Jacks v Jakimowicz
[2015] VCC 1067
•12 August 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised |
Case No. CI-11-01385
| JOHN MICHAEL JACKS | Plaintiff |
| V | |
| PATRICIA ANNE JAKIMOWICZ | Defendant |
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| JUDGE: | HER HONOUR JUDGE KENNEDY | |
| WHERE HELD: | Melbourne | |
| DATE OF HEARING: | 15, 16, 17, 20 and 21 July 2015 | |
| DATE OF JUDGMENT: | 12 August 2015 | |
| CASE MAY BE CITED AS: | Jacks – v – Jakimowicz | |
| MEDIUM NEUTRAL CITATION: | [2015] VCC 1067 | |
REASONS FOR JUDGMENT
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Catchwords: Breach of trust deed and terms of settlement – nature of plaintiff’s claim – whether claim represents workers’ compensation monies and therefore not divisible under the Bankruptcy Act1966 (Cth) s 116(2)(n) – whether defendant already released by virtue of agreements in December 2000 and/or June 2009 – whether claim barred under the Limitation of Actions Act 1958 – whether doctrine of laches applicable
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr E. Moon | Thomas Egan |
| For the Defendant | Mr J. Isles | Stephen Byrne |
HER HONOUR:
1 Following receipt of a worker’s compensation pay out in December 1995, the plaintiff, Mr John Jacks, provided $170,000 to his brother (Mr Victor Jakimowicz) and his brother’s partner, Ms Patricia Jakimowicz (the defendant) to purchase a house at 18 Hawker Street Preston (“Preston”). Mr Jacks subsequently moved into the house though it was never registered into his name.
2 Mr Jacks subsequently brought proceedings seeking, inter alia, a declaration that the Preston property was held on trust for him. This action was settled pursuant to terms of settlement and a declaration of trust dated 29 August 2002 wherein the defendant and Victor Jakimowicz declared that they held the Preston property on trust in favour of the plaintiff and agreed (as trustees) to be obliged to comply with, and ultimately discharge, a mortgage to Suncorp–Metway Ltd (“Suncorp”) over the Preston property.
3 The Suncorp mortgage subsequently went into default with the result that the plaintiff was dispossessed. He has lived in rooming houses ever since.
4 The plaintiff now claims damages (of $325,000[1]) for the failure to comply with the declaration of trust which led to his dispossession.[2] He further claims an equitable interest in a property owned by the defendant at 275 Tantabaroo Road, Willowmavin (“Willowmavin”) pursuant to a resulting or constructive trust, given this property was obtained using the funds advanced from Suncorp on the security of his home.[3]
[1] Being the proceeds of Preston at $495,000 - $170,000 the plaintiff has received subsequently
[2] Statement of Claim dated 31 March 2011, paragraphs 25 and 42.
[3] Statement of Claim dated 31 March 2011, paragraph 47.
5 Alternatively, he claims a separate breach of clause 6 of the terms of settlement in failing to pay the sum of $200,000 then needed to discharge the mortgage.[4]
[4] Statement of Claim dated 31 March 2011, paragraph 21.
6 The defendant raises a number of defences primarily:
· That the claims are prevented by reason that they vested in the trustee in bankruptcy under s 58 of the Bankruptcy Act1966 when the plaintiff became a bankrupt;
· That the defendant is released by virtue of some earlier terms of settlement dated 7 December 2000;
· That the defendant is released by virtue of a further release given in about June 2009;
· That the claims are barred by virtue of The Limitations of Actions Act 1958; and
· That the claims should be denied by virtue of the plaintiff’s prolonged delay (“laches”).
7 The defendant further claimed that if Willowmavin was held on trust then the defendant was entitled to be indemnified out of the trust property for monies expended on improvements to that property. She thereby counterclaimed in an amount of $530,638.93 in respect of these improvements.
8 The issues were therefore, firstly, to determine the nature of the plaintiff’s claim. Secondly, whether any defences were sustained. Finally, if some trust over Willowmavin was established, whether the defendant’s Counterclaim was sustained.
9 In order to consider these issues a detailed chronology is necessary. Some observations about witnesses are also appropriate.
Witnesses
10 The plaintiff gave evidence, as did his solicitor, Mr Thomas Egan.
11 The defendant was also called.
12 The defendant was critical of the plaintiff as a witness. He certainly presented as somewhat unsophisticated, with poor memory and in poor health. He was also somewhat dogged and retained ongoing anger at his removal from his home (still carrying in his pocket the newspaper report of the Suncorp sale which he produced in the witness box in court).
13 However, although there were certainly unsatisfactory aspects of his evidence (for example, saying he had no other creditors when he went bankrupt), I was not satisfied that he was dishonest. His memory was however poor at times. Although this might be explained by his health (he said he had suffered three heart attacks and had been hit in the head 26 times in 2003), his evidence was not always reliable.
14 Mr Egan’s testimony was also affected by the passage of time and he gave little evidence of significance.
15 This left the defendant who was a highly emotional witness. She seemed unable to distance herself from her traumatic relationship with her former spouse. This was highlighted by the fact that at various times she gave long emotional and unresponsive evidence. She also suffered from significant memory problems such that I am generally unable to rely on her evidence.
16 Overall, then, all witnesses in this sad case were affected by significant memory issues such that I am reluctant to accept the testimony of a witness on any significant matter without some objective confirmation. My findings, below, have therefore generally been made on the basis of the objective contemporaneous documentation.
Background/Findings
Parties
17 Mr Jacks is on a disabled support pension and living in a room in Frankston South. He left school at 14 years of age and engaged in unskilled work prior to finishing work after the industrial accident, referred to below.
18 The defendant was the former spouse of Victor Jakimowicz from about 1970 until 2004 and lives at Willowmavin. She works at an aged care facility as a PCA.
19 Victor Jakimowicz was not called as a witness in the proceeding. On the evidence of both parties, he had engaged in various projects including a pipelining business known as ExAC Trac. He also had a gambling issue.
Initial arrangement re Preston
20 On 12 August 1985 the defendant and Victor Jakimowicz were registered as joint proprietors of Preston. The evidence of the defendant was that they purchased the property for $57,000 and borrowed some $50,000 from the NAB to complete the purchase which was later refinanced. In fact, the title shows a mortgage registered to Hotham Building Society on 12 August 1985, later discharged on 20 August 1993 at which time a mortgage to the NAB was registered. However, by 1995 the defendant believed that, given they had kept up mortgage repayments, the mortgage was “pretty small”.
21 In about 1991 the plaintiff injured his back lifting at work. He subsequently had 5 back operations including a fusion operation.
22 The plaintiff adduced a payee advice in his favour from Maurice Blackburn dated 20 December 1995 for an amount of $358,605.80. The defendant in oral evidence accepted that the plaintiff received a payout for a back injury which was a workers compensation payout.
23 There was some cross examination of the plaintiff as to the components of the claim though the plaintiff consistently stated that he was paid the amount as “pain and suffering”. In any event, the mere fact that torts involving wrongs to the person also give rise to economic loss does not detract from their proper characterisation as wrongs to the person.[5]
[5] Sands v State of South Australia [2015] SASFC 36.
24 The evidence of the plaintiff was also that, at about this time, he owned no properties or assets (he was living with his mother) and that his only income was social security.
25 I therefore accept that the amount of $358,605.80 constituted damages or compensation for personal injury done to the plaintiff. This is also consistent with the admission contained in recital B of the Declaration of Trust executed by the defendant on 29 August 2002.
26 There was some divergence between the accounts of how the parties came to agree that the plaintiff would purchase the Preston property. However, the material aspects are not in dispute.
27 Thus, Mr Jacks claims that at some stage prior to receiving his payout, he went to the defendant and Victor Jakimowicz’s place at 18 Hawker Avenue Preston and they asked him if he would like to buy the Preston property for $170,000 (and a car as well).
28 The defendant’s evidence was initially confused and vague consistent with her difficulties overall with giving testimony. However, she ultimately accepted that there was an agreement that she and Victor Jakimowicz would sell the Preston property to the plaintiff for $170,000 which money would come out of his workers’ compensation payout (given he had no other source of income).
29 I therefore accept that the parties agreed that Mr Jacks would purchase the Preston property for $170,000 which agreement was generally reflected in the objective evidence including the Declaration of Trust.[6]
[6] See also, Exhibit A, pages 165 and 173.
30 The oral evidence was unclear as to whether any agreement was reached about the pre-existing mortgage. However, the declaration of 2002 recites that the trustees agreed to discharge the mortgage. I accept this position which reflected an intention that the plaintiff obtain the full title, unencumbered.
31 There was some divergence in the evidence as to how the payout (received in December) was paid over to the defendant and Victor Jakimowicz and who put “pressure” on whom.
32 In the result these divergences were immaterial.
33 Thus both accepted that Mr Jacks advanced a total of $200,000 consisting of $170,000 for the purchase of Preston, $20,000 for the purchase of Victor Jakimowicz’s car, and $10,000 extra for some renovations (which amount was paid back in dribs and drabs).
34 Mr Jacks also claimed that he lent a further $50,000 to the defendant about 4 months later which was never repaid. This was denied by the defendant who said she repaid this amount, but nothing turns on this issue.
35 In the result, Victor Jakimowicz and the defendant moved out of Preston and Mr Jacks (and his mother) then moved in by Christmas Day 1995.
Purchase and sale of Whittlesea
36 In the meantime, the evidence of the defendant was that the couple had decided to try to remove Victor Jakimowicz from bad influences in an endeavour to stop his gambling by moving to Whittlesea.
