Henderson v Templeton

[2001] WASC 160

HENDERSON -v- TEMPLETON [2001] WASC 160

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 160
Published:	20/06/2001
Case No:	CIV:2234/2000	Heard:	6 JUNE 2001
Coram:	MASTER BREDMEYER	Delivered:	15/06/01
No of pages:	7	Judgment Part:	1 of 1
Result:	Application dismissed
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Parties:	CATHERINE FRANCES HENDERSON SUSAN RITA TEMPLETON
Catchwords:	Pleading De facto couple joint ownership of property Constructive trust Unjust enrichment
Legislation:	Property Law Act 1969 (WA), s 126
Case References:	Muschinski v Dodds (1986) 160 CLR 583 Thompson v Winter, unreported; SCt of WA (Murray J); Library No 950644; 28 November 1995 Arthur v Public Trustee (1988) 90 FLR 203 Baumgartner v Baumgartner (1987) 164 CLR 137 Brambles Holdings Limited v Trade Practices Commission (1979) 28 ALR 191 Brimson v Rocla Concrete Pipes Limited (1982) 2 NSWLR 937 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Giumelli v Giumelli (1999) 196 CLR 101 Kais v Turvey (1994) 11 WAR 357 Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor, unreported; SCt of WA; Library No 6414; 25 August 1986 Lonrho PLC v Fayed & Ors [1992] 1 AC 448

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : HENDERSON -v- TEMPLETON [2001] WASC 160 CORAM : MASTER BREDMEYER HEARD : 6 JUNE 2001 DELIVERED : 15 JUNE 2001 PUBLISHED : 20 JUNE 2001 FILE NO/S : CIV 2234 of 2000 BETWEEN : CATHERINE FRANCES HENDERSON

Plaintiff

AND

SUSAN RITA TEMPLETON
Defendant

Catchwords:

Pleading - De facto couple - joint ownership of property - Constructive trust - Unjust enrichment

Legislation:

Property Law Act 1969 (WA), s 126

Result:

Application dismissed

(Page 2)

Representation:

Counsel:

Plaintiff : Mr L A Tsaknis
Defendant : Mr M J McCusker QC

Solicitors:

Plaintiff : Hammond Worthington
Defendant : Bowen Buchbinder Vilensky

Case(s) referred to in judgment(s):

Muschinski v Dodds (1986) 160 CLR 583
Thompson v Winter, unreported; SCt of WA (Murray J); Library No 950644; 28 November 1995

Case(s) also cited:

Arthur v Public Trustee (1988) 90 FLR 203
Baumgartner v Baumgartner (1987) 164 CLR 137
Brambles Holdings Limited v Trade Practices Commission (1979) 28 ALR 191
Brimson v Rocla Concrete Pipes Limited (1982) 2 NSWLR 937
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Giumelli v Giumelli (1999) 196 CLR 101
Kais v Turvey (1994) 11 WAR 357
Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor, unreported; SCt of WA; Library No 6414; 25 August 1986
Lonrho PLC v Fayed & Ors [1992] 1 AC 448

(Page 3)

1 MASTER BREDMEYER: This is an application by the defendant to strike out the plaintiff's statement of claim. The plaintiff says that the application is out of time and the application is opposed on that basis. The application is dated 15 February 2001 and is an application to a Case Management Registrar. The statement of claim in question is the plaintiff's amended statement of claim of 18 January 2001. The application should have been brought within 21 days of that pleading, that is, on or before 8 February. The defendant says an application was filed on 8 February but was rejected by the Supreme Court Registry. That application was in the form of a chamber summons for leave to strike out the amended statement of claim, pursuant to O 20 r 19. It was an application returnable before the Registrar in Chambers. It was rejected because it was not in the form of an application to the Case Management Registrar. I consider that a reasonable explanation for lateness - that the wrong form was initially used - and that leave should be given. However the plaintiff says the lateness is more serious than that because the causes of action under challenge were in the original statement of claim which was filed on 5 October 2000. The plaintiff says those causes of action were unaffected by the amendments to the pleading which were minor.

2 Mr McCusker QC for the defendant, said he was consulted on the initial statement of claim and recommended no opposition to it because of the third prayer for relief which reads:

"3. In the alternative to orders 1 and 2, an order for the partition and sale of the property at 7 Fortview Rd Mt Claremont pursuant to s 126 of the Property Law Act 1969."

