties – Application by third parties for summary dismissal of applicant’s claim as against them – Whether there is no reasonable prospect of success – Discussion of s 45A of the Family Law Act 1975 Legislation: Family Law Act 1975 (Cth) s 45A,
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.09
Cases cited: Corin & Patton (1990) 169 CLR 540
Giumelli & Giumelli (1999) 196 CLR 101.
In the Marriage of Robb (1995) FLC 92 – 555
Khalif & Khalif [2021] FamCAFC 123
Muschinski v Dodds (1985) 160 CLR 583
Division: Division 1 First Instance Number of paragraphs: 81 Date of hearing: 25 January 2022 Place: Sydney Solicitor for the Applicant: Oliveri Attorneys Solicitor for the Respondents: Daniele Scott Solicitors Solicitor for the Respondents: Greg Alfonzetti Solicitor ORDERS
SYC 2457 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DEVES
Applicant
AND: MR DEVES
First Respondent
MS B DEVES
Second Respondent
MR C DEVES
Third Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
11 FEBRUARY 2022
THE COURT ORDERS THAT:
1.That the wife’s claim against the second and third respondents as contained in her Amended Application for Final Orders filed 1 September 2020 is summarily dismissed.
2.That the second and third respondents are removed as parties to the proceedings.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application by the parents of the husband for summary dismissal of the wife’s claim against them in respect of real property registered in their names. The husband’s parents are the second and third respondents to the wife’s initiating application for final property orders. In this application the second and third respondents will be referred to as the applicants.
Ms Deves commenced proceedings by filing an Initiating Application on 23 April 2020, a further Initiating Application on 3 July 2020 and an Amended Initiating Application on 1 September 2020 which joined the second and third respondents to the proceedings. In this application I will refer to her as “the wife”.
In the Application filed 1 September 2020 the wife seeks a declaration that the property at D Street, Suburb E NSW (“the disputed property”) forms part of the joint matrimonial asset pool.
No specific relief is sought against the second and third respondents in the wife’s application for final orders but the proposed declaration would, if made, affect their interest in that property.
The second and third respondents are the registered proprietors of the disputed property.
On 11 December 2020, the second and third respondents filed an Application in a Case seeking summary dismissal of the wife’s application for a declaration.
The wife opposes the application for summary dismissal. The husband supports his parents’ application for summary dismissal.
BACKGROUND
It is necessary to set out in some length the facts relevant to the application for summary dismissal concentrating on the evidence of the wife (taken at its highest) and any other undisputed evidence.
The wife and Mr Deves (“the husband”) commenced a relationship in January 2001 and married in Country H on 4 January 2002. The wife moved to Australia on 11 December 2003, when her partner visa was granted, and commenced co-habitation with the husband and his two sons at the disputed property.
There are no children of the parties’ relationship. The husband shares three now adult children with his former wife. Two of those children lived with the husband and wife and the husband paid his former wife child support in respect of the third child.
The parties separated on 6 April 2017 but remained living under the same roof. The wife moved out of the disputed property in November 2017.
The wife says that the husband’s parents wrote to her on 9 October 2017 in the following terms:
“Our family circumstances have recently changed and we regret that we can no longer offer you accommodation at our premises at D Street, Suburb E.
Please accept this letter as formal notice to vacate the property. Our solicitor advises us that we must provide you with 21 days notice, which means the final date for departure will be the 5th November.”
There was no evidence before the court from the wife or any other person on her behalf that she had responded to that letter which made a clear assertion that the disputed property was owned by Mr C Deves and Ms B Deves.
On 23 April 2020, the wife filed an Initiating Application in the Federal Circuit Court of Australia, as it was then known. In that application, the wife sought an order that each party retain his or her own bank accounts, household contents, motor vehicles, shares and investments, assets, financial resources and, in the husband’s case, his ‘business interests’. To the extent that she sought an adjustment of property, that was sought in Order 5 that read “that a base amount of fifty per centum (50%) is allocated, as required by Section 90XT(1)(a) of the Family Law Act 1975, to the Applicant Wife out of the Respondent Husband’s superannuation interests”.
There was nothing in the application filed 23 April 2020 to suggest that the wife sought relief against any third party or sought relief specifically in respect of the disputed.