37 She and Victor Jakimowicz had entered into a contract to purchase a property at Whittlesea in about September 1995 for $270,000.
38 On 19 January 1996, they were registered as joint proprietors of Whittlesea. A mortgage to the NAB was registered at the same time in respect of a facility of some $100,000.
39 Consistent with these transactions , they utilised the plaintiff’s $170,000 to purchase the Whittlesea property.[7]
[7] Exhibit A, page 165.
40 However, it appeared that the move to Whittlesea did not improve things for the couple. In the result, they sold the property for $385,000 which was transferred on 14 December 2000.
41 There was some dispute raised as to whether there were any proceeds remaining from this sale.
42 The oral evidence of the defendant was unsatisfactory on this point. Thus, although she said that the property was sold to pay debts, she also suggested that there was “some money” left over (without identifying with any precision what it was).
43 However, in her earlier affidavit evidence, she stated that they found themselves “with nothing” after selling Whittlesea.[8]
[8] Exhibit A, page 174.
44 Overall, I accept her earlier sworn evidence that there was effectively nothing left after the sale of Whittlesea.
County Court Action by plaintiff in 2000 and the 2000 Terms
45 Meanwhile the plaintiff claims that he was making continual requests for the title of the property to be given to him (which did not occur). The defendant ultimately agreed that this was the case.
46 This also appeared to be consistent with the objective evidence which suggests that the plaintiff saw a solicitor at some time in about 1999.
47 Thus it appears that a Contract for the Sale of Land was prepared by Mr Egan between the plaintiff and the defendant and Victor Jakimowicz (dated 1999) and signed by the parties in counterpart recording a purchase price of $170,000 and stating that the vendor “acknowledges that the full purchase price has already been paid.”
48 No witness was able to offer much explanation as to the circumstances in which these documents were prepared. In any event, no transfer was prepared or lodged.
49 Instead, on 30 August 2000 the plaintiff lodged a caveat against the Preston property in dealing X010921V claiming an interest “as purchaser pursuant to an agreement made on or about 12th December, 1995” between the three.
50 On 22 September 2000 the plaintiff then commenced County Court of Victoria proceeding 6077 of 2000 against the defendant and Victor Jakimowicz seeking a declaration that the Preston property was held on trust for him and orders that the defendant and Victor Jakimowicz do all things necessary to transfer the legal estate and title of the Preston property absolutely to him and to discharge the NAB mortgage.
51 The plaintiff and Victor Jakimowicz then entered into Terms of Settlement dated 7 December 2000.
52 The defendant was not a party to these terms, and appears not to have been served with the proceeding at this time. Her evidence was that her relationship with Victor Jakimowicz was in serious trouble by this stage given, inter alia, his gambling issues.
53 The full effect of these terms will be examined below. However, they included provision for the plaintiff to withdraw his caveat so as to enable Victor Jakimowicz and the defendant to deal with the Preston property free from any encumbrance by the plaintiff.
54 In the result, as will be seen below, the defendant and Victor Jakimowicz thereafter used the title to obtain funds from Suncorp to purchase the Willowmavin property.
Purchase of Willowmavin and Suncorp mortgage
55 On 12 February 2001 the plaintiff withdrew his caveat against the Preston property.
56 Also on 12 February 2001 the NAB mortgage was then discharged and, instead, a mortgage to Suncorp was registered over Preston for an advance of $200,000.
57 The plaintiff in evidence claimed to have no knowledge of the Suncorp mortgage prior to receipt of demand letters. In fact his evidence as to why he signed the 2000 Terms, withdrew his caveat, and thereby allowed the mortgage to Suncorp to be registered was quite confused. However, his actions appear to have been induced by statements made by his brother to the effect that he was going to receive the title.
58 In any event, the objective evidence as to the timing of the withdrawal of caveat and registration of the Suncorp mortgage suggests at least some acquiescence on the part of the plaintiff. This was also generally accepted by Counsel for the plaintiff.[9]
[9] Statement of Claim dated 31 March 2011 paragraph 14, Transcript 21 July 2015, page 442.
59 On 22 May 2001 the defendant and Victor Jakimowicz were then registered as joint proprietors of the property at 275 Tantaraboo Road, Willowmavin which had been purchased for $136,000.
60 I accept, consistent with the earlier sworn evidence of the defendant, that the property was purchased using the Suncorp funds,[10] particularly given nothing was left over from Whittlesea.
[10] Exhibit A, page 165.
61 In fact, no other mortgage was registered over Willowmavin until later in September 2001 to the NAB for an advance of $120,000. However, the defendant said she didn’t “even know” where these funds went.
August 2002 Terms
62 In the meantime, the County Court proceeding remained on foot.
63 However, on 29 August 2002 the plaintiff, defendant and Victor Jakimowicz entered into the Terms of Settlement (“the 2002 Terms”) and Declaration of Trust the subject of this proceeding.
64 Neither the plaintiff nor the defendant were able to provide much context to these terms. However, it appears that they were executed after a mediation took place at Mr Egan’s business premises.
Terms of settlement
65 The terms of settlement stated that the plaintiff had sued the defendants in the County Court proceedings and had agreed to resolve their differences on the following terms.
66 Clauses 3-7 then read as follows:
3. The Defendants represent and warrant that the registered mortgage over the property at 18 Hawker Avenue Preston in the State if [sic] Victoria, more particularly described in Certificate of Title Volume 4939 Folio 745 is for a sum no greater than $200,000.00 and the Defendants undertake not to increase the amount outstanding under that mortgage.
4. The Defendants will pay the Plaintiff’s costs of and incidental to the proceeding on a party/party basis as agreed, and in default of agreement, as taxed.
5. In accordance with the Deed of Trust referred to in paragraph 7 (this was handwritten) the Defendants agree to pay to the Plaintiff the sum of $200,000.00 within 12 months of the date hereof, and the Plaintiff agrees to accept that sum in full settlement of his claim.
6. In order to secure the sum referred to in paragraph 5, the Defendants will do all things necessary and execute all documents to grant and execute a second mortgage in the sum of $200,000.00 for a period of twelve months from the date hereof over their property at 275 Tantaraboo Road, Kilmore in the State of Victoria, more particularly described in Certificate of Title Volume 10573 Folio 564 to the Plaintiff. The Defendants will pay the Plaintiff’s costs of and incidental to the preparation and registration of that mortgage.
7. The Defendants hereby acknowledge that they hold the property at 18 Hawker Avenue, Preston on trust for the Plaintiff and in that regard the parties have this day executed the Deed of Trust annexed hereto and marked “A”.
67 Pursuant to clause 8, the plaintiff was then obliged to file a Notice of Discontinuance upon receipt of the executed mortgage referred to in paragraph 6 and the costs referred to in paragraphs 4 and 6.
Declaration of Trust
68 There is an accompanying “Declaration of Trust” marked “A” executed by the plaintiff as “the Beneficiary” and by the defendant and Victor Jakimowicz as “the Trustees.”
69 This recites, inter alia:
· that the plaintiff as “Beneficiary” received the sum of $358,605.80 “being proceeds of settlement of a common law/workers compensation award” (recital B);
· that at all relevant times the Trustees had been registered joint proprietors of the land at Preston, defined as the “trust property.” (recital C);
· that the trust property had been subject to a registered mortgage to the NAB and was currently subject to a registered mortgage to Suncorp for $200,000 (recital D).
70 Recital E then recites the relevant agreement in 1995 as follows:
E. In or about 1995 it was agreed between the Beneficiary and the Trustees as follows:
a)that the Beneficiary would purchase the trust property from the Trustees, unencumbered;
b)that the Beneficiary would pay the Trustees the sum of $170,000.00 in full and final payment in respect of the said purchase;
c)that the Trustees would effect certain improvements to the house at their own expense;
d)that the Trustees would sign all documents and do all things necessary at their own expense to enable the Beneficiary to become the registered proprietor of the trust property;
e)that the Trustees would forthwith, alternatively within a reasonable time, discharge the mortgage.
71 Recital F records the actions done pursuant to the terms of the agreement (including the payment of the sum of $170,000). Recital G then records that the Trustees “have at all relevant times agreed to act as Trustees of this trust on the terms of this deed” (recital G).
72 The Declaration of Trust then follows which includes the following clauses:
1. The Trustees declare that the trust property is held by the Trustees upon trust for the Beneficiary to the extent of their net equity in the trust property after allowing for the mortgage.
2. The Trustees are personally obliged out of funds provided by the Trustees to perform and comply with the terms of the mortgage as and when such monies are due to be paid and to ultimately discharge the mortgage.”(emphasis added)
73 These documents are not completely satisfactory.
74 The plaintiff suggested that the appropriate analysis was that the Preston property was held on resulting trust immediately prior to the signing of these documents which morphed into specific rights under the terms of settlement and under the express Declaration of Trust in 2002.[11]
[11] Plaintiff’s Closing Submissions dated 20 July 2015, paragraphs 15, 18 and 49.
75 Such analysis was not challenged and the defendant accepted in closing that the plaintiff’s rights had been as an equitable fee simple owner.[12]
[12] Transcript 21 July 2015, page 493.
76 Consistent with the approach of both parties I therefore accept that, immediately prior to 2002, the plaintiff had an equitable interest in Preston purchased with his compensation monies either as a purchaser under a contract[13], or under a resulting trust.[14]
[13] Evidenced in writing in 1999 or under the doctrine of part performance in taking possession and paying the monies; see Regent v Millett (1976) 133 CLR 679.
