Karabagias v Katopodis
[2021] VCC 1120
•17 August 2021
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-19-02504
| THEODORUS KARABAGIAS | Plaintiff |
| v | |
| GEORGIA KATOPODIS | Defendant |
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JUDGE: | Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 - 29 July 2021, written submissions dated 2, 9 and 12 August 2021 | |
DATE OF JUDGMENT: | 17 August 2021 | |
CASE MAY BE CITED AS: | Karabagias v Katopodis | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1120 | |
REASONS FOR JUDGMENT
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Subject:Equitable interest – property – constructive trust – doctrine of proprietary estoppel
Catchwords: representations – common intention – reliance – whether court should impose or declare a constructive trust – equitable compensation – estoppel – laches
Legislation Cited:
Cases Cited:Zerky v Zerky [2020] VSCA 336; Alderuccio v Alderuccio [2019] VSC 404; Choi v Kim (2013) NSWSC 1774; Muschinski v Dodds (1985) 160 CLR 583; Harris v Harris [2021] VSCA 138; Donis v Donis (2007) VSCA 97; Clementi v Rossi (2019) VSC 725; Karabagias v Katopodis [2019] FCCA 1133
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J McKay | Lennon Lawyers |
| For the Defendant | Mr R Edmunds | Dimos Lawyers |
HER HONOUR:
1The plaintiff, Theodoras Karabagias (Theo), is the 51 year old former son in law of the defendant, Georgia Katapodis (Georgia) who is an 88 year old pensioner. In this proceeding, Theo claims an equitable interest in Unit 1, 12 Churchill Street, Kew (the Property). Since 12 March 2019, pursuant to the doctrine of survivorship, Georgia has been the sole proprietor of 12 Churchill Street, Kew (the Land). Theo seeks declaratory relief or, alternatively, equitable compensation in respect to his claim for one half of the Property. Georgia’s counterclaim seeks declaratory and injunctive relief in respect to Theo’s caveat (dealing no. AR378102M) over the Land.
2Theo says that throughout the period from about July 2012, it was the common intention of, inter alios, him and Georgia that, after Theo and his then wife, Chrysoula Katopodis (Sue) renovated the Property at their expense, it would belong to, and be owned by, each of Theo and Sue.
3Further or alternatively, Georgia and her late husband Petros Katopodis (Petros) represented to Theo that after he and Sue renovated the Property at their expense, it would belong to, and be owned by, each of Theo and Sue.
4Theo claims that in reliance on the common intention and/or the representation and acting to his detriment, he renovated the inside of Unit 1 and while he resided in the Property he paid the gas, electricity, water and other services applicable to it. Theo does not make a claim for unjust enrichment.
5Theo contends that Georgia accordingly:
(a) holds her interest in so much of the Land on which the Property is located on constructive or implied trust in favour of Theo as tenant in common as to one half thereof; and
(b) is estopped from denying that Theo is a beneficial owner of so much of the land on which the Property is located as tenant in common as to one half thereof.
6Alternatively, that Georgia holds the Land on resulting trust in favour of Theo to the extent of the monies used to renovate the Property that were paid by him.
7Theo seeks cascading relief as follows:
(a) a constructive trust to issue on the subdivision to be performed on the Land to convey the Property to Sue and Theo;
(b) alternatively, a constructive trust over the overall Land in the amount of approximately 23%;
(c) alternatively, equitable compensation of the sum equating to the 23% interest in the Land;
(d) alternatively, equitable compensation for the amount expended by Theo on the works together with compounding interest.
8For the reasons set out below, the plaintiff has not made out his case.
9Accordingly, I order that the plaintiff’s claim is dismissed and there is judgment for the defendant in the proceeding. I also make a declaration that the plaintiff does not hold a caveatable interest in the Land, order that Caveat AR378102M be removed from the title to the Land and that the plaintiff pay the defendant’s costs of and incidental to the proceeding on the standard basis, to be taxed in default of agreement, unless either party has a basis for seeking a different order as to costs. I will invite the parties to prepare draft orders to give effect to these reasons, and will determine any issue concerning costs on the papers.
Factual Background
10Georgia and her late husband, Petros were registered as joint proprietors of the Land from 24 February 1966 until 12 March 2019. Following Petros' death in February 2019, Georgia has been registered as the sole proprietor of the Land.
11Unit 1 was Georgia and Petros’ investment property. For approximately 30 years prior to mid-2012, Unit 1 had been rented to a long term tenant, Brian Thomas. When he moved into the Property, the rent was $180 per week. This was increased to $200 per week during his tenancy.
12Theo and Sue were married on 2 February 2011. They separated from one another on or about 8 November 2015 and were divorced on 15 November 2018.
13On or about 5 July 2012, Theo received a lump sum payment from CBUS Superannuation in the sum of $92,956.02 (the lump sum) following an injury to his left fore foot. This payment was deposited into one of his bank accounts with National Australia Bank (NAB). Theo receives a disability support pension.
14It is common ground between the parties that from about March 2013 to about November 2015, Theo and Sue resided in Unit 1.
Issue One The Representations
15Whether the representations to the effect alleged at paragraphs 22 to 28 of the plaintiff’s witness statement (Representations) were made by Georgia and her late husband, Petros, to Theo.
16It was acknowledged by the witnesses and the parties that the events the subject of the proceeding occurred over 8 years ago. The flux of time affected their ability to remember details.