The wife amended her Initiating Application by filing an Amended Initiating Application on 3 July 2020. The amendment to the application was the insertion of Order 11 which read “that the Husband pay to the wife within 14 days of this Order, the sum of $20,000”.
The application itself again did not refer to relief being sought against any third party, nor did it refer to any relief in respect of the disputed property.
At the time of the filing of the 23 April 2020 Initiating Application, consistent with the Federal Circuit Court Rules, the wife filed an affidavit which had been either sworn or affirmed by her on 22 April 2020. That document was before the court on this application as exhibit G. Paragraph five of that affidavit reads as follows:
When we separated I only had the sum of $950.00 cash which the Respondent gave me. The Respondent Husband remains living in the home we occupied for fourteen (14) years which is owned I understand by his parents who live in their family home.
Consistent with that paragraph, there is no evidence contained in the affidavit of 23 April 2020 consistent with the proposition that the disputed property was considered as at 23 April 2020 to be the property of the husband or the husband and wife.
As set out above, on 1 September 2020, the wife filed a Further Amended Application in which she sought a declaration that the disputed property be considered part of the matrimonial property pool. Directions were made for the provision of particulars and pleadings, as set out below such that all parties on the interim application understood that what the wife sought by way of that proposed order was a declaration that the property registered in the legal names of the second and third respondents was held on trust for either the husband and wife or the husband.
At the time of filing of the Further Amended Initiating Application, the wife filed a financial statement. The wife did not assert in that financial statement that she had a legal or equitable interest herself in the disputed property, nor did she suggest in that financial statement that that property constituted a financial resource to her.
On 19 October 2020 when the matter came before a Registrar, the parties entered into consent orders as follows:
1That within 21 days of the date of these Orders, the Applicant provide in writing to the lawyer of the Second and Third Respondents the following pleadings and particulars in relation to the claim of the Applicant regarding the property at D Street, Suburb E NSW (“the Suburb E property”) of which the Second and Third respondents are the registered owners:
1.1the Orders sought by the Applicant in Order 1 of the Amended Initiating Application filed 1 September 2020 seeks a declaration that the Suburb E property is “property forming part of the joint matrimonial asset pool”
Who is it that the applicant asserts is the beneficial owner of the Suburb E property:
a. the Respondent; or
b. the Applicant;
c. both the Respondent and the Applicant?
1.2What is the nature of the non-expressed or implied trust by which it is asserted that the Second and Third Respondents hold the Suburb E property on trust for either or both of the Applicant and the Respondent:
a. a resulting trust; or
b. a constructive trust?
1.3If it is either a resulting or constructive trust, on what date was the trust created?
1.4What are the facts and circumstances asserted that give rise to the trust and the date on which it was created?
1.5Specify the paragraphs in any Affidavit filed by the Applicant in these proceedings prior to the date of these Orders that are asserted to be evidence in support of the assertion of the trust.
1.6Specify the document or documents and the portion of any document or documents produced under Subpoena by the Department of Home Affairs that is asserted to provide evidence in support of the asserted trust.
3.With respect to further or other evidence upon which the Applicant may rely upon [sic] with respect to the claims against the Second and Third Respondents regarding the Suburb E property other than that which is contained in the Affidavits filed by her to date or in any document produced under Subpoena that:
a. in the event that there is no such further or other evidence that her lawyer so confirms in writing within 21 days;
b. in the event that there is such further or other evidence that she file a further Affidavit containing that evidence within 21 days.
4.If there is any legal basis other than a trust upon which the Applicant asserts the court should declare that the Suburb E property is the property of the Applicant or Respondent or either of them please specify what that is.
5.That any Response, Pleading, Application or evidence upon which the Second and Third respondents would seek to rely upon [sic] be filed within 28 days from the date of compliance by the Applicant with Orders 1, 2 and 3.
6.That the costs of the Second and Third Respondents be reserved.
On 2 November 2020, the lawyers acting for the wife wrote to the lawyers acting on behalf of the second and third respondents to provide particulars as provided for in the Orders of 19 October 2020. A copy of that letter became exhibit B in these proceedings. In that letter, the lawyers acting for the wife assert that “the beneficial owners of the Suburb E property are asserted to be the Applicant and the First Respondent jointly”. Further, the letter contended “the Suburb E property is held on a constructive trust”.
