Flourentzou v Spink

[2019] NSWCA 315

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Flourentzou v Spink [2019] NSWCA 315
Decision date:	19 December 2019
Before:	Bathurst CJ at [1]; Gleeson JA at [2]; Barrett AJA at [3]
Decision:	(1) Appeal dismissed.  (2) That the appellants pay the respondent’s costs.
Catchwords:	PERSONAL PROPERTY – gifts – conditional gifts – payments by mother to her daughter and son-in-law towards purchase of house by them to be occupied also by her – intention of mother – whether absolute and unqualified gift – whether gift conditional on her having right of occupation amounting to interest in the property
Legislation Cited:	N/A
Cases Cited:	Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 Bogdanovic v Koteff (1988) 12 NSWLR 472 Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Cohen v Sellar [1926] 1 KB 536 Commissioner of Taxation v McPhail (1968) 117 CLR 111; [1968] HCA 13 Ian Hung Wai v Cheung Sau Kuen [2011] 3 HKLRD 458; [2011] HKCA 94 Jacobs v Davis [1917] 2 KB 532 Lawrence v Branch [2002] WASCA 292 Luke v Waite (1905) 2 CLR 252; [1905] HCA 5 McDonnell v Loosemore [2007] EWCA Civ 1531 Milling v Hardie [2014] NSWCA 163 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 Pecore v Pecore [2007] 1 SCR 795, 2007 SCC 17 Richards v Delbridge (1874) 18 LR Eq 11 Spink v Flourentzou [2019] NSWSC 256 Watson v Foxman (1995) 49 NSWLR 315 West v Mead (2003) 13 BPR 24,431; [2003] NSWSC 161
Texts Cited:	J C Campbell QC, “The consequences of rebutting a presumption of advancement” (2018) 46 Australian Bar Review 229
Category:	Principal judgment
Parties:	Dianne Flourentzou (First Appellant) Mario Flourentzou (Second Appellant) Rickie Spink (Respondent)
Representation:	Counsel: R Glasson with O Berkmann (Appellants) B Zipser (Respondent)   Solicitors: Carroll O’Dea Lawyer (Appellants) Legal Aid NSW (Respondent)
File Number(s):	2019/110486
Publication restriction:	N/A
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2019] NSWSC 256 Date of Decision: 14 March 2019 Before: Robb J File Number(s): 2017/196183

Headnote

[This headnote is not to be read as part of the decision]

A mother (the respondent) made payments to her daughter and son-in-law (the appellants) towards the purchase and renovation of a property, under an arrangement that the respondent would live in the house with the appellants and their children. There was a dispute as to the precise terms of this arrangement.

Following a breakdown of the relationship, the respondent was evicted. In proceedings brought by her, the primary judge found that, by reason of the payments made by the respondent to the appellants, the respondent had a right to an equitable charge over the property.

The issues on appeal were: in relation to the $147,000 contribution towards the purchase of the property, the nature of the payment between parties, and whether it constituted an absolute or conditional gift; and, in relation to $18,314.26 towards renovation of the property, whether the contribution added to the capital value of the property, notwithstanding that the respondent did not pay any outgoings during her three-year occupancy.

The Court held (Barrett AJA, Bathurst CJ and Gleeson JA agreeing) dismissing the appeal:

(1) The essence of an absolute or unqualified gift is that the donor intends that the donee should have enjoyment of the subject matter to the entire exclusion of the donor: at [20]. The payments by the respondent were made with the intention of obtaining the right of residence in the appellants’ property. This positive intention was inconsistent with the making of an absolute gift: at [41].

(2) There was no need to undertake a tracing exercise to quantify the relevant enhancement in value. Establishing financial contribution towards a shared living environment is sufficient: at [44]–[46].

Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 considered.

(3) Such benefit the respondent had by living in the property subsisted for a short period. The circumstances do not warrant application of any significant amortisation factor: at [48].

Milling v Hardie [2014] NSWCA 163 distinguished.

Judgment

1. BATHURST CJ: I agree with the orders proposed by Barrett AJA and with his Honour’s reasons.

2. GLEESON JA: I agree with Barrett AJA.

3. BARRETT AJA: The respondent, Rickie Spink (“Mrs Spink”), is the mother of the first appellant, Dianne Flourentzou (“Dianne”), and the mother-in-law of the second appellant, Mario Flourentzou (“Mario”). The central issue in Equity Division proceedings determined by Robb J in March 2019[1] was the character of certain payments made by Mrs Spink to Dianne and Mario between 1 November 2012 and 4 January 2013 and the consequences of the making of those payments.