17Theo says that after he received the lump sum from CBUS, Sue asked whether he would consider using this money to renovate the Property so that they would not have to borrow the money. Sue had previously made enquiries of the Commonwealth Bank of Australia to borrow money to fund the works. Theo says that Sue became excited when he received the lump sum. In her evidence, Sue said she was happy for Theo and they immediately discussed using some of the monies towards IVF and to renovate Unit 1. Theo claims that he told Sue he was interested in this proposal to fund the works, provided that her parents would agree to transfer the Property to Sue and himself jointly. Georgia said that she did not know where the funds came from to pay for the works. She did not ask Theo and Sue as they did not discuss finances. Sue’s evidence was that she is a private person and did not share with her parents details about their finances.
18Georgia stated that she was not aware of any financial difficulties prior to Sue and Theo moving into Unit 1 and did not give Sue any money toward the renovations. Sue said that she had had discussions with her father, namely that at the time they were on one wage and her father had subsequently lent her some money. She otherwise did not tell her mother about her and Theo’s finances as she did not wish to worry her mother.
19Theo says that Sue subsequently told him that she had discussed the matter with her parents, and they had agreed to transfer ownership of Unit 1 to them jointly, if they were prepared to fund and organise the renovation.
20The Representations were set out in Theo’s witness statement as follows:
22.Shortly afterwards (and in about mid-July), Sue and I met with Petros and Georgia at Unit 2. At the time, Sue and I caught up regularly with Petros and Georgia and we got along very well.
23.We all had coffee and discussed the proposed arrangement. Obviously, I cannot recall the words spoken in the meeting but I can recall the gist of what was said, which is explained below.
24.Petros said that he had discussed the arrangement regarding Unit 1 with Georgia and Sue, and was happy for Sue and I to fund the renovation of Unit 1, and to live in that unit. Georgia said that the unit was in bad shape but could be fixed up.
25.Petros said that he and Georgia were going to leave that unit to Sue anyway, and that they were happy to leave the unit to both Sue and I given that Sue and I were funding the renovations. I recall Georgia saying words in Greek to the effect that ‘if you two want to renovate the unit and live in it, you can consider it yours’. . Petros agreed, and said that the property would be left in their wills to Sue and I, but that Sue and I could treat the unit as our own.
26.Petros said that Sue and I could move into Unit 2 whilst the renovations were carried out in order to save the rent we were paying on the Thornbury property. I recall that Sue and I also agreed to pay the utilities for Unit 1 once we moved in.
27.I thanked Petros and Georgia, and both Sue and I said that we agreed with the proposal and would start making the necessary arrangements.
28.In the following months I had further conversations with Petros, Georgia, and Sue in which we discussed some aspect of the planned renovations, which I took to be a confirmation our arrangement discussed previously in the meeting.
21Georgia gave evidence that all discussions relating to the invitation for Sue to move into the Property were between Petros, Sue and herself. She says Theo was not involved and she never spoke with Theo as he claims. The first discussions took place in or about June/July 2012 at Unit 2. Georgia claims that she told Sue that they wished to let her and Theo live in the Property so they could save money on renting and they would not have to pay them any rent so long as they paid the bills for the water, electricity and rates for the Property. This evidence was corroborated by Sue.
22Sue says that she discussed her parents’ offer with Theo, telling him that her parents had offered to let them live rent free in the Property provided they paid the rates and utilities for the unit. She says Theo’s response was “Great”.
23Georgia’s evidence was that initially Sue said “No” to moving into the Property, and was adamant that if they were to move in, they needed to pay her parents the same rent they were getting from the existing tenant Brian, that is, $200.00 per week. About 1 - 2 weeks later, Sue told Petros and Georgia at Unit 2 that she and Theo would accept her parents’ offer. Sue also told Petros and Georgia that she wanted to paint the Property and make some other changes. She did not tell Georgia and Petros the extent of the works and Petros told her she could fix it if she wanted. Sue told them that she and Theo would pay for the works. Georgia said the first that they knew of the extend of the works was when they saw the construction works.
24Sue says that when Brian moved out , she and Theo inspected the Property and she told Theo that she wanted to renovate the kitchen and bathroom. Theo says that Sue told him that the Property was in bad condition but could be fixed up. Georgia’s evidence was the Property did need a good clean and repainting once Brian vacated, but the premises was otherwise habitable. Sue later spoke with her parents and told them that she wanted to renovate the kitchen and bathroom and asked how they felt about it. Sue says her father said “You can if you want to, but it’s at your own expense”. Sue says that Theo was not present at this discussion.
25In her evidence Georgia stated she was only aware that Sue wanted to repaint and make some minor changes, but did not know the extent of the works until the renovations were underway. She said that she saw the wall come down between the third bedroom and the living room and was very upset about it, but did not say anything at the time because she did not want to upset her daughter. Sue said that she discussed with her parents repainting, sprucing up and making some changes to the Property. Sue’s evidence was that she did not tell her parents that Theo and she intended to knock down the wall and said that her father was unhappy about it and shocked when he saw the demolition.
26Georgia says that while Sue and Theo lived with them in Unit 2 during the renovations works, there was no further discussion with Theo or Sue regarding the agreement they had for them to live in the Property. She described the living arrangement in terms such “that they would come home and sleep.” Georgia did not recall Theo thanking them for letting them live in Unit 2.
