Dries v Ryan

[2000] NSWSC 1163

CITATION:	Dries v Ryan [2000] NSWSC 1163
FILE NUMBER(S):	SC 2754/99
HEARING DATE(S):	29 May, 17-18 August 2000
JUDGMENT DATE:	12 December 2000
PARTIES :	Joanne Maree Dries (Plaintiff) Gregory James Ryan (Defendant)
JUDGMENT OF:	Master McLaughlin

COUNSEL :	P. Dowdy (Plaintiff) M. Errington (Defendant)
SOLICITORS:	Cassidy Gibson Howlin Solicitors (Plaintiff) Bayside Solicitors (Defendant)
CATCHWORDS:	Family Law - Alleged de facto relationship - Parties never resided together - Interests in property - Purchase of a house property as co-owners in unequal shares - Respective contributions to purchase price - Whether provisions of Contracts Review Act are attracted - Contract not in evidence - Whether proceedings are properly constituted - Whether circumstances of acquisition of property give rise to a constructive trust under the general law - Defendant has remained in occupation of property - Claim by Plaintiff for occupation fee - Such a claim not available unless Plainitff has been ousted or excluded - Trust in respect to shareholding of Plaintiff in Defendant's company.
LEGISLATION CITED:	Property (Relationships) Act 1984 Contracts Review Act 1980 Real Property Act 1900
CASES CITED:	Toscano v Holland Securities Pty Limited (1985) 1 NSWLR 145 Baltic Shipping v Dillon (1991) 22 NSWLR 20 Muschinski v Dodds (1985) 160 CLR 583 Baumgartner v Baumgartner (1987) 164 CLR 137 Calverley v Green (1984) 155 CLR 242 Biviano v Natoli (1998) 43 NSWLR 695
DECISION:	See paragraph 52

SUPREME COURT OF
NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Tuesday, 12 December, 2000

2754/99 JOANNE MAREE DRIES -v- GREGORY JAMES RYAN

JUDGMENT

1    MASTER: By statement of claim filed on 17 June 1999 the Plaintiff, Joanne Maree Dries, claims against the Defendant, Gregory James Ryan, firstly, relief pursuant to section 20 of the De Facto Relationships Act 1984 (now the Property (Relationships) Act 1984); secondly, relief under the general law, based upon the principles relating to constructive trusts; and finally, relief under the Contracts Review Act 1980. Each of the foregoing items of relief relates to a house property situate at and known as 255 Sylvania Road, Gymea. (The relief by way of rectification of the contract for the purchase of the house property, originally sought by the statement of claim, was not pursued at the hearing.) 2 At the commencement of the hearing it was noted that it was agreed between the parties that the present value of the aforementioned house property (to which I shall refer as “the Gymea property”) was $435,000. 3 Subsequently, the Defendant (by cross-claim filed on 30 July 1999) sought relief in respect to the interest of the Plaintiff in the company, Ryan Air Conditioning Pty Limited. The Plaintiff and the Defendant are the sole directors and the sole shareholders of that company, which is the vehicle through which the Defendant conducts his air-conditioning business. 4 On 26 May 2000 Justice Bryson ordered that the whole of the proceedings be referred to a Master for hearing and determination. 5 By her statement of claim the plaintiff asserted (in paragraph 3) that from late August 1986 until about 5 November 1997 the plaintiff and the defendant lived together on a bona fide domestic basis, although not married to each other, and otherwise cohabited in a de facto relationship. The existence of that relationship was denied by the defendant (paragraph 2 of the defence). 6 It emerged from the affidavit evidence of the plaintiff, and from other affidavits filed on her behalf (and this was substantiated by the responses given by the plaintiff in the course of her cross-examination) that the cohabiting between the plaintiff and the defendant occurred firstly at the residence of the plaintiff and her mother at 10 Nynya Avenue, Gymea, and, subsequently, after the acquisition of the Sylvania Road property, at that property. However, except on very rare occasions, cohabitation occurred only at weekends, and then usually on only one night, or possibly two nights, at weekends. It hardly ever occurred on a Sunday night, and almost never occurred during the week, unless the parties were on holidays together (they went on occasional camping trips together). 7 It was quite apparent from the evidence of the Plaintiff herself (even leaving aside the evidence of the Defendant) that the Plaintiff and the Defendant did not ever live in a de facto relationship. The parties have never lived together. At most, they regularly spent Saturday nights together, and occasionally one other night together during the week (either Friday night or Sunday night). At all times throughout the relationship the Plaintiff continued to reside with her mother at Nynya Avenue, whilst the Defendant resided, after its acquisition, at the Sylvania Road property. 8 The relationship between the parties did not involve a conjoint residence, any intermingling of finances, any intention of marriage or children, little in the way of emotional commitment. The public aspects of the relationship were in my view accurately described by the Defendant and his witnesses as being in the nature of a week-end boyfriend/girlfriend relationship. 9 In consequence, the claim of the Plaintiff for relief under section 20 of the Property (Relationships) Act will be dismissed. 10    There remain to be considered, however, the claims of the Plaintiff under the general law and under the Contracts Review Act. 11    The house property at Gymea was purchased by the parties in September 1990. The purchase price was $200,000. In addition, there were other incidental expenses associated with the purchase (for example, stamp duty, legal costs and the like). The plaintiff did not contribute to those incidental costs, which were paid entirely by the defendant. 12    The purchase price of $200,000 was funded as follows:

(a) $120,000 borrowed jointly by the plaintiff and the defendant from the National Australia Bank.

(b) $10,000 lent by the plaintiff’s mother to the defendant.

(c) $30,000 advanced by the plaintiff.

(d) $40,000 advanced by the defendant.

13    The entirety of the housing loan from the National Australia Bank, which was secured by mortgage over the house property, was repaid by the defendant. The borrowing from the plaintiff’s mother was repaid by the defendant. 14    The house property when purchased was registered in the names of the plaintiff and the defendant as tenants in common, the plaintiff as to one-seventh and the defendant as to six-sevenths. 15    According to the plaintiff, she was, until the commencement of the present proceedings, under the belief that she and the defendant held the house property jointly in equal shares. It was the evidence of the defendant that at the time of the execution by himself and the plaintiff of the contract to purchase the house property the solicitor who was acting for them on the purchase explained to them that the plaintiff would be receiving only one seventh, whilst the defendant would be receiving six sevenths. 16    The evidence of the plaintiff under cross-examination concerning the visit to the solicitors was not very impressive. I am reluctant to accept the evidence of the plaintiff that nothing said to her, or that she heard nothing, during that visit to the solicitor concerning the interest which she would acquire in the house property. Indeed, I would consider it passing strange if the plaintiff had evinced no interest upon that visit to the solicitor concerning the share which she was to receive in the house property in return for her advance of $30,000 and the committing of herself as a joint mortgagor of the property. 17    Unfortunately, it would appear that the solicitor who had acted for the parties at the time of the purchase has subsequently been struck off the rolls, and that his file has later been destroyed by the firm of solicitors which took over his practice. Thus there was not available at the hearing any documentary, or otherwise objective, evidence concerning what occurred during that visit to the solicitor. 18    Since the time of the acquisition of the house property the defendant has lived there permanently, and has paid all outgoings. The plaintiff has made no contribution to any of the outgoings on the house property. 19    I have had the benefit of receiving written outlines of their respective submissions from Counsel for the Plaintiff and Counsel for the Defendant. Those written outlines will be retained in the Court file. 20    It was my original understanding that the contract relied upon by the Plaintiff, and in respect of which relief was sought under the Contracts Review Act, was the written contract for sale to the Plaintiff and the Defendant as purchaser of the Gymea property. 21 However, that contract was not in evidence. Despite the submission on behalf of the Plaintiff that I should infer that the transfer to the Plaintiff and the Defendant as registered proprietor was consistent with the terms of that contract, I am not prepared to draw such an inference. There is no evidentiary basis for the suggestion that the contract for the purchase of the Gymea property dealt with the rights of the co-purchasers as between themselves. 22 In the course of submissions, however, it was then suggested on behalf of the Plaintiff that the transfer itself (being a “land instrument” of the nature described in section 7(1)(d) of the Act, and in respect of which the Court is enabled to make orders) constituted a contract which attracted the provisions of the Act. That transfer provides that as between the themselves the Plaintiff and Defendant as purchasers (a) shall be tenants in common, and (b) shall hold interests in the Gymea property of one seventh and six sevenths respectively. It was submitted on behalf of the Plaintiff that a contract in those terms between the Plaintiff and the Defendant was unfair. 23 I was also in this regard referred to the provisions of section 36 (11) of the Real Property Act 1900, which provides that a transfer has the effect of a deed, and I was referred to the decision of McLelland J (as he then was) in Toscano v Holland Securities Pty Limited (1985) 1 NSWLR 145. 