Donaghue v Donaghue - [2015] QSC 54

SUPREME COURT OF QUEENSLAND

CITATION:

Donaghue v Donaghue & Anor [2015] QSC 54

PARTIES:

MICHAEL FRANCIS DONAGHUE

(plaintiff)

v
CAITLIN BRIDIE DONAGHUE

(first defendant)

STEVEN PAULETTO

(second defendant)

FILE NO/S:

SC No 4166 of 2013

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

18 March 2015

DELIVERED AT:

Brisbane

HEARING DATE:

10 March 2015; 11 March 2015; 12 March 2015

JUDGE:

Philip McMurdo J

ORDER:

It is declared that the land at 112 Shorncliffe Parade, Shorncliffe, described as Lot 4 on RP 4561, County of Stanley, Parish of Nundah, Title Reference 11441145, is held by the defendants upon a constructive trust for the plaintiff, upon condition that the plaintiff meets all expenses and liabilities of the acquisition and ownership of the house, including the payment of any money falling due to the Commonwealth Bank of Australia under the loan made by it to the defendants.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – dispute over the nature of an agreement - where the plaintiff claimed he asked the first defendant (his daughter) to obtain a loan on his behalf to discharge his existing mortgage on the house – where the first defendant acted on behalf of the second defendant – where the defendants obtained a loan and the plaintiff’s land was transferred to them and registered in their names – where the parties signed a document in the standard form of a contract for the sale of land which did not record the entirety of what was agreed by the parties and contained none of the critical terms contended by the plaintiff – construing intention of the parties – intention of the plaintiff to the knowledge of the defendants – whether the plaintiff was to retain a beneficial interest in the land – whether the defendants were in all respects the owners of the land

CONTRACTS – CONVEYANCING – FROM CONTRACT TO COMPLETION – dispute over the nature of an agreement - where the parties signed a document in the standard form of a contract for the sale of land which did not record the entirety of what was agreed by the parties and contained none of the critical terms contended by the plaintiff – construing intention of the parties – intention of the plaintiff to the knowledge of the defendants – whether the plaintiff was to retain a beneficial interest in the land – whether the defendants were in all respects the owners of the land

EQUITY- TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – GENERALLY – where the plaintiff claimed he asked the first defendant to obtain a loan on his behalf to discharge his existing mortgage on the house – where the defendants obtained a loan and the plaintiff’s land was transferred to them and registered in their names – where the plaintiff claimed he only transferred the house to the defendants as security for his obligation to see that the debt they incurred was repaid…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Donaghue v Donaghue

Details

AGLC: Donaghue v Donaghue [2015] QSC 54
Case: [2015] QSC 54
Decision Date: 18 March 2015

CaseChat Overview and Summary

Donaghue v Donaghue is a case that involves a dispute over the nature of an agreement, where the plaintiff, Mr Donaghue, claimed that he asked his daughter, the first defendant, to obtain a loan on his behalf to discharge his existing mortgage on his house. The second defendant, Mr Pauletto, acted on behalf of the first defendant. The defendants obtained a loan and the plaintiff’s land was transferred to them and registered in their names. The parties signed a document in the standard form of a contract for the sale of land, which did not record the entirety of what was agreed by the parties and contained none of the critical terms contended by the plaintiff.

The legal issues that the court was required to decide were whether the plaintiff was to retain a beneficial interest in the land and whether the defendants were in all respects the owners of the land. The court had to construe the intention of the parties and determine whether the plaintiff's intention was known to the defendants. The court also had to consider whether the plaintiff relied on an expectation as to his present and future entitlement to the house and its proceeds and whether it would be a “species of equitable fraud” for the defendants to insist upon their absolute title to the house. The court had to determine whether the house was held on a resulting trust because the conveyance of it was for a false consideration and whether the presumption of advancement was rebutted.

The court found that the plaintiff and the first defendant had intended that the plaintiff was to retain a beneficial interest in the land and that the defendants were not in all respects the owners of the land. The court held that the plaintiff's intention was known to the defendants and that the defendants had acted in breach of trust by claiming absolute ownership of the land. The court found that the plaintiff relied on an expectation as to his present and future entitlement to the house and its proceeds and that it would be a “species of equitable fraud” for the defendants to insist upon their absolute title to the house. The court held that the house was held on a constructive trust for the plaintiff, upon condition that he meets all expenses and liabilities of the acquisition and ownership of the house, including the payment of any money falling due to the Commonwealth Bank of Australia under the loan made by it to the defendants.

The court ordered that the land at 112 Shorncliffe Parade, Shorncliffe, described as Lot 4 on RP 4561, County of Stanley, Parish of Nundah, Title Reference 11441145, is held by the defendants upon a constructive trust for the plaintiff, upon condition that the plaintiff meets all expenses and liabilities of the acquisition and ownership of the house, including the payment of any money falling due to the Commonwealth Bank of Australia under the loan made by it to the defendants.