27Georgia claims that Theo did not discuss the cost of the works with either her or Petros. She denies Theo’s claims that they told him and Sue that the Property would belong to them. Georgia went on to say that there were no ongoing discussions regarding their living arrangements in the Property.
28Sue says that during the time she and Theo lived with her parents, there was no discussion with them regarding the cost of the works. She also says that there was never any statement made by her parents to either Theo or herself that they would own the Property or that it was theirs. Her parents did, however, on a number of times tell them that they could stay in it for as long as they needed.
29Georgia gave evidence that on 4 May 2004 she and Petros signed mirror wills in which; they appointed each other as executors and trustees; and left their estates to each other; and provided that should either of them die before the other that they appointed their daughters, Annette and Sue as executors and trustees; and left Unit 2 to Annette and Unit 1 to Sue; and otherwise left the residue of their estates equally to their daughters. Petros’ will had not been updated. Georgia’s will was updated on 15 April 2020 which provides for all of Georgia’s assets to be gifted to Annette and Sue to have a life interest to reside in either Unit 1 or 2. In the event that Annette passes away before Sue then the Property is gifted 50% to her grandson and 50% to Sue. If Sue passes away before Georgia then 50% of the estate is shared between Theo’s and Sue’s children.
30Georgia denies that she changed her will after the commencement of these proceedings and the joinder application in the concurrent family law proceedings. She denied it was done to potentially provide protections to Sue against any claim by Theo in the event that she inherited an interest from Georgia’s estate whilst the family law proceedings were on foot. She claims that now that Petros has passed away, this is the way she wanted to leave her estate from the beginning. Given the amended will was made during Stage 4 COVID restrictions and Georgia’s age, I find that she was seeking to protect Sue’s interest. She decided to change her will for this purpose and that she had discussions with her estate planning lawyers to this effect.
31However, I find that Georgia’s conduct is consistent with her version of events that the Property was intended to only benefit Sue and that it was not to benefit Theo and Sue. The 2004 and 2020 wills do not support Theo’s claim that the Property would be given to him “at the year both parents passed away” or that “they would have to change the will before they died to give us the house…the property was going to be given to us once we did the renovations…they were going to change their will”.
32Further, the amended will was prudent estate planning given the size of the asset pool of Theo and Sue which is smaller than the potential inheritance under the 2004 will. In such circumstances there was a risk that the Family Court, in contemplating the division of the asset pool (excluding the inheritance), could make a finding that it is inequitable, and any late inheritance may then be included in the asset pool for distribution between Theo and Sue.
33I accept Theo’s submission that Georgia has changed her will in an attempt to avoid Theo making any claim on part of her estate in the event that Georgia passes away prior to the hearing and determination of the family law proceedings. In these circumstances, there would have been a risk that Sue’s previous gift of the Property under the 4 May 2004 will could potentially form part of the marital asset pool, or that it was open to so argue. Having said that, Georgia has freedom of testation.
34Georgia said that Petros discussed with her that if she needed funds for aged care or medical expenses then it was agreed that they would sell Unit 1. Some of these discussions took place prior to 2012. Georgia said that in early 2019 they had further discussions about having to sell Unit 1 when Petros fell ill and was hospitalised. However, Petros died suddenly in hospital following a second fall in January 2019.
35Theo’s first claim is that he holds an equitable interest in the Property pursuant to a constructive trust arising under the doctrine of proprietary estoppel.
36An overlap between proprietary estoppel and a common intention constructive trust has been discussed on a number of occasions.[1] In Alderuccio v Alderuccio[2], Derham AsJ summarised the position as follows:
“Authority has existed for a very long time for the proposition that where an owner of land creates or encourages an expectation in another, that the other will have an interest in the land, and the other acts upon that expectation, then the owner will be compelled to give effect to it.”[3]
[1] Zerky v Zerky [2020] VSCA 336 at [76].
[2] [2019] VSC 404.
[3] Ibid at [40].
37To succeed, Theo must establish a representation or representations made by Georgia and Petros, reliance, that reliance was reasonable and that Georgia and Petros intended that Theo would rely on this representation, and that he has suffered detriment.
38The defendant submits that the evidence falls short of establishing these matters.
39Insofar as Theo’s evidence contains relevant matters capable of constituting representations set out as follows:
(a) That Georgia and Petros were “happy for Sue and I to fund the renovation of Unit 1, and to live in that unit. Georgia said that the unit was in bad shape but could be fixed up.” [emphasis added]
(b) Georgia saying words in Greek to the effect that ‘if you two want to renovate the unit and live in it, you can consider it yours’. [emphasis added]
(c) Petros agreed, and said that the property would be left in their wills to Sue and I, but that Sue and I could treat the unit as our own. [emphasis added]
40Georgia submits that collectively, or alone, none of these said representations amount to a statement, indication or encouragement by her or Petros that Theo was to have an interest in the Property, as all of her conversations were with Sue and not Theo. She says that she and Petros told Sue that “we wished to let her and Theo live in Unit 1 so they could save money on renting and they would not have to pay us any rent, so long as they paid the bills for water, electricity and rates for Unit 1”. Sue denied that she told Theo that if he paid for the works that she would talk to her parents about agreeing to bequeath the Property to Theo and her upon their death.
