Friar & Friar
[2011] FamCAFC 71
•5 April 2011
FAMILY COURT OF AUSTRALIA
| FRIAR & FRIAR | [2011] FamCAFC 71 |
| FAMILY LAW - APPEAL – SUMMARY DISMISSAL – Where an order was made summarily dismissing the wife’s application for a declaration pursuant to s 78 of the Family Law Act 1975 (Cth) – Discussion of the principles applying to applications for summary dismissal – Discussion of possible merit in wife’s claims in equity - Discussion of remedies available other than those sought by the wife – The Judge erred in summarily dismissing the wife’s application – Appeal allowed FAMILY LAW - APPEAL – COSTS – No order for costs in relation to the appeal – Costs certificates granted to the wife and second respondent |
| Family Law Act 1975 (Cth) Family Law Rules 2004 Federal Proceedings (Costs) Act 1981 (Cth) |
| Beck & Beck (2004) FLC 93-181 Bigg v Suzi (1998) FLC 92-799 Custodio & Pinto & Ors (2006) FLC 92-279 Lindon v Commonwealth of Australia (No.2) (1996) 70 ALJR 541 General Steel Industries Inc v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 Giumelli v Giumelli (1999) 196 CLR 101 Grant v Edwards [1986] 1 Ch 638 Green v Green (1989) 17 NSWLR 343 Muschinski v Dodds (1985) 160 CLR 583 Shepherd v Doolan [2005] NSWSC 42 The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 |
| APPELLANT: | Ms Friar |
| 1ST RESPONDENT: | Mr Friar |
| 2ND RESPONDENT: | Ms W Friar |
| FILE NUMBER: | SYC | 6808 | of | 2007 |
| APPEAL NUMBER: | EA | 62 | of | 2009 |
| DATE DELIVERED: | 5 April 2011 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Finn, Thackray & Watts JJ |
| HEARING DATE: | 15 June 2010 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 23 April 2009 |
| LOWER COURT MNC: | [2009] FamCA 295 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms J Pentelow |
| SOLICITOR FOR THE APPELLANT: | Friend & Co |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr G Foster |
| SOLICITOR FOR THE 2ND RESPONDENT: | Hamish Cummins Family Lawyers |
Orders
To the extent that leave may be required, leave to appeal against the order of the Honourable Justice Fowler made on 23 April 2009 be granted.
The appeal be allowed.
The order made by the Honourable Justice Fowler on 23 April 2009 be set aside.
There be no order for costs in relation to the appeal.
The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to the appeal.
The Court grants to the second respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the second respondent in respect of the costs incurred by her in relation to the appeal.
IT IS NOTED that publication of this judgment under the pseudonym Friar & Friar is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 62 of 2009
File Number: SYC 6808 of 2007
| Ms Friar |
Appellant
And
| Mr Friar |
First Respondent
And
| Ms W Friar |
Second Respondent
REASONS FOR JUDGMENT
Finn J
On 28 September 2007 Ms Friar (“the wife”) filed an application in the Family Court of Australia against her former husband, Mr Friar, as the first respondent (“the husband”) and his sister, Ms W Friar, as the second respondent (“the husband’s sister”), seeking final orders which included:
·a declaration pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) that the wife and the husband be declared the sole owners of a property at 102 H Street, New South Wales (“102”); and
·an order pursuant to s 79 of the Act that by way of alteration of property interests the husband cause his interest in the property at 102 and also a property at 103 H Street (“103”) to be sold and the net proceeds of sale be divided 40 per cent to the husband and 60 per cent to the wife; or that in the alternative, the husband pay to the wife a sum being 60 per cent of the net market value of the whole of the property being 102.
It is useful to explain at the outset that while the registered proprietors of the property at 102 are the husband and the husband’s sister, that property had been the matrimonial home of the wife and the husband for some 30 years. The husband and the husband’s sister are also the registered proprietors of the property at 103; the husband’s sister and her partner reside in that property. Title to both properties had previously been held by the parents and/or other relatives of the husband and his sister.
On 31 July 2008 Fowler J ordered the wife to file “Points of Claim” in relation to the declaration sought by her in relation to the property at 102.
“Points of Claim” dated 18 August 2008 were then filed by the wife on 26 August 2008. That document concluded by stating that the wife seeks a declaration that the husband and the husband’s sister hold the property at 102 “on trust” for the wife and such “other orders and directions as the Court deems appropriate”.
On 12 March 2009 Fowler J heard an application by the husband’s sister for the summary dismissal of the wife’s application for a declaration under s 78 in relation to 102.
On 23 April 2009 Fowler J delivered reasons for judgment and made an order summarily dismissing the wife’s application for the declaration under s 78. It is from that order that the wife now appeals. Her appeal is opposed by the husband’s sister, with the husband, although named as the first respondent to the appeal, taking no part in the appeal.
Fowler J’s reasons for summarily dismissing the application for the s 78 declaration
As his Honour explained at the outset of his reasons for judgment, it was the wife’s claim “as pleaded and particularised in her points of claim which was taken to be the foundation of her case” for the declaration. Thus, the basis on which the application for summary dismissal was to be determined, was the contents of the wife’s points of claim and not on her evidence, which is the more usual course in this jurisdiction (Custodio & Pinto & Ors (2006) FLC 92-279 at [15]). No issue is raised on the appeal regarding that approach.
Similarly, no issue is raised on the appeal regarding his Honour’s acceptance (as opposed to application) of the following principles as the principles to be applied in the determination of applications for summary dismissal, and as those principles were articulated in the submissions of Counsel for the husband’s sister, citing Beck and Beck (2004) FLC 93-181:
17.… (see Bigg v Suzi (1998) FLC 92-799 at 84,973-84,974; and also Pelerman v Pelerman (2000) FLC 93-037 at 87,582):
“‘(a) The power for summary dismissal is a discretionary one.
(b) Relief “is rarely and sparingly provided”.
(c) The parties seeking summary dismissal must show that the application is “doomed to fail” or as has been otherwise described “that the opponent lacked a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”.
(d) A weak case or one that is unlikely to succeed is not “sufficient to warrant termination”.
(e) “If there is a serious legal question to be determined, it should ordinarily be determined at a trial”.
(f)“If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings”.’
In determining an application of this nature … the rule … is that if a version of the facts put forward by the respondent is not inherently incredible, then in the absence of any opportunity for cross-examination it is incumbent upon the court to proceed on the basis that the respondent's version will ultimately be accepted at the trial of the action (see Webster v Lampard (1993) 177 CLR 598 at 608).”
…
20.Further support for the proposition that an application for summary dismissal must be determined on the basis only of the material put forward by the respondent (to that application) is to be found in the passage from the judgment of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at 544-5 (which was quoted by the Full Court in its judgment in Bigg v Suzi) where his Honour said:
"... 2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action (Munnings v Australian Government Solicitor (1994) 68 ALJR 196 at 171f, per Dawson J) or in advancing a claim that is clearly frivolous or vexatious; (Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.)”
His Honour then identified the issue before him as being “whether the facts as pleaded and particularised in the points of claim when … [considered] in the most favourable light are ‘doomed to fail’”.