   1. Spink v Flourentzou [2019] NSWSC 256 (“Primary judgment”).

Core facts

4. The payments were made by Mrs Spink in the context of the purchase and renovation by Dianne and Mario of a house at Casula. Although there was dispute about its precise terms, there was an arrangement among the parties that Mrs Spink would live in a separate part of the house and that renovations would be undertaken both to create that area and to improve the house more generally.

5. Dianne and Mario entered into a purchase contract on 15 September 2012. Completion of the purchase took place on 15 November 2012. Following completion, the house was renovated and Mrs Spink took up residence there with Dianne, Mario and their children, although, as the primary judge said, the fact that Mrs Spink had her own living area meant that there was not a “joint household”. [2] Mrs Spink commenced occupation in January 2013. After about three years, differences arose and Mrs Spink was eventually “evicted” from the property on 28 October 2016. [3] She commenced proceedings against Dianne and Mario in June 2017.

   2. Primary judgment [288].

   3. Primary judgment [168], [169]. Or, as it was put at [42], “required to leave by Dianne and Mario”.

6. As the primary judge observed[4] – and as is so often the case in similar family situations – the parties “gave little attention to legal formalism” in their arrangement.

   4. Primary judgment [184].

Decision of the primary judge

7. The primary judge held that Mrs Spink had provided $147,000 [5] in connection with purchase of the Casula house and $18,314.26 in connection with its subsequent renovation. The payments making up the $147,000 were made between 1 November 2012 and 4 January 2013; that is, in part before completion of the purchase on 15 November 2012, and in part afterwards.

   5. An issue at first instance was the precise amount of the payments made by Mrs Spink towards the purchase. The primary judge’s decision that they totalled $147,000 is not questioned on appeal.

8. His Honour rejected the proposition that Mrs Spink had made an absolute or unqualified gift of the $147,000 to Dianne and Mario. He also said:[6]

Her intention was more subtle than the making of an unqualified gift. Further, I find that Dianne and Mario were aware of the conditions upon which the money was paid over. Mrs Spink's intention was that her payments would ultimately take effect as a gift, but that this would occur on Mrs Spink's death. It was a condition of Dianne and Mario becoming free from any obligation to Mrs Spink that she be allowed to live in her part of the Casula property indefinitely, and Dianne was required to pay half of Mrs Spink's share to Denise [Dianne’s sister] following Mrs Spink's death. Those conditions were inconsistent with the payments being an unqualified gift to Dianne and Mario.

6. Primary judgment [297].

9. The finding was thus that Mrs Spink had made a gift – albeit one that “would ultimately take effect” only on her death, pending which Dianne and Mario would be under an “obligation” to allow Mrs Spink to live in the property; and the gift was subject to a condition that, after Mrs Spink’s death, Dianne was to make a certain payment to her sister, Denise. [7]

   7. Mrs Spink had three children, Dianne, Denise and Troy: primary judgment [2].

10. The making of the payments thus characterised as a qualified or conditional gift was seen by his Honour as a contribution by Mrs Spink to the cost of acquisition of the Casula property, but on the basis that she thereby obtained an interest in the property commensurate with the money outlaid. His Honour also found that the relationship between the parties was not such as to give rise to any presumption of advancement and that any such presumption was, in any event, rebutted by evidence of contrary intention.

11. These conclusions were a product of his Honour’s close review of the evidence regarding intentions of the parties.

12. The ultimate decision of the primary judge was that Mrs Spink’s equity in the Casula property should be satisfied by her having an equitable charge over the property securing an amount equal to her aggregate contribution. His Honour awarded Mrs Spink judgment in the sum of $165,314.26 (that is, $147,000 plus $18,314.26), together with pre-judgment interest, and an equitable charge over the property to secure payment of that amount. [8]

    8. Primary judgment [323].

Issues on appeal

13. By their further amended notice of appeal filed in court at the start of the hearing, Dianne and Mario challenged all of the primary judge’s central findings. The grounds of appeal are:

1. that the primary judge erred in finding that the payments by Mrs Spink to Dianne and Mario were not by way of absolute gift;

