Engwirda, Denise Marilyn v John Engwirda, Regis Projects , Pty Ltd ACN 009 924 761, John Engwirda Pty Ltd ACN 009 815 829, Julie Patricia Engwirda - [1998] QSC 286

IN THE SUPREME COURT
OF QUEENSLAND  Writ No. 880 of 1994
Brisbane
BETWEEN:
  DENISE MARILYN ENGWIRDA
  Plaintiff
AND:
  JOHN ENGWIRDA
  First Defendant
AND:
  REGIS PROJECTS PTY LTD
  ACN 009 924 761
  Second Defendant
AND:
  JOHN ENGWIRDA PTY LTD
  ACN 009 815 829
  Third Defendant
AND:
  JULIE PATRICIA ENGWIRDA
  Fourth Defendant
REASONS FOR JUDGMENT - MOYNIHAN J.

Judgment delivered 17 December 1998

CATCHWORDS: EQUITY - constructive trust - whether former de facto wife could claim an interest in property held by former de facto husband - whether parties had a common intention to pool resources - whether plaintiff had made a contribution founding a constructive trust.
Counsel: W.J. Hodges for the plaintiff.
D.R. Gore Q.C. with K.A. McMillan for the defendants.

Solicitors: Philippa Power & Associates for the plaintiff.
Clayton Utz for the defendants.

Hearing Date:  17 - 19 August 1998 and 7 October 1998.
IN THE SUPREME COURT
OF QUEENSLAND  Writ No. 880 of 1994
Brisbane
BETWEEN:
  DENISE MARILYN ENGWIRDA
  Plaintiff
AND:
  JOHN ENGWIRDA
  First Defendant
AND:
  REGIS PROJECTS PTY LTD
  ACN 009 924 761
  Second Defendant
AND:
  JOHN ENGWIRDA PTY LTD
  ACN 009 815 829
  Third Defendant
AND:
  JULIE PATRICIA ENGWIRDA
  Fourth Defendant
REASONS FOR JUDGMENT - MOYNIHAN J.

Judgment delivered 17 December 1998

The Action

The plaintiff claims to be beneficially entitled to a half or alternatively a proportionate share in the first defendant's property, including property owned by the second and third defendants on the basis that they are controlled by the first defendant.
The plaintiff's claim was originally for a half share founded on an alleged common intention of the parties to share equally their pooled resources. The statement of claim underwent a number of amendments; the earlier of the amendments reflected that the first defendant's entitlement to various properties in which the plaintiff claimed an interest was held in conjunction with others or by legal entities other than the first defendant.
The statement of claim was amended late in the trial to advance a claim of an interest in proportion to the respective contributions of the plaintiff and the first defendant as determined by the court in circumstances where it would otherwise be unconscionable to deny that the plaintiff had such an interest. The amendment was made as a consequence of an intimation by me that a claim on that basis (as distinct from common intention) was not open on the pleadings as they then stood. Counsel for the defendants did not seek an adjournment consequent on the amendment and the trial proceeded.
The principles the plaintiff seeks to invoke have now been the subject of extensive judicial consideration most notably by the High Court in Muschinski v. Dodds[1] and Baumgartner v. Baumgartner[2]. A constructive trust may be imposed on the basis of an express or inferred agreement or even if the person on whose property it is imposed had no intention to create a trust or to hold the property in trust. In the latter case, it is imposed where it would otherwise be unconscionable for it not to be in the particular circumstances; see Baumgartner in particular at 147 and Muschinski at 620 and 621. At the latter reference, Deane J. (with whom Mason J. agreed), having adverted to the dependence on the particular circumstances for invoking the remedy, stated that:-
". . . one is not left at large to indulge random notions for what is fair and just as a matter of abstract morality. Notions of what is fair and just are relevant but only in the confined context of the determining whether conduct should, by reference to legitimate process of legal reasoning, be characterised as unconscionable for the purpose of a specific principle of equity whose rationale and operation is to prevent wrongful and undue advantage being taken by one party of a benefit derived at the expense of the other party in the special circumstances of the unforeseen and premature collapse of a joint relationship or endeavour."
