Deves v Porter

[2003] NSWSC 625

CITATION:	Deves v Porter [2003] NSWSC 625
HEARING DATE(S):	7/7/03-8/7/03
JUDGMENT DATE:	1 August 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Constructive trust imposed
CATCHWORDS:	FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - principles for extension of time under Property (Relationships) Act 1984 - application for adjustment of property interests under section 20 Property (Relationships) Act 1984 - significance of agreement about assets split in application under Property (Relationships) Act 1984 - constructive trust upon termination of de facto relationship - TRUSTS - constructive trusts - arising on termination of de facto relationship - WORDS AND PHRASES - hardship
LEGISLATION CITED:	District Court Act 1973 Evidence Act 1995 Family Law Act 1975 (Cth) Property (Relationships) Act 1984 Property (Relationships) Legislation Amendment Act 1999
CASES CITED:	In the Marriage of Atwill (1981) 7 FamLR 573 B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 Baumgartner v Baumgartner (1987) 164 CLR 137 The Commonwealth v Verwayen (1990) 170 CLR 394 Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 In the Marriage of Frost and Nicholson (1981) FLC 91-051 Giumelli v Giumelli (1999) 196 CLR 101 In the Marriage of Hall (1979) FLC 90-679 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 Mackenzie v Mackenzie (1978) FLC 90-496 McDonald v McDonald (1977) FLC 90-317 Parker v McNair (1990) DFC 95-087 In the Marriage of Perkins (1979) FLC 90-600 Reid v George (1996) DFC 95-173 Sullman v Sullman [2002] NSWSC 169; (2002) DFC 95-248 West v Mead [2003] NSWSC 161 In the Marriage of Whitford (1979) FLC 90-612
PARTIES :	Megan Patricia Deves - Plaintiff Rod Craig Porter - First Defendant John Robert Porter - Second Defendant Brad John Porter - Third Defendant
FILE NUMBER(S):	SC 1016/01
COUNSEL:	E Cohen - Plaintiff Unrepresented - Defendants
SOLICITORS:	Rob Davidson - Plaintiff In person - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

1 AUGUST 2003

1016/01 MEGAN PATRICIA DEVES v ROD CRAIG PORTER & ORS

JUDGMENT

1 HIS HONOUR: This is an application for an order under section 18 Property (Relationships) Act 1984 extending the time to make application under that Act, for an order adjusting property interests under section 20 of that Act, and also an application to declare a constructive trust in relation to the proceeds of sale of a parcel of real estate.

2 There is no procedural difficulty with an application for extension of time under s 18 being combined in the one summons with an application for substantive relief under s 20, and for a declaration of trust under the general law, nor with all aspects of such a summons being dealt with by the Court on the one occasion: Reid v George (1996) DFC ¶ 95-173.

3 The plaintiff, Megan Deves (“Ms Deves”), was born on 5 August 1968. The first defendant, Rod Porter (“Mr Porter”), was born on 26 September 1969. They met around Christmas 1991. Soon thereafter they began to live together at the home of Mr Porter’s parents. They continued to live together, in various places, until September or October 1997. There is no dispute that their relationship amounted to a de facto relationship within the meaning of the Property (Relationships) Act 1984.

4 At the start of the relationship Ms Deves owned a second hand Suzuki Sierra (a small four wheel drive motor vehicle), and Mr Porter owned a Ford Falcon motor vehicle. Otherwise, neither of them had any significant assets.

5 For substantially all of the relationship, they both worked. He worked in the building industry, she as a hairdresser (or, for a short period of time, as a bar worker). They had no children.

6 In late 1993 Ms Deves and Mr Porter discussed the possible purchase of a block of land. Though nothing came of that possible purchase, their discussions resulted in them starting a joint banking account with the Macarthur Credit Union.

7 In late 1994 Ms Deves, who had previously worked as an employee, purchased a hairdressing salon in Campbelltown. That purchase was made pursuant to a contract which she entered on 21 October 1994. She borrowed the purchase price, together with a further sum to cover operating costs, from the Macarthur Credit Union, borrowing in total $20,940.

8 In late 1994 Mr Porter’s father came to hear that a block of land known as “Brooklands”, in Greendale Road Wallacia, was available for sale. It was opposite where Mr Porter’s sister lived. Mr Porter’s father formed the idea that he, and two of his sons (Rod and Brad) should purchase the land, in equal shares. Mr Porter in turn suggested to Ms Deves that they should buy that one-third share together. I am not satisfied that the plaintiff agreed to this proposal. She would have liked to buy a property with Mr Porter, but did not like the idea of other members of the Porter family being co-owners.