2. that the primary judge erred in finding that the money paid by Mrs Spink to Dianne and Mario was a conditional gift in terms that were not pleaded by Mrs Spink;

3. that the primary judge erred in finding that, as a matter of law, a presumption of advancement did not apply because the money was not paid solely to Mrs Spink’s daughter (Dianne);

4. that the primary judge erred in finding that it was the intention of Mrs Spink and of Dianne and Mario that, if the relationship continued, any obligation that Dianne and Mario owed to Mrs Spink would terminate on Mrs Spink’s death, at which time Dianne would be obliged to pay half Mrs Spink’s share of the contributed money to Dianne’s sister (Denise);

5. that the primary judge erred in finding that, if the presumption of advancement otherwise applied, it was rebutted by the evidence of the parties’ true intention;

6. that the primary judge erred in finding that Mrs Spink’s contribution to the cost of renovation would have added to the capital value of the property; and

7. that the primary judge erred in finding that the sum of $18,314.26 paid by Mrs Spink for renovation should be treated as part of her contribution, notwithstanding that she was not required to pay any rent or to contribute to outgoings during the time she lived at the property.

14. In his oral submissions, Mr Glasson of counsel, who appeared for Dianne and Mario, gave particular attention to the first of these matters, that is, whether the primary judge erred in finding that the payments by Mrs Spink were not by way of absolute gift. After some discussion about the nature and structure of the grounds of appeal, Mr Glasson conceded that, if his clients failed in relation to that issue (that is, Ground (1) above), only two of the remaining grounds would need to be addressed, being Grounds (6) and (7) above.

15. Mrs Spink’s case on appeal is that the primary judge was correct for the reasons given and that, as to the $18,314.26 referable to renovation, his Honour’s decision should be upheld on a separate estoppel ground outlined in a notice of contention.

Some legal propositions in brief

16. Before the grounds of appeal and the submissions of Dianne and Mario are addressed, it is desirable to make brief reference to some propositions of law. [9] If two persons contribute the whole of the purchase price of property and title is taken by only one of them who thereby becomes the sole legal owner, it is generally presumed that that legal owner holds beneficially for both persons in the proportions in which they provided the purchase money; but if the co-contributor stands in one of several relationships to that legal owner (say, a parent), a different presumption will prevail, namely, that the co‑contributor’s contribution was solely for the benefit of the legal owner who therefore enjoys the entire beneficial interest. [10]

    9. The brief statement at [16]–[18] is based on J C Campbell QC, “The consequences of rebutting a presumption of advancement” (2018) 46 Australian Bar Review 229.

    10. This is because the existence and nature of the relationship are alone sufficient to make it "more probable than not that a beneficial interest was intended to be conferred": Calverley v Green (1984) 155 CLR 242 at 250 (Gibbs CJ); [1984] HCA 81.

17. These presumptions, while sometimes cast as legal principles, are in truth no more than prima facie conclusions as to parties’ intentions indicated by bare facts. Where the bare facts are that two persons have contributed the purchase moneys, the prima facie conclusion is that there existed a common intention that they are to enjoy beneficial ownership in proportion to their contributions unless the existence of a particular kind of relationship between them indicates an overriding and unilateral intention of one of them (the assumed parent, in this discussion) that the other alone will benefit, which unilateral intention is destructive of any such common intention.

18. Either or both of the prima face conclusions as to intention indicated by bare facts may be displaced by proof that the particular intention indicated at a prima facie level is inconsistent with the intention in fact existing. Indeed, it has been said that the so-called presumptions are merely “legal tools which assist in determining” the relevant intention. [11]

    11. Pecore v Pecore [2007] 1 SCR 795, 2007 SCC 17 at [80].

19. Intention is also central to the question whether a particular transfer of money or property is a gift. A transfer is a gift if it is made voluntarily and without receipt by the transferor of any material advantage in return. [12] Words of present gift show an intention to give over property to another, and not to retain it in the donor’s own hands for any purpose, fiduciary or otherwise. [13]