His Honour next explained that the remedy sought by the wife was not a declaration of express trust, or the declaration of a resulting or implied trust, but rather a declaration of a constructive trust. However, having cited passages from various High Court decisions (including Muschinski v Dodds (1985) 160 CLR 583; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; The Commonwealth of Australia v Verwayen (1990) 170 CLR 394; and Giumelli v Giumelli (1999) 196 CLR 101), his Honour observed (at paragraph 22) that the Court should consider whether there is an appropriate equitable remedy falling short of a constructive trust, and he later observed (at paragraph 25) that the imposition of remedial constructive trust is to be done carefully and sparingly. Again, as I understood the submissions made to this Court, no issue was raised as to the correctness of these observations by his Honour and, in my view, they appear to accord with the observations of Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli at [2] to [6].
In endeavouring to apply the principles, which he had thus identified, to the circumstances of this case, his Honour referred to the contents of paragraphs 23 and 24 of the wife’s points of claim. In order to understand both his Honour’s reasons for his decision to summarily dismiss the wife’s s 78 claim and, also those grounds of the wife’s appeal against that decision which I consider have merit, it is necessary first to set out those paragraphs:
23. After the death of [the husband’s father] [the wife, the husband and the husband’s sister] entered in to an arrangement or understanding that the [wife] and [the husband] would be the beneficial owners of 102 and the [husband’s sister] either by herself or with [her partner] would be the beneficial owner of 103 [property].
PARTICULARS
(1)The [wife] and [the] husband occupied and maintained 102 and paid rates, mortgage instalments and other expenses in respect of the property.
(2)The [husband’s sister] and [her partner] occupied and maintained 103 and paid rates, mortgage instalments and other expenses in respect of the property.
(3)In 1989 the [wife] won $71,000 from a poker machine jackpot. $10,000 of the proceeds was used to pay for a customized kitchen for 102 [property].
(4)The [wife] paid mortgage instalments, solicitors fees and other expenses in respect of loans taken out on the security of 102 [property].
24.[The husband’s mother] and the [husband and the husband’s sister] represented to the [wife] that she and [the] husband were the beneficial owners of 102 [property].
PARTICULARS
(a)During the early 1980s [the husband’s mother] told the [wife] that she and the [husband] should sell the property and move away as it was an evil place.
(b)During the 1980s the [husband’s sister] told the [wife] that she and [the] husband should not sell 102 as it was an asset and would be worth more in years to come.
(c)During the 1980s the [husband’s sister] told the [wife] that she did not have to worry because if anything happened to [the] husband she would still be the owner of 102 even though her name was not on the title deeds to the property.
With respect to the contents of paragraphs 23 and 24 of the wife’s points of claim, his Honour said (at paragraph 26 of his reasons):
…
a)The lands in respect of which the order is sought have been held by the husband and husband’s sister since 1976 (paragraph 12 of the points of claim).
b)The wife has had the benefit of occupation without the payment of rent in so far as the interest of the husband’s sister is concerned for some 33 years.
c)It is not asserted that the husband’s sister has held out to the wife that she has any present interest in the subject lands. In paragraph 23 of the points of claim a general assertion is made which is particularised as there set out. No such assertion is made against the husband’s sister in this pleading.
d)In paragraph 24 of the points of claim the representation is asserted generally but the general claim is particularised as there set out, and it is notable that the first such representation is not one of the husband’s sister and that the second representation which is said to be of the husband’s sister is, in my view, not a representation as to ownership of land but merely advice as to the retention of the property. The suggestion as to its future worth is not a representation as to its present ownership. The representation particularised as to what might occur in the event of something happening to her present husband in the future is not a representation as to the present legal or equitable ownership of the property.
…
Then after making reference to the matters in paragraphs 25 to 27 of the points of claim and concluding that they did not sustain the wife’s claim (for my purposes it is unnecessary to refer to the matters in paragraphs 25 to 27 of the points of claim, or to his Honour’s conclusion in relation to them), his Honour continued:
27. Paragraph 23 of the points of claim particularises the expenditure of monies by the parties on the home in which they resided and includes the installation of a kitchen, painting and the like. It is notable that on the dates provided it appears that the expenditure occurred prior to the assertions made as to representations. The expenditure of the money under this paragraph is to be balanced in any event against the benefit obtained by the wife by way of occupancy of the property. If there was a net benefit accruing to the interest of the husband’s sister and the husband, then that could be adjusted if properly proved by a remedy other than the remedy of declaration of a constructive trust. On the material I am obliged to consider, there is not a case to be made out that there has been an unconscionable benefit retained by the husband’s sister and, in my view, no detriment to the wife has been demonstrated.
His Honour then expressed his conclusion that the wife’s application for a declaration under s 78 should be summarily dismissed:
28. In my view the application for the order numbered one in the application filed in these proceedings is upon all these considerations bound to fail, since there are no representations of the husband’s sister which can be reasonably taken to give effect to the claim of the wife, and there is no evidence of detriment such as would require the transfer of the husband’s sister’s beneficial ownership of the former matrimonial home by the construction of a trust. The application for that order is summarily dismissed.
Reasons why the appeal should succeed
A number of the wife’s grounds of appeal assert misapprehensions on the part of his Honour as to exactly what was being alleged by the wife in paragraphs 23 and 24 of her points of claim, with the wife’s case being that had his Honour properly apprehended certain matters in her points of claim, then he would not have summarily dismissed her claim for a declaration under s 78 that she was entitled to some form of equitable relief.
While it has to be said that the drafting of the wife’s points of claim is not as satisfactory or precise as it might have been, nevertheless when the points of claim in question are considered “in the most favourable light” (as his Honour had earlier recognised that they should be), it should, in my view, be accepted that contrary to his Honour’s conclusions:
·that the wife was claiming that after the death of the husband’s father in 1980 or 1981, the husband’s sister had been one of the parties to the “arrangement or understanding that [the wife] and [the husband] would be beneficial owners of” the property at 102 (Ground 2); and
·that the wife was not claiming that the expenditure by her (particularised in paragraph 23 of the points of claim) had occurred prior to the representations relied on by her had been made, but rather that such expenditure (or part of it) had been made after such representations (Grounds 7 and 8).
Similarly, it should be accepted, in my view, and again contrary to his Honour’s conclusion, that the representations of the husband’s sister contained in paragraph 24(b) of the points of claim (being that the wife and the husband should not sell the property at 102 as it would be worth more in years to come), contained an assumption that the husband and the wife owned (or would own) that property (Ground 3).
Once the elements of the wife’s claim just discussed are understood in the ways in which I consider that they should have been understood, her case for equitable relief would then be founded on “… an assumption as to the future acquisition of ownership of property which have been induced by representations upon which there had been detrimental reliance by the plaintiff” (per Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli [6]), and could not be said to be “doomed to fail”. The wife’s application for relief under s 78 should not therefore, with respect, have been summarily dismissed.
This is particularly so when it is remembered (as his Honour acknowledged at paragraph 22 of his reasons and appears to have again recognised at paragraph 27 of his reasons) that some other equitable remedy or relief short of a constructive trust may well have been available under s 78 of the Act to the wife in the circumstances of this case (again see Giumelli [2] to [6]). Section 78 provides for declarations with respect not only to “title” but also to “rights” in respect of property. The possibility of remedies other than a constructive trust can be seen to have been envisaged both in the orders sought at the conclusion of the wife’s points of claim document, and in the submissions made on her behalf to his Honour (albeit perhaps faintly).
It must be emphasised that the wife’s case against the husband’s sister may ultimately not succeed, but it should be permitted to proceed to trial to establish if her claim to some form of equitable relief can be made out having regard to the requirements for such relief, being representations as to future ownership and consequent detriment, as explained in Giumelli.