9 Mr Porter’s father proposed to mortgage the family home of Mr Porter’s mother and father to raise the purchase price for the land. In January 1995 Mr Porter, his parents, and Brad, went to the bank in connection with that loan. Mr Porter’s mother was most upset to discover that there was no plan for her to be one of the purchasers. At the time the family home of Mr Porter’s parents was unencumbered, partly because Mr Porter’s mother had applied some of an inheritance which she had received in 1983 to paying off the mortgage on it.

10 After leaving the bank, the Porters went to a car park near the solicitors they were proposing to use for the purchase, in Penrith. Ms Deves was there, having driven there in the car of Mr Porter’s mother. The three Porter men went to see the solicitor, then returned to tell Mr Porter’s mother that she could have her name on the deeds. Ms Deves was emphatic that she was not going to be a joint purchaser, and did not go into the solicitor’s office. I have arrived at this account principally on the basis of the evidence of Mr Porter’s mother – her evidence was mistaken in some of the legal terminology she used, but I accept her as reliable about the general nature of who said what to whom.

11 On 16 January 1995 a contract to purchase “Brooklands” was exchanged. The purchasers were Mr Porter’s parents as to a one third share, Mr Porter as to a one third share, and Brad as to a one third share. The price was $190,000.

12 Settlement of the purchase of “Brooklands” took place on 27 February 1995. The purchase price, including the deposit and some incidental expenses, was financed completely by a home loan from Westpac, taken out in the name of Mr Porter, his father, and Brad. After all drawings had been made against that loan, a total amount of $197,069 had been borrowed.

13 At the time of purchase of “Brooklands” Ms Deves and Mr Porter were living in a rented house at Warragamba, for which they paid $150 per week rent.

14 “Brooklands” had a cottage erected on it, in a poor state of repair. After settlement, Mr Porter painted it, and Ms Deves and various members of the Porter family cleaned it up. Ms Deves and Mr Porter moved into the cottage as soon as it was painted. At that stage they ceased paying rent for the Warragamba house. They paid no rent for occupying “Brooklands”.

15 Brad also moved into the house. He occupied a sunroom, which had its own entrance from the outside. Mr Porter’s mother cleaned Brad’s room and did Brad’s washing, but Ms Deves sometimes cooked for him.

16 During the time that Ms Deves and Mr Porter were living at “Brooklands” various improvements were made. The bathroom was painted, floor tiles and wall tiles were fixed, and a spa bath installed. Some fencing was carried out. Ms Deves was the one who painted the bathroom, and she helped with the tiling.

17 To repay the Westpac home loan, a separate account, called an “Advantage Saver” account, was established by Mr Porter, his father and Brad with Westpac. That was an account which was always kept in credit, and from which Westpac drew regular monthly amounts, under a periodical payment authority, which were credited to the loan account. Cheques were drawn periodically on the joint account of Mr Porter and Ms Deves, with the Credit Union, and paid into that “Advantage Saver” account. As well, Mr Porter’s father, and Brad, made contributions to the “Advantage Saver” account from time to time.

18 During the time that Ms Deves was living with Mr Porter at “Brooklands” she did, in general terms, more of the cooking and other domestic tasks, while he performed the outside tasks like mowing. He did some of the cooking, but not most of it.

19 Mr Porter had no bank account apart from the joint account. His monthly earnings, which varied but were of the order of $2,000 to $2,500 per month, were paid into that account. Ms Deves had a separate bank account for her hairdressing business. The takings of the hairdressing business were paid into that separate account. Sometimes, though, Ms Deves used money derived from the hairdressing business for payment of ordinary recurrent domestic expenses, and sometimes she paid amounts into the joint account. Mr Porter had a second job, where he worked at the Warragamba Workers’ Club on some nights of the week. He used the money derived from this second job for his own entertainment and other living expenses.

20 In August 1995 Mr Porter injured his hand at work – he severed tendons and arteries in it. He was off work for 12 weeks following this injury. He then returned to work for three months, then had another operation on his hand which required another six weeks off work. During those periods off work, Mr Porter’s employer voluntarily paid him the difference between the worker’s compensation payments he received, and his usual wages.

21 In March 1996 the plaintiff purchased a second-hand 1992 Mitsubishi Magna motorcar, for a total price of $16,990. Of this amount, $4,000 was paid as a trade-in allowance, given for Mr Porter’s Ford Falcon. Prior to this time Ms Deves’ Suzuki Sierra had been sold. She says she sold it for $6,000, and from the proceeds paid off $2,000 from her credit card, and deposited the balance to the joint account. All the entries in the joint account are in evidence, from mid February 1995. No deposit of the order of $4,000 was made to the joint account after mid February 1995. Ms Deves’ counsel was of the impression that the Suzuki had been sold before “Brooklands” was purchased. That must be right, as that is the only way of making Ms Deves’ evidence on this topic consistent with the joint account entries. However the balance in the joint account in mid February was less than $1,200, which had all been consumed before payments started to be made from the joint account to pay off the mortgage on “Brooklands”.