[14] Calverley v Green (1984) 155 CLR 242 at page 246 (Gibbs CJ) and pages 266-267 (Deane J).
77 Any such equitable interest, however, was substituted for the plaintiff’s interest under the Declaration of Trust and the terms in 2002.
78 As highlighted already, the declaration of trust provides for an independent obligation on the Trustees to (jointly and severally) “comply with” the mortgage and to “ultimately discharge” the mortgage (clause 2 of the trust).
79 Although it is not completely clear (given the money is to be paid to the plaintiff) both Counsel also appeared to accept that the contractual obligation to pay the sum of $200,000 in clause 5 of the Terms also constituted a separate contractual obligation to pay out the mortgage (then valued at $200,000). This is consistent with the handwritten notation which suggests that the money is to be paid “in accordance with the Deed of Trust”. It is also consistent with clause 3 of the Terms which contains a separate warranty that the mortgage is for a sum no greater than $200,000.
80 By order of 14 March 2003 the County Court proceeding was struck out with a right of reinstatement.
Action by Suncorp and dispossession of the plaintiff
81 It was not challenged that the defendant and Victor Jakimowicz failed to comply with their obligations under the 2002 Terms or Declaration of Trust. In particular, the defendant and Victor Jakimowicz failed to pay the sum of $200,000 within 12 months or at all.
82 There were various efforts made by Mr Egan to enforce the terms[15] though none was effective.
[15] For example, Exhibit 1 (359) and Exhibit E (342, 346, 355 – 358, 360, 363, 388 and 409).
83 On 29 March 2004 the plaintiff lodged a caveat over Preston citing the “declaration of trust entered into with Victor Jakimowicz and Patricia Jakimowicz on the 7th December 2000.”
84 On 11 November 2005 he also lodged a caveat against Willowmavin (later removed in 2008) as “equitable mortgagee” pursuant to the 2002 Terms / Declaration of Trust.
85 On Easter Sunday 2004 the defendant separated from Victor Jakimowicz and thereafter went to live with her mother until she died in 2009.
86 Meanwhile it appeared that there were a number of defaults in relation to Suncorp. Thus, there is a notice to quit (which the plaintiff saw) dated 3 October 2002. Mr Jacks also said that other letters were sent by Suncorp, although these were not adduced in evidence.
87 Mr Jacks claimed that he asked for the defendant to “fix things up” but received no satisfaction, though he claims that his brother (and also the defendant) told him that things would be “fixed up”. However the defendant denied saying that she said everything would be “fixed up”.
88 In the result, Suncorp did not commence proceedings for possession until 22 March 2007. In that proceeding Suncorp relied upon the failure of the defendant and Victor Jakimowicz to comply with a notice of default dated 20 July 2006 within 30 days.
89 The defendant claimed that she became aware of Suncorp’s actions in about May 2007 (when she was served). She said she “felt sick” and knew that if the Suncorp mortgage was not repaid the plaintiff would lose the Preston property. However, she maintained that she could not do anything to stop it notwithstanding that she also acknowledged that she had an obligation to pay the mortgage under the declaration of trust.
90 Suncorp thereafter obtained a default judgment on 28 May 2007 for possession and the outstanding loan monies in default of appearance against Victor Jakimowicz, and on 29 June against the defendant in default of defence.
91 Then on 31 October 2007 Suncorp executed a warrant of possession and the plaintiff was evicted from the Preston property (his mother had passed away by this time).
92 The plaintiff gave emotional evidence about the impact of this eviction which was attended by 7 police and one sheriff, and which was clearly a traumatising event.
93 According to his evidence, he was taken to the police station and subsequently taken back to retrieve some shirts and his dog. He thereafter was taken to a rooming house and has lived in similar type accommodation ever since. He also never saw his possessions again which “disappeared.”
94 On 20 December 2008 Suncorp entered into a contract to sell the Preston property at auction for $495,000.
95 Pursuant to an order of Justice Forrest, the plaintiff’s caveat over Preston was thereafter removed on 2 February 2009.
96 On 11 February 2009 two new incoming purchasers were registered as proprietors of Preston and there is a “removal” of the Suncorp mortgage.
97 On 16 February 2009, Suncorp paid $224,228.58 into Court (pursuant to the orders of Justice Forrest) being the surplus monies from its mortgagee sale of Preston.
Willowmavin
98 In the meantime the defendant had brought her own proceeding against Victor Jakimowicz by writ filed 23 May 2007 for an adjustment of interests under s 285 of the Property Law Act 1958 which centred on her interests in Willowmavin.
99 On 2 May 2008 the plaintiff registered a withdrawal of caveat over Willowmavin. His explanation was that this was done at Victor Jakimowicz’s request who bought him some stubbies at the pub and said “everything’s going to be fixed up”. He also claimed that this was the last time he saw his brother.
100 The NAB mortgage was also discharged on 24 June 2008.
101 On 18 December 2008 the defendant was then registered as the sole proprietor of the Willowmavin property.
102 The transfer says for “natural love and affection.” However, the defendant claims that she made various payments to, or on behalf of, Victor Jakimowicz at around this time to obtain Victor Jakimowicz’s “departure” (2008-2009). Thus she says she paid out a loan to Car and Home Finance Pty Ltd (CHF) secured on Willowmavin by taking out a separate loan to the ANZ ($67,666). She also paid out a friend, Shane Gardner ($20,000) and her daughter ($15,000) as well as paying $50,000 directly to Victor Jakimowicz.
103 She claimed that Victor Jakimowicz had asked her to execute the CHF loan (of May 2008) on the basis that it would be used to pay out Suncorp and get the plaintiff back in the house. Given this did not appear to be how the proceeds were used, she did not know what became of the CHF monies.
104 Despite these payments, she said that she still had to take proceedings to get Victor Jakimowicz out of the property which occurred some 6 months later. She then gave him further amounts of money to get him out and had to expend further money to fix the property which was a “pigsty”.
105 She further claimed that she expended other amounts on improvements although her evidence in this respect was highly generalised and unsupported by objective evidence.[16]
Bankruptcy of plaintiff and payment out
[16] Thus, though some dockets were adduced they only came to a total of some $1270.10 see Exhibit 5.
106 Meanwhile, on 14 April 2009 a sequestration order was made against the plaintiff’s bankrupt estate and Robyn Lee Erskine appointed as trustee.
107 On 17 April 2009 Ms Erskine commenced Supreme Court of Victoria proceeding 6049 of 2009 against the defendant, Victor Jakimowicz and another caveator seeking an order for the payment of the $224,228.58 monies out of Court relying on the bankrupt’s interest in the property.
108 On 1 June 2009 the plaintiff was joined to the Erskine proceeding as the fourth defendant.
109 Negotiations thereafter ensued which the defendant claims resulted in a release which allegation will be examined further below.
110 In any event, by orders made on 6 July 2009 the amount of $170,000 was paid to the plaintiff and the balance to Ms Erskine. These orders were made with the consent of Mr Jacks (who was represented) and the defendant (who was also represented).
111 On 5 February 2010 the plaintiff again lodged a caveat against the Willowmavin property in dealing AH019774C claiming an interest pursuant to the 29 August 2002 terms of settlement.
112 On 1 March 2011 the defendant applied under s 89A of the Transfer of Land Act 1958 for service of a notice under s 89A(3) on the plaintiff.
113 On 31 March 2011 the plaintiff then commenced this proceeding.
114 On 15 August 2011 on the defendant’s application, Judge Lacava stayed this proceeding accepting the defendant’s submission that it was not competent for the plaintiff to pursue his claims in this proceeding by reason of the sequestration order.
115 On 13 October 2011 the Court of Appeal granted leave to appeal against the orders of Judge Lacava.
116 On 7 March 2012 the plaintiff and defendant enter into terms of settlement at a judicial mediation conducted in the Court of Appeal proceeding, by which they agreed that the Willowmavin property be offered for sale with a reserve price of $720,000. No agreement was entered into regarding the distribution of the net proceeds of sale.
117 On 19 October 2013 the Willowmavin property was then offered for sale at auction and passed in on a bid of $455,000.
118 Since that sale, on 21 October 2013 Victor Jakimowicz lodged a caveat by reason of “direct and indirect financial contribution”.
119 On 17 June 2014 the Court of Appeal allowed the plaintiff’s appeal and the orders of Judge Lacava made on 15 August 2011 were set aside. In so finding the Court observed that there is nothing in the Act that prevents an undischarged bankrupt from bringing proceedings in his own name though he may lack standing to bring a particular proceeding to the extent the cause of action had vested in the trustee. Ultimately, the facts needed to be fully investigated and could not be determined on a summary application.[17]
[17] Jacks v Jakimowicz [2014] VSCA 120 at paragraphs 22 and 32.
Nature of Plaintiff’s Claims
120 In closing submissions, Counsel for the plaintiff clarified that he made claims in respect of two separate breaches of the 2002 Terms of Settlement and Declaration of Trust.
121 The primary breach relied upon was the breach by the defendant of the obligation contained in clause 2 of the Declaration of Trust to comply with the terms of the Suncorp mortgage and ultimately to have it discharged. The plaintiff further highlighted that the defendant knew that if the Suncorp mortgage was not repaid then the plaintiff would lose the property. The plaintiff sought damages of $325,000 in respect of this breach. He also sought a proprietary remedy.
122 Additionally, the plaintiff asserted that Willowmavin was held on resulting trust by the defendant for the plaintiff.