Conclusion
For these reasons therefore, and without considering all issues raised in the wife’s grounds of appeal and the submissions in support of those grounds, I would grant leave to appeal should it be required, allow the appeal, and set aside the order summarily dismissing the wife’s application for a declaration pursuant to s 78 of the Act.
I would make no order for costs in relation to the appeal, and grant both parties appropriate certificates under the Federal Proceedings (Costs) Act 1981 (Cth) in relation to the costs of the appeal.
Thackray & Watts JJ
Introduction
This is an appeal from an order made by Fowler J on 23 April 2009, summarily dismissing the wife’s application for a declaration that she and the husband are the sole owners of 102 H Street.
The husband and his sister (“the respondents”) are the registered proprietors of 102 H Street (in equal shares). They are also registered as proprietors of 103 H Street (the husband holding a quarter interest and his sister the balance).
We will refer to the properties as “102” and “103” respectively. 102 was the matrimonial home of the husband and wife for over 30 years. The husband’s sister lives at 103.
The wife claims there was an arrangement or understanding that she and the husband owned the whole of 102 and the husband’s sister owned the whole of 103. The wife further claims that she contributed to 102 in reliance on this arrangement or understanding, and on representations made by the sister that she and the husband were the beneficial owners of 102.
We were advised that if the declaration was made, the value of the modest asset pool would increase by about $250,000 (calculated on the basis that the husband would abandon his quarter interest in 103).
The application for summary dismissal was determined entirely on the basis of the wife’s “points of claim”. This course was adopted after the wife’s counsel had objected to Fowler J reading the affidavit the wife had filed, and declined an opportunity to file other affidavits on which she might wish to rely.
Short chronology
The husband and wife were both born in 1951. The husband’s sister was born a few years later (dates given in the papers differ).
In 1958 the respondents’ parents became the registered proprietors of 102. The respondents’ father became the registered proprietor of 103 in 1967.
The husband and wife commenced cohabitation in June 1969, but did not marry until 1981. They had two children, born in 1969 and 1972.
After they commenced cohabitation, the husband and wife lived with the respondents’ parents at 102. The husband’s sister also lived there. The respondents’ grandmother lived at 103.
In 1976 the respondents purchased 102 from their parents in equal shares for $35,000. The respondents borrowed $18,000 from their parents to finance the acquisition, and an unspecified amount from a credit union to assist in completing the purchase. Both loans were secured against the title to 102.
The husband’s parents and grandmother moved away from the street after the purchase was completed. The respondents and their partners continued to live at 102, while 103 was let.
The respondents’ father died in about 1980 or 1981. He left 103 to his wife and his three children in equal shares. The property was unencumbered.
After the father’s death, the mortgages registered on the title to 102 were discharged, and the husband’s sister and her partner moved into 103.
The wife asserts that, following the death of the respondents’ father, she and the respondents entered into an arrangement or understanding pursuant to which the husband and wife would have beneficial ownership of 102, and the sister (either by herself or with her partner), would have beneficial ownership of 103. The wife also claims that, during the 1980s, the husband’s mother and sister represented to her that she (the wife) and the husband were the beneficial owners of 102.
In 1984 the husband’s sister purchased the quarter interest in 103 that had been left to the respondents’ other sibling. In so doing, she became the registered proprietor of a half interest in the property (the balance continuing to be held by the husband and his mother).
In 2002 the husband’s sister acquired the interest of her mother in 103, thereby obtaining the three quarter interest she now holds in that property.
In 1984 and 2001 the husband’s sister and her partner borrowed funds which were secured against 103. In 2001, with the consent of the husband’s sister, the husband and wife borrowed funds which were secured against 102.
In 1989 the wife won $71,000 on a poker machine. She applied $10,000 from the winnings to the refurbishment of the kitchen at 102.
The parties separated in 2004, when the wife left the home at 102. The husband continued to reside there, and his sister and her partner continued to reside at 103.
The wife commenced proceedings in September 2007. Paragraph 1 of her initiating application sought an order pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) that she and the husband “be declared the sole owners” of 102. Her application then went on to seek orders pursuant to s 79. Those included a proposal for the sale of the husband’s interest not only in 102, but also in 103. Counsel for the wife advised us that the request for an order for sale of the interest in 103 was a “fallback position”.
In July 2008 Fowler J ordered the wife to file “points of claim” to support her application for a declaration (which she did in August 2008), and the sister to file a response (which she did in September 2008). His Honour ultimately ruled that he would have regard only to the wife’s points of claim. No issue is taken with that ruling.
The wife’s points of claim concluded with the following paragraphs (our emphasis added):
BY WAY OF FINAL RELIEF
38.The applicant seeks:-
39.A declaration that the respondents hold the property known as
102 [property] in the state of NSW on trust for the applicant.40.Such further or other orders and directions as the Court deems appropriate.
…
The husband’s sister did not file a formal application for summary dismissal of the wife’s claim, but provided submissions in support of that application on 12 March 2009. Fowler J heard the application on the same day as the submissions were provided. He delivered judgment on 23 April 2009 and made the order which is the subject of this appeal.
The husband was named as the first respondent in the appeal; however, he took no part, since the real issue is between the wife and the husband’s sister, who was named as the second respondent to the appeal.
Summary dismissal principles
Fowler J found that the principles relevant to applications for summary dismissal had been accurately stated in the submissions made to him by counsel for the sister. There is no issue taken with that finding.
Rules 10.12(c) and (d) of the Family Law Rules 2004 (“the Rules”) relevantly provide that a respondent may apply for “summary orders” in relation to an application on the basis that it is “frivolous, vexatious or an abuse of process” or has “no reasonable likelihood of success”.
The Rules are properly read as supplementing the power of the Court to dismiss frivolous or vexatious proceedings pursuant to s 118(1) of the Act. The Rules are also to be read in the context of the many cases confirming the Court’s inherent power to dismiss or permanently stay an application which cannot succeed, as to which see the authorities discussed in Bigg v Suzi (1998) FLC 92-799 at 84,974.
Kirby J outlined the principles governing summary dismissal applications in Lindon v The Commonwealth (No.2) (1996) 70 ALJR 541 at 544 – 545 as follows (our emphasis added):
1.It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against Government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the Court, is rarely and sparingly provided;
2.To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;
3.An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment;
4.Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts;
5.If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading. A question has arisen as to whether O 26, r 18 applies to part only of a pleading. However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr Lindon's statement of claim; and
6.The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit. (footnotes omitted)
While Kirby J expressed the test as requiring the applicant for summary dismissal to demonstrate, by reference to their opponent’s documents, that “the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”, the test has also been formulated in many other ways (see General Steel Industries Inc v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 at 129). However, for the purposes of an application for summary dismissal under the Act, the test is that laid down by the Rules, namely that the claim must be “frivolous, vexatious or an abuse of process” or has “no reasonable likelihood of success”.
Regardless of the formulation, “exceptional caution” must be used in applications for summary dismissal and the power should be “sparingly employed”: Barwick CJ in General Steel Industries (supra at 129).
Equitable principles
Counsel for the wife set out the wife’s case as follows (footnotes omitted):
5.13The appellant alleges that there was an arrangement or understanding (“common intention”) between herself and the respondents to the effect that she and the husband would be the beneficial owners of the matrimonial home and the sister would be the beneficial owner of 103. She claims she acted to her detriment on the basis of the common intention and in reliance on representations made to her by the respondents to the effect that she had or would have a beneficial interest in the land. She asserts that by insisting on their legal title in order to defeat her promised interest in the land the respondents have acted unconscionably towards her.