22 The parties separated in September or October of 1997. They had been having differences of opinion over whether Mr Porter was drinking and gambling too much. The plaintiff took the 1992 Mitsubishi Magna, and also took over responsibility for the loan taken out in connection with it, which at that time stood at around $8,150. They divided other furniture and household items, which I infer were of not much value. At that time, they had a conversation in which they agreed that Ms Deves was to keep the shop, car and furniture, and Mr Porter was to keep the property.

23 After they ceased cohabiting, Ms Deves and Mr Porter remained friends. They talked on some occasions of living together again, but nothing came of it.

24 After cohabitation ended, Mr Porter received $25,000 as compensation for the injury to his hand. Ms Deves said she would like $10,000 of that amount. Mr Porter refused.

25 In 1998, at some unspecified time, Ms Deves told Mr Porter that she would like some money for her share in “Brooklands”. He replied that he did not have any money to give her. She asked again a few months later, and was told that he still did not have any money.

26 In May 1999 Mr Porter’s mother transferred her interest in “Brooklands” to Mr Porter’s father, in accordance with some orders of the Family Court of Australia. This resulted in “Brooklands” being owned by Mr Porter, Mr Porter’s father, and Brad. Mr Porter’s father and Brad are the second and third defendants in this litigation. They were joined as defendants, I gather, on the theory that, if a constructive trust was to be declared of the proceeds of sale of “Brooklands”, they should be parties. No case was mounted suggesting that any part of the beneficial interests of Mr Porter’s father or Brad, in the proceeds of sale of “Brooklands” should be paid to Ms Deves.

27 In about February 2000 “Brooklands” was advertised for sale. It was sold for $400,000. Settlement occurred on 11 May 2000. An amount of $128,925.51 was paid to Westpac to discharge the mortgage over the property. Mr Porter received $83,386.46 as his share of the net proceeds paid on settlement. In addition, the purchaser had paid a deposit of $20,000. There was no real estate agent involved in the sale, and the solicitor’s costs of acting on the sale were deducted as one of the expenses taken into account in calculating the net proceeds on settlement, so I infer that Mr Porter also received one third of that $20,000. For practical purposes, his share of the proceeds of sale can be taken as $90,000.

28 The total amount paid from the joint account of Ms Daves and Mr Porter, to the “Advantage Saver” account, before separation, was $25,600. The total amount credited, from all sources, to the “Advantage Saver” account prior to separation was a little over $82,000. Thus, the joint account contributed slightly less than one third of the total amount credited to the “Advantage Saver” account during that period. The total amount paid to the Westpac loan account prior to separation was $80,335. The difference between this amount, and the total amount which was credited to the “Advantage Saver” account, is explained by the fact that the “Advantage Saver” account was one which maintained a credit balance, usually of the order of $1,000 or $2,000, but on 1 October 1997 (the date which I have adopted as the date of separation for the purpose of making these calculation) unusually high at $3,670. The total credits to the Westpac “Advantage Saver” account during the entire period that “Brooklands” was owned was of the order of $142,000. Likewise, the total amount contributed by way of periodical payments to discharge the loan account prior to sale of the property was around $142,000. Schedules showing how these amounts are derived are attached to this judgment.

29 Around the time of the sale, Ms Deves rang Mr Porter and asked how much she would get from the sale, to which he replied, “We will see”.

30 Ms Deves had not sought any legal advice about what her rights might be following the ending of cohabitation. Some time after the sale of “Brooklands” she was told by a friend that, after two years from separation, she could not apply for orders for adjustment of rights to property. She made a half-hearted attempt at that stage to get some legal advice, but did not actually obtain any. She accepted what her friend had told her. By that time, of course, the two-year period had already expired.

31 She consulted her present solicitor in September 2000. These proceedings were commenced on 3 January 2001.

32 After the separation, Mr Porter moved into a caravan on “Brooklands”. By this time Brad was in a domestic relationship, and had had a son, born in June of 1997. Brad, his partner and child moved into the “Brooklands” house when Ms Deves moved out, and continued to live there. Mr Porter stayed living in the caravan for some months, then moved to live with his mother, where he continues to live.

33 Neither party has put on evidence of their present financial situation.

Property (Relationships) Act Extension of Time

34 Extensive amendments were made to the Property (Relationships) Act by the Property (Relationships) Legislation Amendment Act 1999 (“the Amending Act”). The Amending Act inserted a new subsection 6(2), which reads:

“(2) Without affecting subsection (1), this Act, as amended by the Property (Relationships) Legislation Amendment Act 1999, does not (except for Part 5) apply to or in respect of:
(a) a domestic relationship that ceased before the commencement of this subsection, or
(b) a person in so far as he or she was a party to a relationship referred to in paragraph (a).”