41I accept Georgia’s submission that there was no agreement in July 2012 to the effect alleged, or as to the scope of works subsequently done, or that the works to the extent that were undertaken were going to be done. This is because:
(a) Theo was not a party to the discussions in and about mid July 2012 involving Georgia, Petros and Sue;
(b) the offer was to let Sue and Theo live rent free in the Property so they would not have to pay rent, provided they paid for the outgoings;
(c) Sue and Theo did not see the inside of the Property until Brian vacated it in August 2012;
(d) Quotes from the builder were only obtained in September 2012 and for the additional bathroom works, those were obtained on 3 December 2012;
(e) Georgia did not know the extent of the works until she saw the removal of a wall and the lost third bedroom;
(f) Georgia and Petros had discussions regarding the possibility of selling the Property to fund their aged care accommodation and Petros’ direction to Georgia “if he died and she went hungry”;
(g) Georgia and Petros’ 2004 wills provided for their two daughters equally;
(h) Georgia and Petros’ offer of perpetual rent free accommodation meant a savings in rent in the sum of $10,428.57 per year on the Property (or $60,840 on the Thornbury property for the period);
(i) the inconsistency of the pleaded case that it was the common intention of, inter alios, Theo and Georgia that, after Theo and Sue renovated the Property at their expense, it would belong to, and be owned by, each of Theo and his then wife vis-à-vis Theo’s evidence that the Property was to be left to him and Sue by Petros and Georgia in their wills.
42Alternatively, even if the alleged representations did give rise to a creation or encouragement of an expectation in Theo, the balance of the evidence does not allow the Court to conclude there has been reliance or detriment.
43The alleged detriment is said to arise from the works. It is clear on that evidence that these instances of alleged detriment occurred:
(a) after Sue requested the updated kitchen and bathroom;
(b) Georgia and Petros said that Sue and Theo could undertake renovation works if they wanted to, but it was at their expense;
(c) according to Theo, prior to the renovations, the Property was “filthy, smelly, and in a very poor state. It was not fit for Sue and I to live in. … I recall that Sue wouldn’t even step foot in it.” Nick Vasilopoulos (Theo’s best man), Jim Karabagias (Theo’s brother) and Steve Mastrapas (carpenter) gave evidence to the effect that the Property was extremely run down and almost uninhabitable. Nick and Jim assisted Theo in demolition works in preparation for the builders. Nick agreed that the kitchen was in poor condition and while the Property was liveable, it was not desirable.
44In these circumstances, any detriment Theo suffered was not, on his own evidence, in response to any representations made by Georgia and Petros in relation to an interest in Land. The request for the renovations was made by Sue and the works were done to make the Property habitable for them to live rent free for as long as they wanted. I accept that the Property was run down and that Sue wished for the kitchen and bathroom to be updated prior to moving in. Further, I accept that Georgia did not know where the funds to pay for the renovations came from; just that she told them that any works were to be completed at their expense. It follows that any claim of proprietary estoppel is bound to fail.
45In my view, I am satisfied on the evidence that in or about mid-2012, Georgia and Petros orally offered Sue the opportunity for her and Theo to move into the Property and live there rent free, subject to them paying council rates, utilities and water rates for the land. This was done so that they could save money, rather than continuing to pay rent at a rate of $1,690 a month.
46As noted by Judge Harland in the family law proceedings at [39][4]:
Whilst it is not disputed that the parties carried out some renovations on the property owned by the proposed second respondent, the extent, cost and value of those works are in dispute. It is also apparent that whilst the parties carried out those works on that property they had the benefit of living in that property for several years without needing to pay rent. [emphasis added]
[4] Karabagias v Katopodis [2019] FCCA 1133.
47I further find that Georgia and Petros orally agreed with Sue that she and Theo could undertake the works at their cost and offered Sue and Theo the option of living with them in Unit 2 whilst those works were undertaken, which offer was orally accepted. The offer was made at the request of Sue to make the Property habitable for her and Theo.
48I also find that Theo and Sue undertook the works on the Property at Theo’s expense, but they had the benefit of living in the Property for several years without being required to pay rent to Georgia and Petros or to continue to pay rent to their landlord in Thornbury.
49However, on balance, as set out above, I do not accept that the representations were made to Theo as claimed.
Issue Two Consequences of the Representations
50If issue 1 is answered affirmatively, then as a consequence of the Representations having been made:
(a) Whether a common intention was formed between Theo, Petros, and Georgia to the effect that the Property , would be held on trust for the benefit of Theo and Sue in equal shares; and/or
(b) Whether Theo believed, assumed, or understood that the Property would be held on trust for the benefit of him and Sue in equal shares.
51Taking into account the evidence before the Court, I find that the common intention of Theo, Sue, Petros and Georgia was that the Theo and Sue could live in the Property rent free, subject to paying council rates, utilities and water rates. They would thereby be able to save money and if Theo and Sue wished to make any changes to the Property, they could do so at their expense; in exchange they were able to live in it for as long as they wanted without needing to pay rent.
52Given my previous findings, there is no common intention as alleged by Theo.
Issue Three The Works Claimed by Theo
53Whether Theo procured the works to the Property alleged at paragraphs 37 to 53 of his witness statement (or any of those works) (Works) at his cost (or substantially at his cost).
54Theo says that he has expended about $90,000 on renovations for the Property. He claims that any additional money spent on the renovations above and beyond the CBUS lump sum payout was sourced from his savings, and the money he saved on rent throughout the renovations period. Sue’s evidence was that they had been paying $1,690 rent a month for a property in Thornbury before they moved into Unit 2 with her parents and subsequently the Property.