5.12Further or in the alternative the wife claims she made contributions to the improvement, acquisition and maintenance of the property of a joint relationship or endeavour which has failed and it would be unconscionable for the respondents to retain the benefits of her contributions.
Counsel for the wife further advised that the wife relied on the following “equitable causes of action”, namely:
(i) Common intention constructive trust;
(ii) Proprietary estoppel;
(iii) Unconscionable retention of benefit.
Although it was conceded that not all of these bases for the granting of relief had been specifically identified before Fowler J, counsel submitted that the available remedies had been specified (at Transcript, 12 March 2009, page 22).
It is unnecessary to discuss in detail what the wife needs to establish in order to obtain the relief sought. Counsel for the husband’s sister did not take issue with the following general principles stated by counsel for the wife in paragraphs 6.1 to 6.3 of her Summary of Argument (footnotes omitted):
6.1.To succeed in an application to have the court impose a common intention constructive trust a claimant (C) will have to demonstrate:
(i)A common intention that the claimant and the owner of land (O) should have a beneficial interest in the property; and
(ii)That C acted to his or her detriment on the basis of that common intention so that it would be inequitable for O to deny C an interest. The species of constructive trust based on common intention is established by an “agreement, arrangement or understanding” actually reached between the parties and relied on and acted on by the claimant. Equity enforces it because it, would be unconscionable for the other party to disregard the claimant’s rights…” There are close parallels between constructive trusts which arise from the parties’ common intention and the doctrine of proprietary estoppel.
6.2To succeed in an application to have the court impose a constructive trust as a remedy for proprietary estoppel, the claimant (C) will have to demonstrate:
(i)That O, (i) induced, encouraged or allowed the claimant C to believe that he has or will acquire, an interest in O’s property; that
(ii)In reliance upon this belief, C acted to his detriment to the knowledge of O; and
(iii)That O seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive.
6.3The Court can impose a remedial constructive trust upon the ownership of property in recognition of the financial and non financial contributions of the parties pursuant to the principle of unconscionable retention of benefit. In Muschinski, Deane J at 620 concluded that a constructive trust should be imposed on the following basis:
[I]n a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other properly contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that the other party should so enjoy it ….. equity will not permit the other party to assert or retain the benefit of the relevant property to the extent to which it would be unconscionable for him to do so.
In discussing the application of these principles, counsel for the sister initially focussed on what was described as “the Baumgartner type of constructive trust”, where equity restores to a party contributions which he or she has made to a joint venture which fails. Counsel for the sister submitted this type of constructive trust could not be imposed as there was no joint venture.
Counsel for the sister next discussed constructive trusts imposed on the basis of a common intention. He accepted that for such a trust to be imposed it is necessary to establish two matters; first, that there was a common intention that the parties would have a beneficial interest in the property; and, secondly, that the claimant acted to his or her detriment on the basis of that common intention.
Counsel for the sister accepted that the requisite common intention can be demonstrated in various ways based on the conduct of the parties, and can also be implied by the Court. He also acknowledged that beneficial interests of parties in a property “may change in the course of the relationship”.
Whilst counsel for the sister accepted that the question of what demonstrates a common intention is “one of evidence, not law”, he placed strong emphasis on the following statement by White J in Shepherd v Doolan [2005] NSWSC 42 at [37]:
… A common intention that a party have a beneficial interest in a property owned by another will not be inferred merely from their joint occupation of the property, nor the carrying out of household duties, nor the bringing up of children on the property, nor the doing of repairs, renovations, maintenance, decoration or improvement, nor the provision of furniture.
Counsel for the sister submitted that in dealing with the issue of detriment, the conduct relied upon must be referrable to the promise or intention, and this would ultimately depend upon the nature of the conduct and of the promise or the intention. Counsel also referred to Grant v Edwards [1986] 1 Ch 638 at [648] where Nourse LJ held that the conduct must have been of such nature that the claimant could not reasonably have been expected to embark upon it “unless [he or] she was to have an interest in the house”.
Finally, counsel for the sister referred to authorities which establish that, even where there has been reliance on a representation that the claimant would have a proprietary interest, the Court should first decide whether there is an appropriate equitable remedy which falls short of the imposition of a trust. These authorities include Giumelli v Giumelli (1999) 196 CLR 101.
In his oral argument, counsel for the sister submitted that the matters relied upon by the wife did not satisfy either of the requirements for a common intention constructive trust. He claimed there was no evidence of a common intention, and none of the conduct asserted by the wife would be considered by equity to be a sufficient detriment.
Grounds of appeal
The wife relied on 12 grounds of appeal. Regrettably, her Summary of Argument failed to comply with Rule 22.22(2)(a), in that it did not “set out each ground of appeal and, for each ground of appeal, a statement of the arguments setting out the points of law or fact and the authorities relied on”. The sister’s Summary of Argument followed suit. The failure of counsel to comply with the basic requirements of a Summary of Argument made it difficult for us to relate some of the submissions to the specific complaints.
Grounds 1 and 2 – error in understanding of wife’s claim
Grounds 1 and 2 concern errors said to have been made by his Honour in describing the wife’s case.
Before setting out his Honour’s findings, we will first recite the paragraphs of the points of claim relevant to these grounds. To assist understanding, it should be noted that when we recite from the points of claim, the wife is “the “applicant”, the husband is “the first respondent”, the husband’s sister is “the second respondent”, Mr and Mrs Friar Snr are the husband’s parents; Mr P is the partner of the husband’s sister and Ms S is the respondents’ sibling.
The paragraphs relevant to Grounds 1 and 2 are as follows:
23.After the death of [Mr Friar Snr] the applicant and respondents entered into an arrangement or understanding that the applicant and first respondent would be the beneficial owners of 102 and the second respondent either by herself or with [Mr P] would be the beneficial owner of 103.
PARTICULARS
(1)The applicant and her husband occupied and maintained 102 and paid rates, mortgage installments [sic] and other expenses in respect of the property.
(2)The second respondent and [Mr P] occupied and maintained 103 and paid rates, mortgage installments [sic] and other expenses in respect of the property.
(3)In 1989 the applicant won $71,000 from a poker machine jackpot. $10,000 of the proceeds were used to pay for a customized kitchen for 102 [property].
(4)The applicant paid mortgage instalments, solicitors fees and other expenses in respect of loans taken out on the security of 102 [property].
24.[Mrs Friar Snr] and the respondents represented to the applicant that she and her husband were the beneficial owners of 102 [property].
PARTICULARS
(a)During the early 1980s [Mrs Friar Snr] told the applicant that she and the first respondent should sell the property and move away as it was an evil place.
(b)During the 1980s the second respondent told the applicant that she and her husband should not sell 102 as it was an asset and would be worth more in years to come.
(c)During the 1980s the second respondent told the applicant that she did not have to worry because if anything happened to her husband she would still be the owner of 102 even though her name was not on the title deeds to the property.
Although the complaints about the way his Honour dealt with these points of claim are confined to paragraph 26(c) of his reasons, we will also recite paragraph 26(d), as we think he intended them to be read together. This is because the first sentence of paragraph 26(c) seems more closely connected with the findings in 26(d) than with the findings in the paragraph where it appears.