That correspondence refers to the affidavit evidence of the wife in her affidavits of 1 September 2020 and 29 October 2020 being documents relied upon on this application. In addition, reference was made to documents produced on subpoena by Department of Immigration and Multicultural and Indigenous Affairs (“DIMIA”) copies of which were annexed to the wife’s affidavit dated 29 October 2020.
Included with the response to the request for particulars was a document entitled points of claim. The points of claim raised a claim of estoppel and the applicant contended that “the same facts and circumstances for the constructive trust” ground the application of principles of estoppel.
Given the nature of the claim sought to be pursued by the wife, it is important to set out her points of claim in full. Those were contained in the document served under cover of the letter dated 2 November 2020 and became exhibit C in the proceedings. That document reads as follows:
1“The second and third respondents are the parents of the first respondent.
2Since about 1968, the second and third respondents have owned the property at D Street Suburb E in the State of New South Wales having Folio Identifier … (the matrimonial home).
3The matrimonial home was uninhabitable and required a great deal of construction and renovation work to become habitable.
4At some time prior to 2002 the second and third respondents gave the matrimonial home to the first respondent alone or in the alternative to the first respondent and the applicant jointly (“the gift”).
Particulars:
(i)On or about 7 May 2002 the third respondent made a Statutory Declaration under the NSW Oaths Act 1900 that the second respondent and the third respondent had made the gift to the first respondent and the applicant.
(ii)On or about 13 June 2003 the third respondent wrote a letter to Mr F, an officer of the Department of Immigration and Multicultural and Indigenous Affairs (“DIMIA”), to the effect that the second and third respondents had made the gift to the first respondent for himself, the applicant and their two boys to use as their home.
5Subsequent to the gift having been made the applicant and the first respondent carried out a great deal of work on the construction and renovation of the matrimonial home.
Particulars:
The work carried out is referred to in the following:
(a)A letter to Mr F (referred to above the written by the third respondent on or about 13 June 2003) in which she stated that the first respondent has worked so hard on the house so as to have it beautiful for his family when the applicant arrived in Australia.
(b)On or about June 2003 the first respondent said in writing to DIMIA that he had been renovating the matrimonial home (“my father’s 2nd home that he gave me”) and after about 6 and a half months the house was finished so that the applicant could move in with him and his 2 sons.
(c)A note from Mr F to the effect that the first respondent told DIMIA that when the applicant stayed with his parents while the house was being renovated the applicant was nearly every day with the second respondent painting the house.
6In the premises the Second and Third Respondents hold the matrimonial home on trust for the Applicant and the First Respondent jointly.
7In the alternative the respondents and each of them made representations to the applicant that the matrimonial home was given to the first respondent for the benefit of both the Applicant and the First Respondent so that they could raise their family which included the 2 sons of the First Respondent (“the representations”).
8In reliance upon the representations the Applicant carried out work on the matrimonial home and maintained it, and did all the household chores and looked after the First Respondent’s children until they became adults.
9In the premises, the respondents and each of them are estopped from denying that the matrimonial home belongs in equity to the Frist Respondent and to the Applicant jointly.”
THE LAW
Given the nature of the wife’s claim, it is necessary to consider the law relating to the claim which she makes for equitable relief and the law in respect of applications for summary dismissal.
Section 45A of the Family Law Act 1975 (Cth) provides that:
No reasonable prospect of successfully prosecuting proceedings
(2) The court may make a decree for one party against another in relations to the whole or any part of a proceedings if:
(a) the first party is defending the proceedings or that part of the proceedings; and
(b) the court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
When there is no reasonable prospect of success
(3) For the purposes of this section, a defence or proceedings or part of proceedings need not be:
(a) hopeless; or
(b) bound to fail;
to have no reasonable prospect of success.
The application is made pursuant to rule 10.09 of the Federal Circuit and family Court of Australia Rules 2021 (“the Rules”).
The case law emphasises the need to approach the case of the wife as though her evidence, where not inherently improbably, will be accepted at trial.
The wife’s case requires the Court to find that the registered title holders of the disputed property through their acts and or representations created a situation where they hold the disputed property on trust for the parties or the husband.