[1](1985) 160 CLR 583
[2](1987) 164 CLR 137
Background
The action arises out of the breakdown of a relationship between the plaintiff and the first defendant which began in 1969 and ended towards the end of 1988. The second defendant - its shareholders are the first defendant and his brother Andy - became the trustee of the John Engwirda Family Trust and holds property in which the plaintiff claims an interest. The fourth defendant is the daughter of the plaintiff and the first defendant and became a director and shareholder of the third, in controversial circumstances.
The first defendant was born in Holland on 20 September 1942 and came to Australia with his family in 1950. He left school in year 10 and commenced work in the building industry in Brisbane before moving to the Gold Coast in 1962 to work with his brother Frank who was a builder there. In 1965 the first defendant and his brother Andy embarked on what proved to be a successful business relationship. They were initially partners and essentially remained so[3], although they came to operate through company and trust structures for commercial and taxation reasons. The brothers worked firstly as builders carrying out residential (including multi-unit) construction on the Gold Coast, they then entered into some lucrative civil engineering contracts on the Gold Coast and in south-east Queensland and moved into the acquisition of land and the construction and sale of multi-unit properties. There was a degree of overlapping in these various phases. Andy Engwirda's day-to-day contribution to the joint enterprise was the hands-on on-site construction supervision and the first defendant's was in relation to planning, land acquisition, finance and associated back-office work.
[3]For a time during the period under consideration, Andy Engwirda dropped out of active involvement in construction activities but continued as an investor. So far as the action is concerned, nothing turns on this.
The first defendant had married in 1966 but that marriage, which was childless, broke up in 1968. The experience seems to have influenced the first defendant against embarking on marriage a second time around. The plaintiff and the first defendant first met at his sister's 21st birthday on 11 November 1969. The plaintiff was born on 18 December 1949 so that she was almost 20 and the first defendant was 27 when they met. The plaintiff had a daughter, Lesley, born on 15 April 1968 of a previous association. The plaintiff had apparently worked as a waitress but was on social security benefits when she and the first defendant met. She had no assets of any consequence and, it might fairly be said, no great financial prospects. The first defendant on the other hand was accumulating assets, was in a successful business and well on the path to attaining his ambition, which he achieved, of retiring at 40.
As I have said, the plaintiff and the first defendant met on 11 November 1969. They had what might be described as an intermittent and casual relationship; the first defendant was also seeing at least one other woman, until 1973. In 1973 the plaintiff became pregnant with the first defendant's daughter Julie who was born on 12 October in that year. Not long before the birth the plaintiff, the first defendant and the plaintiff's daughter Lesley, commenced living together. The first defendant thereafter treated, and continued up to and after separation to treat, Lesley as a member of the family. The plaintiff and the first defendant had a second child, a son born on 11 May 1976.
The first defendant never intended to marry the plaintiff and gave her no occasion to believe that he would. On the other hand, the plaintiff adopted the name Engwirda and there is no occasion to doubt that people who came into contact with the plaintiff and the first defendant believed that they were married and the first defendant did nothing to disabuse them.
The plaintiff's financial situation and prospects had not significantly changed between the time she and the first defendant met and the time that they commenced to live together. The first defendant's financial position and prospects had continued to advance; for example a statement of assets and liabilities prepared in August 1973 apparently for the purpose of obtaining finance shows a surplus of assets over liabilities in excess of $300,000.00.
During the period the parties were together, the plaintiff received income by way of salary or distributions from the first defendant and various entities controlled by him but did not otherwise work for remuneration. As will emerge, she acquired assets organised and funded by the first defendant or entities controlled by him and these generated income.
As 1988 progressed, for reasons which are not altogether clear, the relationship between the plaintiff and the first defendant deteriorated to the extent that the first defendant decided to terminate it and the plaintiff acquiesced, or at least faced up to the inevitable. It is not possible on the evidence to apportion, or even determine responsibility for this even if it were relevant to do so. There were discussions about financial arrangements and property was sold, including the plaintiff's property, to reduce borrowings and tax liabilities and other arrangements were canvassed if not concluded. The parties seem to have continued in a fairly amicable relationship, not least one assumes on account of the children, after they physically separated either at the end of 1988 or early in 1989.
