Hall v Hall
[2004] QDC 183
•18 June 2004.
DISTRICT COURT OF QUEENSLAND
CITATION:
Hall v Hall [2004] QDC 183
PARTIES:
JULIE HALL
Plaintiff
v
KEITH ROYSTON HALL
Defendant
FILE NO/S:
BD3877/2003
DIVISION:
PROCEEDING:
Trial
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
18 June 2004.
DELIVERED AT:
Brisbane
HEARING DATE:
19, 20 May 2004
JUDGE:
McGill DCJ
ORDER:
Declare that the defendant holds his interest in the land situated at 7 Harmon court, Loganholme on trust to discharge the mortgage to the Bank of Queensland Ltd and exonerate the plaintiff from any liability to the bank. Judgment that the defendant pay the plaintiff the amount of $2,500. Adjourn the further consideration of the application to appoint trustees for sale to a date to be fixed.
CATCHWORDS:
TRUSTS AND TRUSTEES – Constructive Trusts – agreement to acquire house in particular proportions – whether one owner solely responsible, as against other owner, for discharge of mortgage.
Calverley v Green (1984) 155 CLR 242 – applied.
Capital Finance Co Ltd v Bray [1964] 1 WLR 323 – followed.
Muschinski v Dodds (1985) 160 CLR 583 – applied.
COUNSEL: R J Clark for the plaintiff
C J R Wiltshire for the defendantSOLICITORS:
Compass Legal Solutions for the plaintiff
Peter Rowlands & Co solicitors for the defendant.
By a contract in writing dated 8 April 2003 the plaintiff and defendant agreed to buy a house and land situated at 7 Harmon Court, Loganholme, Queensland for a price of $180,000.[1] The contract was subject to finance, and contained a special condition requiring something to be done by the vendor, which evidently was done.
[1]Exhibit 1 Document 7 pp 12-13. I shall refer to this house and land as “the property”.
At the time of signing the contract a deposit of $500 was paid.[2] The land was subsequently conveyed in settlement of the contract to the plaintiff and defendant as tenants in common, in unequal shares: 56/100ths to the defendant, and 44/100ths to the plaintiff. The purchase was completed with the assistance of a loan from the Bank of Queensland Limited, secured over the interest of both parties in the land.
[2]By the defendant: plaintiff p 29; defendant pp 117-120, referring to Exhibit 1 p 17.
The defendant is the son of the plaintiff, who has two other younger children, another son and a daughter: p 9. Following the settlement of the purchase the plaintiff moved into the house, and lived there for some months. The defendant was at the time living with a woman, and expected to continue to do so, and not to be living in the house with the plaintiff.[3] The relationship with his partner deteriorated, however, and on a couple of occasions the defendant moved in with the plaintiff for a short period, before moving back out again to return to his partner.[4] Finally, in August 2003, the defendant moved back into the house where he has remained, and soon after the plaintiff went to stay with her daughter.[5] There was a dispute between the parties as to the circumstances under which the plaintiff moved out, but no dispute that after the plaintiff moved out the defendant changed the locks on the property[6], and the plaintiff has been provided with a key only temporarily on one occasion by arrangement to give her the opportunity to remove some personal belongings from the house.[7]
[3]Defendant p.207. He was acquiring his interest in the land as an investment: p.217.
[4] Plaintiff p 16; Exhibit 2 paras 28-29. Defendant p 112, 149, Exhibit 12 para 16.
[5]The plaintiff’s evidence at pp.16-17; for the month see Rowntree p.93. The defendant said about September: p 150, August in Exhibit 12.
[6]Defendant p 152.
[7]Plaintiff p.66; and see Exhibit 1 document 31 p.62.
A dispute has now arisen as to the disposition of the beneficial interest of the parties in the property, as to who has the right to live in it, as to whether it is to be sold, and, if so, how the proceeds are to be distributed. The plaintiff also sought, in the alternative, an order that the defendant pay the amounts payable under the mortgage, to recover money paid by the plaintiff to the defendant and not applied to the purchase of the house, and in detinue in respect of the plaintiff’s goods remaining in the house. The defendant has applied for the appointment of statutory trustees for sale.
There was a solicitor acting for the parties on the purchase, a Mr Leach, a member of a firm of solicitors practising at Rochedale.[8] In connection with this both parties signed some documents which provided that the property was to be held as tenants in common in the shares specified.[9] Unfortunately neither party called Mr Leach as a witness, his unavailability was not accounted for, but neither party submitted that it was the other party’s responsibility to call him, and nether party asked me to draw any inference against the other because of that failure. There is however some evidence from the plaintiff about some advice which he gave her. What is absent is any evidence as to what he was told by either party as to the basis for the agreed distribution of the legal title.
[8]Exhibit 1 Document 7 p 12; Document 16 p 35.
[9]A copy of the document appears at pp.35-39 of Exhibit 1. It appears to me that there were three documents, a three page questionnaire and authority to act consisting of pp.36, 39 and 37 respectively, and one page documents reproduced at p.35 and p.38. It may be that there was more of the document on p.38 than appears in Exhibit 1, but if so nothing turns on that.