123 The second breach relied upon was the breach by the defendant of the obligation to pay the $200,000 (representing the amount of the Suncorp mortgage at the time) and to grant to the plaintiff a mortgage over Willowmavin to secure payment of the $200,000.00 under clauses 5 and 6 of the Terms.
124 It is necessary to consider whether these claims are established and, if yes, the appropriate relief to be granted.
Failure to pay/discharge mortgage and quantum of loss
125 The actions of Suncorp recited above establish that the Trustees did not comply with the terms of the mortgage, and the defendant did not suggest otherwise.
126 However, the defendant claimed that, because the Trustees only held the “net equity” on trust (excluding the mortgage) that the failure to pay the mortgage constituted a breach of the terms of settlement and not a breach of trust.[18]
[18] Defendant’s Outline of Argument dated 20 July 2015, paragraph 30.
127 I do not accept this characterisation.
128 Firstly, the reference to “net equity” in clause 1 is inelegant and unhelpful. Although it might reflect the understanding of a layman that a mortgagor must take a property subject to a mortgage, the actual position at law is that under the Torrens system, the mortgagor remains the proprietor of the fee simple in the land both at law and in equity, with the mortgage operating only as a statutory charge over the land.[19] In the present circumstances, the trustees therefore held the entire property on trust for the plaintiff, although that property (both at law and equity) was subject to the mortgage.
[19] Transfer of Land Act 1958, s 74(2); Tyler, Young and Croft, Fisher & Lightwood’s Law of Mortgage, (2nd ed, 2005), paragraphs 4.1 and 4.7.
129 Secondly, clause 1 must be read together with clause 2 which imposes an obligation on the trustees to ensure that the mortgage is complied with and ultimately discharged. This is clearly intended to be imposed on the Trustees, to ensure that the trust property is preserved since any breach of the mortgage would place the trust property at risk (as occurred here). Moreover, the obligation to “ultimately discharge” contemplates that the trust property would ultimately be unencumbered.
130 I am therefore satisfied that there was a breach of the trust deed by the defendant. The non-compliance with the mortgage was further a “neglect or default” on the part of the defendant for which she is to be answerable without the need for any wilful default. [20] In any event, her own evidence established that she was conscious that she was obliged to pay the mortgage to Suncorp and, further, was aware that this obligation was in default at a critical time from May 2007.[21]
[20] S36 Trustee Act 1958
[21] This would appear to constitute a “wilful default” pursuant to the test in Re Vickery [1931] 1 Ch 572 at 583
131 The issue then becomes what remedy should be granted and how to measure the loss.
132 The relevant principle is that a defaulting trustee is to “make good” to the trust estate the loss that has been caused by her wrongful act.[22]
[22] J D Heydon and M J Leeming, Jacob’s Law of Trusts in Australia, (2007 7th ed), page 597.
133 If the mortgage had been complied with the plaintiff would be restored to his home which would not have been sold. The defendant then says that this would still be subject to the mortgage. However, the trustees were also obliged to “ultimately” discharge the mortgage. By reason of their non-compliance with the mortgage Suncorp took possession, realised the proceeds to satisfy its debt, and thereby removed its mortgage. In so doing the Trustees were effectively disabled from “discharging” the mortgage to ensure that the plaintiff was “ultimately” entitled to the full beneficial ownership.
134 Accordingly, the defendant’s failure to comply with, and ultimately discharge, the mortgage, has meant that the plaintiff has been deprived of the full benefit of the trust property (absent the mortgage).
135 Given it is impossible to restore the physical property to the plaintiff, the court must do its best to assess an appropriate monetary amount. Counsel for the plaintiff submitted that the appropriate money order to be made in the proceeding is that the defendant pay the plaintiff $325,000.00.[23] This is the difference between the sale price of $495,000.00 and the $170,000.00 paid to the plaintiff out of the funds in court.
[23] Plaintiff’s Closing Submissions dated 20 July 2015, paragraph 112(a).
136 There are some difficulties in the approach taken by the plaintiff in arriving at the sum of $325,000.00.
137 Firstly, the court was not provided with any evidence of the actual market value of the Preston property (at any time). Rather, the amount sought to be substituted for that value, $495,000.00, was the price obtained on a sale. Nonetheless, given it was appropriate to assess as at today’s date[24] the value of $495,000 would appear to be favourable to the defendant. Doing the best that can be done, the figure therefore appears to be an appropriate starting point – and the defendant did not suggest otherwise.
[24] Dawson (dec’d) [1966] 2 NSWR 211 at page 216.
138 More significantly however, it does not appear to be appropriate for the plaintiff to obtain the entire difference sought. This is because the money paid to the trustee in bankruptcy was also used for the benefit of the plaintiff in the payment of his creditors. Moreover, the application of the monies held in court was the subject of agreement between the plaintiff and his trustee at a time when the plaintiff was represented.
139 The plaintiff’s loss should therefore be the difference between the value of the Preston property of $495,000 and $224,228.58 (being the funds received by the plaintiff and/or his trustee). This is a value of $270,771.42.
140 Accordingly, subject to the defences below, the plaintiff is entitled to damages for breach of trust measured at $270,771.42.
Proprietary remedy
141 The plaintiff sought an order or declaration that Willowmavin is held on trust for the plaintiff. Alternatively, an order for payment of money secured by a charge over the defendant’s interest in Willowmavin.
142 The basis for the trust was set out in paragraph 47 of the Statement of Claim as follows:
By reason of:
(a) the purchase of the Willowmavin property by the defendant and Victor being effected using funds borrowed exclusively from Suncorp;
(b) the repayment of those moneys was secured by the grant of a mortgage over the Preston property;
(c) the defendant’s failure to ensure that she and Victor complied with their obligations owed to Suncorp under the loan agreement and the Suncorp mortgage;
(d) as a result, the plaintiff lost possession of the Preston property; and/ or
(e) the defendant’s breach of trust in relation to the Preston property,
the defendant holds the Willowmavin property on trust for the plaintiff.
143 However, I am not prepared to grant a proprietary remedy as a matter of discretion in the circumstances of this case.
144 First, the usual basis for claims of this nature rests on principles of equitable tracing. Thus in the case of Robins v Incentive Dynamics Pty Ltd[25] cited by the plaintiff, Mason P states that a remedial constructive trust will generally be appropriate where profit “can be traced into identifiable property in the hands of the defaulting beneficiary…”. This is not applicable in the present case where the plaintiff accepts that the proceeds of the $170,000 have been effectively dissipated. Instead the source of the funds to purchase Willowmavin have been sourced from Suncorp and not from the plaintiff.
[25] (2003) 45 ACSR 244 at paragraph 75.
145 Secondly, although the plaintiff’s beneficial interest in Preston was effectively diminished by the actions of the defendant and her co-trustee in creating the mortgage, this appears to have been done with the acquiescence of the plaintiff beneficiary. The deed of trust also makes clear that the funds to pay the mortgage are to be sourced from “personal” funds, rather than from any other property.
146 Indeed, the 2002 Terms demonstrate that the parties turned their minds to the circumstances in which a proprietary interest in Willowmavin was to be granted pursuant to clause 6 of the Terms. There is no justification to impose some other means now to settle the dispute.[26]
[26] Bathurst CC v PWC Properties (1998) 195 CLR 566 at page 585.
147 Finally, the plaintiff has done little generally to convince the Court to grant the imposition of a proprietary remedy in its discretion. The primary factor the plaintiff points to in support of the remedy is the “insolvency” of the defendant.[27] However, there was no evidence that the defendant was insolvent. Counsel for the plaintiff referred to a concession made by the defendant in cross-examination that the “only real asset she has is the Willowmavin property” in support of this submission. This is insufficient to show that the defendant is insolvent.
[27] Plaintiff’s Closing Submissions dated 20 July 2015, paragraph 29.
148 Accordingly I am not satisfied as a matter of discretion that the imposition of a remedial constructive trust is appropriate, nor that it is appropriate to impose a charge.
Resulting Trust
149 Counsel for the plaintiff asserted that because the entire amount of the monies used to purchase Willowmavin came from Suncorp that the plaintiff had effectively contributed the entirety of the purchase price of Willowmavin. This was because, following the sale of Preston and repayment of Suncorp, he effectively provided the entire purchase price. As such, Willowmavin was held by the defendant on resulting trust for the plaintiff.
150 The provision of security to obtain an advance of funds (by a third party, Suncorp) does not constitute a contribution to the purchase price by the plaintiff. Indeed, there is authority to the effect that payment of mortgage instalments does not give rise to a resulting trust given this is regarded as a payment towards securing the release of the charge created rather than payment of the purchase price.[28]
[28] Calverley v Green (1984) 155 CLR 242 at page 257 (Mason and Brennan JJ).
151 In any event, no authority was cited which suggests that the use of an asset as security for a loan used to purchase property constituted a contribution to the purchase price sufficient to give rise to a resulting trust.
152 A resulting trust is not established.
Breach of the obligation to pay $200,000 and grant a mortgage over Willowmavin to secure payment
153 As indicated already, clause 5 of the 2002 Terms appears to impose a separate contractual obligation to discharge the Suncorp mortgage.
154 Given this construction, the obligation is superfluous to the primary breach of trust claim already established (of higher value).
155 In any event, the granting of a mortgage under clause 6 would not be appropriate.
156 First, the grant of the mortgage is intended to secure an obligation by the defendant to discharge the Suncorp mortgage. Given the Suncorp mortgage no longer exists this would be futile.