55Sue’s evidence was that she and Theo spent around $45,176 on renovations (but that Petros paid $5,900 for re-stumping) and $17,464.25 on IVF related costs.
56She went on to say that she and Theo operated separate bank accounts. Theo had his NAB a/c (“Theo’s NAB a/c”). Copies of Theo’s NAB a/c for the period 15 June 2012 to 14 December 2012 showed an opening deposit on 5 July 2012 of $92,956.02 being Theo’s CBUS lump sum and a closing balance of Dr $3.78 on 11 December 2012.
57Further, Sue stated that Theo would transfer monies as needed into either her CBA a/c or CBA Gold Saver a/c for her to pay costs relating to the building works, living expenses and IVF treatments.
58During this period a total of $73,000.00 was transferred from Theo’s NAB a/c to Sue’s CBA a/c and from that account transfers totalling $20,403.00 were made to her CBA Mastercard a/c and transfers totalling $50,680.47 were made to her CBA Gold Saver a/c. Much was made at the hearing about the descriptions given to many of the electronic transfers from Theo’s NAB a/c to Sue’s CBA a/c. In my view, despite the descriptions given to the entries there was no difficulty in tracing the payments and it was identified that a total of $73,000 was transferred between 1 July 2012 to 30 September 2012 and a further $370 on 25 October 2012.
59Sue had a loan contract no. 359129695 with ESANDA dated 21.01.12 relating to the finance of a van purchased by their courier company with a total sum financed of $61,182.94. These payments were separate and independent to Theo’s CBUS lump sum.
60Sue says that on her analysis of the records, she applied a total of $45,176.00 from Theo’s NAB a/c to pay for the renovation works. She further says that her records show expenses incurred in Australia in relation to her IVF treatments totalling $17,464.25. Theo conceded that the payment for the IVF treatments came out of his CBUS lump sum. Therefore the CBUS lump sum of $92,956.02 is discounted to an available amount of $75,491,77 for the possible application to the cost of the Works.
61Further, Theo’s NAB a/c shows regular transfers to Sue’s CBA a/c in lump sums of $5,000 which she says she applied pre-September 2012 to IVF, the purchase of the van for their courier business, rent for their Thornbury residence of $1,690 per month (until they moved into Unit 2), and general living expenses. Post September 2012 to the exhaustion of the lump sum by December 2012, these funds were applied to the renovation Works and living expenses.
62Georgia argued in closing submissions that dealing with the IVF costs, the first payment of $4,132.05 was from Sue’s CBA Mastercard a/c following the transfer of $6,000.00 to that a/c from Theo on 6 July 2012. The balance of IVF payments of $13,517.50 paid either from Sue’s CBA Mastercard or Gold Saver a/c’s flow from part of the $70,370.00 transferred from Theo’s NAB a/c into Sue’s CBA a/c. Deducting $13,517.50 from $70,370.00 leaves $56,852.50 available from Theo’s transfers.
63The next question is how much of that $56,852.50 was paid towards building works. Theo’s claims as to expenditure on building works are detailed below.
64The Works claimed are as follows:
Item
Item: Plaintiff’s alleged expense
Defendant’s reconciliation:
Evidence
A
Payments to builder approx $25,000.00 in January 2013 by Theo
Admits $22,014.00 paid from Mori Holdings P/L CBA a/c 06 313010362520 in the total amount of $22,014 (by 5 instalments)
$22,964
B
Mr. Gymnopoulos – Plasterer $4,500.00 cash in or about January 2013 Theo
Admits $1,445.00 paid by Sue Katopodis by credit card on 08.11.12 to Chad Plaster & Facades.
$1,445
C
Restumper - $5,000.00 on or about 09.09.12 by Theo
Admits a quote from City Reblocking P/L on 09.09.12 for $5,900.00 but is to Petros Katopodis
$5,900
D
Tiler – about $5,000.00 by Theo on a date he cannot recall
Admits $750.00 paid by Sue Katopodis by credit card for tiles & a National Tiles Co P/L invoice 22.01.13 for $466.62
$1,216.62
E
Painters – about $4,000.00 by Theo on a date he cannot recall
Admits total of $4,196.00 by 3 internet transfers to James McBride of $1,500.00 on 01.01.13, $1,160.00 on 16.01.13 & $700.00 on 30.01.13 from Sue Katopodis Gold Saver Credit Card plus one payment in cash of $420.00
$4,196
F
Plumber – about $4,000.00 by Theo on a date he cannot recall
Amount of alleged payment not admitted
-
G
Kitchen installer paid $10,000.00 by Theo in or about December 2012 and paid $15,000.00 for appliances
Admits $10,989.00 paid to Speedy
Kitchens from Sue Katopodis’ Gold Saver a/c
Appliances cost $9,000.00 from Harvey Norman & paid from Gold Saver & credit card a/c’s.
$10,989
H
Theo claims total transfers from his NAB a/c of $90,287.80 were used for renovations
Total A to G = $72,500
Totals of A to G noted as follows:
A. $22,014
B. $1,445
C. $5,900 (dispute Theo paid)
D. $750
E. $4,169
F. –
G. $10,898
Total $45,175
IVF $17,650
Esanda contract $31,704,64
Total $94,530.79
$46,710.62
($1,800 bin hire)
Total $48,510.62
65Theo gave evidence that he initially claimed the sum of $75,582.29 in his statement of claim, but then added to that amount his expenditure on white goods and furniture purchased at Harvey Norman which increased the amount to $90,000. Theo claimed that the white goods ought to be included in his claim which was not founded in restitution. However, given my anterior finding that there was no detrimental reliance in equity and that the white goods and furniture are not part of the fixtures of the Property, these items are properly the subject of the family law proceedings for a claim for chattels. It was noted that Sue had previously given a range of $48,000 to $58,000 representing Theo’s expenditure in an affidavit filed in the family law proceedings.