However, the evidence of both parties is that the distribution of legal title was agreed upon in order to reflect contributions to the purchase price of $80,000 on the part of the plaintiff, and $100,000 on the part of the defendant.[10] The distribution of the title was therefore based on the proposition that the plaintiff was putting in $80,000, and the defendant putting in $100,000. The plaintiff had $80,000 to put in, but the defendant had to borrow his contribution of $100,000 since he did not already have it.
[10]That is mathematically apt for a total purchase price of $180,000. See plaintiff p 13; defendant p 166.
Background
In early April 2003 the plaintiff had the expectation of receiving in the near future $81,000, which would be available as her share of the purchase price. The plaintiff is 66 years of age, having come to Australia in June 1969: p.7. Soon after, her marriage ended, in 1970: p.8. In March 1994 she moved to Brisbane, and formed a relationship with a Mr Radomi with whom she bought a house, at Teak Street. By 2002 Mr Radomi had left the premises[11], and had initiated moves to have the house sold and the proceeds divided. Ultimately the house was sold, and as a result the plaintiff went to live with her daughter.[12]
[11]At some time after he left the defendant was also living there with the plaintiff, but he had moved out before the house was sold: Exhibit 12 para 7; Exhibit 2 para 5, para 8; and see the address in Exhibit 1 document 3 p.7.
[12]Contract dated 11 February 2003 settled 14 March 2003; plaintiff p 23.
The plaintiff had by this time been discussing with the defendant difficulties about her obtaining accommodation.[13] She is and has been for some time on a pension (p.8), and lived with a dog of which she was very fond, which made it difficult for her to obtain suitable accommodation in a home unit. This led to an agreement between the plaintiff and the defendant that they would join in buying a house. The plaintiff had her share of the sale proceeds, but no other significant assets, and only received a pension. She expected, no doubt correctly, that she would not be able to borrow any significant amount of money to put towards purchasing a house: p 24. The defendant had a bank account which had a small amount in it[14], but he owned no land, and had no significant assets. Indeed he had various debts. On the other hand, he was in employment[15], and had some capacity to repay a loan.
[13]Exhibit 2 para 9.
[14]Exhibit 1 document 9 p.17.
[15]Exhibit 1 document 6 p.11.
It was common ground that there was such an agreement, and that the house was for the plaintiff to live in[16]; there was a dispute as to other matters, such as whether the plaintiff was not to live in the house and whether the defendant was to make all the mortgage payments. Neither party was precise about when the agreement was arrived at, and I suspect that it was something which may well have evolved somewhat over time. The house at Harman Court was not the first property that they looked at and considered purchasing. At one state the defendant paid a deposit of $7,000 on another property (p 103), with money which he borrowed from his partner.[17] Ultimately that contract did not proceed, and the $7,000 was refunded to him, and ultimately paid back by him to his partner.[18]
[16]Defendant p.193.
[17]Defendant, p 128, p 130. The woman with whom he was for a time living, in a relationship which was initially very serious (p.190) but which he described as volatile: p 102. I will use this term for convenience, although it may be that she would not agree with it.
[18]For the refund see Exhibit 10, entry 7 March 2003; defendant p,130; for the repayment see Exhibit 1 p 23 (part of $17,257.58); defendant p 128.
Eventually they found and agreed to purchase the Harman Court property for $180,000, comprising $80,000 which the plaintiff had, and $100,000 which would be borrowed by the defendant and treated as a contribution by him. Hence the distribution of the title to the property. Presumably that was worked out after the intention was formed to purchase this particular property. There was no difficulty in the plaintiff’s making available her $80,000; the position of the defendant was more complicated. He did not have $100,000, and could only make such a contribution if he could borrow this amount.
The mortgage
The defendant said that his initial attempts to borrow money were unsuccessful, but eventually he made contact with the Bank of Queensland, and that bank did ultimately lend the amount required to complete the purchase: p.108. That bank however had a policy that in circumstances like this it would lend money only if there was a security over the whole of the property, so that both of the owners were liable on the loan.[19] That was the way in which the matter ultimately proceeded, and it was not disputed by either party that as against the bank both plaintiff and defendant were liable on the loan. The plaintiff said that it was the defendant who negotiated with the bank[20] and I accept that, although the plaintiff did at some stage sign an application form for finance showing both parties as applicants.[21] When the information in this document was entered into a computer record (a copy of which appears at p.30 of Exhibit 1) by the bank officer (p 78, p 89) the date of 1 May 2003 was attributed to the application, so presumably the handwritten application, document 11, was signed on or shortly before that date.[22]
[19]Terry p 90. The plaintiff said she was told by the defendant that they could not get the house if she did not sign the mortgage (p.47) which is consistent with this policy.
[20]Plaintiff p 11; and see Terry p 78.
[21]Exhibit 1, document 11, which is undated but signed by both parties at p.27. See plaintiff, p 12; defendant p 136.