After they separated the plaintiff and the first defendant's children were financially dependent on the first defendant and he supported them. He also provided some support, including by way of a loan, to the plaintiff when she got into financial difficulties including the rise of her credit card debts. There was some correspondence, initiated by the plaintiff, between solicitors for the parties early in the separation in respect of a claim to property by the plaintiff but it can't be said that it was vigorously pursued and the issue remained unresolved. At some time, it seems to have been towards the end of 1993, the plaintiff approached the first defendant for a loan. He declined on the basis that he was committed to taking a woman with whom he then had an association, her son and his son and daughter on a holiday to the United States with the consequence that he did not have the funds to accede to the plaintiff's request. I accept that some years later the plaintiff told the first defendant that the incident precipitated the initiation of these proceedings on 21 June 1994.
Paragraph 5 of an amended defence of 2 December 1994 alleged that the plaintiff and the first defendant made an oral agreement to the effect that any claim the plaintiff may have had against the first defendant was settled on terms which are set out in the pleading, that the first defendant had abided by the terms and that the plaintiff's claim was barred or alternatively that it was not unconscionable for the first defendant to assert the plaintiff had no entitlement to the property controlled. There is some occasion to think that the plea, which was withdrawn, may have reflected a misunderstanding by its authors of the first defendant's instruction. The position seems to be that there was agreement about some matters but there was no overall concluded agreement. In any event, insofar as the plea reflected the first defendant's instructions, its having being made then withdrawn may bear on his creditability. Essentially, I accept his evidence.
The Financial Arrangements between the Parties
The first defendant and his brother Andy were essentially in partnership up until the first defendant's retirement but, acting on advice, they commenced to utilise corporate and trust structures. I have no difficulty in concluding that the first defendant was keen to take advantage of arrangements minimising the incidence of income tax and that his association with the plaintiff came to provide an opportunity to do this, for example, in terms of income splitting. I am also satisfied that the first defendant wished to make provision for the plaintiff, for their two children and the plaintiff's daughter Lesley and a family trust provided a vehicle for doing this.
It is unnecessary to canvass here the detail of the various financial arrangements entered into by the first defendant over the years in respect particularly to various unit developments. I am satisfied that the arrangements were genuine arrangements. In particular, I am not persuaded that the first defendant entered into any arrangement or engaged in any transactions with a view to avoiding any obligation he had or might otherwise have had to the plaintiff. The various transactions were not shams or, as I have said, other than genuine business arrangements designed, among other things, to minimise the incidence of tax.
By 1973 the plaintiff and Andy were increasingly moving to direct involvement as high rise developers. Again it is unnecessary to disentangle the intricacies of the various transactions canvassed by the evidence. Broadly speaking, the pattern was that the brothers, acting through trust and corporate structures reflecting their respective interests, entered into what can, perhaps loosely, be described as joint ventures with others who contributed capital to the aggregation of land and to the construction on the land of multi unit developments. The other venturers' involvement was usually through corporate and trustee structures comparable to those utilised by the Engwirda brothers. There was generally a specific arrangement for each specific project. The surplus from each joint venture was, again generally speaking, distributed in the form of building units in the development to the participating venturers in proportions reflecting their contributions. The units were then sold by the interest which had become entitled to them or retained to generate income.
The plaintiff and the first defendant commenced cohabitation in a property in which the first defendant had an interest at about the time the Engwirda brothers and the joint venturers named Stack entered into the first of a series of trust deeds and associated documents, which became characteristics of the first defendant's subsequent business activities, in respect of what became known as the Southern Cross unit development. In 1976 the plaintiff and the first defendant moved into a residence which the first defendant had constructed on land he owned at Burleigh Heads. During the period of their co-habitation, the parties resided in properties owned by the first defendant or entities controlled by him and she did not contribute to this from her own funds.
Towards the end of 1978 the first defendant decided that the plaintiff should have an interest in a multi unit development called Pacific Regis. The first defendant's evidence, which I accept, was that he made the arrangement to put some assets into the plaintiff's name, to give her some security for herself and in the relationship and to give her experience in handling money and in commercial enterprise. The plaintiff's interest, funded by way of loan, was reflected in the Pacific Regis trust deed and was maintained in its original proportion during subsequent variations in the arrangement.