35 Section 6(2) commenced on 28 June 1999. Ms Deves and Mr Porter had ceased cohabitating before then. Thus, the amendments made by the Amending Act do not apply to their relationship.

36 Section 18 Property (Relationships) Act 1984, in the form it had prior to the 1999 amendments, said:

“(1) Except as provided by subsections (2) and (3), where de facto partners have ceased to live together as husband and wife on a bona fide domestic basis, an application to a court for an order under this Part shall be made before the expiration of the period of 2 years after the day on which they ceased, or last ceased, as the case may require, to so live together.
(2) A court may, at any time after the expiration of the period referred to in subsection (1), grant leave to a de facto partner to apply to the court for an order under this Part (other than an order under section 27 (1) made where the court is satisfied as to the matters specified in section 27 (1) (b)) where the court is satisfied, having regard to such matters as it considers relevant, that greater hardship would be caused to the applicant if that leave were not granted than would be caused to the respondent if that leave were granted.
(3) Where, under subsection (2), a court grants a de facto partner leave to apply to the court for an order under this Part, the de facto partner may apply accordingly.”

37 At the time of enacting section 18, the New South Wales Parliament had available for consideration section 44 of the Family Law Act 1975 (Cth). Section 44(3) of that Act provides that proceedings for maintenance or property adjustment shall not be instituted after 12 months from the date of making a decree nisi except by leave of the Court. Section 44(4) said:

“The Court shall not grant leave under subsection (3) unless the Court is satisfied that hardship would be caused to a party of a marriage or a child of a marriage unless leave were granted”.

Faced with that example, the New South Wales Parliament adopted a test, in section 18(1) of the Property (Relationships) Act 1984 requiring there to be greater hardship on the applicant than on the respondent before leave is granted.

38 Even so, the case law construing section 44 Family Law Act is still of assistance in construing section 18. The Full Court of the Family Court has held, in McDonald v McDonald (1977) FLC ¶ 90-317 that an applicant seeking leave must establish:

(1) a reasonable prima facie case for relief had the applicant instituted the proceedings in time,

(2) that denial of the applicant’s claim would cause hardship to him or her, and

(3) an adequate explanation as to his or her delay.

That the first and third of these elements are present at all is a recognition of the fact that the power to extend time is a discretionary one. Further, Nygh J, in In the Marriage of Frost and Nicholson (1981) FLC ¶ 91-051 said, at 76,422:

“Even if those three elements are satisfied, the Court should still, in determining whether to exercise its discretion in granting relief, consider the question of prejudice which the respondent would suffer by reason of the delay in bringing the application.”

39 In Mackenzie v Mackenzie (1978) FLC ¶ 90-496 Strauss J said, at 77,580:

“Subsection 44(3) confers a discretionary power to grant leave. This discretion must be exercised judicially. In McDonald’s case, the Full Court referred to matter of the kind which may affect the exercise of the discretion. However, subsec 44(4) makes it clear that this discretionary power to grant leave does not become exercisable unless the Court is satisfied that hardship would be caused to a party or child if leave were not granted. I stress the words “satisfied” and “would” because they seem to me to throw light on the kind of case which an applicant for leave must establish. The onus resting on our applicant is not discharged by showing merely that hardship might be caused, if leave were not granted. Further, sec 44(4) inhibits that granting of leave unless the applicant has made out the requisite case, but it does not provide that leave must be granted if the court is satisfied that hardship would be caused by the refusal to grant leave. No doubt, the fact that hardship would be caused to an applicant or a child if leave were not granted, and the degree of such hardship, is a matter affecting the proper exercise of the discretion.

The very purpose of sec 44(4) is to enable the Court to grant leave to institute proceedings in order to avoid hardship. The Court should exercise this power liberally, but only if it is satisfied that hardship would be caused to an applicant or a child of a marriage if he or she were barred from making a claim for maintenance or relating to property. As against this, the court cannot ignore the policy underlying sec 44(3) which is that ordinarily proceedings should be commenced within a year from the date of the decree nisi . Section 44(3) and other provisions of the Act … demonstrate a policy that the financial relationships between the spouses should, wherever possible, be brought to finality within a reasonable time after the dissolution of the marriage. Hence, even if there is hardship, the Court is bound to take into account in its determination whether to grant leave, the length of the delay and the reasons for the delay. As McDonald’s case shows, such other matters as prejudice to the respondent, resulting from the delay are also relevant to the exercise of the discretion.”