[22]The application was approved on 7 May 2003: Exhibit 1 document 15 p.34.
At that stage the amount sought to be borrowed was $144,000. Again, there is an explanation for the discrepancy between this amount, and the arrangement that the defendant would borrow $100,000. The plaintiff’s money was apparently for a time held in a trust account after the Teak Street property was sold, and shortly after it was released to the plaintiff the plaintiff paid the money into the defendant’s bank account.[23] It is common ground that this was done deliberately by the plaintiff at the request of the defendant[24], and by 1 May there was still in excess of $80,000 in that bank account: Exhibit 1 p.21. But the defendant had some debts. He owed $1,450.30 to Optus[25], about $8,000 to the Australian Taxation Office[26], about $12,000 to Esanda in respect of the purchase of a motor vehicle, and over $17,000 to his partner. Some of the money which was owed to the partner was money he had borrowed and put into a business he was trying to set up together with another man: p.114.
[23]$80,000 was withdrawn by the plaintiff on 16 April 2003 – document 8, p.14 in Exhibit 1 – and deposited to the defendant’s bank account on 17 April 2003: Exhibit 1, document 9, p.18. See also plaintiff, p 10, defendant p 120. The money came into the plaintiff’s account on 11 April: Exhibit 1 document 8 p.14.
[24]Plaintiff p.10; defendant p.142.
[25]Exhibit 7.
[26]Defendant p 126; this remains unpaid.
Evidently at some point the advantage of consolidating at least some of these debts by means of the home loan which was to be obtained from the Bank of Queensland occurred to him; hence the proposal to borrow more than was really needed, an additional $44,000. The plaintiff agreed that by the time she went to the bank to sign the document, which must have been signed on or before 1 May, she was aware that the amount to be borrowed was $144,000: p 35. Her explanation was that she was just told that this was the way it had to be and she was going along with what her son proposed. He said that she was aware that this extra money was being borrowed for him to spend, either on paying debts or setting up the business. It is certainly clear that by 1 May the defendant was intending that $144,000 would be borrowed, the plaintiff was aware of this and was willing to go along with the arrangement (p 36), and that the parties were treating the additional borrowing as being in effect additional money for the defendant to use.
I accept that the defendant did tell the plaintiff that he was having difficulty getting a loan because of his existing debts.[27] Although payment of these was not a requirement of the Bank of Queensland[28] (at least so far as the existing debts were disclosed to it) this may have been something he was told by brokers whom he had earlier consulted about obtaining a loan. Although the defendant claimed that his mother agreed to his using her money to pay his debts, he also spoke of the extra amount being borrowed from the bank, that is the extra over $100,000, as being understood by the plaintiff as money for him to pay off his debts: p.138. Indeed, he claimed[29] that she had said of this extra money when they were at the bank, “he is going to mess around with the other $40,000.” That fits in with the fact that none of the $80,000 was actually used by the defendant until after the loan application had been made, and no doubt after he had reason to believe it would be approved. I accept that the plaintiff knew that this larger amount was being borrowed, and that she understood it was for the defendant’s use, and did not object to that course because the arrangement between the plaintiff and the defendant was that the defendant would make the mortgage payments, and therefore would be paying off this larger sum.
[27]Plaintiff pp.12, 26; defendant pp.108-9, 162.
[28]Terry p.83.
[29]Defendant pp.137, 189.
Other payments
The whole of the money borrowed from the bank however was ultimately put towards the loan account, that is, it was applied in settlement of the purchase of the house.[30] Between 1 May and 23 May, when $35,430.07 was transferred from the defendant’s account to the loan account[31] a number of significant payments were made out of the defendant’s bank account. On 6 May $12,112.80 was paid, in the purchase of a bank cheque which was paid to Esanda to discharge that debt[32]. On 12 May $1,500 was withdrawn, and on 19 May $3,000 was withdrawn, apparently to pay the costs and outlays of the solicitors handling the conveyance to the parties as purchasers, and on 21 May $17,257.58 was withdrawn. The defendant said that this last sum was paid to his partner to repay money borrowed from her: p 124.
[30]Exhibit 11, which shows that the settlement payment of $179,430.07 included $35,430.07 deposited as “equity”, so the effective advance was $144,000. There was no evidence directly about this, but I suspect that it was a requirement of the bank that matters be dealt with in this way.
[31]See Exhibit 1 p.23.
[32]Defendant p 124, p 132; Exhibit 1 p 22 (bank statement), p 33 (letter); and see Terry p 83, Exhibit 8.
In the amended statement of claim this payment was attributed to Esanda Finance in respect of the car: para 9.3. That was admitted in the amended defence (para 11), but it is clear that this was a mistake, and that it was the withdrawal on 6 May which funded the payout of the car finance with Esanda. That withdrawal was admitted in the defence to be a payment to the Australian Taxation Office, but I accept that this was also a mistake, and that the debt to the Australian Taxation Office remains essentially unpaid. Finally the pleading admitted that on 1 May 2003 $1,450.30 was paid to Optus, and it is clear that that was also an error[33]. Notwithstanding the admissions on the pleadings, I do not consider that I am constrained from making findings as to the true situation on the basis of the evidence before me, in circumstances where it is clear that both pleadings are in this respect in error.