    12. Commissioner of Taxation v McPhail (1968) 117 CLR 111 at 116 (Owen J); [1968] HCA 13.

    13. Richards v Delbridge (1874) 18 LR Eq 11 at 15 (Jessel MR).

20. It is thus of the essence of “absolute” or “unqualified” gift that the donor intends that the donee should have enjoyment of the subject matter to the entire exclusion of the donor. The intention of the donor is that the donee shall have full ownership “without any implied reservation of a right to an ultimate refundment”. [14] Where the donor reserves any such right or otherwise qualifies enjoyment of the subject matter by the donee, the case is sometimes described as one of “conditional gift”. [15] A gift in contemplation of marriage is sometimes found to be “conditional”, with the consequence that, if the party who has received the gift refuses to fulfil the condition of marriage, that party must return the property given; while if the party who has made the gift refuses to fulfil the condition of marriage, that party loses the right to claim return of the property given. [16]

    14. Luke v Waite (1905) 2 CLR 252 at 262 (Griffith CJ); [1905] HCA 5.

    15. For a case of “conditional gift” in circumstances resembling those of the present case, see Lawrence v Branch [2002] WASCA 292.

    16. See, for example, Jacobs v Davis [1917] 2 KB 532; Cohen v Sellar [1926] 1 KB 536; Ian Hung Wai v Cheung Sau Kuen [2011] 3 HKLRD 458; [2011] HKCA 94.

21. Where money or property is transferred by way of conditional gift, a consequence may be that the transferee holds the money or property as a trustee. In McDonnell v Loosemore [2007] EWCA Civ 1531, for example, it was said of circumstances very similar to those of this case that a finding of conditional gift would have meant that the money transferred by the parent was transferred “on a form of trust to hold it for the donor if certain conditions (such as allowing [the parent] to live in the house) were not fulfilled”. Yet again, the issue is one of intention; and the relevant intention is that of the transferor. The question is whether the circumstances in which the transfer is made show an intention of the transferor (or putative donor) to create a trust which is binding upon the conscience of the donee. Regard is to be had to the whole of the relevant circumstances to discover the intention manifested by the words and actions comprising those circumstances. [17]

    17. Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [65] (French CJ).

22. Different considerations attend the creation (or imposition) of constructive trusts according to principles explained in Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78, and Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59, cases to which the primary judge referred in the part of his judgment in which he identified Mrs Spink’s equity in the Casula property. Such a constructive trust is imposed to prevent an unconscionable assertion of legal title, but even in that kind of case, the intentions of the parties may be relevant to delineation of the relationship in the context of which the question of unconscionability is to be addressed. That point was made by Campbell J in a passage in West v Mead (2003) 13 BPR 24,431; [2003] NSWSC 161 quoted by the primary judge in the same part of his judgment.

The “absolute” gift issue

23. On the hearing of the appeal, Dianne and Mario placed overwhelming emphasis on their contention that Mrs Spink had made an “absolute” gift of the $147,000. When asked by the bench whether Dianne and Mario, having received each instalment of the $147,000, were free to spend it on holidays or lottery tickets without thereby invading any legal right of Mrs Spink, their counsel gave an affirmative answer.

24. The evidence of Mrs Spink herself was obviously relevant to the state of her intention. But the primary judge expressed serious reservations about that evidence (as he did about the evidence of both Dianne and Mario). His Honour had a concern about the accuracy of Mrs Spink’s recollections in relation to the nature and terms of her arrangement with Dianne and Mario, particularly since no contemporaneous notes of hers were produced and she was asked to recall events of some six years earlier. As his Honour also noted, the case was of “great self-interest” to Mrs Spink (as well as to Dianne and Mario) because the losing party, whoever it might be, would suffer a grave financial blow. The primary judge reinforced his reservations about Mrs Spink’s evidence by referring to the well-known observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318–319 about the fallibility of human memory and the potential influence of unconscious overlay.

25. The aspect of the evidence most influential in the primary judge’s findings regarding Mrs Spink’s intentions (and, indeed, those of Dianne and Mario) was the testimony of Ms Hiripis, an officer of the Bank of Cyprus from which Dianne and Mario obtained their housing loan. In advancing the proposition that Mrs Spink had made an absolute gift, Dianne and Mario place particular emphasis on Ms Hiripis’s evidence.

26. As the primary judge noted, Ms Hiripis was an independent witness who had no vested interest in the outcome of the proceedings. She was also the only witness who created any contemporaneous record of events. At an early stage, she made calculations of the capacity of Dianne and Mario to service and repay a loan. As contemporaneous documents and her evidence made clear, she did so by reference to an assumption that $150,000 would be made available by Mrs Spink by way of “non-refundable gift” – words she said were “bank terms”.