157 Second, it is conceded by the plaintiff that specific performance of the agreement to grant the mortgage over Willowmavin is not possible.[29] That mortgage was to be granted by both the defendant and Victor Jakimowicz. As the defendant is now the sole registered proprietor, any mortgage can only be granted by her.
[29] Transcript 21 July 2015, page 476.
158 Finally, the mortgage was only intended to operate “for a period of twelve months from the date hereof” (the date of the terms) which time period has well and truly expired.
159 Overall, then, and in the light of the remedy already established, it is not appropriate to order payment of the $200,000 and the execution of the second mortgage.
160 There was also no other basis suggested for the grant of a mortgage in a different amount (as appears to be sought in paragraph 34(c) of the plaintiff’s submissions).
Conclusion
161 The plaintiff is entitled to relief in the amount of $270,771.42 for breach of the obligations of the defendant as a co-trustee under the declaration of trust to comply with the terms of the mortgage and to ultimately discharge it.
162 The plaintiff is not entitled to any other proprietary remedy.
163 It therefore remains to consider the defences advanced.
Defences
Bankruptcy Act
164 The defendant alleged that the present claim based on the 2002 Terms and Declaration of Trust vested in the trustee in bankruptcy under s 58 of the Bankrutpcy Act.
165 Further, that if (which was denied) the funds that were originally used to purchase Preston were exempted or protected under s 116 that the subsequent use of those funds meant they had lost their characteristic as compensation.[30]
[30] Further Amended Defence and Counterclaim dated 15 July 2015, paragraph 48.
166 The plaintiff submitted that the current claim, in truth, represents the damages or compensation originally received such that he had standing pursuant to s 116(2)(n) and (3) citing Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd & Ors.[31]
Relevant provisions
[31] (1989) 87 ALR 294.
167 Section 5(1) of the Act defines, unless the contrary intention appears, ‘property’ to mean ‘real or personal property of every description ... and includes any estate, interest or profit, whether present or future, vested or contingent …’ and ‘the property of the bankrupt’ to mean:
the property divisible among the bankrupt’s creditors; and
(ii) any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt.
168 Section 58(1)(a) of the Act, provides that where a debtor becomes a bankrupt:
the property of the bankrupt … vests forthwith in the Official Trustee or … the registered trustee.
169 Section 116 of the Act relevantly provides as follows:
Property divisible among creditors
Subject to this Act:
(a)all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy …; and
(b)the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge …
…
is property divisible amongst the creditors of the bankrupt.
Subsection (1) does not extend to the following property:
…
(g) any right of the bankrupt to recover damages or
compensation:
(i) for personal injury or wrong done to the bankrupt …
and any damages or compensation recovered by the bankrupt … in respect of such an injury or wrong …
…
(n)property to which, by virtue of subsection (3), this paragraph applies;
…
(2D) In subsections (3) and (4):
…
exempt money means money of any of the following kinds:
…
(b) damages or compensation of a kind referred to in paragraph (2)(g);
…
protected money … means:
(a) exempt money
(3)Where, at any time, the whole, or substantially the whole, of the money paid for the purchase, or used in the acquisition, of particular property is protected money, paragraph (2)(n) applies to the property (emphasis added).
Resolution
170 Both counsel accepted that, prima facie, the plaintiff’s claim under the 2002 Terms and/or the Declaration of Trust, was property which was divisible amongst the creditors of the bankrupt.
171 The sole issue was whether s 116(2) altered this position.
172 As indicated already, I accept that the $170,000 provided for the purchase of Preston was protected money by reason that it constituted damages or compensation for personal injury.
173 The real issue is whether it lost its character by reason of its “transformation” into the rights under the declaration of trust now sought to be enforced.
174 In considering this issue, the leading case is Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd & Ors.[32]
[32] (1989) 87 ALR 294.
175 In that case the bankrupt received a personal injury settlement and used those monies to purchase an initial property at Frenchs Forest (property A). However, he subsequently sold that property and purchased two further properties at Bonnells Bay with the proceeds (properties B and C).
176 The applicants submitted that, given it was the proceeds of property A which were used to purchase the subsequent interests, those interests were not property to which paragraph (n) of s 116(2) applies (pursuant to s116(3)). Thus, the proceeds of property A did not answer the description of damages or compensation recovered by the bankrupt in respect of personal injury so as to fall within paragraph (g).[33]
[33] Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd & Ors (1989) 87 ALR 294 at page 299.
177 This submission appears to have considerable force if the literal words of s 116(3) are applied. Thus, contrary to the literal words of s 116(3), the money paid for the purchase of properties B and C was not protected money (but was instead the proceeds of another property, A).
178 This submission, however, was rejected by the Federal court. Firstly, Neave J undertook a history of the legislature which indicated an intention to progressively limit, in the event of supervening bankruptcy, the property available for distribution amongst the bankrupt’s creditors. His Honour continued:
The matters to which reference has been made suggest that the provisions require the further attention of the Parliament.
I turn now to the particular issue which arises in the present case. The argument presented on behalf of the applicants requires the language of s 116(3) to be read as fastening upon, to the exclusion of all other considerations, the immediate source of the money used in the purchase or acquisition of the property in question. I am unable to accept that approach. Notwithstanding the difficulties to which the language of the provision gives rise, I am of opinion that s 116(2)(g) and (n) and s 116(3) sufficiently reflect a legislative intention that a bankrupt, notwithstanding his bankruptcy, is to continue to have the benefit not only of any damages or compensation of the kind referred to in s 116(2)(g) recovered by him, but also of any property which can, as at the time when he becomes a bankrupt, properly be described as representing such damages or compensation. Those provisions are, therefore, to be construed accordingly. In the light of that evident legislative intention, I can see no basis for concluding that the protection is to extend only to the damages or compensation and to property initially purchased or acquired with the money recovered by way of damages or compensation: see Leach v Official Assignee [1975] 1 NZLR 83 at 87–8. In my opinion, ss 116(3) requires that the totality of the circumstances be considered and the question asked whether the property, in truth, represents such damages or compensation. In the circumstances of a particular case, where properties have been bought and sold, it may well be difficult for a bankrupt to establish that property of which he is the beneficial owner as at the time when he becomes a bankrupt does, in truth, represent damages or compensation of the kind referred to in s 116(2)(g) which he recovered at some earlier time. That circumstance, however, provides no reason for reading the provisions in the limited way contended for by the applicants and as protecting only the money received by way of damages or compensation and the property first purchased therewith. The question is ultimately one of fact.[34]
[34] Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd & Ors (1989) 87 ALR 294 at pages 303-304 (Neave J).
179 This decision was followed in Re Manivilovski; ex parte Official Trustee in Bankruptcy[35] and the approach was further endorsed by the Full Federal Court in Turner v Official Trustee in Bankruptcy[36] where the Court stated:
The section requires, in the first instance, a consideration of the question whether the property is entirely accounted for by the application of protected moneys. If that is not the case, but nevertheless those moneys account for nearly all of what has been used in payment for or in the acquisition of the property, then this too will suffice to keep the property from being divided amongst creditors. … In our view, s 116(3) provides that a bankrupt may retain property than can be seen to represent the protected monies, subject to only a minor qualification of input from other sources (emphasis added).[37]
[35] (1993) 117 ALR 537.
[36] (1996) 71 FCR 418.
[37] Turner v Official Trustee in Bankruptcy (1996) 71 FCR 418 at page 422.
180 The crucial question therefore appears to be whether the property “in truth, represents such damages or compensation.”
181 The defendant submitted that it did not. In doing so she submitted that:
(a)the loan owed to Suncorp Metway represented a different sum to the $170,000 which always remained in the Preston property and constituted a commercial arrangement reached between 2 brothers for financial accommodation to be given to Victor Jakimowicz;[38]
(b) that a number of cases supported her case, particularly Foyster v Prentice.[39]
[38] Defendant’s Outline of Argument dated 20 July 2015, paragraph 40.
[39] [2008] FMCA 757.
182 As indicated already, by reason of the declaration of trust, the plaintiff’s rights in relation to the Preston property (obtained with his compensation payout) are replaced with the specific range of rights expressed therein. However, his workers compensation payout still represents the source of the funds used to acquire these rights. In other words, given he never had any other funds, I am satisfied that the monies used in the acquisition of the plaintiff’s rights under the declaration of trust was protected money for the purposes of ss 116(2)(n) and (3).
183 I also do not accept the defendant’s submission in closing that the concept of the “particular property” is confined to the property acquired with the worker’s compensation payout. This submission was rejected in Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd & Ors.[40] I can see no difference in principle between a situation where the subsequent property is real property as opposed to rights (as here) under a declaration of trust.
[40] (1989) 87 ALR 294.
184 In relation to the mortgage it is appropriate that a “substance” approach be taken, as endorsed in Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd & Ors.[41] Clause 2 effectively imposes an obligation on the defendant Trustees to “take care of” the mortgage and ensure it ultimately disappears. In this way, the evident intention of the declaration of trust is to ensure that, in substance, the plaintiff ultimately receives the full benefit of his equitable interest (represented by his compensation payout) unencumbered by the mortgage as he purchased it in the first place.
[41] (1989) 87 ALR 294.
185 In this way I consider that his rights to sue for non-compliance with clause 2 in truth represent his protected monies.
186 As indicated already the defendant cited a number of cases with particular reliance on Foyster v Prentice.[42]
[42] [2008] FMCA 757.
187 The decision of Foyster v Prentice[43] involved an acrimonious dispute between a trustee and a bankrupt wherein the bankrupt sought a range of relief. One of these related to reimbursement of monies allegedly received as damages for personal injury which had shortly prior to the bankruptcy been paid to the petitioning creditor (out of the bankrupt’s bank account) to avoid bankruptcy and then transferred to the trustee.