[33]See Exhibit 7, a document from Optus (dated 1 May 2003) acknowledging a payment of $1,450.30 on 3 March 2003. I suspect this money came from his partner.
On 23 May 2003, the same day as payment was made to the home loan account, $1,367.78 was also transferred to that account to cover various bank fees and charges. That left $11,615.25 in the defendant’s bank account. The defendant did not seek to prove that any part of that money had been subsequently used either for the acquisition of the house or for payment of the mortgage.
Legal advice
The loan and mortgage documentation was ready to be signed on 12 May 2003.[34] The bank insisted that the plaintiff have legal advice before the mortgage was signed, and as a result the plaintiff went with the mortgage and some other documents, including a form for the solicitor to certify to the bank that advice had been given, to see Mr Leach. She saw him alone, that is without the defendant being present. According to the plaintiff Mr Leach strongly advised her against agreeing to the shareholding being 56 to 44 in the defendant’s favour, and advised her in effect that she should be holding the title until the defendant had actually paid some money: p.44. The plaintiff said that she signed the mortgage notwithstanding this advice, and without first speaking to the defendant again (p.45), and conceded that she was not unwilling or reluctant to sign it and had not told the solicitor that, and that the defendant had placed no pressure on her to sign it.[35] She did say that after she spoke to Mr Leach she spoke to the defendant and his partner again, and told them of Mr Leach’s advice, and that the defendant had responded that that was not true, that he was putting in $100,000 and she was only putting in $80,000, so that was why he had the bigger percentage, and she said she then agreed that that was correct: p.44. The mortgage was signed by her, and dated 16 May 2003.
[34]Exhibit 9, sent to the defendant; a similar letter, and copies of the loan agreement and mortgage, were sent to the plaintiff: Exhibit 1, document 18 p.42.
[35]Plaintiff p.43. She did this because she trusted the defendant: p.57, and see defendant p.145.
Mr Leach signed a certificate in the form provided by the bank certifying that he had explained the content and effect of the mortgage to the plaintiff, and that the plaintiff had acknowledge to him that she was aware of and fully understood the terms of the security documents and the obligations thereunder, and executed the security documents freely and voluntarily and without coercion on the part of any person whatsoever: Exhibit 1 document 19 p.44. This document identifies both parties as “customer”, but only the plaintiff as “mortgagor”, although it may be that that was because the certificate was sought only in respect of the plaintiff; the bank probably assumed that the defendant could look after himself.
When the certificate was signed, Mr Leach amended it so that, instead of certifying that these things had happened before the mortgage was signed, he certified that they had happened after the plaintiff had signed the mortgage. The document in that form was returned to the bank, and sent by the branch officer to head office to see whether the amended certificate was acceptable: p 81. Head office was not prepared to accept it, and further documents were sent out to be re-executed, with a fresh certificate. The witness from the branch of the bank, who gave evidence, could not recall just how long that process took, but conceded that it would have taken a couple of days. Notwithstanding this, the second certificate signed by Mr Leach, which certifies that the various things happened prior to the mortgage being executed, is also dated 16 May 2003, (Exhibit 6), and the mortgage which was eventually registered[36] signed by the plaintiff with her signature apparently witnessed by Mr Leach, is also dated 16 May 2003.
[36]Exhibit 1 document 21 p.46.
Notwithstanding this apparent inconsistency, the plaintiff effectively conceded under cross-examination that Mr Leach had made her aware of the effect of the mortgage and the obligation she was under because of it[37], and I accept that at the time when she executed the mortgage she was aware of its true effect, and the practical consequences as between her and the bank, and executed it voluntarily and without coercion on the part of the defendant.
[37]Plaintiff p.48; as to absence of coercion see p.46.
Payments off the mortgage
After the transaction settled the plaintiff moved into the house, and the defendant began to make payments on the mortgage. Exhibit 11 shows payments from his bank of $490 on 6 June and 20 June 2003, and Exhibit 10 shows payments in the same amount on 18 July, 1 August, 15 August, 29 August, 12 September, 26 September, 24 October, 7 November, and 21 November. There is not available to me a complete set of either the defendant’s bank statements or the bank statements on the home loan account, which were also sent to the defendant, but the statements that are available indicate that regular payments of $490 were made by the defendant every 14 days, and that suggests that there were also payments of $490 on 4 July and 10 October, and I accept that these two payments were made.