23. In a credit submission that Ms Hiripis generated within the Bank of Cyprus on or about 15 August 2012, there was reference to a “$150,000 gift” in connection with the home loan. The memorandum gave the following as one of the reasons for Ms Hiripis’s recommendation that a $580,000 home loan facility should be approved:

Clients are to provide a Statutory Declaration from Dianne's mother Rickie Spink confirming that the $150,000 is a non-refundable gift and will be provided from the sale proceeds from the sale of her unencumbered unit located at [address] Engadine NSW.

28. Other documents created by Ms Hiripis within the Bank also referred to the making of a “non-refundable gift” by Mrs Spink.

29. Mrs Spink made and gave to the Bank a statutory declaration dated 29 October 2012 containing the following statement:

I will be providing sixty thousand dollars $60,000 – to Marios [sic] & Dianne Flourentzou. This is to help with the purchase of the property at [address] Casula 2170. This amount will be supplied before settlement.

30. The content of the statutory declaration was composed by Mrs Spink herself, having regard to what she was told by others as to the Bank’s expectations. Ms Hiripis said that she told Mrs Spink at a meeting at the Bank that the required wording was to the effect that Mrs Spink would make “a non‑refundable gift of $60,000” (Mrs Spink gave evidence that she did not attend the meeting). Notwithstanding this, Mrs Spink composed, and Ms Hiripis accepted, a statutory declaration that did not contain any such statement.

31. The primary judge set out the following evidence given by Ms Hiripis concerning the source of her belief that Mrs Spink was to make a “non‑refundable gift”: [18]

    18. Primary judgment [99]–[100].

Q. "Dianne's mother will be providing" but that assertion is based on things that Dianne had told you, wasn't it?

A. No. It was based on conversations with Mrs Spink as well.

Q. Mrs Spink didn't use the word "non-refundable gift", did she?

A. No. The words "non-refundable" are bank terms used. So she wouldn't come up to me you wouldn't come up to a normal conversation and say, "It's a non-refundable gift." These are banking terms.

Q. You had no basis to believe then, did you, that the gift so called was a non-refundable gift other than what Dianne told you?

A. Incorrect. I had no basis to believe it wasn't a gift. Otherwise the loan would have been assessed completely differently.

…

Q. Did she say or do anything that said to you, "I am making a gift which I don't expect to be paid back"?

A. There was no she did not say or do anything that would make me assume it wouldn't. Otherwise I would have assessed the loan differently again.

Q. I'll take that answer as a yes to my question. There was nothing to assume either way, was there?

A. I suppose.

Q. Nothing to assume either way

…

A. There was no indication to me that they would have to pay the money back in any shape or form.

Q. Or that they were getting it free.

A. As far as I knew, she was giving the money to them. But it was not elaborated.

32. The evidence of Ms Hiripis shows that she, in accordance with Bank policy, expected that the money provided by Mrs Spink would be in the form of an absolute and unconditional gift and that Mrs Spink would provide, by statutory declaration, confirmation that it was of that character – in other words, that Mrs Spink would state her own intention to that effect in solemn written form. Ms Hiripis said that she made these things clear to Mrs Spink, albeit on an occasion when Mrs Spink’s evidence was that she was not present. Whatever Ms Hiripis may have communicated to Mrs Spink, directly or indirectly, Mrs Spink did not provide written confirmation that she would be providing an absolute and unconditional gift. Her statutory declaration of 29 October 2012 (as to $60,000 only) made no mention of a gift. Her statement that she would be “providing” funds “to help with” the purchase was consistent with any of the possible methods of financially assisting a property purchase by the outlay of money. There is nothing in the evidence to confirm that Ms Hiripis’s unilaterally held expectation of absolute and unconditional gift came to play any part in the formation of the relevant intention of Mrs Spink – or, for that matter, in the relevant intentions of Dianne and Mario.

33. While, as I have said, the primary judge entertained serious reservations about the evidence of Mrs Spink, Dianne and Mario as to the character of the payments making up the $147,000 and the terms of the arrangement by reference to which the money was provided, it is instructive to refer to certain aspects of that evidence.