26.Turning then to the facts in this case as asserted in the points of claim:
a) …
b) …
c)It is not asserted that the husband’s sister has held out to the wife that she has any present interest in the subject lands. In paragraph 23 of the points of claim a general assertion is made which is particularised as there set out. No such assertion is made against the husband’s sister in this pleading.
d)In paragraph 24 of the points of claim the representation is asserted generally but the general claim is particularised as there set out, and it is notable that the first such representation is not one of the husband’s sister and that the second representation which is said to be of the husband’s sister is, in my view, not a representation as to ownership of land but merely advice as to the retention of the property. The suggestion as to its future worth is not a representation as to its present ownership. The representation particularised as to what might occur in the event of something happening to her present husband in the future is not a representation as to the present legal or equitable ownership of the property.
…
The wife’s complaints concerning these findings are as follows:
1.His Honour erred in concluding that the appellant was not alleging that the second respondent had represented to her that she had a present interest in 102 [property] (J26(c)). His Honour should have concluded that such a representation was being asserted in paragraph 24 of the points of claim by use of the words “the respondents represented to the [appellant] that she and her husband were the beneficial owners of 102 [property] ….”..
2.His Honour erred in concluding that the appellant was not alleging that the second respondent entered into the arrangement or understanding alleged in paragraph 23 of the points of claim (J26(c)). His Honour should have concluded that such an allegation was being asserted in paragraph 23 of the point of claim by use of the words “the [appellant] and the respondents entered into an arrangement or understanding that the [appellant] and [her husband] would be the beneficial owners of 102 [property] …”..
In support of Ground 1, it was submitted that the finding that the wife had not asserted that the husband’s sister had held out to the wife that she had a present interest in the property could not be sustained because of what had been said in the opening statement of paragraph 24 of the points of claim.
Since there were two “respondents”, namely the husband and his sister, we accept that paragraph 24 of the points of claim contained an assertion that the husband’s sister had held out to the wife that the wife did have a “present interest in the subject lands”. However, we do not accept that a judge of his Honour’s experience would make an error as fundamental as not appreciating that this was part of the wife’s case.
In our view, the key to understanding his Honour’s reasons is to accept that, in the opening sentence of subparagraph 26(c), he was intending to refer only to what the wife had said in paragraph 23 of her points of claim. Once that is accepted, his Honour was correct in what he said, because although the wife made a general claim of an “arrangement or understanding” about ownership of the properties, she made no assertion in the preamble to paragraph 23, or in the particulars in that paragraph, that the sister had “held out” that the wife had any present interest.
Having made his findings about paragraph 23, albeit perhaps not as clearly as he intended, his Honour then commenced paragraph 26(d) by saying, “In paragraph 24 of the points of claim the representation is asserted generally …”. We consider it tolerably clear that “the representation” was intended by his Honour to be a reference to the statement appearing at the commencement of the previous paragraph concerning the sister having held out that the wife had an interest in the property. His Honour then went on to explain why he considered the particulars could not support the assertion that the sister had held out, or represented, that the wife had an interest in the property.
Counsel for the sister did not seek to explain his Honour’s apparently erroneous finding in paragraph 26(c) in the way we have. In fact, he suggested there may have been a typographical error, with the reference to paragraph 23 of the points of claim perhaps having been intended as a reference to paragraph 24. In any event, he submitted that his Honour’s conclusion could be sustained on the basis that the general claim set out in the opening sentence of paragraph 24 was not established by the particulars given in respect of that claim.
We do not accept that submission. In our view, the particulars provided in paragraph 24 were capable of supporting the general proposition that the sister had held out that the wife had a present interest in the property. Given the “extreme caution” which should attend any application for summary dismissal, we consider the proper time to determine the validity of the general proposition was at trial, when all of the evidence would have been given and an opportunity provided for full argument in light of that evidence.
We therefore consider Ground 1 has merit. This does not mean, however, that the appeal must succeed, since even if his Honour erred in what he said about representations made by the sister, the wife nevertheless still needed to establish she had acted to her detriment in reliance on the representations. His Honour’s findings on that issue are the subject of a separate ground of appeal.
Turning to Ground 2, we accept that his Honour erred if, in the final sentence of paragraph 26(c), he was referring to the assertion contained in the opening sentence of paragraph 23 of the points of claim. This is because the reference in that paragraph to “the respondents” clearly included reference to the sister.
Again, we cannot accept that the Judge would have made so fundamental an error. We think that when his Honour referred to “this pleading” in the final sentence of paragraph 26(c), he must have been referring not to the general proposition in paragraph 23, but rather to the particulars provided in support of it. Examination of those particulars will confirm they make no assertion that the sister said anything to contribute to “an arrangement or understanding”. The particulars only assert factual matters that might be seen as consistent with such an arrangement or understanding. The actual assertions made “against” the sister are contained in paragraph 24, and his Honour, in paragraph 26(d), expressly recognised that some of these did involve representations by the sister, although his view was that they were not representations that the husband and wife were the beneficial owners of 102.
The validity of his Honour’s finding concerning the possible effect of the statements said to have been made will be considered under the next ground of appeal, but we accept that his Honour understood what the wife was asserting. We are therefore not persuaded there is any merit in Ground 2.
Ground 3 – error concerning representation of ownership
Ground 3 asserts that his Honour erred in concluding that the representation made by the sister, as recorded in paragraph 24(b) of the points of claim, was not a representation of ownership, but rather an opinion in relation to the future worth of the property.
It will be recalled that the representation was in the following terms:
(b)During the 1980s the [husband’s sister] told the [wife] that she and her husband should not sell 102 as it was an asset and would be worth more in years to come.
It will also be recalled that in dealing with this assertion, his Honour (at paragraph 26(d) of his reasons) expressed his view that the statement was:
… not a representation of ownership of land but merely advice as to the retention of the property. The suggestion as to its future worth is not a representation as to its present ownership.
In our view, the statement recorded at paragraph 24(b) was capable of having the effect contended for by the wife, especially when considered (as it should have been) together with the statement in paragraph 24(c).
Whether it did have the effect contended would, in part, depend upon the context in which the statement was made. Context is vital to a proper assessment of statements. In this regard, we note that the wife had provided an affidavit supporting her substantive application, which was included in the appeal books. It contained assertions of what could only be described as ongoing physical abuse and humiliation by the husband, which if what is asserted is true, would have been well known to the husband’s sister. In the event such evidence was led at trial, and accepted, it is possible it would influence the way in which conversations would be construed.
If the sister did not believe that the wife could properly assert some form of ownership over 102, it might be asked why would she bother giving the wife advice about selling the property. The evidence about the extent of the husband’s abuse of the wife might lead the court to infer that the sister would have known that the husband would take no notice of any view the wife may express about the future ownership of the property – unless it was understood within the family that she had some control over the destiny of the property.
The fact that the wife’s affidavit was not relied upon before his Honour would ordinarily preclude us from taking it into account. However, it was provided to us in the appeal papers without demur, and we also note that the wife’s assertion about violence was briefly mentioned in paragraph 29(a) of the points of claim. We have, in any event, referred to the content of the affidavit only as an illustration of the type of evidence that might emerge at trial, and result in conversations being interpreted in a way other than might at first have appeared the more probable. It is the sort of evidence which Kirby J may well have had in mind when he wrote:
Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.