In December 2003 there was apparently an interest rate increase, and on 5 December a payment of $503 was made. Exhibit 10 shows that on 19 December there was another payment of $503 made, but this payment was reversed on 23 December, presumably because the defendant’s account was then overdrawn. Exhibit 1 shows on p.94-5 the statement on the loan account from 23 December 2003. There was evidently a further increase in the fortnightly payment on 2 January 2004, to $512.50, and the direct debit continued to operate apparently until the end of March, but the statement shows that each of the regular payments was subsequently reversed. There was also a payment from the defendant’s account for $512.50 on 6 January 2004 which was not reversed. That appears to be the last payment made by the defendant towards the mortgage. The position therefore was that until December 2003 the defendant was making regular payments on the mortgage, but after this time only one payment was made, in January 2004.[38]
[38]On this basis I find that the total of mortgage payments, not counting the deposits on 23 May 2003 of equity ($35,430.07) and fees ($1,367.78) came to $7,385.50. These payments are consistent with the difference between the closing balance in Exhibit 11 and the opening balance in Exhibit 1 document 41 p.94, six months later. I reject the defendant’s evidence that he had paid $10,000 off the mortgage (p.112), and do not accept that any other payment has been made.
When the plaintiff became aware that the mortgage was in default[39] she made some payments, of $900 on 15 March, of $200 on 5 April and 13 April, and of $1,000 on 20 April.[40] There was subsequently a payment by her of $200 on 4 May 2004.[41]
[39]By the letter Exhibit 1 document 33 p 74 – see plaintiff p 22.
[40]Exhibit 1 document 41 pp.94-95; document 40 pp.89-92. Plaintiff p 65.
[41]Page 22, p.65 and Exhibit 1 p.93.
The agreement
The plaintiff maintained that the defendant suggested buying the house together, said that he did not want to live there, and that she could live there for the rest of her life with her dog and that it would be an investment for him: p.10. She said that it was agreed once she knew how much she was going to get from the sale of the other property that she would put up $80,000 and he would borrow $100,000 and he would pay the mortgage off and she would help with the rates: p.10.[42] That was why the title to the house was to be divided 56/44: p 13. The defendant conceded that when working out the division of the interest in the property it was worked out on the basis that the plaintiff was putting in $80,000 and he was putting in $100,000: p.166. The defendant also twice under cross-examination used the expression “I borrowed $144,000.”[43] The defendant also said various things suggesting that he was to be at least principally responsible for making payments under the mortgage[44], although he did not actually admit that the original arrangement between the parties was that, as between the plaintiff and the defendant, he would be responsible for making payments under the mortgage. He asserted for example that the plaintiff had said that if she could pay some of the mortgage payments she would do so and he would be happy with that.
[42]See also Exhibit 2 para 12; pp.28, 34, 47, 56; Rowntree p.92.
[43]Page 167 lines 7-8, p.168 line 20.
[44]eg p 112 line 14 “I was paying all the mortgage payments”; p 198 line 7 “I would be paying most of the mortgage payments … if she could afford to pay mortgage payments, then that would pay the house off quicker”; Exhibit 12 para 12: “I would pay the mortgage payments but if she could help then she would.”
He also asserted that in late 2003, when he had to give up work in order to have an operation on his ankle, the plaintiff had said that she would take over the mortgage payments.[45] The plaintiff denied that there was any such agreement (p 68), and in fact she never made regular mortgage payments, or any payments until March 2004 after she found out that the mortgage was in default, and in all the circumstances I am not persuaded that there ever was such an agreement.
[45]Defendant p.153. The operation was on 16 July 2003: p.113. The defendant has been off work since.
In all the circumstances I find that the arrangement between the parties under which the house was purchased was that the title would be held in proportions to reflect the contributions of the parties, on the basis that the plaintiff put in $80,000 which she had, and the defendant put in $100,000 which he would borrow. Although in order to satisfy the requirements of the bank the interests of both parties had to be mortgaged and both parties were borrowing the money, as between the plaintiff and the defendant it was agreed that it was the responsibility of the defendant to discharge the debt to the bank. That also explains the additional money being borrowed; this was in effect to refinance some debts of the defendant, and should be treated as having done so notwithstanding that the whole of the money borrowed was put towards the house purchase, and the debts of the defendant were actually paid from the plaintiff’s money which had been paid into the defendant’s account.
I accept that the plaintiff understood and agreed that her interest in the house would be mortgaged to the bank, and that as far as the bank was concerned both she and her son would be liable for mortgage payments, but she agreed to do this because the defendant had agreed that he would be responsible for making the payments: p.47. So long as he was agreeing to this, and did in fact do this, she was not prejudiced either by his borrowing the money on the security of her interest as well, or indeed by his borrowing additional money, in effect for other purposes of his, also on that security.[46] If the defendant had in fact continued to make mortgage payments and ultimately paid out the mortgage the distribution of the legal title, and hence the distribution of the beneficial title, in the property would have been appropriate. That I accept was why things were arranged the way they were.
[46]Consistent with her understanding: p 14, lines 11-20.