As a consequence of such arrangements the plaintiff became the owner of units 43 and 44 in the Pacific Regis development and of units 18 and 23 in the Oceania development. The plaintiff's interest in Oceania was documented and financed on a basis comparable to the arrangements made in respect of her Pacific Regis units. Unit 18 in Oceania was sold for $176,000.00 in March 1988 to reduce borrowings and the plaintiff and first defendant's tax liabilities. Unit 23 was sold in October 1988 for $195,000.00 and the plaintiff retained the proceeds. The plaintiff retained the Pacific Regis units which in February 1989 were valued in the order of $455,000.00 until she sold unit 43 in 1994 for $210,000.00 but retained unit 44. Late in 1988 DME Nominees Pty Ltd, as trustee for the Denise Engwirda Superannuation Fund, acquired two units (41 and 42) in the Kooralbyn Resort. At the time of trial, the plaintiff also owned her residence at 182 Burleigh Street, Burleigh Waters.
The financial affairs of the plaintiff, the first defendant and of the enterprises with which he was involved were essentially conducted separately. As I have already mentioned, there were specific arrangements by which the plaintiff acquired interests in unit projects. The plaintiff had her own bank account and was not a signatory for the various accounts associated with the first defendant's business interests. The plaintiff and first defendant never had a joint bank account.
The evidence is in some respects not as explicit as it might be in respect of the first defendant's acquisition of assets or of interest in assets. It seems however, that the position at separation can now fairly be summarised as follows:-
(a)the first defendant held units 45, 46, 55, 56, 57 and 58 in the Pacific Regis development;
(b)the first defendant held a half share (as tenant in common with Andy Engwirda) in land on the Burleigh connection (Reedy Creek Road);
(c)the first defendant held a half share (as tenant in common with Andy and Margaret Engwirda as joint tenants) in land at 79 Lower West Burleigh Road;
(d)the first defendant held units 47 and 48 at Kooralbyn as trustee for the John Engwirda Family Trust.
The second defendant held:-
(a)Southern Cross units 59, 60, 61 and 62 as trustee for the first defendant;
(b)Southern Cross units 26, 52, 53 and 54 as trustee for the John Engwirda Family Trust.
A Common Intention
A common intention may be express or inferred as a matter of fact; Stowe and Devereaux Holdings Pty Ltd v. Stowe[4]. There was no express agreement in the present case and I am not prepared to infer a common intention that the plaintiff and the first defendant should enjoy the benefit of capital effort and income contributed as alleged in the statement of claim. The first defendant’s intention, in which the plaintiff acquiesced, was manifest in the specific arrangements which were made in respect of finances and the plaintiff's acquisition of units in the developments previously referred to. The arrangements were evidenced by the contemporaneous documentation in the form of trust deeds and other documents recognising the plaintiff’s and others, including the first defendant's specific interest in specific properties. Dealings have been consistent with the arrangements reflected in the documentation and there are no unfulfilled obligations arising as a consequence of the arrangements. The plaintiff's contribution to properties in respect of which she acquired an interest was by way of a loan from the first defendant for that specific purpose. 24 Even ignoring the considerations just canvassed, the evidence pointed to by the plaintiff in support of the inference of a common intention is at best equivocal. For example, the assets statements in exs.9 to 12 are at least equally consistent with the view that the assets were being kept separate as they are of the view that they were pooled. The loan applications of 28 December 1978 (ex.18) were for separate loans and resulted in approvals of separate loans. The first defendant was cross-examined with a view to establishing a common intention. He resolutely denied the pooling of resources before being persuaded to accept a pooling of efforts "what you did and what she did" towards "raising the kids". But in the context of the evidence such endeavours do not go far enough to establish the common intention relied on.
[4](1994-95) 19 Fam. LR 409 at 413 and the cases there cited.

The same may be said of ex.29 which is a copy of notes made by the first defendant for the purpose of giving instructions to his solicitor which came into the possession of the plaintiff in circumstances not comprehensively canvassed by the evidence. The plaintiff relies on specific references in the document which have to be read in the context in which it was made; it was a scribbled preliminary note for the purpose of obtaining legal advice. The reference to "our earnings" in the document is in the context of the document recording the loan of funds to enable the plaintiff to participate in some development project, to assist with earning and to make some tentative arrangement suggestion. Again in isolation it is at best equivocal and in the context of the whole of the evidence it doesn't found a finding of common intention. Particulars were supplied of the allegation of common intention which referred to conversations between the plaintiff and the first defendant and between them and others with references to "our" property but the evidence was not forthcoming.