[43] [2008] FMCA 757.
188 Federal magistrate Wilson rejected the bankrupt’s claim on the basis that the amount paid did not in truth represent damages or compensation pursuant to the test in Iskenderian. Instead he characterised it as “an amalgam of funds used by the [bankrupt] as an attempt to purchase a compromise.”[44]
[44] Foyster v Prentice [2008] FMCA 757 at paragraph 73.
189 The case is therefore immediately distinguishable since the interest of the plaintiff prior to execution of the declaration was not an “amalgam of funds” but was represented, in truth, by one property (which in turn was wholly represented by his payout).
190 Further, although it might be said that the 2002 Terms and Declaration of Trust represent a compromise, the fact that the clause 2 obligations are imposed on the defendants as trustees is significant. As indicated already, this appears to take it outside the class of case where the plaintiff merely “purchases a compromise” and highlights that the defendants are intended to ensure that the plaintiff enjoy his full equitable interest (represented by his payout) unaffected by the encumbrance.
191 None of the other cases cited by the defendant are directly on point, nor do they assist the defendant.
192 The decision of Cummings v Claremont Petroleum NL & Anor[45] has no direct application to the present circumstances. In that case, the High Court was concerned with whether bankrupts had standing to institute an appeal, finding in the result that they did not.
[45] (1996) 185 CLR 124.
193 The decision of the Full Federal Court in Moss v Eagleston[46] is also concerned with very different facts, that is, whether a claim against a solicitor for failing to sue was in respect of a “personal injury or wrong” for the purposes of s 60(4).
[46] [2011] NSWCA 404.
194 However, in coming to the view that there was no reason in policy or in the language of the Act to treat an action for the loss of an action differently to an action, Allsop J (in the leading judgment) examines the history of both s 60(4) and the cognate provision, s 116(2)(g), and ultimately endorses a “substance” approach.
195 Thus, his Honour states that the distinction between person and property is a “substantive one.” Further, that the distinction was made by judges who declared it to be unjust and harsh that the estate of the bankrupt should be swelled by a wrong to the person.[47]
[47] Moss v Eaglestone [2011] NSWCA 404 at paragraph 64.
196 To this extent the decision generally supports again a liberal application.
197 Metsikas v Quirk[48] is also distinguishable, since it was concerned with whether a claim by a bankrupt in the nature of a tracing remedy as a consequence of being defrauded belonged to the trustee. In that case the bankrupt sought to argue (on a costs issue) that her claim was a claim for damages in respect of “wrong done to the bankrupt.” However this was rejected by Lockhart J who found that the claim was “one in respect of the plaintiff’s property: she was defrauded of money, and she sued to recover money. The claim has nothing to do with any personal injury or wrong and everything to do with a wrong to her property.”[49]
[48] [2010] NSWSC 756.
[49] Metsikas v Quirk [2010] NSWSC 756 at paragraph 11.
198 The case is therefore distinguishable and was not concerned with the issue here where there is clearly an initial receipt of damages for personal injury; the question being whether its character has been lost.
Summary
199 I am satisfied that the plaintiff’s rights under the declaration of trust, in truth, represents his compensation payout. It follows that the plaintiff’s breach of trust claim was not divisible amongst his creditors under s116(2)(n) and (3).
200 The defence based on the Bankruptcy Act is rejected.
2000 Release
201 This deed was entered into between the plaintiff and Victor Jakimowicz alone following issue of the first County Court proceeding but before the defendant was served.
202 The material clauses read as follows:
1. John shall within seven (7) days of this day cause his solicitors to deliver to Victor a Withdrawal of Caveat in registrable form and execute any other document or take any other step reasonably required within such period to allow Victor and Patricia to deal with the property free from any encumbrance by John.
…
3. Victor shall enter into and execute in his own capacity and procure from Patricia her execution of a Deed of Trust acknowledging the particulars set out in the Statement of Claim and further acknowledging that John is entitled to the relief sought therein including but not limited to a declaration that Victor and Patricia hold the property on trust for John.
……
5. Victor undertakes not to take or cause to be taken any proceeding curial or otherwise to have John evicted from the property and undertakes to give him quiet use, possession and occupation of the property. Victor further undertakes not to sell or otherwise deal with the property in a way that prejudices John’s occupancy of the property.
6. John and Victor in consideration of their complying with these Terms of Settlement forever release and discharge each other from all actions, claims, demands, suits and costs whatsoever and agree that these Terms of Settlement may be pleaded in bar to any further proceeding of whatsoever nature taken by either of them against the other.
….
8. The parties agree that upon execution of these Terms of Settlement the claim as against Victor shall be discontinued and that upon signing, sealing and delivery of the Deed of Trust the claim as against Patricia shall also be discontinued.
Defendant’s submissions
203 The defendant alleged that the entry into these terms of settlement by the plaintiff and Victor Jakimowicz had the effect that the plaintiff as creditor released and discharged Victor Jakimowicz from all claims, demands and suits whatsoever arising which included pursuant to the 2002 Terms and Declaration of Trust.[50]
[50] Further Amended Defence and Counterclaim dated 15 July 2015, paragraph 19E.
204 Next, insofar as the release in clause 6 is only operative “in consideration of their complying” with the terms, the defendant alleged that Victor Jakimowicz procured the relevant declaration of trust constituted by the 2002 Declaration of Trust in compliance with clause 3 and otherwise generally complied with the terms.
205 Further, that given Victor Jakimowicz was released, this had the effect that the defendant was also released given that the release of one of a number of co-debtors who are jointly or severally liable releases them all.[51]
Resolution
[51] Further Amended Defence and Counterclaim dated 15 July 2015, paragraph 19G; Defendant’s Outline of Argument dated 20 July 2015, paragraph 21.
206 Firstly, I do not consider that Victor Jakimowicz complied with the terms so as to take the benefit of the release in clause 6.
207 There is no evidence that the Deed of Trust of 2002 was “procured” pursuant to the 2000 Terms according to clause 3.
208 Instead, no reference was made at all to the 2000 terms in the 2002 Declaration of Trust. More significantly, no acknowledgement is made in the 2002 Declaration that the plaintiff is entitled to all “the relief sought” in the statement of claim (as required under clause 3) which included an injunction restraining the defendants from selling Whittlesea (paragraph 7). Nor could it so acknowledge given Whittlesea had already been transferred earlier in December 2000.
209 Victor Jakimowicz has also clearly not complied with his undertaking to give quiet use and possession of Preston under clause 5.
210 It follows that the release does not operate.
211 However, even if these hurdles were addressed, any “release” under clause 6 would not cover the mutual obligations undertaken under the 2002 arrangements. Thus, if (contrary to my primary finding) the 2002 Declaration of Trust was procured under the 2000 Deed, the obligations contained therein would have to be read together with the 2000 Deed. It would not be permissible to rely on the 2002 Deed (so as to obtain a release) and then ignore its provisions
212 Accordingly no defence is established on the basis of the 2000 Deed.
2009 Release
213 The defendant relies on the terms of correspondence of 10 June 2009 and 16 June 2009 as constituting a further agreement to release the defendant from this claim which correspondence was exchanged in the context of the proceeding brought by the trustee in bankruptcy for payment of the monies held in court.[52]
[52] Further Amended Defence and Counterclaim dated 15 July 2015, paragraphs 19B(b)(ii) and 19C.
214 In order to assess this defence it is necessary to set out the relevant correspondence.
215 On 17 April 2009 in her capacity as trustee in bankruptcy of the plaintiff’s estate Ms Erskine filed a Summons on Originating Motion in the Supreme Court. The defendants were Victor Jakimowicz, Patricia Jakimowicz and CHF. The Originating Motion sought the release of $224,228.58 held in court, being the proceeds of the sale of Preston.
216 On 27 April Frank Costanzo & Associates Lawyers (“Constanzo Lawyers”) appeared on behalf of the defendant.
217 On 5 May Constanzo Lawyers wrote to Ms Erskine’s solicitor, Mr Egan, stating that its client, the defendant (Ms Jakimowicz), would not make a claim to the monies held in court, and suggested that the release of the monies to Ms Erskine would amount to a full and final settlement of the action, and release the defendant from any other claims arising out of the plaintiff’s bankruptcy.
218 On 7 May Costanzo Lawyers notified Associate Justice Daly of the Supreme Court that the defendant would not be opposing the proceeding and furthermore consented to the release of the funds held in Court to Ms Erskine.
219 On 25 May on behalf of Ms Erskine, Mr Egan wrote to Constanzo Lawyers rejecting the defendant’s proposal that Ms Erskine release the defendant from any further claim.
220 On 27 May Costanzo responded to Mr Egan’s letter demanding that a caveat lodged over the Willowmavin property by Ms Erskine be removed. The letter also stated that unless Ms Erskine and the defendant could resolve all matters in dispute between them, the defendant would oppose the release of monies in court to the trustee.
221 On 1 June 2009 the plaintiff was joined as the Fourth Defendant by order of Associate Justice Evans.
222 By letter of 10 June 2009 Costanzo Lawyers wrote to John Pastro & Co (Mr Jacks’ then solicitors) making an offer that proposed the monies in court be paid out to Ms Erskine, who would use the money to pay the plaintiff’s creditors and the trustee’s fees and remit the balance to the plaintiff, and as a result the plaintiff and the defendant would release each other “in full of any further claims that they may have against each other.”