40 In McKenzie, at 77,581 Strauss J said that “hardship” in section 44(4)

“should be taken to mean no less than a substantial detriment … What amounts to a substantial detriment will depend on the circumstances of the applicant or a child of the marriage. In an appropriate case, the loss of something of comparatively little value may constitute a substantial detriment … . The loss of the mere right … to litigate a claim … is not the hardship to which subsec (4) refers. It is the hardship which would be caused by the loss of that right, with which the subsec is concerned. … a party or the parties may have chosen to leave the financial and property relationships of the parties unchanged for the time being, in order to provide for children during their infancy, or for a spouse until remarriage, or until some other change in the circumstances of either of them should occur. Obvious examples are where the matrimonial home has been left in joint names or where a joint business venture has been continued after the dissolution of the marriage. If then the situation arises in which the justice of the matter requires that their financial or property relationships should be resolved or adjusted … hardship in the relevant sense may result to an applicant if an applicant is not granted leave to institute proceedings.”

41 The concept of “hardship” as requiring a “substantial detriment” has also been accepted in In the Marriage of Perkins (1979) FLC ¶ 90-600 at 78,054, In the Marriage of Whitford (1979) FLC ¶ 90-612. The particular shade of meaning which is appropriate to the adjective “substantial” in this phrase emerges from the decision of the Full Court of the Family Court (Asche and Powley SJJ Strauss J) in In the Marriage of Whitford (1979) FLC ¶ 90-612 at 78,144:

“In our view the meaning of “hardship” in subsec 44(4) is akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment.”

Their Honours went on, at 78,145:

“In ordinary parlance, hardship means something more burdensome than “any appreciable detriment” . We consider that in subsec 44(4) the word should have its usual, though not necessarily its most stringent, connotations.”

42 Their Honours go on to give a valuable elaboration, too long to quote here, of ways in which the individual circumstances of an applicant can affect whether or not refusing of leave amounts to hardship. A different bench of the Full Family Court (Evatt CJ, Fogarty and Yuill JJ) in In the Marriage of Hall (1979) FLC ¶ 90-679 at 78,627 also accepted that “substantial detriment” was the generally accepted interpretation of “hardship” in section 44.

43 While the Family Court has accepted that loss of anything more than nominal maintenance will usually amount to hardship (In the Marriage of Atwill (1981) 7 FamLR 573 at 577), this is because of the test by reference to which maintenances awarded. There is no analogous principle applied in relation to applications for a property settlement (ibid).

44 Consistently with these authorities, McLelland J said, of section 18(2) Property (Relationships) Act 1984, in Parker v McNair (1990) DFC ¶ 95-087:

“… although the preponderance of hardship is a condition which the court must find satisfied before it can grant leave, it is not a condition the satisfaction of which requires the granting of leave. The use of the expression “may” in that subsection gives the court a residual discretion and other matters relevant to the interests of justice as between the parties can be taken into account including, for example, the question of whether there is an adequate explanation for delay which has occurred.”

45 In the present case, while the pleading is somewhat inartistic, the defendants have raised a defence under section 18.

46 When, as in this case, an application for extension of time is made in the same proceedings as an application under section 20, the requirement identified in McDonald for a reasonable prima facie case for relief to be demonstrated does not have the same significance as when one hearing concerns the application for extension of time, and another hearing concerns the claim for substantive relief. In the present case, for reasons which will appear later, I am of the view that Ms Deves has a case for relief under the Property (Relationships) Act.

47 To deny her the opportunity of bringing that claim would, in my view, result in hardship to her. A significant reason for the delay in bringing the proceedings is that in 1998 she accepted Mr Porter’s statement (which was true) that he did not have any money. Had she taken proceedings at that stage, she probably could have compelled a sale of “Brooklands”, or caused the Porters to rearrange their interests in the property amongst themselves, so that Mr Porter had the means to pay her claim. If the fact that she did not take that sort of a tough line in 1998 had the consequence that she was, now, disentitled from bringing a claim at all, that would, in my view, be a hardship to her. There is no evidence of Mr Porter having arranged his affairs on the basis that he would not have to make any payment to Ms Deves from the proceeds of sale of “Brooklands”. Nor is there any evidence of him having arranged his affairs in reliance on the statement by Ms Deves, at the time the property was about to be purchased, that she did not want any part of it. In my view the plaintiff has established that greater hardship would be caused to her if leave were not to be granted than would be caused to Mr Porter if leave were to be granted.

48 The explanation for the delay in bringing the proceedings is not completely satisfactory, but a significant part of it is Ms Deves accepting that, until “Brooklands” was sold, Mr Porter had no money. There is not a very good explanation for the delay between the sale of “Brooklands” and the commencement of the proceedings, but that delay is only of the order of seven months. Overall, there is an adequate explanation for the delay in bringing the proceedings.