We therefore find merit in Ground 3, at least to the extent that we consider the statement relied upon by the wife is capable (depending upon the context, and when read with paragraph 24(c)), of constituting a representation of ownership. We consider the decision as to whether it did, in fact, amount to such a representation ought to have been left until trial.
In light of our finding of merit in this ground, it is unnecessary to consider the submission in paragraph 10.1 of the wife’s Summary of Argument relating to an error by his Honour in assuming that it was necessary to show that the representations related to a present interest in the property, since it is sufficient to rely upon a representation as to future ownership. We note, in any event, that there was no ground of appeal which directly raised this issue.
Ground 4 – further error concerning representation as to ownership
Ground 4 asserts that his Honour erred in concluding that the representation alleged in paragraph 24(c) was not a representation as to present ownership.
It will be recalled this representation was in the following terms:
During the 1980s the second respondent told the applicant that she did not have to worry because if anything happened to her husband she would still be the owner of 102 even though her name was not on the title deeds to the property.
It will also be recalled that his Honour relevantly found (at paragraph 26(d) of his reasons):
… The representation particularised as to what might occur in the event of something happening to her present husband in the future is not a representation as to the present legal or equitable ownership of the property.
With respect to his Honour, this conclusion seems to ignore two important things.
First, the representation was that the wife would “still be” the owner of the property. The wife was not on the title and therefore, if the Court were to accept that the statement was made in the form alleged, it would provide some support for the proposition that the sister was representing that the wife was already a beneficial owner of 102.
The second matter apparently overlooked is the fact that the husband’s sister was a registered proprietor of 102. If ownership followed the title, and the husband were to die, the most the wife could hope to receive was the husband’s half interest. It would not make her “the owner” of the property, as was said to have been asserted, since the sister would continue to be a registered proprietor. In such circumstances the wife would have much to “worry” about, since the sister could bring about a sale of the property.
We therefore find merit in Ground 4.
Grounds 5 and 6
Grounds 5 and 6 relate to paragraphs 25 to 27 of the points of claim, which were expressed as follows (there were two paragraphs numbered 26):
25.In 1984 the second respondent purchased [Ms S’s] one quarter (1/4) interest in 103 [property] and became the registered proprietor of a one half interest in the property, [Mrs Friar Snr] and the first respondent each retaining their one quarter (1/4) interests.
26.From about 1984 loans that benefited the second respondent and [Mr P] were obtained and secured against the title to 103 [property] with the consent of [Mrs Friar Snr] and/or the first respondent.
PARTICULARS
(1)In 1984 an unknown amount was borrowed from the Westpac bank using 103 as security for the loan (“the Westpac loan”) – see mortgage dated 4/7/84. The second respondent and [Mr P] were described on the mortgage as “the debtors”.
(2)In September 2001 the amount of $240,000.00 was borrowed from the ANZ bank using 103 as security for the loan (“the ANZ loan”) – see mortgage dated 11/9/01. The second respondent and [Mr P] who were described on the mortgage as “the debtors”.
(3)In September 2002 a further $20,000.00 was borrowed from the ANZ bank using 103 as security for the loan (“the second ANZ loan” – see mortgage dated 16/9/02.
26.From about 2001, loans that benefited the first respondent
and or his son [Mr A Friar] were obtained and secured
against the tile to 103 [sic] [property] with the consent
of the second respondent.
27.In 2002 [Mrs Friar Snr’s] one quarter (1/4) interest in 103 [property] was transferred to the second respondent who became registered as proprietor of a three quarter (3/4) interest in the land, the first respondent retaining his one quarter (1/4) interest.
PARTICULARS
(a)[Mrs Friar Snr] suffered from dementia and on a date unknown she executed a power of attorney in favour of the second respondent. The second respondent signed the transfer for her mother (as transferor) and herself (as transferee).
(b)The consideration recorded on the transfer was $175,000.00.
His Honour recognised that the reference to “103” in the second paragraph numbered 26 was intended to be a reference to “102”, as he wrote “(sic)” after “103” when he recited the points of claim. Counsel for the sister also accepted there was a typographical error in the points of claim.
The findings made in paragraph 26(e) of his Honour’s reasons about paragraphs 25 to 27 of the points of claim were as follows:
The matters asserted in paragraphs 25 to 27 of the points of claim do not sustain the claim of the wife. Each of the matters there raised could be referable to arrangements unrelated to the ownership of the property, and no reasonable inference can be drawn that they are facts upon which reliance could be placed as sustaining a representation or joint venture affecting ownership of the matrimonial home.
Grounds 5 and 6 complain about these findings in these terms:
5.His Honour erred in concluding that the matters asserted in paragraphs 25 to 27 of the points of claim did not sustain the appellant’s claim as “Each of the matters there raised could be referable to arrangements unrelated to the ownership of the property, and no reasonable inference can be drawn that they are facts upon which reliance could be placed as sustaining a representation or joint venture affecting ownership of the matrimonial home” (J26(e)).
6.His Honour should have concluded that the matters alleged in paragraphs 25 to 27 of the points of claim, namely that the appellant and first respondent (“the Friars”) treated 102 as their own and the second respondent and her partner (“the Ps”) treated 103 as their own, was a relevant circumstance when determining if there was a representation or an arrangement or understanding that the [Friars] would be the beneficial owners of 102 and the second respondent (either by herself or with her partner, [Mr P]) would be the beneficial owner of 103.
We accept that the matters contained in paragraphs 25 to 27 of the points of claim could, as his Honour found, be referable to matters unrelated to the ownership of the two properties. It should be remembered, however, that in summary dismissal proceedings, the case of the respondent is to be taken at its highest. In our view, if proven and considered collectively, the matters referred to in paragraphs 25 to 27 could be found at trial to be corroborative of the assertion of the wife about the ownership of the two properties. Even the assertion in paragraph 27(b) about the sister acquiring the mother’s quarter interest for $175,000 could potentially assume significance if it were to be established that she did not, in fact, pay the stated purchase price. It would mean, if the wife’s version of the family arrangement is accepted, that the sister ended up receiving a half interest in 103 for which she made no payment (i.e. the quarter shares of the husband and the mother), while the husband and the wife ended up with the sister’s half share in 102, for which they made no payment.
In paragraph 26(e) of his reasons, his Honour referred to the absence of facts to sustain a finding of a “representation or joint venture”. Whilst to support the imposition of a constructive trust based on common intention it is clearly necessary to prove a common intention that the claimant will have a beneficial interest in the property, it is not necessary to prove a “joint venture”, nor is it necessary to prove express communications or agreement or admissions concerning ownership. The common intention may be inferred by conduct: Grant v Edwards (supra), applied in Green v Green (1989) 17 NSWLR 343 by Gleeson CJ, with whom Priestley JA agreed.
Therefore, the fact that the matters relied upon by the wife in paragraphs 25 - 27 of the points of claim could be referable to arrangements unrelated to the ownership of the property, and the fact that those matters may not support a finding of a “representation or joint venture” were not of relevance to the application for summary dismissal. We conclude that the matters relied upon by the wife in paragraphs 25 - 27 of the points of claim could be referrable to arrangements in relation to the ownership of the property. Evidence about these matters may well be probative as to whether or not the wife’s version of family arrangements is accepted.
We therefore consider there is merit in these grounds.
Ground 7 – error of fact relating to date of expenditure
Ground 7 asserts error in his Honour’s finding that the expenditure outlined in paragraph 23 of the points of claim occurred prior to the making of the alleged representations. This complaint relates to paragraph 27 of the reasons, where his Honour said, “It is notable that on the dates provided it appears that the expenditure occurred prior to the assertions made as to representations”.