223 On the same day, Constanzo Lawyers sent the offer to Mr Egan, asking if Ms Erskine agreed to it.
224 On 16 June Pastro & Co informed Costanzo Lawyers by email as follows:
Raffaella: just confirming that our client John Jacks has verbally instructed us by phone today to accept the terms of your client’s offer of settlement (as outlined in your letter to us dated 10 June 2009).
We understand that you will now draft a document containing the terms of settlement and forward it to us as soon as possible, for execution by our client.
225 On 17 June, Constanzo Lawyers emailed through “draft Terms of Settlement” between the 3 parties (the trustee, the defendant and the plaintiff) to John Pastro. The email also asked John Pastro & Co to advise of any amendments, and asked that the Consent Orders be signed and returned, so Constanzo lawyers could send them to Mr Egan, so orders could be made on the papers.
226 On 18 June John Pastro & Co wrote to Costanzo Lawyers confirming they would send the Deed to the plaintiff that day for his execution, however that document was never signed by the plaintiff.
227 On 19 June Costanzo Lawyers wrote to Mr Egan referring to a telephone conversation of that date and noting that the trustee sought amendments to the Terms of Settlement and/or the Consent orders. The letter stated that the plaintiff had accepted the defendant’s offer, that they considered the matter resolved, and asked Ms Erskine to notify them of any amendments she had to the Deed by later that day.
228 On 3 July 2009 Mr Egan wrote to Costanzo Lawyers stating that they had been advised by the bankrupt’s solicitor that the bankrupt had declined to give a release in the terms sought and that it was now incumbent on her to establish a valid entitlement to the funds. It further stated that it was apparent that “your client cannot successfully maintain any claim to any part of the funds in court.”
229 Then on 6 July, the parties obtained Consent Orders which provided for the payment of $170,000 of the monies in court to the plaintiff, and the balance to Ms Erskine.
Defendant’s submissions
230 The defendant’s position is that the correspondence of 10 and 16 June amounts to a preliminary agreement, evincing an intention to be bound immediately, pursuant to the first category of Masters v Cameron.[53] Further that it is not necessary that the agreement be between all parties to the 2009 proceeding for the plaintiff and defendant to be bound.
[53] (1954) 91 CLR 353 at page 360.
Resolution
231 I consider that the offer contained in the 10 June 2009 letter proposed an arrangement between all 3 parties. In the absence of an agreement from the trustee I therefore consider that no meeting of minds occurred such as could found a preliminary agreement.
232 I say this given the terms of the 10 June 2009 letter itself which proposed actions to be taken by the trustee (e.g. the receipt and application of the proceeds), and given the offer was sent to both the plaintiff and Ms Erskine requesting acceptance.
233 If there be any doubt, conduct or correspondence subsequent to the alleged offer and acceptance can also be used in these circumstances as evidence to show whether or not a contract was concluded.[54]
[54] Seddon, Bigwood and Ellinghaus Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed., 2012) at [3.9], citing Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68.
234 The subsequent conduct confirms that no concluded agreement had been reached. Thus, the draft terms sent on 17 June proposed a tripartite agreement. The subsequent consent order also provided for a completely different arrangement (to that allegedly agreed) wherein the plaintiff was paid $170,000 with the balance to the trustee. This was completely different to what was proposed in the 10 June correspondence wherein the proceeds were to first go to the trustee, with the balance to the plaintiff.
235 This is sufficient to dispose of the defence. However, even if (contrary to my above finding) no tripartite agreement was contemplated, I am not satisfied that the arrangement would come within the first category of Masters v Cameron[55] (wherein the parties intend to be bound immediately though expressing a desire to draw up their agreement to a more formal document at a later stage).
[55] (1954) 91 CLR 353.
236 Rather, I consider that the parties intended to postpone the creation of contractual relations until a formal contract was executed (within the 3rd category of Masters). Thus:
· In the email advising of the plaintiff’s verbal instruction there is no evidence the plaintiff intends to be immediately bound; instead any agreement awaited execution of a document;
· The email of 17 June invited amendments;
· The draft deed does not refer to any prior agreement (see recital H).
237 The subsequent conduct already referred to above is also again inconsistent with any concluded agreement having been reached even when considered between the plaintiff and defendant alone.
Conclusion
238 I am not satisfied that there was any agreement reached on the basis of the 2009 correspondence, because the parties always contemplated that the agreement would be tripartite in nature, and Ms Erskine never agreed to the proposed terms (including the release). Even if I am wrong on this, no immediately binding agreement was reached between the plaintiff and the defendant pending a formal contract.
239 The defence based on an alleged release in 2009 is rejected.
Limitations of Actions Act
240 Insofar as the plaintiff relies on a breach of trust claim, the defendant relies on s 21(2) of the Limitation of Actions Act (“LAA”) which provides that an action shall not be brought after six years from the date on which the right of action accrued.[56]
[56] Further Amended Defence and Counterclaim dated 15 July 2015, paragraph 19A.
241 She further says that the cause of action accrued from the very first time there was a failure to pay the mortgage citing a notice to quit dated 3 October 2002 (she also cites another demand in July 2004 but this does not appear to have been adduced into evidence[57]).
[57] Defendant’s Outline of Argument dated 20 July 2015, paragraph 65.
242 The notice to quit alleges that there had been failure to comply with a demand dated 21 August 2002 by 24 September 2002 and that there was an ongoing default such that Suncorp proposed to exercise powers of sale as mortgagee.
243 However, this did not appear to have occurred. Rather, as recited above, Suncorp has ultimately obtained possession on the basis of a notice of default dated July 2006.
244 The right of action of a beneficiary for breach of trust accrues at the time of the breach.[58] Although there may have been earlier breaches, in my view clause 2 of the Declaration imposes a continuing obligation to comply with the terms of the mortgage.[59]
[58] Re Somerset; Somerset v Earl Poulett [1894] 1 Ch 231 at page 263; Seiwa Australia Pty Ltd v Seeto Financial Pty Ltd [2008] NSWSC 1260 at paragraph 107.
[59] See the distinction drawn in Larking v Great Western Gravel (1940) 64 CLR 221 at 236-238 (Dixon J), albeit in context of a contractual obligation.
245 In such circumstances the failure to comply with the notice of default in about July 2006 (which gave rise to the loss) constitutes an independent breach rather than a failure to remedy a past breach. In such circumstances the proceeding has commenced (on 31 March 2011) within 6 years of the accrual of the right of action (in about July 2006).
246 Insofar as the present claim relies upon the failure to (ultimately) discharge the mortgage, this may be seen as a “once and for all” obligation. However, it did not become apparent that this trust obligation had been breached until 11 February 2009 when the Preston property settled and the Suncorp mortgage was removed for the transfer to the incoming purchasers. Thus, it was only at that point that it became impossible for the trustees to ever comply with the obligation to discharge the mortgage.
247 Given the breach of the obligation to discharge occurred in February 2009 the proceeding has again been brought within the relevant 6 year period.
248 The defence based on the LAA accordingly fails.
249 It is unnecessary in those circumstances to consider a further matter raised by the plaintiff in reply as to whether there was some equitable fraud in any event.[60]
[60] Reply and Defence to Further Amended Defence and Counterclaim dated 16 July 2015, paragraph 2.
Laches
250 In final submissions, the defendant claimed reliance on s 31 LAA which states:
Nothing in this Act shall affect any equitable jurisdiction to refuse relief on the ground of acquiescence or otherwise.
251 In paragraph 19B of the Further Amended Defence and Counterclaim dated 15 July 2015, the defendant says the plaintiff delayed in enforcing his rights. Thereby, the plaintiff is said to have:
a)permitted or allowed the defendant and her husband (the plaintiff’s brother) to occupy the Willowmavin property;
b)and the defendant believed that he did not intend to make a claim against the defendant;
252 The following particulars are then cited in support:
i.Between 2002 and 2009 the plaintiff did not assert his claim or lodge any caveats over the Willowmavin property;
ii.By letter dated 10 June 2009 the defendant’s then solicitor John Constanza [sic] offered to the plaintiff that that [sic] the defendant would settle the plaintiff’s claim for the payment of money from the Supreme Court by the payment of the sum in Court to the plaintiff on the basis that the defendant be released from any other claims which he might have against her. This offer was accepted by the plaintiff by his then solicitor John Pastro on 18 June 2009.
253 The defendant then says that the plaintiff’s delay resulted in prejudice to her, which is framed in the following terms (19B(c)):
and in this belief the defendant acted to her prejudice in incurring the expenses and costs associated with the Willowmavin property as referred to in paragraph 50 of her amended defence and paying her former husband to transfer his interest in the Willowmavin property to her. (emphasis added)
254 By way of particulars, the defendant alleges that the defendant paid her former husband in several instalments of varying sums between 2008 and 2009. At paragraph 19B(d) the defendant alleges that she paid to Victor Jakimowicz, or on his behalf, sums of money totalling $160,000 including the amount to pay out CHF.
255 In written submissions the defendant emphasized that, if the plaintiff had instituted a claim in 2003 she would have sold the property.[61] Further, that the delay was referable to some “secret covenant” between the two brothers.[62]
[61] Defendant’s Outline of Argument dated 20 July 2015, paragraph 67.
[62] Defendant’s Outline of Argument dated 20 July 2015, paragraph 70.
Principles
256 Both parties accepted that the laches principles applied in relation to a breach of trust claim as an equitable claim.