As argued the wife’s case is for a finding that there was a constructive trust and in the alternative the principles of equitable estoppel would require the third parties to transfer their legal interest in the property to the husband and wife (or the husband) – although the wife does not seek such an order.
In order for the Court to find that the disputed property is held on constructive trust it would be necessary to find that it would be unconscionable for the registered proprietors to retain the beneficial interest in the disputed property. As Deane J stated in Muschinski v Dodds (1985) 160 CLR 583 at 614:
Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.
A constructive trust may be imposed by operation of law where all the factual elements for so doing are made out. These include: “subject-matter, trustee, beneficiary (or, conceivably, purpose), and personal obligation attaching to property”: Muschinski at 614. The imposition of a constructive trust is an exercise of discretion.
A constructive trust may be imposed absent intention although it is plain that in this case the wife is arguing that the husband’s parents intended that the disputed property would be the property of the husband and wife or the husband. It is necessary in those circumstances to apply the law as it relates to common intention constructive trusts. Proof of common intention can be express or inferred from conduct.
In order to satisfy the court that a constructive trust should be imposed it is also necessary for the wife to demonstrate detrimental reliance on the representations and or conduct that constitute the common intention.
The wife contends that if the court were not minded to impose (or recognise) a constructive trust in respect of the disputed property then equitable estoppel would recognise her detrimental reliance upon the representations of the husband’s parents.
CONSIDERATION
The solicitor who appears on behalf of the second and third respondent argued that the court was entitled to have regard to the evidence of the wife (at its highest), any undisputed evidence before the court, and any absence of evidence, the presence of which would be expected given the case contended for on behalf of the wife. I accept that it is appropriate to have regard to those three categories of evidence, keeping at the forefront the necessity to take the wife’s evidence at its highest.
The evidence relied upon by the wife was contained in two affidavits. The wife says at paragraph three of her affidavit filed 1 September 2020:
“a couple months [sic] after we started our relationship in 2001, he introduced me to his parents and his children. The Respondent told me he was in the process of renovating his house. He told me that the house was under his parents’ name but that his parents gave it to him and he has been paying money to his parents. He said words in substance to the effect: ‘my parents gave me the house but the house remains in my parents’ name. I have been paying money to my parents for some time now because they gave me the house. I do not want to put my name on the title because I am worried that I will have the problems with the tax office and with child maintenance.’ He was living with me at my apartment in Suburb G where I used to live at that time for a few nights a week while he was renovating the house. I had helped the Respondent while he was renovating the house by cleaning and packing things away.”
The following matters arise out of the evidence of the wife:
(a)She is contending that the husband made a representation to her in 2001 that he had been given the home of his parents but that the title remained in his parents’ name. She does not give evidence that there had been any representation that the title would be conveyed. Further, the evidence in the above paragraph is consistent with the evidence of the husband that he was paying his parents money. That proposition is as counsel who appeared on behalf of the second and third respondents identified, inconsistent with the proposition that the husband had been gifted the house by his parents.
(b)The next thing that arises out of the evidence given by the wife is that her involvement at that time in respect of the disputed property was that she helped the husband by “cleaning and packing things away”.
At paragraph 4 of the affidavit of 1 September 2020, the wife gives evidence that she came to Australia on 11 December 2003 and “I had been looking after the Respondent, his children, the dog and the house throughout our relationship. I looked after his children as if they were my own as I did not have any children of my own.”
The wife gives evidence in her affidavit of contributions she made to the care, welfare and development of the husband’s children as might be consistent with contributions recognised by the court in In the Marriage of Robb (1995) FLC 92 - 555. The wife says that she was able to send money to Country H to support family in Country H from her earnings and that the husband assisted her with repainting of her house in Country H. This evidence suggests that the husband and wife, each made contributions to the welfare of their partner’s family. In and of itself this evidence does not assist the wife’s argument as against the third parties.
In the wife’s October 2020 affidavit, she gave further evidence which, having regard to the letter of 3 November 2020 and the content of the parties consent orders, must be considered the evidence which she wishes to bring in support of her application. That evidence details work undertaken by the husband and/or the husband and wife in respect of the disputed property. The wife contends at paragraph three that she went to “Suburb E nearly every day helping him by painting, cleaning and packing things away during the renovation.” The wife does not give any evidence about the duration of those renovations. She further details at paragraph four “I was helping the First Respondent and the Third Respondent with the cleaning and painting inside the house, sanding the frame of the timber of the bedroom door, removing the kitchen units and placing them into the skip and pulling out the timber floor which needed to be replaced.”