It will be recalled it had been asserted in the points of claim that:
·the expenditure on 102 included rates, mortgage instalments and solicitors’ fees regarding the loans, as well as the $10,000 kitchen refurbishment;
·the arrangement or understanding about the equitable ownership of 102 and 103 was reached after the death of the husband’s father;
·the father died in either 1980 or 1981;
·the representations by the sister to the wife were said to have been made during the 1980s.
The payment of mortgage instalments, rates and other expenses was said to have occurred after the death of the father. The $10,000 expended on the kitchen occurred after the poker machine win in 1989. Consequently, there was no basis on which his Honour could find that the expenditure occurred prior to the alleged representations. Counsel for the sister appeared to concede this fact, although he submitted it did not matter because the same result would have flowed whether the statements came before or after the expenditure.
There is therefore merit in Ground 7, albeit its significance clearly depends upon the fate of other grounds of appeal.
Ground 8 – error regarding detrimental reliance
It is unnecessary to consider Ground 8. First, the complaint relies upon the same error of chronology that was the subject of the previous ground. Secondly, on our reading of paragraph 27 of his Honour’s reasons, which is the subject of this ground, his Honour did not make the finding it is claimed he made. We accept his Honour found there was no detrimental reliance, but this was not because the conduct the wife relied upon predated the statements made by the sister, but because he considered there was no detriment. That finding is dealt with in the next two grounds of appeal.
Ground 9 – lack of evidence of detrimental reliance
Ground 9 asserts that his Honour erred in finding (in paragraph 28) that there was “no evidence of detriment” to support the claim based on reliance. It was said this was an error because his Honour had acknowledged, in paragraph 11, that the application had been conducted on the basis of the points of claim, not on any other evidence. It was therefore submitted that it was irrelevant there was no “evidence” to support the claim.
We do not consider there is any substance in this submission. It is true that his Honour, referred to the fact that counsel for the wife had declined the opportunity he had offered her to rely upon an affidavit already filed, and to provide further affidavits before the application for summary dismissal was determined. The wife nevertheless did, in her points of claim, refer in general terms to her expenditure on the property. We are satisfied that, in referring to the absence of “evidence of detriment” sufficient to support the wife’s application, his Honour was referring to what was set out in the points of claim, and was not being critical of the fact that “evidence” had not been provided.
The issue of real importance relating to detriment is addressed in the next ground of appeal.
Ground 10 – error in finding concerning absence of detriment
Ground 10 takes issue with the way his Honour approached the issue of the detriment to the wife as a result of having relied on the alleged representations. The complaint is directed against a finding in paragraph 27 of the reasons, but we will also set out paragraph 28, in which his Honour summarised why he proposed to dismiss the wife’s claim against the sister.
27.Paragraph 23 of the points of claim particularises the expenditure of monies by the parties on the home in which they resided and includes the installation of a kitchen, painting and the like. It is notable that on the dates provided it appears that the expenditure occurred prior to the assertions made as to representations. The expenditure of the money under this paragraph is to be balanced in any event against the benefit obtained by the wife by way of occupancy of the property. If there was a net benefit accruing to the interest of the husband’s sister and the husband, then that could be adjusted if properly proved by a remedy other than the remedy of declaration of a constructive trust. On the material I am obliged to consider, there is not a case to be made out that there has been an unconscionable benefit retained by the husband’s sister and, in my view, no detriment to the wife has been demonstrated.
28.In my view the application for the order numbered one in the application filed in these proceedings is upon all these considerations bound to fail, since there are no representations of the husband’s sister which can be reasonably taken to give effect to the claim of the wife, and there is no evidence of detriment such as would require the transfer of the husband’s sister’s beneficial ownership of the former matrimonial home by the construction of a trust. The application for that order is summarily dismissed.
Ground 10 attacks his Honour’s approach by asserting that:
10.His Honour erred in stating that any detriment to the appellant could be ascertained by balancing her expenditure of money on the home against the benefit she obtained in occupying the property and in stating that any net benefit accruing to the husband and his sister could be adjusted by a remedy other than a declaration of a constructive [sic] (J27). His Honour should have considered that in a cause of action for proprietary estoppel including estoppel by common intention or encouragement, detriment is not limited to financial detriment and the Court is not limited to granting relief that reverses detriment; Gillett v Holt [2003] 3 WLR 815; Pascoe v Turner [1979] 1 WLR 431 CA. The Court will prima facie give effect to the claimant’s expectation such as an expectation of a beneficial interest in land: Giumelli v Giumelli (1999) 196 CLR 101 @ 123.)
Counsel for the wife submitted that, in paragraph 27, his Honour was making a determination that could only be made once all the evidence had been filed and assessed. She noted that no evidence had been adduced concerning the monetary value of the wife’s expenditure on the home, nor concerning the value of her occupation of the home.
Counsel for the wife went on to make the following submissions (original emphasis):
12.2It is submitted that C’s enjoyment of O’s property rent free will not necessarily be considered to outweigh any detriment that she may have incurred. Detriment is “not a narrow or technical concept”. It is not a matter of balancing financial gains and losses. The Court must make a “broad enquiry” and it is not limited to granting relief that reverses detriment. The Court will prima facie give effect to the claimant’s expectation such as an expectation of a beneficial interest in land. Also, countervailing benefits may not be taken into account when this would be contrary to the common intention of the parties, for example in common intention of constructive trust cases or unconscionable retention of benefit cases. Non-financial contributions as a homemaker and parent are also taken into account in cases of remedial constructive trusts. A constructive trust is an equitable remedy and therefore a discretionary one. In cases of proprietary estoppel the Court must look at the circumstances to determine the “minimum equity to do justice to the plaintiff”.
Counsel for the sister conceded that the wife’s expenditure could amount to a “detriment” if there was, in fact, an agreement or common intention. He also acknowledged that the authorities make clear that “detriment” is not a narrow concept and does not have to be financial, although it does have to be substantial. He nevertheless submitted that his Honour was right in undertaking what he said the High Court had called a “practical equation” in order to ascertain whether there was a detriment in reality.
We assume that, in suggesting his Honour had undertaken a “practical equation”, counsel for the sister had in mind the use of that term by Deane J in Muschinski v Dodds (1985) 160 CLR 583 at 622. Deane J used the term in the context of seeking to measure or balance direct financial contributions and indirect non-financial contributions in deciding whether it would be unconscionable for a party to a de facto relationship to retain legal title to a property after the failure of a joint venture with their de facto spouse.
The question of whether or not Deane J’s approach was in accordance with established principle has been the subject of academic comment (see Parkinson, P, ‘Doing equity between de facto spouses: from Calverley v Green to Baumgartner’, Adelaide Law Review, vol 11 no 4, 1988, at 370). Assuming, however, that Fowler J was right in seeking to balance the wife’s expenditure against her rent-free occupation of the property, we accept the submission of her counsel that his Honour did not have the information to allow him to undertake the exercise. There was no evidence of the rental value of the property. Nor had the wife descended into specifics concerning the value of the payments she had made on the property. We note also that no mention was made of the value to the sister of the rent-free occupation of 103, in which the husband had a registered interest.
In our view, all his Honour needed to do in dealing with the issue of detriment was to find that the assertions made by the wife were capable of constituting detriment. The extent of, and legal consequences attached to, that detriment should then have been left for trial.