49 There is, therefore, power for the Court to extend time. It is, in my view, appropriate that that power should be exercised.

Property (Relationships) Act Section 20

50 Section 20 of the Act, in the form it had immediately before the 1999 amendments, is as follows:

“(1) On an application by a de facto partner for an order under this Part to adjust interests with respect to the property of the de facto partners or either of them, a court may make such order adjusting the interests of the partners in the property as to it seems just and equitable having regard to:


(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the de facto partners to the acquisition, conservation or improvement of any of the property of the partners or either of them or to the financial resources of the partners or either of them, and

(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the de facto partners to the welfare of the other de facto partner or to the welfare of the family constituted by the partners and one or more of the following, namely:

(i) a child of the partners,

(ii) a child accepted by the partners or either of them into the household of the partners, whether or not the child is a child of either of the partners.
(2) A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a de facto partner in respect of the property.”

51 I considered the construction of that section in Sullman v Sullman [2002] NSWSC 169; (2002) DFC ¶ 95-248 at [243]-[253]. I will not repeat what I there said.

52 The only property of any significance which Ms Deves and Mr Porter had, at the end of the relationship, were Mr Porter’s interest in “Brooklands”, and the Mitsubishi. Their relationship was one where there was a pooling of all their resources, apart from that portion of the income of the hairdressing salon which was used to pay off the debt on the salon, and the income which Mr Porter earned from his second job. The actual contributions which Ms Deves made to the joint account, were significantly less than those which Mr Porter made. However, Ms Deves also paid for some of the recurring expenditure of the household from her earnings, without those earnings passing through the joint account. No attempt was made to quantify the amount she spent in this way, but the fact that such payments were made is clear enough. Ms Deves did more of the everyday household tasks than Mr Porter did. On the other hand, it was Mr Porter, and members of his family, who were responsible for the larger part of the improvements made to the property. A very real contribution to the acquisition of “Brooklands” was the willingness of Mr Porter’s parents to mortgage their home so that the whole of the purchase price of “Brooklands” could be borrowed. That should be regarded, in my view, as a contribution made on behalf of Mr Porter to the acquisition of Mr Porter’s interest in “Brooklands”. Bearing in mind all of these contributions, it is just and equitable that those assets which existed at the end of the relationship, be divided equally.

53 The evidence presents some difficulty in making this equal division. In large part that difficulty arises from the fact that “Brooklands” was being contributed to by Ms Deves and Mr Porter for about 2½ years, and then mortgage payments towards it continued to be made, without any involvement on Ms Deves’ part, for about another 2½ years. The contributions made from the joint account totalled $25,600, out of the total amounts paid towards the mortgage, from all sources, of $142,000. Thus, the joint account contributed 18% of the total mortgage payments made.

54 When “Brooklands” was sold, Mr Porter received about $90,000. His father, and Brad, would have received similar amounts. Thus, the total proceeds of sale, available for distribution, were $270,000. It is just and equitable to adjust Mr Porter’s share of the proceeds so that one half of 18% of the total mortgage contributions are treated as having been made by Ms Deves. That would result in her receiving 9% of $270,000, namely $24,300. It is, in my view, more appropriate to recognise an interest on her part in “Brooklands” by this sort of calculation, rather than treating her as having a charge for one half of the $25,600 which was contributed from the joint account.

55 The Mitsubishi had been purchased for, effectively, $17,000 eighteen months before the end of the relationship. $4,000 of that was effectively contributed by Mr Porter, in the form of trading in his Ford Falcon. The appropriate inference to make is that payments of the loan taken out for the car were made, while the relationship continued, from their joint resources. At the conclusion of the relationship Ms Deves received the car, subject to an obligation to pay out the then loan of $8,150. While there is no evidence of the value of the car at the time of separation, a vehicle which had been purchased for $17,000 eighteen months previously would be worth more than $8,150. Ms Deves should give Mr Porter credit for one half of the $4,000 which he contributed to the purchase price, and one half of the amount by which the value of the car, at the time of separation, exceeded the amount owing on it. I would estimate the value of the car at that time as being a little over $11,000, say $11,150 Thus, Ms Deves should give credit for $3,500.

56 In the result, I find that there should be an adjustment of property rights under section 20, such that Mr Porter pays to Ms Deves $20,800.