24 It was submitted on her behalf that there was in the transfer to the Plaintiff of only a one seventh interest in the Gymea property, both procedural injustice and substantive injustice That injustice, so it was submitted, resulted from the solicitor who effected the transfer in those terms being wrong in the view which he took as to the respective interests of the parties in the property; further, so it was submitted, that solicitor ignored the belief of the Plaintiff as to her interest, and also ignored the fact that the Plaintiff had accepted a liability under the mortgage as to a one half interest in the property (in this later regard I was taken to the decision of the Court of Appeal in Baltic Shipping v Dillon (1991) 22 NSWLR 20 (especially the judgment of Kirby P)). 25 Concerning the foregoing claim of the Plaintiff grounded on the Contracts Review Act, it was submitted on behalf of the Defendant that the Plaintiff herself in her evidence did not allege any contract of the nature described by Counsel for the Plaintiff to arise out of the transfer, and that, in any event, there was no consideration passing between the parties in respect to the asserted contract arising out of the transfer. Further, that such an assertion was not raised in the statement of claim, and that the remedies sought in that pleading were inconsistent with such an assertion. 26    Further, the Defendant pointed to the fact that the Plaintiff on her own evidence said that she did not remember what was said in the solicitor’s office, and that the Defendant was not cross-examined as to what happened to the solicitor’s office. 27    In my conclusion the transfer does not constitute a contract between the Plaintiff and the Defendant of such a nature as to attract the provisions of the Contracts Review Act. The contract which the Plaintiff and the Defendant as purchaser entered into for the purchase of the Gymea property was not in evidence before the Court. It is not possible, therefore, for the Court to express any view concerning the terms of that contract. However, even if that document were to be in evidence, I consider that it would be necessary for the other party or parties to that document, being the vendor, to be joined as parties to any claim for relief under the Contracts Review Act. 28    Not only am I not satisfied upon the evidence presently before the Court that the Plaintiff has established any entitlement under the Contracts Review Act, but I consider that the proceedings as presently constituted are not such as would attract the provisions of that Act, or would entitle the Court, even if otherwise it were so minded, to grant to the Plaintiff any relief under the Act. It follows, therefore, that that claim for relief must be dismissed. 29    There still remains to be considered, however, the claim of the Plaintiff under the general law, grounded upon the principles relating to constructive trusts which have been enunciated by the High Court of Australia in such decisions as Muschinski v Dodds (1985) 160 CLR 583 at 619-620, Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148 (see, also, Calverley v Green (1984) 155 CLR 242). 30 The facts of the present case fall squarely within the foregoing principles. It is all very well for the Defendant to say that the Plaintiff contributed only $30,000 to a purchase price of $200,000, and that in consequence her entitlement to an interest in the Gymea property is reflected in her being registered as to a one seventh share therein. Such an approach would, in my view, totally disregard the fact that the Plaintiff pledged her credit and accepted, with the Defendant, joint and several liability as mortgagor of the subject property. The circumstance that, in the event, the Defendant met the entirety of the mortgage payments does not alter the fact that had the Defendant been unwilling, or unable, to meet those payments, the National Australia Bank as mortgagee could, and probably would, have looked to the Plaintiff to meet the entirety of the indebtedness under the mortgage. 31 In my conclusion the Plaintiff is entitled to an interest in the Gymea property which reflects not only her actual contribution of $30,000, but also her joint liability under the mortgage of $120,000. That is, in strict arithmetical terms, the Plaintiff could be regarded as having an interest to the extent of no less than $90,000, and possibly as great as $150,000, in a purchase of $200,000. That would give to the Plaintiff an interest of between 45 per cent and 75 per cent in the house property. 