66Theo said that he paid the builders in cash and he could not recall the exact amount and gave a range of between $15,000 to $25,000. He was taken to the Mori Holdings (the courier company’s) account which showed payments by instalments by cheque to the builder amounting to $22,014. There was a discrepancy between the quotes provided and the actual invoices because others had come in over the weekend before Steve Mastrapas arrived on site and began removing some tiles. Furthermore, additional works were required in the bathroom given its condition at the time. Although Theo claims that the majority of the builder’s invoices were paid in cash, Steve Mastrapas recalled being paid by cheque and cash for the works. Sue’s evidence was that she paid what was invoiced. Georgia in closing submissions conceded two further cash payments of $330 and $620. I, therefore, accept the defendant’s reconciliations, based on the invoices and Mori Holdings’ bank accounts, together with the two cash payments which proves Theo’s contribution to the builder was in the sum of $22,964.
67Theo claims that he paid about $4,500 to the plasterer, Alex Gymnopoulos. Plastering was done in the new section of the house including the kitchen and there were cornices installed on the ceiling in the main bedroom and the laundry. Theo supplied the plaster himself and paid by credit card in the sum of $1,445. Sue agreed that they purchased plaster for use by the builder. The plasterer was paid in cash and Theo estimated that he paid about $4,500 to Alex. Sue did not recall other plasterers and could only recall Steve doing the plastering. Steve also said that he plastered the Property and that he included an amount for plastering in his bill. The evidence shows a payment of $1,445 for materials only.
68Theo gave evidence that he paid the re-stumper $5,900 and Alex Lekkas addressed the invoice to Petros as he was the owner of the Land. The sum of $5,900 is supported by an invoice dated 9 September 2012. Although the invoice for the restumping is made out to Petros, Georgia has not claimed these works as part of the items paid for by Petros for improvements at the Property. I accept the evidence of Alex Lekkas, the re-stumper, that he made out the invoice to Petros when he completed the work on the Property as he needed the invoice to match the name on the building permit. I find on a balance of probabilities that Theo paid for the restumping and the amount of $5,900 is attributable to him. Georgia in closing submissions further conceded that the sum of $5,900 was likely paid from Theo’s transferred funds.
69There were no supporting documents provided by the Theo in relation to the Works completed by the tiler. Two invoices, one for $750 and paid by credit card and a second from National Tiles in the sum of $466.62 were produced in evidence. The tiler was paid in cash transferred to Sue’s account. Sue did not have any documents showing how the tiler got paid. She was only able to produce the aforementioned invoices for the tiles themselves and agreed the two invoices ought to be added together. Georgia submitted that whilst tiling works were done, the evidence does not establish a tiler was paid by Theo. She claims that a more likely conclusion is that tiling labour was included in Steve’s works and his payments. The sum of $1,216.62 is supported on the evidence.
70Theo stated that he paid the painters approximately $4,000 in cash. Sue claims she paid the painters via 3 internet transfers to James McBride (the painter) in the sums of $1,500, $1,160 and $700 plus the sum of $420 which was paid in cash by transfer from the courier company’s account. The documents disclose a total of $4,196.
71Theo made a guess that he paid the plumber $4,000 in cash. There is no supporting documentation for this amount. Sue confirmed that there was someone who installed the toilet and the bath tub. She said they did not move the layout of the pipes and could not recall cash payments being made.
72Georgia conceded that the three payments relating to bin hire were made directly out of Theo’s NAB a/c in the amount of $590 each and an additional $30. Steve said that the works would have required 3 bins. An additional amount of $1,800 is allowed for as part of Theo’s contributions to the works.
73In relation to the kitchen, Theo estimated that he paid $10,000 to the kitchen installer and $15,000 for appliances. The evidence shows that a payment was made to Speedy Kitchens in the sum of $10,989 and $9,000 for appliances from Harvey Norman. Sue said that they were purchased on layby over 2-3 months until they were placed in the Property. Sue disputed that the source of funds for the appliances came from Theo’s lump sum. There are no supporting documents in relation to the appliances, however, as these are chattels, they do not go to capital expenses and are the subject of the Family Court proceeding.
74In evidence Sue identified payments for the kitchen works from her Westpac credit card and said the handwritten entries were hers and relate to payments for the kitchen (which total $6,395.00) and a further payment to an electrician of $2,000.00. Georgia says that this credit card is consistent with Sue’s evidence of arranging a credit card in or about July 2012 to pay for some works. Georgia argues that this credit card debt is separate from Theo’s monies and that there is no clear evidence where the difference of $4,594.00 was paid from – some may have come from Theo’s transfers. Georgia only allows for $4,594 to be attributed to Theo. In my view, given the regular transfers from Theo’s NAB a/c into Sue’s account, and the records showing that $52,028.36 was transferred out of Theo’s NAB a/c to Sue’s CBA Gold Saver a/c between 1 July 2012 and 30 September 2012, it is probable that Sue’s credit card bill for the $6,395 was paid from Theo’s lump sum.