Constructive Trust

57 In West v Mead [2003] NSWSC 161 at [52]-[64] I set out principles relevant to the imposition of a constructive trust, in accordance with the High Court’s decision in Baumgartner v Baumgartner (1987) 164 CLR 137. I will apply that analysis here without repeating it. There was a joint relationship or endeavour between Ms Deves and Mr Porter, and the “Brooklands” property was acquired in the course of, and for the purposes of, that joint relationship or endeavour. Even though Ms Deves had been adamant, at the time that contract for the purchase of “Brooklands” were to be signed, that she did not want any part of it, she and Mr Porter saw their relationship as a stable one, they actually lived in the house on “Brooklands”, and she actually contributed to the mortgage payments. That is enough, it seems to me, to satisfy the requirement that the property was acquired in the course of, and for the purposes of, the joint relationship or endeavour. There are no circumstances to rebut the presumption that the beneficial interest in assets acquired in the course of, and for the purposes of, that joint relationship or endeavour should be shared equally, as between Ms Deves and Mr Porter.

58 For the reasons I gave in West v Mead at [69]-[84], the fact that Ms Deves and Mr Porter made contributions to the purchase price of “Brooklands” from a joint account is not critical to the finding that a constructive trust should be imposed in relation to Mr Porter’s interest in “Brooklands”. This is because the contributions towards the mortgage payments which were made from that joint account, were made in accordance with the authority which each had conferred on the other, and hence full legal and beneficial title to money so paid from the joint account, passed to the payee. Rather, the constructive trust arises because the relationship has broken down, a case was not sought to be made that it was the fault of one party rather than the other, and now Mr Porter seeks to assert legal rights in relation to property acquired in the course of, and for the purposes of, the joint relationship, namely “Brooklands”, in a way which fails to recognise any interest of Ms Deves. To act that way is, in accordance with the principles which equity applies in this area, to act unconscionably, and a constructive trust will be imposed to the extent necessary to undo that unconscionable behaviour. The appropriate way of recognising such a constructive trust in the proceeds of sale of “Brooklands” is to require Mr Porter to pay Ms Deves the sum of $24,300, calculated in the same way as I have set out in paragraph 54 above.

59 However, it is a fundamental maxim of equity that he (or she) who seeks equity must do equity. It would be appropriate to impose a constructive trust on the only significant asset which Mr Porter took out of the relationship only if Ms Deves submitted to a constructive trust being imposed in favour of Mr Porter on the only significant asset which she took out of the relationship, namely the Mitsubishi. I would fix the quantum of such a constructive trust at $3,500, calculated in the way set out in paragraph 55 above.

60 It is appropriate that these two amounts be set off. The result of applying the principles concerning constructive trust is that Mr Porter should pay to Ms Deves $20,800.

Any Significance in the Agreement About Asset Split?

61 I have found that at the time of separation Mr Porter and Ms Deves had a conversation about which assets each was to keep. I am not satisfied that this conversation is one which was intended to be a binding agreement. The evidence about it is very sketchy, and did not place it in any context from which I could be satisfied that the parties were making an arrangement which they intended to bind them permanently. As well, it is well established that subsequent conduct can be taken into account in deciding whether there was an intention to enter contractual relations: B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251. The request which Ms Deves made in 1998 for some money, and Mr Porter’s response (which made no suggestion that financial matters had already been settled between them) is inconsistent with there having been an earlier intention to enter contractual relations. The same can be said of Mr Porter’s response to Ms Deves’ enquiry, around the time of the sale of “Brooklands”, about how much she would get from the sale.

62 Even if the agreement were contractual, it would not, in my view, make any difference to the outcome. The agreement would, on that hypothesis, be a “separation agreement” within the meaning of section 44 of the Property (Relationships) Act 1984, in the form it had prior to the 1999 amendments.

63 Before the 1999 amendments, section 47 of the Property (Relationships) Act 1984 provided:

“(1) Where, on an application by a de facto partner for an order under Part 3, a court is satisfied:
(a) that there is a cohabitation agreement or separation agreement between the de facto partners,
(b) that the agreement is in writing,
(c) that the agreement is signed by the partner against whom it is sought to be enforced,
(d) that each partner was, before the time at which the agreement was signed by him or her, as the case may be, furnished with a certificate in or to the effect of the prescribed form by a solicitor which states that, before that time, the solicitor advised that partner, independently of the other partner, as to the following matters:
(i) the effect of the agreement on the rights of the partners to apply for an order under Part 3,
(ii) whether or not, at that time, it was to the advantage, financially or otherwise, of that partner to enter into the agreement,
(iii) whether or not, at that time, it was prudent for that partner to enter into the agreement,
(iv) whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable, and
(e) that the certificates referred to in paragraph (d) are endorsed on or annexed to or otherwise accompany the agreement,
the court shall not, except as provided by sections 49 and 50, make an order under Part 3 in so far as the order would be inconsistent with the terms of the agreement.
(2) Where, on an application by a de facto partner for an order under Part 3, a court is satisfied that there is a cohabitation agreement or separation agreement between the de facto partners, but the court is not satisfied as to any one or more of the matters referred to in subsection (1) (b), (c), (d) or (e), the court may make such order as it could have made if there were no cohabitation agreement or separation agreement between the partners, but in making its order, the court, in addition to the matters to which it is required to have regard under Part 3, may have regard to the terms of the cohabitation agreement or separation agreement.