In these circumstances, it probably does not matter very much whether the defendant explained to the plaintiff that he would be dipping into her money prior to the settlement of the house (and to some extent afterwards) and that the extra money that was being borrowed would make up for this, rather than some of the money being borrowed being used for these other purposes. So long as the plaintiff was getting credit for $80,000 towards the house purchase, it really did not matter whether it was actually her $80,000 which was paid to the vendor. However, I rejected the defendant’s evidence that the payments which he made in effect from her money prior to 23 May were a gift by the plaintiff to the defendant. [47] That would have been inconsistent with her getting credit for those payments towards the purchase of the house. The only plausible explanations are either that she was unaware of what was happening and assumed that it was her $80,000 which went towards the purchase of the house, or that she understood and was content for some of her money to be used for these purposes on the basis that the defendant would make up for it from the money that was being borrowed from the bank, which as between the plaintiff and the defendant was being treated as a borrowing by the defendant alone. However, in case it may be thought elsewhere that something turns on this point, if I had to make a finding on this point I would find on the balance of probabilities that the former was the situation.
[47]Defendant pp.162-3; and see Exhibit 12 para 11; this was denied by the plaintiff: pp.11, 24.
Credibility
I should say something about the credibility of the witnesses. On the whole I thought that the plaintiff was an honest witness but not necessarily always a reliable witness. There were some things that she said which cannot be correct. For example at p.25 she said that she found out that various payments had been made by the defendant out of her $80,000 at the time when she signed the contract at the bank that it was $144,000. This must be a reference to signing the loan application: p.27, which was on or before 1 May 2003, at a time when the $80,000 was still intact in the account. It did seem to me that she was generally willing to make appropriate concessions, although I should mention one piece of her evidence, at p.28 in cross-examination, when she was asked, “So it made sense for Keith to have the greater share of the equity in the house since he was going to be responsible for the greater share of the debt repayments? – That is correct.” That question of course implies that it was not only the defendant who was responsible for making debt repayment, but I do not think the plaintiff appreciated that, and I do not treat this answer as an admission that it was part of the arrangement between the parties that she have some responsibility for the mortgage payments. I do not think the plaintiff was sufficiently sophisticated to detect the implied assertion in the question.
On the other hand, I could not regard the defendant’s evidence as being particularly reliable. He appeared to be very worked up over the proceedings, and at times had some difficulty in controlling himself, both in and out of the witness box.[48] His answers were often unresponsive (eg pp.109-110), and at times he appeared to get carried away, particularly during cross-examination. He seemed to have a strong sense of being badly done by in all this, and was keen to present his side of the story as fully as possible. That led me to suspect that he was at times saying things which were intended to be helpful to his case rather than describing what he actually recalled. He also said at times, particularly during cross-examination, that his memory of the events was now bad: eg p.215. At p.140 he said that the plaintiff only went to the bank once, but at p.195 maintained that she went more than once. He claimed that an amount of $8,700, obtained as an insurance payout after he wrote off his car, had been paid off the mortgage (p.191) which is not reflected in the bank documentation for the mortgage account. Plainly there was no lump sum payment of anything like this amount ever made, and the figure he quoted was more than all of the mortgage payments that I can find attributable to him.
[48]See p.27 of the transcript which records a spontaneous admission by the defendant from the bar table during the plaintiff’s cross-examination.
Although there are some parts of his evidence which I do accept and regard as reliable, I am wary about the reliability of some of his evidence. In general I prefer to resolve conflicts between the plaintiff and the defendant by reference to contemporaneous documents or other evidence, or on the basis of what fits in with the overall pattern of events disclosed by the evidence. If it were necessary to resolve a direct conflict only on the basis of credibility, I prefer the evidence of the plaintiff to that of the defendant. I accept the evidence of the other witnesses.
What is to be done
The defendant’s case was that the distribution of the legal title was based on the plaintiff’s contribution of about $37,000 to the acquisition of the house[49], together with her obligation to discharge the mortgage, but the defendant obtained a larger share of title to the house because of the expectation that he would be principally responsible for making the payments on the mortgage. That however is contrary to some of the statements of the defendant in the witness box, and to the logic of the transaction as I have explained it, and to the evidence of the plaintiff, and I reject that analysis. It follows that I reject also the conclusion put forward on behalf of the defendant, that the house should be sold, the mortgage discharged, and the balance divided between the parties in the proportions of their legal title.
[49]On the basis that part of the $80,000 was to pay his bills: p.120.
On the other hand, it appears inevitable that the house must be sold. There is default under the mortgage, and it appears clear that the defendant is not prepared to continue to maintain payments under the mortgage. The plaintiff would not have the capacity to do so. It also appears clear that both parties cannot live together in the house. The plaintiff said that she originally came to Queensland to get away from the defendant, and that she left the house after he moved in because of his hostility including actual violence towards her.[50] The defendant denied that, but I think it unlikely that the plaintiff would have left the house at that time unless there had been some good reason for her to do so, and her distressed condition at the time when she arrived at her daughter’s house[51] provides some independent support for her having been mistreated in some way by the defendant, that is her having been somehow driven out of the house. I accept that she was driven out by the defendant; it is unnecessary to go further than that. The defendant admits having subsequently changed the locks, and having excluded the plaintiff from the house thereafter (except on one occasion when a specific arrangement was made to enable her to collect some personal effects). There is or has been at times orders under the Domestic Violence Family Protection Act in favour of each party against the other.[52]
[50]Plaintiff p.58: this was strongly denied by the defendant: p.150.