I should add that this action is a dispute over the equitable ownership of a residential property registered in the names of the plaintiff and defendant as joint tenants. Mr McCusker explained that he considered this prayer for relief was arguable, and I agree with that, so there was no point in opposing the equitable claims raised in the pleading. However, he said that with the deletion of prayer 3 in the amended statement of claim, the whole case then turned on the equitable claims which he thought were bad and should be struck out. I am not convinced by that explanation. Equitable claims to the ownership of land can co-exist with a statutory claim for a sale in lieu in partition under s 126 of the Property Law Act 1969 (WA) and the attack on the equitable claims could have, and I think, should have, been brought earlier. Nevertheless, I think that an explanation for the lateness and I propose to give leave to bring this application out of time.

(Page 4)

3 I want to consider the heart of the statement of claim. It is pleaded that the plaintiff and defendant were in a same sex relationship between 1985 to about January 2000 and they ceased living together on 6 June 2000. In March 1997 the plaintiff and defendant purchased, as joint tenants, a residential property at 7 Fortview Road, Mt Claremont for a total purchase price, including purchasing costs, of $309,694. The money was provided by the defendant, apparently largely from a loan from the defendant's father. I say apparently, as it is not clear in the pleading. In February 1998 the plaintiff sold a property she owned in Cottesloe and gave the proceeds of that ($251,557) to the defendant, apparently to pay off the loan, or part of the loan, from the defendant's father. So the plaintiff contributed about five sixths of the purchase price and the defendant about one sixth. It is pleaded in par 22 that it would be unconscionable for the defendant to retain the benefit of the plaintiff's contributions which were made to foster the personal relationship which the defendant knew the plaintiff considered to be of a permanent character and which the plaintiff hoped to advance. The prayer for relief which follows from that, prayer 1, is a declaration that the defendant holds her interest in the property on trust for the plaintiff. The next prayer is that the defendant transfer to the plaintiff her interest in the property. A further and/or alternative cause of action pleaded, arising from the same facts, is that the defendant would be unjustly enriched if she were entitled to retain the benefit of the contributions made by the payment without making payment for those contributions to the plaintiff and the plaintiff is entitled to recover the value of those contributions made. The relevant prayer relating to that is prayer 3: "Equitable compensation or, alternatively, equitable damages".

4 The major attack on these pleas is based on Muschinski v Dodds (1986) 160 CLR 583. In that case the property was in the joint names of Ms Muschinski and Mr Dodds and they had made vastly unequal contributions to the purchase of that property. Ms Muschinski had contributed nearly all of the money to buy the property. Their plan was that their de facto relationship would continue and that Mr Dodds would renovate an old cottage on the property and pay for the erection of a house on the land out of moneys which he thought were coming to him from a divorce settlement, plus his earnings. The relationship broke down before Mr Dodds was able to do any of that. The order given by the High Court, as fashioned by Deane J, was that the parties held their respective legal interests in the property as tenants in common upon trust to repay to each his or her respective contributions and then to share the residue in equal shares. The defendant's case in the pleading before me is that that is the

(Page 5)

only kind of order the plaintiff can get in this case - a return of her capital contribution to the purchase of the house. Likewise, it is said the defendant should get a return of her capital contribution - approximately $50,000 - and the balance of the property should be shared equally between them. The balance of the value of the property is significant as its present value is approximately $500,000. There has been a significant capital gain since they purchased it.