There was no common intention to share the first defendant's property or the property of entities controlled by him and there was no pooling in respect of that property. The plaintiff made little contribution in terms of money or assets; indeed the first defendant had no need of such a contribution from her. In my view, the first defendant's financial position during the time he and the plaintiff were together and at the time of their separation (and indeed subsequently) was essentially a consequence of his and his brother Andy's efforts. In all probability the first defendant's financial position and his property in or entitlement to the assets in which the plaintiff now claims an interest would have been pretty much the same irrespective of whether he had entered into a relationship with the plaintiff.
The Plaintiff's Contribution
No doubt the plaintiff contributed as a homemaker and parent during the time she and the first defendant lived together effectively as man and wife. It is apparent that the first defendant in his evidence failed to appreciate the extent of the plaintiff's contribution to the family in terms of child care particularly when the children were young. On the other hand, I am inclined to accept the first defendant's evidence supported by that of Julie Engwirda to the effect that the first defendant's contribution in this respect was considerably more than the plaintiff was prepared to acknowledge, even before the first defendant retired in 1982 and that it increased after he did so. It is difficult to make any further evaluations of the respective contributions on the evidence. This is, however, not a case where the first defendant was relieved of involvement in household, child rearing and other financial responsibilities to pursue his business activity. Nor is it a case where it can be concluded that the plaintiff gave up financial opportunities in order to discharge her family responsibility. Nor can it be said that after the separation she was required to shoulder the burden of supporting the children which had previously been done by the first defendant. He continued to support them.
It was submitted that the plaintiff by her contribution in attending to household needs and to the care of the children to the extent to which she did, assisted the first defendant by allowing him to put his attention to the business of earning income and acquiring, holding and improving assets including the specific property in respect of which the plaintiff now claims an interest. The first defendant rejected a proposition put in cross-examination that the plaintiff's discharge of these responsibilities allowed him to focus his full attention on business affairs and that he was thereby able to avoid "going down the shute” during hard economic times as had happened to other property developers. The evidence does not support the proposition and it was rejected by the first defendant.
The plaintiff was not involved in any planning or decisions about the projects which were the source of the first defendant's wealth which supported what was a comfortable, if not affluent, lifestyle for the plaintiff, the first defendant, Lesley, and the two children of the relationship between the plaintiff and the first defendant.
There was what can only be described as a valiant endeavour, including the tender of an extract from the Queensland Master Builders Association Magazine of 24 October 1974, referring to the plaintiff, the first defendant and others at a dinner party, to suggest that the plaintiff supported the first defendant’s business activities by entertaining and acting as a hostess. The incident was an isolated one and there is no basis for concluding that to the extent to which the plaintiff was involved in such activity, she had no more than a marginal, if any effect, on the accretion of the assets in which she now claims an interest. The first defendant did not rely on entertainment of this kind for business purposes.
A similar comment may be made about a submission based on the use of the plaintiff's maiden name in an option agreement so as to disguise the first defendant's interest in the property. It cost the plaintiff nothing either in financial or other terms and as I have indicated it is difficult to take the submission seriously.
The plaintiff did part-time bookkeeping, secretarial work and ran errands and the like for enterprises associated with the first defendant, particularly after he had retired and office staff were no longer employed to do those things. There is no occasion to doubt that on occasions the plaintiff in conjunction with Andy Engwirda's wife selected fabric and made decisions about the decoration of units. There is however, no basis for concluding that this was particularly onerous or that the plaintiff forewent any income earning or other opportunity which she might otherwise have pursued. If the plaintiff had not been involved in the activity then presumably the decisions would have been made by somebody else, however it does not necessarily follow that this would involve expense.
The plaintiff received a total of $162,767.00[5] from the first defendant for enterprises associated with him for part-time work in the period from the financial year 1972-73 to the 1988-89 financial year. The evidence does not found any conclusion other than that this sum, the payment of which no doubt reflected income splitting considerations, was other than adequate recompense for any work that the plaintiff did.