[51]Rowntree p.93.
[52]Plaintiff p.18: Exhibit 1 document 32 page 72. I do not attribute any significance to this.
Whether or not it was part of the original agreement that the defendant not live in the house, it was certainly part of the original agreement that the plaintiff would be able to live in the house, and the defendant’s exclusion of the plaintiff from the house is a clear breach of that agreement. As a co-owner, the plaintiff is entitled to occupy the house, although she would not be entitled to do so to the exclusion of the defendant unless that was part of the original agreement, or unless she is entitled to some remedy to that effect arising out of his behaviour towards her. But assuming she is, the defendant was adamant he was not going to make mortgage payments if he was excluded from the house.
In these circumstances, it is unnecessary to make a finding as to whether it was part of the agreement between the parties that the defendant not live at the property. At the time he did not expect to be doing so, and I accept that he said something to the effect that he would be living somewhere else, though I doubt whether at the time the parties contemplated that he would never be allowed to live there. Accordingly I am not persuaded that the agreement ever went that far. Even if it did, it would be a large step to deprive one co-owner of any right ever to occupy the premises, and (subject to any right of the plaintiff arising because of the defendant’s behaviour towards her) that would not be necessary to protect the legitimate interests of the plaintiff, and so would not be enforced in equity.
It appears clear that the relationship between the parties has now entirely broken down. There was indeed a certain amount of hostility towards the plaintiff manifested by the defendant even during the hearing by his manner in the witness box. In these circumstances, I do not think that it is realistic to expect that the plaintiff will be able to continue to live in the house in the future, at least unless she can find some way to refinance the mortgage so that the defendant will not be liable for it. Unless that can be done, the house will have to be sold and (unless that is to be left to the bank) the appropriate mechanism is to appoint trustees for sale under the Property Law Act. I find that the value of the property is now $235,000, on the basis of the valuation by Mr. Barrett (Exhibit 1 document 42 page 96) which is the only proper evidence of value before me.
If the property is to be sold, the proceeds should be dealt with in accordance with the agreement between the parties pursuant to which the property was acquired. The bank of course is entitled to the discharge of its mortgage first out of the proceeds of sale, but as between the parties I am satisfied and find that it was a term of the agreement that it was the defendant who was responsible for discharging the mortgage, and therefore the burden of discharging the mortgage should fall on the defendant’s share of the proceeds of sale. In theory therefore the plaintiff is entitled to 44 percent of the net proceeds of sale, and the defendant is entitled to whatever is left after the mortgage is discharged out of the balance of the proceeds of sale. To the extent that the defendant’s share of the proceeds of sale is not sufficient to discharge the mortgage, it will have to be discharged out of the plaintiff’s share, but in those circumstances the plaintiff is entitled to recover such amount from the defendant as money paid by the plaintiff to the use of the defendant. The plaintiff is also entitled to recover from the defendant the $2,500 she has paid off the mortgage.
Undue influence
The plaintiff alleged that there had been undue influence on the part of the defendant, but in the light of the findings above and particularly bearing in mind that the plaintiff had the benefit of independent legal advice before signing the mortgage I do not accept there was any undue influence. There was certainly no evidence of any undue influence in relation to the signing of the contract to purchase the property. It seems that everything went well between the parties until August 2003, when the defendant moved back into the house and the plaintiff left. The plaintiff had at least the opportunity to discuss the matter with her daughter, with whom she was living, in April and May 2003. There is nothing in the evidence to suggest that her will was in any way overborne by the defendant, and indeed such evidence as there is on the topic is to the contrary. No case of undue influence has been made out.
Resulting trust
The plaintiff also relied on a resulting trust, but in my opinion such an approach is misplaced. A resulting trust is something which can arise in circumstances where there is no actual agreement between the parties as to the disposition of the beneficial interest in property, where in the absence of such agreement, or of a presumption or actual evidence of an intention by one party to enrich the other, the law assumes that the intention was that the beneficial interest in the property be proportionate to the parties’ respective contributions. But it necessarily does not apply when there is evidence of an actual agreement between the parties as to the disposition of the beneficial interest,[53] as is the case here. Accordingly there is no room for a resulting trust.
[53]Calverley v Green (1984) 155 CLR 242 at 251, 255, 269.
Constructive trust
A constructive trust is applied by way of a remedy in various circumstances, including where a party is relying on the state of the legal title in a way which is contrary to the agreement or arrangement on the basis of which that title has been acquired by the parties.[54] For the defendant to assert an entitlement to 56 percent of the proceeds of the sale of the property after the discharge of the mortgage in my opinion amounts to reliance on his legal title in a way which is contrary to the agreement between the parties on the basis of which the property was acquired, namely that as between the parties it was the responsibility of the defendant to discharge the mortgage. In these circumstances, it is appropriate to impose a constructive trust by way of a declaration that the defendant holds his interest in the property on trust to discharge the mortgage.