32 I do not disregard the fact the Defendant has paid all outgoings in respect to the house property. That is only appropriate, since the house property was acquired to be, and for the past ten years has in fact been, the residence of the Defendant. There was never any intention that it should be the conjoint residence of the parties. Those payments do not affect the entitlement of the Plaintiff under a constructive trust. 33 There have not been placed before the Court precise details of the incidental expenses associated with the purchase, which expenses were borne exclusively by the Defendant. Depending upon the amount of those incidental expenses, it is possible that they might have the effect of reducing, very slightly, the foregoing arithmetical calculation resulting in an interest of at least 45 per cent in the property. 34 It seems to me, however, that the application of the principles relating to constructive trusts which were recognised by the High Court of Australia in the decisions to which I have herein referred should not be approached merely upon a strictly mathematical basis. It would in the circumstances of this case be unconscionable and inequitable for the Defendant to be entitled to more than a one half interest in the property. 35 In the circumstances, therefore, I consider that the constructive trust which has arisen in respect to the Gymea property is one upon which the property is held beneficially for the parties in equal shares. 36 It follows, therefore, that in my conclusion the Plaintiff is entitled to receive from the Defendant payment of an amount equivalent to one half of the present value of the house property (that is, one half of $435,000, being an amount of $217,500), and that, in return, the Plaintiff should assign her right, title and interest in the house property to the Defendant. 37 In this regard it is appropriate to record that the Plaintiff, although by her statement of claim seeking a transfer to her of the entirety of the house property, sought at the outset of the hearing only one half of the house property -- that is, an interest presently worth $217,500. That is the interest which I have concluded she is entitled to receive. 38 By his cross-claim the Defendant seeks relief in respect to the one share held by the Plaintiff in the company Ryan Air Conditioning Pty Limited. The Defendant asserts that that share is held by the Plaintiff on trust for the Defendant. However, the Plaintiff claims that she holds that share beneficially, and that, in consequence, she is entitled to a one half interest in the value of the company. A valuation of the company was conducted by Mr D. J. Fury, chartered accountant, who concluded that the company had a present value of $148,258. Thus, so it was submitted on behalf of the Plaintiff, she was entitled to an interest in the company in an amount of $74,129. 39 Throughout the time when the Plaintiff was associated with the Defendant it is abundantly clear that the Plaintiff did not ever regard herself as having any beneficial interest in the company. She allowed herself to appointed a director and to become a shareholder solely in order to facilitate the business of the defendant, which he had previously been conducting in his own name for a number of years, to be conducted through the vehicle of a company. The plaintiff did not receive any director’s fees. Neither did she receive any dividends. She did not pay for her one share in the company. She signed whatever company documents were placed in front of her by the defendant, without giving any thought as to the nature or significance of those documents. The plaintiff did not ever work installing air conditioning. The most that can be said of the plaintiff’s involvement in the company was the fact that she occasionally drove the defendant, when he lost his drivers licence. 40 The payment of $398 a month which the plaintiff received from the company, was to enable the plaintiff to make the hire purchase payments on the boat which had been acquired by the Defendant. Although that boat was registered in the name of the plaintiff, she clearly regarded it as being the defendant’s property. By the same token, although the Nissan Pulsar motor car was registered in the name of the company, it was clearly regarded by the plaintiff as being her car. She had owned the car before it was transferred to the company, and she has continued to use it since the termination of her relationship with the defendant. The Plaintiff under cross-examination said that the parties regarded these transactions concerning the boat and the motor car as a perfectly fair arrangement. The plaintiff agreed that the whole point in the transactions relating to the boat and the motor car and the payment to the plaintiff by the company of $398 a month was to enable the company to acquire the boat in a tax deductible way. 41 The Plaintiff did not ever pay any consideration for her share in the company. The totality of the assets of the company were contributed by and were acquired by the Defendant. The Plaintiff did not assert anything to the contrary. 