34. Mrs Spink obtained the $147,000 from the sale of her residence at Engadine. Having sold that property, she had nowhere of her own to live. And having paid the $147,000 towards the purchase of the Casula property by Dianne and Mario, she had no ability to buy another residence of her own. Mrs Spink was born in March 1950. At age 62, having recently extricated herself from an unsuccessful dress shop business and having no other assets of significance,[19] Mrs Spink would not have placed herself in that position of financial vulnerability unless she had had some firm expectation of living accommodation suitable to her needs.

    19. At the time of the hearing before the primary judge, Mrs Spink was dependent upon the pension and the goodwill of friends and acquaintances for accommodation and was on a waiting list for public housing: primary judgment [5]. She had financially assisted her son, Troy, to acquire a motor mechanic business in 2009 but the recoverability of those funds, if the situation was in truth one of loan, was, at best, very uncertain: primary judgment [27], [37], [76]–[88], [170].

35. Mrs Spink gave evidence that, for some time before the proposal developed, she had travelled several times a week from her home at Engadine to the then home of Dianne and Mario at Moorebank to assist Dianne who was having difficulty coping after the birth of the couple’s third child. Dianne and Mario did not give contrary evidence, except that there were some differences as to the frequency of the visits. A desire of Mrs Spink to be on hand to assist with the family and a desire of Dianne and Mario to have her in the home for that purpose clearly played a part in the formation of the arrangement.

36. Mario’s evidence was that Mrs Spink made an absolute gift of the $147,000 because she was grateful that he and Dianne had agreed to give her what amounted to a bare right of occupancy terminable at will. He was at pains to say that his respect for his mother-in-law was such that he never entertained any thought of terminating her occupancy – at least until she “got legal”, referring to Mrs Spink’s assertion of an interest in the property by means of lodgement of a caveat. The forbearance that was a product of respect evaporated abruptly at that point.

37. Mario also said that he wanted Mrs Spink to have the impression that she was welcome to live with Dianne and him for as long as she was able to.

38. Dianne gave evidence of discussions about the intended or expected duration of Mrs Spink’s occupation. She said of that occupation that “we” (no doubt she and Mario) “never committed to that being a forever home, but long-term, I was happy to have her live with me”. She also said that she “never had a problem” with the idea of long-term occupation by Mrs Spink; also that she had never had it in her mind that the arrangement that Mrs Spink would live with her would last only as long as Dianne herself decided. Dianne’s intention was thus that Mrs Spink’s occupation should not be simply at will and was to be at least “long‑term”.

39. It is clear that, as Dianne and Mario made their preparations to purchase the Casula property, there developed an arrangement between them and Mrs Spink that she also would make her home there. It is also clear that both sides saw advantages in such an arrangement. Dianne and Mario were obtaining needed finance and the advantage of having Mrs Spink readily at hand for help and support with their family. Mrs Spink was obtaining a substitute home in a context in which help and support for her could reasonably be expected as she aged.

40. Had Mrs Spink not provided $147,000 towards the purchase, the Casula property would probably not have been acquired and the arrangement would not have come to fruition. But Mrs Spink did provide the funds. In doing so, she destroyed her ability to use the money towards obtaining alternative accommodation. She would not have taken that very significant step unless she had been led by Dianne and Mario to believe that the new house that she was helping to finance would be her home for as long as she needed it. Had it been put to Mrs Spink that she was not to enjoy enduring occupation and could be required to leave the house after, say, five or ten years, her natural response would have been, “But what will happen to me then, at age 67 or 72, when I have nothing but a pension and no way of acquiring other accommodation?” She would have responded in much stronger terms had it been suggested to her that Dianne and Mario would be entitled to evict her the day after she moved in or at any later time of their choosing.

41. In summary, the circumstances revealed by the evidence point decisively to a conclusion that Mrs Spink did not outlay the $147,000 as an absolute gift intended purely as an exercise in altruism engendered by love and affection (or gratitude). The evidence goes beyond the merely negative conclusion that she lacked an unqualified donative intention. It establishes that she had a positive intention inconsistent with the making of an absolute gift and that she intended to play her part in the effectuation of an arrangement under which she was to obtain a right in respect of the property. Mrs Spink made the outlay with an intention of thereby obtaining the right of residence that the arrangement envisaged for her. On the basis outlined by Priestley JA in Bogdanovic v Koteff (1988) 12 NSWLR 472 at 475, she had an interest in the land. [20]

    20. And, for the reasons given in that case, it was an interest that subsisted even though the land was held under the provisions of the Real Property Act 1900 (NSW).