(3) A court may make an order referred to in subsection (2) notwithstanding that the cohabitation agreement or separation agreement purports to exclude the jurisdiction of the court to make that order.”

64 The separation agreement in the present case is not in writing, not signed, and not certified to be entered into after provision of independent legal advice on the topics referred to in section 47(1)(d). Thus the way would be open for the Court to make an order inconsistent with the terms of the agreement. While it would be necessary, in accordance with section 47(2) to have regard to the terms of the separation agreement, I would not, in the circumstances it was entered, give it any weight at all. The test which the Court is required to apply under section 20 is to make such order as seems just and equitable having regard to the matters set out in paragraphs 20(1)(a) and 20(1)(b). There is no reason to believe that that is the question that Ms Deves and Mr Porter were directing their minds to when they made the agreement. Further, neither of them has put forward a case as having acted on the basis of that agreement being binding, in the way he or she has arranged his or her affairs.

65 Nor would I regard the agreement as one which affected the conclusion which I came to concerning the application of the law of constructive trusts. While a contract can significantly affect the order which it is appropriate for a court to make, when imposing a constructive trust, this agreement was not, for the reasons I have already given, one intended to be contractual.

Reliance on Representation

66 Another basis on which Ms Deves sought to put her case was that there had been a representation made to her by Mr Porter that she would have a half interest in the property, and that she had relied on that representation in giving up the more comfortable Warragamba premises and moving to “Brooklands”, in doing the work which she did at “Brooklands”, and in making the financial contributions which she made towards “Brooklands”. I am not satisfied that the factual basis for this case is made out. Whatever Mr Porter might have said to her prior to the occasion when she and the various members of the Porter family went to the solicitor’s office in Penrith, her clear rejection of having any part in the purchase of “Brooklands” destroys any such case. She has not sought to set up any representation made after the purchase of “Brooklands”.

67 As well, such a case is one based in estoppel. The appropriate remedy for such a case, if made out, is the minimum remedy which can undo the prejudice suffered by reason of reliance on the representation: The Commonwealth v Verwayen (1990) 170 CLR 394. When giving effect to an estoppel arising from a representation about what use the plaintiff would be able to make of land, “before a constructive trust is imposed, the court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust”: Giumelli v Giumelli (1999) 196 CLR 101 at 113. The appropriate remedy for such a case, if made out, would not be more extensive than the remedy I have already found appropriate under the Property (Relationships) Act 1984, and by way of constructive trust, and it may well be less extensive.

Costs

68 I have not heard the parties on costs. What follows is something which would be unnecessary if both parties were legally represented, but as one party is not represented, it should, I think be said.

69 As is appropriate at this stage of the proceedings, I am unaware of what, if any, settlement offers might have been made. Consistently with the policy of the Court of encouraging settlement of disputes, section 131(2)(h) Evidence Act 1995 excepts from the privilege which ordinarily attaches to settlement negotiations evidence of settlement negotiations where a communication or document which was part of those settlement negotiations is relevant to determining liability for costs. Relevance can arise if one party, having been offered a settlement of a particular type, does not accept it, and the litigation produces an outcome less favourable to that party than the settlement offer. Such a settlement offer then operates as one factor for the Court to take into account in exercising an overall discretion as to costs, though not by bringing into existence any automatic entitlement to costs, or any presumption as to how the costs ought be paid – LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 at [104]-[124].

70 As well, the application in this case under the Property (Relationships) Act 1984 was one which was clearly within the jurisdiction of the District Court, under section 134(1)(g) District Court Act 1973. While it is clear that only the Supreme Court has jurisdiction in relation to the declaration of the constructive trust which I have imposed, it might be appropriate to consider if there are any cost consequences of the constructive trust litigation having resulted in the plaintiff receiving no more than she was entitled to receive under the Property (Relationships) Act 1984.

(1) Order the first defendant to pay to the plaintiff the sum of $20,800.

(2) Grant leave to any party to restore the matter before me, on a date arranged with my Associate (but being no later than 28 days from the date of delivery of these reasons for judgment) for argument of any further questions either party wishes to raise consequential upon these reasons for judgment.

(3) These orders not to be entered for 28 days.

**********

Last Modified: 08/01/2003