75On Georgia’s accounting, she deducts her acknowledged sum of $42,088.62 from the $56,852.50 of Theo’s transferred funds after allowance for IVF which leaves $14,763.88. If the disputed claims regarding the plasterers of $4,500.00, tiler of $5,000.00 and plumber of $5,000.00 are proved then these add a further $14,500.00. However, Georgia submits that the overall expenditure is only $56,588.62.
76Theo submits that the payment to ‘Masters’ of 29 October 2012 of $1,117.80 was used in the renovation works, but has not been accounted for in Georgia’s numbers. Although this amount is set out in his further and better particulars, there is no evidence before the court as to whether this amount was incurred in the renovations works or some other purpose. I do not accept that this payment formed part of Theo’s expenditure on the Works.
77Finally, Theo’s evidence was that cash sums were paid to the following tradesmen: (a) $4,500 to the plasterers; (b) $5,000 to the tiler; and (c) $5,000 to the plumber. Theo submits that the Court should find that the cash payments were expended as part of the renovations on the basis of the principles set out in Cheshire & Fifoot’s Law of Contract[5]:
‘The principle that mere difficulty (in assessing damages) does not relieve a court from estimating damages as best it can has been affirmed on numerous occasions, and in a great variety of circumstances. In the face of uncertain evidence the law is willing to take a ‘broad brush approach’, particularly where evidence of loss is within the defendant’s keeping, or it is impossible to produce precise details of the loss.’ [emphasis added]
[5] 10th Australian Edition, paragraph 23.24, page 1148. Seddon, Bigwood, & Ellinghaus.
78Theo submitted that it was not put to him or any of his trade witnesses that these Works had not been completed in the manner and by the persons alleged in Theo’s witness statement. The amounts paid were approximations given by Theo but the he says that the reasonableness of the amounts was not challenged in evidence. The extracts from Sue’s bank statements did not negate the proposition that cash payments had been made to tradesmen from the moneys paid to Sue’s accounts from Theo’s NAB a/c. In all the circumstances, and adopting the ‘broad brush’ approach stated above, and I am satisfied that the balance of the available $56,852.50 was applied to the renovation works comprising cash payments to the trades.
79Although some payments were made on Sue’s credit cards as set out above, I accept Theo’s CBUS lump sum was utilised towards payment of these expenses. The total expenses made out on the evidence before the court is $56,852.50.
Issue Four Reliance
80If issues 1 to 3 are answered affirmatively, whether Theo carried out the Works:
(a) In reliance on the Representations; and/or
(b) In pursuance to the common intention and/or belief, assumption, or understanding referred to respectively at paragraphs 2(a) and (b) above; and
(c) With the knowledge of the defendant.
81Theo says that he would not have spent money on the renovation of the Property had he not been assured by Georgia and Petros that he and Sue would become the eventual owners of it. The lump sum payment he received from CBUS represented effectively all the money he had in the world, including superannuation.
82At present Theo says he has no significant assets and lives alone in a rental property. He says that he badly needed his lump sum superannuation payout and would never have spent that money in renovating a property in someone else’s name had he not believed that he would acquire an interest in the Property.
83Although the court is sympathetic to Theo’s financial and health difficulties, given my previous finding that there were no representations as alleged and no common intention as alleged, I agree with Georgia’s position that the representations related to rent free accommodation for an indefinite period and Theo expended some of his payout on the works in reliance upon having rent free accommodation and a more comfortable home for he and his family than had the Property not been renovated. As such, there was no reliance on the part of Theo.
Issue Five Any Trust
84If issues 1 to 4 are answered affirmatively:
(a) Whether there is any reason why the Court should not impose or declare a constructive trust over Unit 1 (or over the Land at 12 Churchill Street, Kew ); and
(b) The terms and extent of any trust to be imposed.
85A constructive trust of the nature that is asserted by Theo is remedial in nature arising out of Court orders.[6] Georgia contends that in those circumstances, Theo cannot hold a present interest in the Property.
[6] Choi v Kim (2013) NSWSC 1774 at [5].
86Theo says that he now understands that Unit 1 and Unit 2 are not separately titled, and form part of a single parcel of land at 12 Churchill Street. He claims he was not aware of this at the time Georgia and Petros made their alleged promises to him and Sue, or when the renovations were carried out.
87He says that at the time he believed that the units were separately titled, having simply assumed this from the manner in which the residences were separately constructed. He claims that neither Georgia, Petros, nor Sue informed him that the units were combined in a single title.
88Georgia submits that a common intention constructive trust of the type sought by Theo cannot be declared if Theo is unable to establish all the matters he relies upon regarding the alleged representations, reliance and resiling by the owners, and the Court accepts the evidence of Georgia and Sue as to the true offer made in June/July 2012.