257 In the High Court decision of Orr v Ford[63] notwithstanding that the plaintiff stood by for some 8 years with knowledge of the opponent’s change of attitude, the majority (Wilson, Toohey, Gaudron JJ) found no laches. Deane J (Mason CJ agreeing), however, found that the conduct did constitute gross laches which precluded the grant of equitable relief but that the plaintiff was entitled to a 30/156 share after allowing for improvements.
[63] (1989) 167 CLR 316.
258 Nevertheless, the dissenting judgment of Deane J has been often cited in enunciating relevant laches principles. His Honour stated that the ultimate test was whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable to place him if the remedy were afterwards to be asserted. He also noted that it was difficult to envisage circumstances falling short of waiver, release, election or estoppel in which laches of a beneficiary would make it inequitable and unreasonable to grant relief for enforcement of an express trust in relation to trust property.[64]
[64] Deane J (at page 341) cites two exceptions to this, neither of which appear applicable to this case although both applied in the matter before the High Court on that occasion.
259 Deane J also states that one must identify with precision the substantive nature of the claim to which laches is said to constitute a defence.[65]
[65] Orr v Ford (1989) 167 CLR 316 at page 342.
260 The elements of a defence of Laches were identified by Young JA in the New South Wales Court of Appeal decision in Crawley v Short[66] as:
[66] [2009] NSWCA 410 at paragraph 163.
a) Knowledge of the wrong;
b) Delay; and
c) Unconscionable prejudice caused by the delay.
261 In application of these elements, the Court said that the ultimate question was “whether, in all the circumstances, the plaintiff has impliedly, in equity, released the defendant from his or her claim or has so acted as to make it unfair that the claim should now succeed.”[67]
[67] [2009] NSWCA 410 at paragraph 175.
262 The principles in Crawley were also recently applied by the Victorian Court of Appeal in Falkingham v Peninsula Kingswood Country Gold Club Ltd.[68]
[68] [2015] VSCA 16.
Application of principles
263 In considering whether the defence is made out it is convenient to consider the elements identified by Young JA bearing in mind the substantive nature of the claim is a claim for breach of trust based on a failure to comply with a mortgage and to ultimately discharge that mortgage.
Knowledge of the wrong
264 The defendant alleged that the plaintiff was aware that the Suncorp mortgage was in default from the time that Suncorp issued the first Notice to Quit, which was issued on 3 October 2002. However, he did not issue proceedings until 2011.
265 Nevertheless, for reasons already identified, the relevant default grounding the claim only occurs in 2006.
266 Moreover, although there may have been earlier non-compliance, the evidence of the plaintiff was that, to the extent he knew of earlier non-compliance he asked for the matter to be fixed up, and was told that it would be “fixed up.” Although the defendant denied saying this there was no reason to disbelieve the plaintiff insofar as Victor Jakimowicz was concerned. Given the inaction of Suncorp between 2002 and 2006 it also appears that something was done to “fix up” the loan.
267 However, I accept that the plaintiff clearly had knowledge that things had not been fixed up by the time he was evicted in October 2007. In fact, his solicitor was advised of the Suncorp proceedings by correspondence from the defendant’s solicitors on 15 May 2007.[69]
[69] Exhibit F, page 391.
268 It will therefore be significant to examine his conduct after approximately May 2007.
Delay
269 Firstly, it is necessary to reject the suggestion that there was a motive for the delay based on some “secret covenant” between brothers. The unchallenged evidence was that the last time the plaintiff saw Victor Jakimowicz was when he took him to the police station and he signed the withdrawal of caveat form over Willowmavin in about April 2008.
270 Next it is of some significance that during 2007 the defendant was well aware that the plaintiff had not “gone away” and in fact, to some extent, acknowledged his rights in the context of trying to finalise arrangements with Victor Jakimowicz and in endeavouring to avoid the eviction. Thus in correspondence of 18 January 2007 from the defendant’s lawyers it is stated that: “Our office has taken into consideration in drafting the Deed that your client is owed $200,000 by our client and Victor, and that this amount is to be repaid back to your client.” By correspondence of 10 August 2007 the defendant’s solicitors also noted that she was “concerned about the well being of the present occupiers” and had been in “preliminary discussions” to refinance Preston to avoid the eviction.
271 Returning to the actions of the plaintiff however, it can also not be said that he “stood by” and did nothing even after his eviction. Although it is true that he did not take court proceeding until 2011, the plaintiff and/or his trustee took the following actions between 2007 and 2011:
· The plaintiff retained a caveat over Preston which was only removed pursuant to a court order made in January 2009;
· The plaintiff’s trustee lodged a caveat over Willowmavin from May 2009 to January 2010;
· As indicated above, the plaintiff’s solicitor made various attempts to enforce the plaintiff’s rights including even in January 2008 after the eviction;[70]
[70] See documents referred to in footnote 15 above.
· The plaintiff’s’ trustee commenced the Supreme Court proceeding in April 2009 making a claim for the proceeds in court; and
· The plaintiff retained a caveat over Willowmavin until May 2008; and then again from February 2010.
272 Although it is true that the purpose of a caveat is to act as an injunction,[71] the continual lodgement of caveats was inconsistent with an election not to pursue rights.
[71] J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 at page 552.
273 In relation to the 2009 proceedings, as indicated already, the plaintiff was a party to this action and had clearly not “gone away.” For reasons given already, I am also not satisfied that the defendant obtained any release in 2009 (though she was clearly aware of the desirability of obtaining one).
274 In one way or another, the plaintiff continually pursued his rights under the settlement agreement, never implying he had released the defendant.
Unconscionable prejudice
275 Firstly, the oral evidence of the defendant was utterly unsatisfactory as to what if any belief she had formed as to the plaintiff’s intentions. Although at various points she claimed she thought it was “finished” she also said at times “I just didn’t know” [whether he would pursue his claims].
276 However, her own actions were inconsistent with any belief that the plaintiff had really gone away. Instead, the defendant appears to have taken actions without obtaining appropriate releases and in circumstances where she should have known that the plaintiff had not released her from any claim.
277 Thus, in oral evidence when questioned about why she signed the CHF loan in 2008 her own evidence was that she had “to get John back in his house”, and later “it was supposed to sort John out. That’s why I signed for it”. This despite the fact that no steps were taken to ensure that the CHF monies were actually directed to the plaintiff.
278 She also gave evidence that when she paid Victor Jakimowicz out, that her solicitor at that time, Raffealla, advised her not to do the transfer of land because “we hadn’t settled in court, that he (the plaintiff) could come back after me because it was just an agreement with him”.
279 Finally, for reasons given already, the defendant was prepared to consent to the payment of monies out of court without obtaining an appropriate release in circumstances where she appeared to be aware of the desirability of obtaining one.
280 Whatever actions the defendant took then do not appear to be based on any well founded belief that the plaintiff would not take action.
281 Turning then to the alleged prejudice, there was a suggestion in submission that the defendant would have sold Willowmavin if the plaintiff had issued proceedings promptly.[72] However, this allegation was not contained in the pleadings. The evidence in support of it was also vague and unreliable. It was also inconsistent with the defendant’s objective actions in 2007-2008 wherein she made extensive efforts to secure Willowmavin in her own name notwithstanding she was well aware of the plaintiff’s ongoing interest.
[72] Defendant’s Outline of Argument dated 20 July 2015, paragraph 67.
282 Insofar as the defendant relies on the payments she made to Victor Jakimowicz in 2008-2009 and also on ongoing payments on the property, there was little objective evidence to establish such payments other than vague generalised oral evidence. In particular, there was no objective evidence as to what amounts were paid (and when) with many of the amounts contained in paragraph 50 post-dating the issue of the proceeding.
283 Moreover, even if (contrary to the above) it might be accepted that the plaintiff would not have made the payments she made in 2008-2009 if the plaintiff was more active, no appropriate evidence established any prejudice at all. Thus, in the absence of appropriate evidence (e.g. of valuation evidence, contributions of Victor Jakimowicz, enjoyment of occupation etc) I am simply unable to determine whether the defendant is actually better off as sole owner of Willowmavin or not.
284 No unconscionable prejudice is established.
Conclusion
285 I am not satisfied that the plaintiff has impliedly, in equity, released the defendant from his claim or has so acted as to make it unfair that the claim should now succeed.
286 The defence of laches is not established.
Counterclaim
287 There was a paucity of objective evidence to establish the amounts of alleged expenditure the subject of the Counterclaim.
288 In any event, consistent with the pleading, Counsel for the defendant conceded that it would be unnecessary to consider the counterclaim unless the court imposed a constructive trust.
289 Given the court has not imposed any trust over Willowmavin, it follows that the Counterclaim should be dismissed.
Other matters
290 The defendant submitted that an inference should be drawn that Victor Jakimowicz’s evidence “would not have helped” the plaintiff in this case on the basis of Jones v Dunkel.[73]
[73] (1959) 101 CLR 298. See Defendant’s Outline of Argument dated 20 July 2015, paragraph 82.
291 It was unclear precisely in what context any such inference should be drawn.
292 In any event, the evidence of the plaintiff was that he had not seen Victor Jakimowicz since he asked him to sign the withdrawal of caveat in about 2008, buying him some beer. There was no direct challenge to this evidence. Moreover, on the evidence before the court, there was no other evidence to suggest that Victor Jakimowicz aligned himself with anyone but himself.
293 In such circumstances, I am unable to be satisfied that it would be natural for the plaintiff to call Victor Jakimowicz any more than it would be natural for the defendant to now call him.
Conclusion
294 There is judgment for the plaintiff in the amount of $270,771.42
295 The Counterclaim should be dismissed.
296 I will hear from the parties as to the appropriate form of final orders.
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