42 It was submitted on behalf of the Defendant that, since he had paid for everything in relation to the company, including the Plaintiff’s share, then there had arisen, if not an express trust in relation to that share, at least a resulting trust (and, further, that there was no presumption of advancement in this regard). 43 In my conclusion the Plaintiff has not established any beneficial interest in the company. She became a shareholder merely to help the Defendant. I am satisfied that she held her share as trustee for the Defendant, if not on an express trust, then certainly on a resulting trust. 44 It should also here be recorded that it was submitted on behalf of the Plaintiff that the Defendant had had the benefit of living in the house property since the termination of whatever relationship existed between the parties, and that it was only proper that that benefit should be recognised by the imposition upon the Defendant of a notional occupation fee for that period. 45 It is quite clear from such judicial authorities as Biviano v Natoli (1998) 43 NSWLR 695 at 700-702 per Beazley JA (and the cases there cited) that liability to pay an occupation fee would arise only if the Plaintiff had been ousted or excluded from the property. That was not the situation in the instant case. In any event, the Defendant has paid all the outgoings in respect to the property throughout the period for which the Plaintiff submits that a notional occupation fee should be brought into account. 46 I summarise my foregoing conclusions. The Plaintiff’s claim under the Property (Relationships) Act must be dismissed, as must also be her claim under the Contracts Review Act. The Plaintiff is entitled to relief grounded upon the existence of a constructive trust in respect to the acquisition of the Gymea property. I consider that she is entitled to a one half interest in that property. 47    The Defendant is entitled to relief in respect to the share held by the Plaintiff in the Defendant’s company. In my conclusion the Plaintiff holds that share on trust for the Defendant. 48    It follows, therefore, that the Plaintiff is entitled to relief in respect to the house property, being a declaration that the parties hold that property in equal shares, and, if the Plaintiff so desires, an order that the Defendant pay to her the sum of $217,500 in return for the transfer by the Plaintiff to the Defendant of her half interest in that property. Further, the Defendant is entitled to a declaration that the Plaintiff holds her one share in Ryan Air-Conditioning (Aust) Pty Limited on trust for the Defendant, and an order that the Plaintiff transfer that one share to the Defendant. 49    I have not heard any submissions as to costs. The Plaintiff has been substantially successful upon her claim in respect to an interest in the house property, grounded upon the general law. The Defendant has been totally successful in respect to his claim concerning the share in the company. The Plaintiff has been unsuccessful upon her claim under the Property (Relationships) Act (the evidence in respect of which occupied a substantial part of the hearing) and upon her claim for relief under the Contracts Review Act. 50    My present view is that it is appropriate that there should be no order as to costs, to the intent that each party should bear her or his own costs of the proceedings. If, however, either party wishes an opportunity to be heard concerning costs, such an opportunity will be granted. 51    Accordingly, it is appropriate that short minutes of order should be brought in to reflect my foregoing views and conclusions. 52    At this stage I make only the following order:

(1) I stand the matter over to a date to be fixed by arrangement with my Associate, for the purpose of bringing in short minutes of order to reflect my foregoing views and conclusions, and, if either party so desires, for the purpose of receiving submissions as to costs.
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Last Modified: 01/19/2001