The wife gives evidence of further work undertaken to the disputed property. She says that in 2005, she and the husband rented a sanding machine and she moved the furniture so that he could sand. She says she painted the floor and put some glue on the timber floor and cleaned the house before they moved back in.
In 2007 she says that the husband decided to build a bedroom upstairs for his son X and that the wife accompanied the husband to Bunnings and fetched and carried tools.
In 2014, the wife says renovations were undertaken to a bathroom to make it bigger and she assisted with selection of the toilet, tiles and appliances, did some cleaning and put some glue and silicon between tiles and cleaned up when the renovation was completed.
In 2016, the wife says she helped the husband trim palm trees and plants after a neighbour complained and put the rubbish in the bin.
For the purpose of this application, I accept that the wife undertook the tasks set out in her affidavit material.
The wife says that she was encouraged to work harder on the renovations having heard the words by the second and third respondents and words to a similar effect (she says) from the husband. Even accepting this to be the case to ground her claim the wife needs to demonstrate a detriment. Increased attention to the limited number of renovation tasks undertaken by her cannot be such a detriment, particularly when seen in the context that she was helping her spouse with tasks designed to improve the amenity of the home in which they lived for their mutual benefit.
To the extent that the wife argues that the second and third respondents are estopped from denying the interest of either the husband and/or the husband and wife in the disputed property, then she does so in reliance upon what she says were her contributions to that property. The wife did not file any evidence about the value of work undertaken to the property. Taking the wife’s evidence about her involvement in any renovations and improvements at its highest, it could not be said that work which she undertook has unjustly enriched the legal owners of the disputed property.
WHAT IS THE RELEVANCE OF REPRESENTATIONS MADE TO THE DEPARTMENT OF IMMIGRATION?
Documents were produced on subpoena by the Department of Home Affairs relating to the husband’s application to sponsor the wife for a visa. Those documents are annexed to the wife’s affidavit of 30 October 2020. There is a record of interview with the wife on 2 September 2002 at 2.30 pm. The notes taken by the departmental officer record as follows:
A week later after met up, … invited … for dinner at waterfront restaurant, … said, … has just divorced and living with his parents. … had sometime visit … at parents house. … said, sponsor has owned a house nearby parents house at Suburb E, D [sic] Street, the house is still under renovation, constriction until present.
In submissions on behalf of the wife it was contended that, that representation by the wife to the Department of Immigration that the husband owned the house at Suburb E was supportive of the proposition that the second and third respondents had gifted the house to the husband.
The inclusion of that statement in the notes of the DIMIA is certainly consistent with the proposition that the husband may have represented to the wife that he owned the property.
On behalf of the second and third respondents, it was argued that it is not possible to use that representation (by itself) as evidence in support of the proposition that the second and third respondents had divested themselves of an interest in real property. I accept that submission. Nor can it bind the second and third respondents as a representation by them may be capable of doing. It is relevant in that regard to see what representations the second respondent herself made.
The wife also relied upon both a statutory declaration by the second respondent and a letter from the second respondent to the DIMIA. The statutory declaration was dated 7 May 2002 and included the following sentence: “my husband and I have given Mr Deves and Ms Deves our second house for them to live in as their own home.” That statutory declaration went on to state “Mr Deves has two young sons from his first marriage who live with him…”
That evidence at its height, is consistent with the proposition that, the second and third respondents as the registered proprietors of the disputed property, provided that property to their son and subsequently to their son and daughter in law as a home. In a similar fashion, in the letter which the husband’s mother wrote to the Department of Immigration on 13 June 2003, she said “my husband and I have given our second home which we own to Mr Deves to use as a home for him and Ms Deves and their two boys.” That letter goes on to say “Mr Deves has worked so hard on the house so as to have it beautiful for his family when Ms Deves arrives here in Australia.”