[5]This was part of a total of $1,728,903.00 she received as salary distributions and rental income.
It is true that the plaintiff's account was used largely for household purposes and to the extent to which trust distributions were paid to that account they were utilised for those purposes. Once again, however, I am not prepared to conclude that the plaintiff forewent any opportunities for the generation of income or made sacrifices so that those funds might be devoted to household activities or, for that matter, that she in any way stinted herself.
No doubt during and after the relationship the first defendant's financial position was significantly better than the plaintiff's. I am not persuaded that this of itself founds a basis for intervention by the Court although from time to time during the trial I was left with the distinct impression that it was being submitted that it was.
I am not persuaded that there is evidence founding a conclusion that the plaintiff made contributions directly to the acquisition or improvement of any of the properties in respect of which she now claims an interest. In other words, there is no link or connection established between the plaintiff's services and the assets sought to be made the subject of the charge; see The Public Trustee v. Kukula[6] and Stowe v. Stowe[7] and Baumgartner v. Baumgartner[8].
[6](1990) 14 Fam. LR 97 at 102
[7]at 419
[8]at 153
Put shortly, the plaintiff in my view has not established that the first defendant is taking a wrongful or undue advantage of a benefit derived at her expense in terms of the specific principles canvassed in cases such as Baumgartner[9] and Muschinski[10].
[9]at 153
[10](1985) 160 CLR 583
John Engwirda Pty Ltd
The statement of claim pleads that the first defendant is and was at all relevant times the holder of two of the three issued shares in the third defendant. It is then pleaded that in April 1993 the first defendant asked the plaintiff to resign as a director of the third in favour of the fourth defendant, their daughter Julie. It is alleged that in making the request the first defendant represented to the plaintiff that as Julie was then doing the office work of the company (as was the case) it was more convenient for her to replace the plaintiff for the signing of documents. It is then alleged that the first defendant sent documents to the plaintiff and that she signed them "in the belief that such related to her resignation as a director" but in the event she also signed a transfer of her shares to Julie. The documents in question were the plaintiff's resignation as a director of the second and third defendants and a transfer of her shares in the third.
Julie Engwirda gave evidence. I am mindful of the submission made on the plaintiff's behalf that she has received considerable financial assistance from her father and has an expectation of continuing benefits from him. I accept her evidence notably with respect to the first defendant's contribution to household and child related activities referred to earlier and bearing on the transfer of the plaintiff's shares in the third defendant to her. As to the latter, there were three simple documents clearly identifiable for what they were, which the plaintiff had had for some days prior to their completion. The transfer of shares was clearly marked as such. I am not persuaded that the first defendant said or did anything to mislead the plaintiff as to the nature of the documents. I accept that as she was signing the documents the plaintiff remarked to Julie to the effect that the plaintiff wanted her out of the house and then out of the company. Put shortly, I am satisfied that the plaintiff was not under any misapprehension when she signed the share transfer.
Regis Projects Pty Ltd and the John Engwirda Family Trust
The statement of claim sought a declaration that the property held by the second defendant as trustee for the John Engwirda Family Trust was held either for the first defendant's benefit or at his direction and that half or a proportion determined by the Court was held in trust for the plaintiff. Alternatively, it was sought that an independent trustee be appointed to replace the second defendant. As I understand the pleading, in order to found the alternative it was pleaded that the first defendant had operated the trust to the exclusion of the plaintiff and failed to make any distribution of capital income to the plaintiff and that the second defendant had, contrary to the proper exercise of its discretion under the trust deed, unfairly discriminated against the plaintiff in failing to make distributions. On the view I take of the matter, it is unnecessary to determine whether, as was submitted for the plaintiff, what was described as the principle in Ascot Investments Pty Ltd v. Harper and Anor[11] applied to advance the plaintiff's claim to interests in property held by the second defendant as trustee of the John Engwirda Family Trust.
[11](1981-82) 148 CLR 337
I should however, perhaps record that the evidence does no more than establish that the distributions made by the trust did not include the plaintiff since she and the first defendant separated. There is nothing to found a conclusion of any impermissible or improper exercise of the trustee's discretion.
The reasons being those I have canvassed, I dismiss the action.