[54]Muschinski v Dodds (1985) 160 CLR 583 at 613.
Alternative claim
There was a claim in the alternative for money had and received, in respect of that part of the $80,000 deposited by the plaintiff to the defendant’s bank account which was not ultimately utilised in the acquisition of the property. The amount which was used in this way was $35,430.07 as “equity”, so the balance of $80,000, namely $44,569.93, was applied by the defendant to his own use. This includes the bank fees for the mortgage ($1,367.78) which are his responsibility, and the solicitors costs; I accept that the plaintiff did not agree to pay these (p.26) and reject the defendant’s evidence at p.111. On the view I have adopted above it is unnecessary to deal with that claim.[55] If however it were concluded elsewhere that the plaintiff is not entitled to be reimbursed by the defendant for the discharge of the mortgage from her share of the proceeds of the sale of the property, it would follow that the plaintiff is entitled to recover this amount. The plaintiff is entitled to be credited for the full amount of the $80,000 deposited in the defendant’s bank account, and, to the extent that that is not achieved by treating the whole of that amount as a contribution towards the acquisition of the property, the plaintiff is entitled to recover the balance from the defendant, and indeed the defendant would hold his interest in the property on trust to secure repayment of that sum. But for reasons given earlier that is not the basis upon which I am proceeding.
[55]This is because, if the plaintiff is entitled to be credited with $80,000 as a contribution to the acquisition of the house, she will have received the full benefit of her payment to the defendant.
Detinue of chattels
The remaining issue is in relation to detinue, in respect of the plaintiff’s chattels in the possession of the defendant. The plaintiff left most of her property in the house when she left it, and a long list of furniture and other items is set out in two letters from the plaintiff’s solicitors to the defendant, on 14 April 2004 and 16 April 2004.[56] Those letters demanded that the defendant deliver the property to the plaintiff at an address other than at the property, and it was common ground that the chattels had not been so delivered: p.152. The defendant admits that the chattels are the property of the plaintiff, but objects to having to pay to have them delivered to some other location; indeed he asserted that he just did not have the money to pay the removalists.
[56]Exhibit 1 documents 38, 39, pp.85, 88. The plaintiff verified that these goods were hers: p.18.
The chattels were in the property which both parties owned and own, and accordingly the defendant has not converted them merely by leaving them there and not delivering them. The plaintiff is suing in detinue, which requires a demand for possession and the refusal to hand them over. But the plaintiff did not demand to be allowed to take possession of the goods, rather she demanded that the defendant deliver them to her at some other address. That is not an obligation a person in the defendant’s position is obliged to undertake, and accordingly the letters were not a sufficient demand for the purpose of an action in detinue: Capital Finance Co Ltd v Bray [1964] 1 WLR 323, where Denning MR at p.329 quoted from Salmond on Torts: “No one is bound, save by contract, to take a chattel to the owner of it. His only obligation is not to prevent the owner from getting it when he comes for it.”[57] It follows therefore that there is no good cause of action in detinue. The plaintiff however clearly has a right to recover possession of her chattels, and if as appears likely the house is to be sold then arrangements will have to be made for the plaintiff to remove the goods at some time to enable that to occur.
[57]See also Fleming on Torts (9th ed) p.65; Fitzgerald v Kellion Estates Pty Ltd (1977) 2 BPR 9181 at 9186; Lloyd v Osborne (1899) 20 NSWR (L) 190 at 194.
Conclusion
I was asked to give the parties a further opportunity, before appointing trustees for sale, to resolve the matter, principally to enable the plaintiff to attempt to refinance so as to pay out the defendant. If the plaintiff can do that, well and good. Otherwise it is appropriate to appoint trustees for sale, and as I suggested at the conclusion of the trial each party should nominate one independent trustee. Those trustees should hold the property on the statutory trust for sale, and hold the proceeds on trust for the plaintiff, except to the extent that the proceeds of sale, after paying the costs of sale and the trustees’ costs, were sufficient for the mortgage to the Bank of Queensland Limited to be discharged solely from the defendant’s 56 percent share of those proceeds, in which case the balance of that 56 percent share of the proceeds is to be paid to the defendant. If trustees are appointed I will order an enquiry before the registrar as to any and what amount is payable by the defendant to the plaintiff to compensate the plaintiff for any part of her 44 percent share of the proceeds of the sale of the land which has been called upon in order to discharge the mortgage to the Bank of Queensland Limited because the defendant’s share was insufficient for that purpose, and give judgment that the defendant pay to the plaintiff such amount as may be found on such enquiry to be payable (if any).
I therefore now declare that the defendant holds his interest in the land on trust to discharge the mortgage to the Bank of Queensland Ltd and exonerate the plaintiff from any liability to the bank. I give judgment that the defendant pay the plaintiff the amount of $2,500. I adjourn the further consideration of the application to appoint trustees for sale to a date to be fixed. I will hear submissions in relation to the question of costs.
0
2
0