On its face again, that representation is consistent with the proposition that the second and third respondents provided their home, which they own, to their son and he made improvements to it in order to make it suitable to accommodate his children and his new wife. Temporally, that letter also suggests that the husband was undertaking this renovation work at a time when the wife was not yet in Australia. This is evidence relied upon by the wife in her case and I am entitled to take it at its highest. The wife does not dispute any of the content of the documents which she annexes to her affidavit material.
To the extent that the wife’s affidavit material otherwise suggests that annexures D and E to the affidavit are supportive of the proposition that the second and third respondents had divested themselves of a legal or equitable interest in the disputed property, I cannot find that the evidence supports that proposition.
It is plain from the DIMIA documents that the wife was accepted by the husband and his family as a member of their extended family and that they all supported her application for immigration to Australia.
The husband and the wife both agree that monies were paid to the husbands parents. That is inconsistent with the proposition that the property had been gifted to the husband or in the alternative, inconsistent with the proposition that it was held by the parents on trust for the husband and wife. In those circumstances it would be curious if the husband and wife were paying the second and third respondents. The second and third respondents in their affidavit material give evidence that, at all times whilst the property was occupied by the husband and wife, they remained responsible for outgoings in respect of the property including council rates, land tax and until recently, water rates. The wife does not dispute that evidence. The evidence of payment of the outgoings in respect of the property is consistent with their beneficial ownership of that property.
The wife advanced either by her points of claim or by submissions made on her behalf at the interim hearing, three potential bases upon which she asserted the court would in due course make a declaration. They were as follows:
1That the second and third respondents had gifted the disputed property to the husband and/or the husband and wife;
2That the second and third respondents held the disputed property on a constructive trust in favour of the husband and/or the husband and wife;
3That principles of equitable estoppel prevented the second and third respondents from denying that the husband and/or husband and wife had an equitable interest in the disputed property.
Did the husband’s parents make a gift of their interest in real property?
Turning to the first of those contentions, namely whether or not the second and third respondents had made a gift of the disputed property. Whilst that proposition was advanced in the points of claim, and expanded upon in the written submissions filed on behalf of the wife, it was abandoned during oral submissions.
It was contended on behalf of the second and third respondents consistent with the principles in Corin & Patton (1990) 169 CLR 540 that, in order to perfect a gift, the second and third respondents must have done everything that, according to the nature of the property (here Torrens title property), is necessary to be done in order to transfer the property and render the gift binding on them: at p.559 per Mason CJ and McHugh J. Accordingly, it was not open to the wife to contend that the purported gift from the second and third respondents had been perfected. The wife’s solicitor conceded that the contention that there had been a gift could not be sustained.
Do the husband’s parents hold their interest in the disputed property on constructive trust in favour of the husband and or husband wife?
The Full Court in Khalif & Khalif [2021] FamCAFC 123 at [7]-[14] set out the requirements to the establishment of a common intention constructive trust. The elements required to be present in order to conclude that the property is held by way of constructive trust are as follows:
1The parties formed a common intention (a question of fact, inferred by express communication or inferred from the conduct of the parties) as to ownership of the beneficial interest in property; and
2the party claiming a beneficial interest must show that he, or she, has acted to his, or her, detriment; and
3It would be a fraud on the claimant for the other party to assert that the claimant had no beneficial interest in the property; and
4Where elements 1 – 3 are satisfied, equity will not permit the other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable to do so.
Any claim by the wife that a trust operates as a consequence of the intentions of the husband’s parents must fail. The highest the wife’s evidence establishes is that the husband’s parents intended that the parties could have use of the property as their home.
Absent evidence of intention would the court nonetheless impose a constructive trust as a consequence of the conduct of the second and third respondents upon which the wife has relied, to her detriment?
The imposition of a constructive trust cannot be based on vague principles of fairness or redistributive justice. The second and third respondents provided their son and daughter and law with a home. The husband says at reduced rent (although no finding is possible or necessary – the wife gave no evidence on the topic). The second and third respondents paid the outgoings. Each of the second and third respondents have furnished copies of their wills by which they seek to treat their three children equally through division of their estate between them (inconsistent absent any other evidence) with the proposition that they have made a gift of valuable real property to one of those children.