42. The contention that the provision of the $147,000 was an absolute gift cannot be accepted. The primary judge was correct in his conclusion on that matter. The principal ground of appeal fails.

Other grounds of appeal

43. In view of the position outlined at [14] above, it remains to consider only Grounds (6) and (7) concerning the sum of $18,314.26 outlaid by Mrs Spink towards renovation of the Casula property.

44. The first issue, in that connection (raised by Ground (6)), goes to the finding that Mrs Spink’s outlay of $18,314.26 would have added to the capital value of the property. Dianne and Mario say that there was no evidence before the primary judge supporting that finding and that, when the $45,715 (or more) that they spent from their own money on renovation is taken into account, it is not possible to determine how much in value Mrs Spink’s outlay might have added. They refer to the fact that, as the primary judge found, some of the money spent on renovation involved replacement of items such as an electrical switchboard; and such replacement did not obviously involve any improvement or enhancement in value. They also point to the observation in West v Mead (above) (at [89]) that, insofar as certain payments were in the nature of maintenance, they did not give rise to any asset upon which a constructive trust could be imposed. The response of Mrs Spink is that the primary judge did not quantify the relevant enhancement in value and that it should be accepted, without evidence, that the outlay gave rise to some increase in value, even if small.

45. Mr Zipser of counsel, who appeared for Mrs Spink, made the further point that, in this area of the law, there is no need to undertake some form of tracing exercise with a view to establishing in mathematical terms just how and where enhanced property value resulted from contribution. Mrs Spink’s outlay benefited Dianne and Mario as the owners and co-occupiers of the property. If she paid for a new electrical switchboard to replace one that had reached the end of its life, she conferred a benefit upon them and herself as occupants. As Mr Zipser pointed out, the finding of constructive trust in Baumgartner v Baumgartner (above) did not depend on identifying specific value enhancing effects of contributions. Rather, there was reference by Mason CJ, Wilson and Deane JJ to “contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of the furniture and the making of their home”. [21]

    21. (1987) 164 CLR 137; [1987] HCA 59 at 149.

46. Mr Zipser’s submissions should be accepted. The primary judge’s finding concerning the effect, in terms of enhanced property value, of Mrs Spink’s outlay of $18,314.26 towards renovation of the Casula property was not one of significance to the outcome of the case. Enhancement of property value was not a central issue. Rather, the focus was upon financial contributions towards a shared living environment. Ground (6) should not be upheld.

47. By Ground (7), Dianne and Mario challenge the primary judge’s finding that the $18,314.26 paid by Mrs Spink towards renovation should be treated as part of her contribution, even though she was not required to pay any rent or to contribute to outgoings during the time she lived at the property. They say, in effect, that the outlay on improvements should be seen to have been amortised or used up over time because Mrs Spink enjoyed accommodation rent-free and without paying property expenses such as rates and utilities. Reference was made in that regard to Milling v Hardie [2014] NSWCA 163 and, in particular, observations of Macfarlan JA at [55(3)].

48. For reasons advanced by Mr Zipser, that challenge must fail. Mrs Spink was in residence from January 2013 to October 2016. The renovations to which she contributed commenced at some unidentified point after January 2013. There was no finding on the matter of timing. Such benefit as Mrs Spink enjoyed by reason of living in the renovated house must be presumed to have subsisted for less than three and a half years and perhaps as little as two years. That contrasts very sharply with enjoyment of some twenty years in Milling v Hardie. The circumstances of this case do not warrant the application of any recognisably significant amortisation factor. Ground (7) should not be upheld.

49. These conclusions on Grounds (6) and (7) are sufficient to dispose of the appeal as it relates to Mrs Spink’s outlay of $18,314.26. There is no need to deal with Mrs Spink’s notice of contention by means of which she sought to assert an estoppel based on Morris v Morris [1982] 1 NSWLR 61, a question considered but not decided by the primary judge.

Conclusion

50. Having failed on Ground (1), accepted that, in that event, Grounds (2), (3), (4) and (5) are not sustainable and failed also on Grounds (6) and (7), Dianne and Mario have not established an entitlement to have the judgment and orders below set aside.

51. I propose orders as follows:

1. Appeal dismissed.

2. That the appellants pay the respondent’s costs.

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Endnotes

Decision last updated: 19 December 2019