We are also concerned about the conclusions his Honour may have drawn from two judgments cited in his reasons at paragraphs 19 and 21.
The first was that of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 423, where the following was said (our emphasis added):
The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon.
The second judgment was that of Gaudron J in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 487 where her Honour said:
… the substantive doctrine of estoppel permits a court to do what is required to avoid detriment and does not, in every case, require the making good of the assumption. …
It was immediately after citing these authorities that Fowler J drew attention to other authorities establishing that, when dealing with a claim for the imposition of a constructive trust, the court should first consider whether other lesser remedies are appropriate.
The juxtaposition of these parts of the reasons suggests to us that his Honour may have proceeded on the basis that the wife would not be able to establish that she had suffered sufficient net detriment to make it “fair” that she and/or the husband receive the sister’s half interest in 102 (even if the sister was found to be entitled to the husband’s quarter interest in 103). If that was the approach his Honour adopted, then we consider he erred. The fact that lesser remedies are available does not mean that a court would not impose a constructive trust over the whole of the property. The court’s obligation is to consider whether such lesser remedies are appropriate. In some cases it will only be by giving effect to the promise made, or the assumption created, that equity will be done.
Since Waltons Stores and Verwayen were decided, the High Court has made clear that a court is not confined to granting relief that reverses the detriment. In Giumelli, it was said (at [33], footnotes omitted):
… The appellants challenge the width of the specific relief granted by the Full Court. In particular, they emphasise that an order for the creation and conveyance of the promised lot went beyond any "reversal" of the detriment occasioned by the respondent in reliance upon the third promise. They submit that it was not open to the Full Court, in a case such as the present, to grant relief which went beyond the reversal of such detriment. In that regard, the appellants claim decisive support from the decision in Verwayen. However, in our view and consistently with the course of Australian authority since Verwayen, that decision is not authority for any such curtailment of the relief available in this case. Rather, there is much support in the judgments for a broader view of the present matter.
We are concerned that in deciding that the application for a declaration of trust must inevitably fail, his Honour may not have taken account of what was said by the High Court in Giumelli.
For these reasons, we consider there is merit in this ground.
Ground 11 – error in prematurely dismissing claim
Ground 11 asserts that:
His Honour erred in finding that the claim for the relief of a declaration of a constructive trust was bound to fail and in summarily dismissing the claim (J28) which should have been left to the trial judge. The trial judge is required to consider all the circumstances of the case and determine what relief if any is necessary in order to prevent unconscionable conduct: Gillett v Holt, ibid.
This complaint appears, at least in part, directed to the approach his Honour adopted in finding that because the wife could not obtain the precise relief she sought, her entire application under s 78 should be dismissed. That his Honour adopted this approach can be seen by what he said not only in paragraph 27, but also in paragraph 28 of his reasons.
Fowler J, earlier in his reasons, had recognised that in ruling on an application for the imposition of a constructive trust, the Court should first consider whether there is an appropriate lesser equitable remedy (see paragraphs 22, 23 and 25 of his reasons where he recited dicta from Giumelli which confirm this is the proper approach). In paragraph 23, his Honour identified remedies that may be available which fall short of the imposition of a trust, namely “a licence to reside or a charge over property”.
In his oral submissions to us, counsel for the sister said:
It may be that if his Honour’s order stands that the applicant may recast their claim to seek relief by way of charge or some right of occupation. We don’t know because it’s not pleaded and no particulars are provided, but at the moment the points of claim were solely focussed on the attack as to our beneficial interest as to the entirety of that in 102. (Transcript, appeal hearing, 15 June 2010, page 24)
Later, counsel for the sister also said:
I don’t resile from the circumstance that the applicant could, indeed, at some future stage, amend and seek other relief if she so advised, but the way in which that matter was run before his Honour was that is the discrete issue for determination today, and that was the position that both counsel took before his Honour. So your Honours would have to determine, if his Honour was correct in dismissing that relief, of course it doesn’t estop the applicant from getting some advice and perhaps formulating some lesser sort of equitable relief, of course, at her risk in relation to a similar application again, if any further points of claim don’t come up to the mark. (Transcript, appeal hearing, 15 June 2010, page 41)
On our reading of what was said at the hearing below, counsel for the wife did not accept that it was appropriate for his Honour to determine only whether the principal application would succeed. She did point out that other relief might be available. (Transcript, 12 March 2009, page 22)
In any event, counsel for the sister submitted on appeal that when hearing the wife’s s 78 application, it would not be open to the Court to make any order other than the one sought, or an order dismissing the application. When we doubted that proposition in the course of argument, counsel noted that Fowler J had given the wife an opportunity at the hearing to amend her points of claim, but she had not taken up the opportunity.
In our view, there was no need for the wife to amend her application before the Court would be able to grant her a lesser form of relief. In the event the Court did not see it as appropriate to make the declaration of trust, we consider it could nevertheless make a declaration of any lesser equitable entitlement the wife had in the property. In this regard, we note that s 78 permits the Court to declare not only “title” but also “rights” in relation to property. This was properly conceded by counsel for the sister in his oral submissions when he acknowledged that on a s 78 application the Court could make a declaration of an entitlement to an equitable charge over property.
Whilst we accept that it would have been open to the wife to have specified in her application other relief as alternatives to the primary relief sought, we do not consider it was obligatory for her to do so. For example, we note in Giumelli that the applicant was granted a remedy he had never sought.
In any event, we note that when the wife detailed the relief sought in her points of claim, in addition to seeking a declaration of trust, she also sought “such further or other orders and directions as the Court deems appropriate”. It is true the wife did not formally amend her application (which she was entitled to do without leave), but the points of claim showed that she recognised other forms of relief would be available if the primary application failed. Counsel for the sister was therefore not correct in suggesting in his oral submissions that the points of claim “did not encompass any lesser sort of relief”.
We consider his Honour ought to have proceeded on the basis that the wife would, before trial, formally amend her application to seek the relief set out in the points of claim, rather than proceeding on the basis that the relief to be sought was as contained in the application. However, as we have already indicated, the wife’s failure to amend would not prevent the Court from making an order in her favour for some relief falling short of what had been sought.
We consider there is merit in Ground 11.
Ground 12
Ground 12 asserts that his Honour “erred in exercising his discretion to summarily dismiss” the wife’s claim, as it was “far from certain that no triable issue was disclosed”. Given the merit we have found in dealing with earlier grounds, it is unnecessary to consider this complaint.
Conclusion and costs
The appeal will be allowed. We are satisfied the wife has a case which ought to be permitted to proceed to trial.
The Notice of Appeal sought leave to appeal “so far as the court may determine leave is necessary”. No argument was developed on this issue before us, although counsel for the wife, in her Summary of Argument, had drawn attention to Beck & Beck (2004) FLC 93-181, where leave to appeal was sought against a decision to summarily dismiss an application. In that matter, the Full Court expressed doubt as to whether leave to appeal was needed. Given the absence of argument, we intend to adopt the same approach as was adopted in Beck – i.e. we will proceed on the basis that leave to appeal may have been needed and we will grant such leave.
Both counsel sought costs certificates under the Federal Proceedings (Costs) Act1981 (Cth) in the event the appeal succeeded. Given that the appeal has succeeded on a point of law, we consider such certificates should be granted.
I certify that the preceding one hundred and forty four (144) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Thackray and Watts JJ) and delivered on 5 April 2011.
Associate:
Date:
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