Orders

Orders of the court

It is declared that the land at 112 Shorncliffe Parade, Shorncliffe, described as Lot 4 on RP 4561, County of Stanley, Parish of Nundah, Title Reference 11441145, is held by the defendants upon a constructive trust for the plaintiff, upon condition that the plaintiff meets all expenses and liabilities of the acquisition and ownership of the house, including the payment of any money falling due to the Commonwealth Bank of Australia under the loan made by it to the defendants.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Mr Donaghue then lodged a caveat and commenced this proceeding. The evidence There were three witnesses at this trial, namely the parties. There were markedly conflicting versions given by Mr Donaghue and Ms Castner, corresponding with their respective cases, as to their discussions which led to the transfer. Mr Pauletto was not involved in any of those discussions. Mr Donaghue argues that the agreement for which he contends was made by Ms Castner also as Mr Pauletto’s agent. There is no case pleaded or argued by Mr Pauletto to dispute that agency, if Mr Donaghue otherwise proves his case. Mr Pauletto’s evidence is that his understanding of the transaction was according to what Ms Castner told him and according to the documents which recorded it. That evidence was challenged upon the basis that he must have understood and intended the position to be as Mr Donaghue contends was the true agreement. In essence then the questions are what did the parties intend, or at least what did Mr Donaghue intend to the knowledge of the defendants? These are to be answered by reference to their oral evidence, the documentary evidence and an assessment of the relative probabilities on the competing versions. The starting point is that the parties did sign a document in the standard form of a contract for the sale of land, which contains none of the critical terms for which Mr Donaghue contends. And this was a document prepared by Mr Donaghue’s solicitor, to whom Mr Donaghue wrote on 9 March 2012. In that letter, he began by describing his financial difficulties leading to his being in default under his mortgage. But he then wrote:“My daughter Caitlin Donaghue who works for PWC is arranging for a loan with the CTB to pay out the full amount required. This might take a few weeks due to the valuations, etc so it is my request that an approach be made to [his mortgagee] to delay any further action until the loan can be paid out in full. … I would like to also engage you in any conveyancing action required as a consequence of Caitlin’s purchase of the property.”This letter provides some support for the defendants’ case that as early as 9 March 2012, the proposal was for the house to be transferred to her, rather than that emerging later as Mr Donaghue recalled. On the other hand, it refers to her arranging a loan “to pay out the full amount required” by his mortgagee, which could be considered to be consistent with his case. The solicitors engaged by Mr Donaghue were given limited instructions, as appears from their letter to him on 26 April 2012. This was six days after completion of the purported sale of the house, when the CBA had paid out Mr Donaghue’s existing mortgage and had paid the balance of its loan to an account of the defendants. The solicitors then wrote to Mr Donaghue as follows:“We refer to the above and confirm your instructions were to negotiate with GE Mortgage Solutions an extension of time to payout and finalise the debt.We further confirm your instructions to sell the property to Caitlin Donaghue and Steven Pauletto in an amount of $380,000.00. We confirm the parties signed a Contract of Sale on 5 April with settlement effected on 20 April 2012.We confirm your instructions that Caitlin, Steven and yourself will discuss and arrange the tenancy agreements and repayment details.…CBA will now attend to the registration of the Release of Mortgage and Transfer of the property.We have been advised by Gadens Lawyers that the eviction has been cancelled and the matter is now at an end.”This letter strongly indicates that the solicitors’ retainer was limited to negotiations with the existing mortgagee and the conveyance of the house and that they were not retained to advise upon and prepare documentation which would record the full agreement or understanding of the parties. Rather, the parties were to “discuss and arrange the tenancy agreements and repayment details”. The submissions for the defendants sought support from that evidence because of its reference to a tenancy. On the other hand, it also referred to “repayment details”, which would not be something to be discussed if Mr Donaghue was not to be involved in any “repayment”.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Donaghue v Donaghue & Anor [2015] QSC 54
PARTIES:	MICHAEL FRANCIS DONAGHUE (plaintiff) v CAITLIN BRIDIE DONAGHUE (first defendant) STEVEN PAULETTO (second defendant)
FILE NO/S:	SC No 4166 of 2013
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	18 March 2015
DELIVERED AT:	Brisbane
HEARING DATE:	10 March 2015; 11 March 2015; 12 March 2015
JUDGE:	Philip McMurdo J
ORDER:	It is declared that the land at 112 Shorncliffe Parade, Shorncliffe, described as Lot 4 on RP 4561, County of Stanley, Parish of Nundah, Title Reference 11441145, is held by the defendants upon a constructive trust for the plaintiff, upon condition that the plaintiff meets all expenses and liabilities of the acquisition and ownership of the house, including the payment of any money falling due to the Commonwealth Bank of Australia under the loan made by it to the defendants.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – dispute over the nature of an agreement - where the plaintiff claimed he asked the first defendant (his daughter) to obtain a loan on his behalf to discharge his existing mortgage on the house – where the first defendant acted on behalf of the second defendant – where the defendants obtained a loan and the plaintiff’s land was transferred to them and registered in their names – where the parties signed a document in the standard form of a contract for the sale of land which did not record the entirety of what was agreed by the parties and contained none of the critical terms contended by the plaintiff – construing intention of the parties – intention of the plaintiff to the knowledge of the defendants – whether the plaintiff was to retain a beneficial interest in the land – whether the defendants were in all respects the owners of the land CONTRACTS – CONVEYANCING – FROM CONTRACT TO COMPLETION – dispute over the nature of an agreement - where the parties signed a document in the standard form of a contract for the sale of land which did not record the entirety of what was agreed by the parties and contained none of the critical terms contended by the plaintiff – construing intention of the parties – intention of the plaintiff to the knowledge of the defendants – whether the plaintiff was to retain a beneficial interest in the land – whether the defendants were in all respects the owners of the land EQUITY- TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – GENERALLY – where the plaintiff claimed he asked the first defendant to obtain a loan on his behalf to discharge his existing mortgage on the house – where the defendants obtained a loan and the plaintiff’s land was transferred to them and registered in their names – where the plaintiff claimed he only transferred the house to the defendants as security for his obligation to see that the debt they incurred was repaid…