I accept that the task that is being undertaken at this stage is not to determine the wife’s application but rather to determine whether the evidence establishes that the wife’s claim is one where there is no reasonable prospect of success. I am satisfied that on the evidence to date and having regard to the elements the wife is obliged to prove the case for imposition of a constructive trust is one without reasonable prospects of success.
It is therefore necessary to turn to the claim of equitable estoppel.
The principles which apply are set out in the decision of Giumelli & Giumelli (1999) 196 CLR 101, the elements necessary to be proven to establish the equitable estoppel are as follows:
1A party has relied on an assumption/representation about a past, present or future state of affairs; and
2the assumption/representation was induced by the conduct of the other party (where the representation must be clear and unequivocal); and
3the relying party acted on the assumption/representation to their detriment where the representor does not adhere to the assumption/representation (and the detriment is a material disadvantage); and
4The relying party acted reasonably by adopting and acting upon the assumption/representation through their actions (where a reasonable expectation that the promise will induce the promise/representee to act on it is present); and
5In the circumstances it is unconscionable for the representor to depart from the assumption/representation made to the relying party (established if the representor intended, knew or ought to have known that the assumption had been adopted where the nature and extent of the detriment is sufficiently significant).
The representations relied upon by the wife are:
(c)The wife says Mr C Deves said to her on an unspecified date prior to her occupation of the property “we gave this house to Mr Deves and now it belongs to both of you. We are renovating it so that you can both move in with the kids.”
(d)The wife says that Ms B Deves said to her on an unspecified date “you are now the boys’ mother and this house belongs to Mr Deves and you”.
As a matter of law, even if it is accepted that Mr C Deves spoke the words attributed to him he had in fact not gifted the house to his son at that time and his comment to the effect it now belongs to both of you must be seen in the context that the second and third respondents allowed the husband and wife to occupy their property (and pay rent).
The second and third respondents deny having made the comments attributed to them. I note their denials but as this is an application for summary dismissal I must operate on the basis that the evidence given by the wife concerning the representations may be accepted by a judge at trial.
Accepting those representations does not require the court to ignore the uncontroversial or objective evidence which places the representations in context. I take into account the fact that between the time of receipt of the letter from the second and third respondents (9 October 2017) and the amendment of her application (September 2020) the wife conducted her case in this court on the basis that neither she nor the husband had a legal or beneficial interest in the disputed property.
I have also taken into account the following agreed fact - the parties paid rent to the husband’s parents while in occupation of the premises. This is inconsistent with a finding that the husband’s parents intended to confer an interest in the disputed property on the husband and or husband and wife.
I have also taken into account the fact that the husband’s parents continued to be responsible for payment of the rates and land tax in respect of the property. This is inconsistent with a finding that the husband’s parents intended to confer an interest in the disputed property on the husband and or husband and wife.
The real question is whether or not, if these words were spoken by the respondents they are sufficient to create a legal or equitable interest in property. The words themselves do not create a legal right. The words may be sufficient to constitute evidence of intention but the actions of the speakers are inconsistent with that intention. They continued to treat the property as owned by them and maintained by them. Further, the wife cannot demonstrate any detriment as a consequence of the alleged representation.
As a consequence of the above findings I am satisfied that the wife has no prospect of successfully prosecuting that part of the proceedings that is that her claim against the husband’s parents has “no reasonable likelihood of success” (r 10.09 of the Rules).
On the evidence relied upon by the wife there is no real question to be tried. The solicitor advocate who appeared on behalf of the second and third respondents pointed to the requirement under the Order 2 of the orders of 19 October 2020 that the wife file and identify all evidence upon which she sought to rely in support of her claim as indicating that the wife had (as she was obliged by the order) put her case at its highest and could not be heard to argue that further or better evidence may come to hand. It was submitted that while a party may be permitted to amend pleadings which are deficient she cannot change the facts. I accept that submission.
In the context of an application seeking orders impacting upon third parties to a marriage and reliant upon principles of equity, the determination of whether or not the application will have a reasonable prospect of success falls to be determined having regard to the evidence of the applicant wife at its highest and any collateral objective evidence available to the court.
The facts relied upon by the wife to ground her equitable relief are insufficient to establish the necessary legal requirements for the declaration she (implicitly) seeks and accordingly her application as against the second and third respondents does not have a reasonable prospect of success and will be dismissed.
I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 11 February 2022
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