5 I consider that the orders advocated by the defendant are arguable, obviously because that was what was done in Muschinski v Dodds. But I do not consider those orders are the only ones available. Another order equally open is that the parties hold their legal interests in trust for the plaintiff as to five sixths and for the defendant as to one sixth based on their respective capital contributions. As a result of such an order, the parties would share in the capital appreciation of the property in those respective proportions. I give an example of a finding like this. In Thompson v Winter, unreported; SCt of WA (Murray J); Library No 950644; 28 November 1995, the defendant, Mr Winter, purchased a house in Floreat in December 1988 for $154,000 in his name. His de facto partner, the plaintiff, Mrs Thompson, contributed $5,000 to the purchase and later $38,132 towards the preservation and improvement of the property. The parties separated in July 1990 and later came together again and finally separated in July 1991. There had by then been a substantial appreciation in the value of the property from $154,000 to $265,000 or $270,000. In that case the trial Judge found that the defendant had agreed to transfer a half share in the property to the plaintiff and the Judge implied a trust in the plaintiff's favour to the extent of a half share to the defendant. A transfer document had been prepared. The Judge's finding on the agreement to transfer a half interest to the plaintiff is not relevant to my discussion at the moment, but the Judge's alternative finding is. If he was found wrong in his major finding, he considered that the plaintiff's contributions, financial and otherwise, towards the purchase, maintenance and improvement of the property, justified a declaration of trust that he hold the property on a constructive trust as to a 25 per cent interest for her.

6 In the present case, I think it perfectly arguable that the plaintiff is entitled to a declaration that the property is held on trust for her as to a five sixth share. However, as stated, the prayer for relief, she seeks a 100 per cent share - that the defendant holds her whole interest in the property on trust for the plaintiff. What is the justification for that? The plaintiff's counsel relies on a statement from Murray J in Thompson v Winter, above, at 8:

(Page 6)

" ... The other basis of claim is clearly for a constructive trust arising out of the circumstances of the relationship between the parties and the plaintiff's alleged contribution to it and to the property, particularly financially, but also in other ways, because it does not at all depend upon the actual presumed intention of the settlor or both parties but is of the type which will be imposed by equity despite the fact that there had been no intention express or implied to create a trust." (Emphasis mine.)

The plaintiff also relies on a passage from Muschinski v Dodds, above, at 620, per Deane J:

"Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property 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 that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of a relevant property to the extent that it would be unconscionable for him so to do." (Emphasis mine.)

7 What were the other contributions which the plaintiff made which might arguably justify a 100 per cent declaration of trust in her favour? A number of matters are relied on in the pleading. Firstly, in the period before the Mt Claremont property was bought when the parties were living together in Cottesloe, it is said that almost all of the day-to-day living expenses incurred by the plaintiff and defendant were paid for by the plaintiff. The defendant retained possession of the plaintiff's Challenge Bank saving account card and used that card to pay for the day-to-day living expenses of the plaintiff and defendant. It is also pleaded that from 1983 onwards the plaintiff had a much larger income than the defendant and the income of each for each year is given. It is also said that all rates, taxes, outgoings, maintenance and improvements on the Cottesloe property were paid for by the plaintiff. I query the relevance of all of that. Secondly, it is pleaded that since the purchase of the Mt Claremont property in March 1997 until January 2000 when their relationship deteriorated, almost all of the daily living expenses for the plaintiff and defendant, were paid by the plaintiff, and all rates, taxes, outgoings, maintenance and improvements to the Mt Claremont property

(Page 7)

were paid by the plaintiff. I query the relevance of the plaintiff's payment of the day-to-day living expenses, but I may be wrong in that, and I decline to strike out that plea. It may be arguable. The plaintiff's payment of rates, taxes, maintenance and outgoings on the Mt Claremont property is relevant and may justify her getting a better than five sixths share, so I propose to let that pleading stand.

8 The second cause of action already referred to in par 23 is that further, or in the alternative, the defendant would be unjustly enriched if she was entitled to retain the benefit of the contributions made by the plaintiff. I think that is arguable. I think it is wrongly headed "Quantum meruit". That heading should be deleted. I think it is arguable because that is a major part of the order made by the High Court in Muschinski v Dodds and is what counsel for the defendant is advocating in this case. Prayer for relief 3 refers to equitable compensation or, alternatively, equitable damages. I consider that the return of the contributions made by the plaintiff could amount to equitable compensation. I doubt very much if it would be called equitable damages, but it matters little and I am prepared to let that prayer for relief stand.

9 I thought of going through the pleading and striking out most of the pleas regarding the Cottesloe property as not relevant, but it is not in the defendant's outline and objections were only raised in passing. Then the defendant wants some of it in - as a basis for her plea that the plaintiff promised to transfer a half share in the Cottesloe property to her, and later, when it was sold, that the net proceeds would be shared equally.

10 Leave is granted to bring the application out of time, but the application will be dismissed.