89Further, Georgia argues that it would be unconscionable to impose a constructive trust of the type referred to in Muschinski v Dodds[7] given:
(a) Theo’s evidence is that he and Sue would not become owners of the Property and its contingent land until after Petros and Georgia died;
(b) To declare he is entitled to become a current owner would be contrary to that evidence and would result in a subdivision and sale which would be a burden to Georgia, particularly if she needed to sell the property to fund aged care accommodation, diminish the value of her overall property and impact on others who stand to inherit under her April 2020 will;
(c) The Monies expended by Theo on renovations were $42,088.62 (on Georgia’s case) and $56,588.62 (on Theo’s case, if provision is made for costs of plasters, tilers and plumber);
(d) Whilst there is a concession that the current value of the Land on which the Property is sited is $880,000.00 if it were subdivided with a land area of 294 sq meters along the lines set out in the expert report of Murray Orr from Property Valuers Australia Pty Ltd dated 27 July 2021. Mr, Orr has nonetheless maintained in all his prior reports and his oral evidence that the renovation works have added no value to either the whole of the land or to the land on which the Property is sited. Georgia says it would also be unconscionable to impose any form of constructive trust for any amount where the works have not added value to the land and Theo and Sue enjoyed rent free accommodation for at least 3 years;
(e) By reason of rent free accommodation Georgia (and Petros whilst he was alive) missed out on rental in the sum of $200 per week from their long term tenant of 30 years who stated had he not been asked to leave he would have stayed there.
[7] (1985) 160 CLR 583 at 620.
90Georgia submits that a claim to 50% of land valued at $880,000.00 (i.e. to $440,000.00) in circumstances where Theo spent approximately $42,000.00 on improvements but had the offer of rent free accommodation indefinitely and a more comfortable dwelling for he and his family, is extravagant and out of all proportion to relief in the form of a constructive trust.[8]
[8] Harris v Harris [2021] VSCA 138 at [65]-[79]; Donis v Donis (2007) VSCA 97 at [20].
91Given the Court’s finding that the representations as alleged were not made and, as a consequence, there was no common intention between Theo and Georgia that the Property would be held for the benefit of Theo and Sue on trust, and/or that Theo believed, assumed or understood that the Property would be held on such a trust, there is no reason for the Court to declare a trust over the Property in favour of Theo and Sue.
Issue Six Equitable Compensation
92If issues 1 to 4 are answered affirmatively, but the Court considers that it is not open (or appropriate) to impose or declare a constructive trust over the Property or the Land, then:
(a) Whether the defendant ought to pay equitable compensation to the plaintiff; and
(b) If so, the amount of such equitable compensation and any interest; and
(c) Whether any terms should be imposed in connection with the award of equitable compensation, including as to any security over the Land.
93Theo says that he had discussions with Sue, Petros and Georgia in about March 2013 whereby it was agreed that Theo and Sue would pay Georgia and Petros $200 per month in cash to assist them with their groceries and personal expenses each month. Georgia denied ever receiving $200 per month from Theo and Sue, saying that she would never take money from her child. During the time that Theo and Sue lived with Georgia and Petros while the renovations were being undertaken, if such payment was made, then it would be ordinary living expenses. Any monthly payment was not an equity contribution or rent.
94Georgia says that the habitation was ‘rent free’, but Theo’s evidence contradicts that position, saying that he and Sue paid Georgia and Petros $200 per month during the period they lived in the Property from March 2013 to November 2015 (amounting to a total of $6,600 paid in cash). Sue said that when she first had discussions with her parents about moving into the Property, she offered to pay $50 per week in rent if they moved in, however, her parents refused to accept any rental. Sue denies that she and Theo paid her parents $200 per month to contribute to their groceries and personal expenses. Even if I accepted the payment of $50 a week to Petros and Georgia, in my view, such payment is for ordinary living expenses and not relevant to the relief sought by Theo in this proceeding.
95It is, however, common ground that Theo and Sue resided at the Property from March 2013 to November 2018 without having to pay $200 per week in rent (amounting to a total of $27,664).
96Georgia recalled that Theo and Sue stayed in Unit 2 for one month, however, Theo and Sue recalled that they lived in Unit 2 from September or November 2012 to February/March 2013.
97Georgia and Petros paid $4,490.20 on improvements to the Property (see analysis below).
98Theo relied on Mr D Biggs of Armstrong Biggs Valuers Pty Ltd to provide retrospective and current market value for the Property and the Land.
99Mr Biggs was asked to prepare an expert report as to the current market value of 12 Churchill Street, Kew Vic 3101, both as a whole and also specify the respective market values of each of Unit 1 and Unit 2 as the property had not been subdivided. He was also asked to provide a retrospective value for Unit 1 as at around November 2012.
100Mr Biggs made enquiries with the City of Boroondara Town Planning Department in relation to the ability to subdivide the Land. They indicated that due to the size of the land and location of the improvements it could be assumed that a subdivision of the site would be readily attainable.
101In his first report, Mr Biggs valued the whole Land as at 29 January 2020 in the amount of $1.84m with Unit 1 valued at $895,000 and Unit 2 at $945,000. The retrospective valuation of Unit 1 as at November 2012 was estimated at $615,000.
102In his updated report, Mr Biggs revised the valuation of the whole Land as at 19 July 2021 in the amount of $2.154m with Unit 1 valued at $1,190,000 and Unit 2 at $1,270,000. In his valuation, Mr Biggs considered Unit 1 to be a 2 bedroom, 1 study and lounge room configuration post renovation.
103Mr Biggs allowed a land area of 330 meters square for Unit 1 in any proposed subdivision at $3,145 per square meter. The total current market value for Unit 1 was therefore calculated at $1,190m. Mr Biggs allowed for more space in the back portion of the parcel of land to allow for two rectangles for Unit 1 and 2.
104Georgia relied on the expert evidence of Murray Orr from Property Valuers Australia Pty Ltd. In his first report, Mr Orr also noted that he made an enquiry at Boroondara Council Planning Department which indicates it is likely that if an appropriate subdivision application were made, that two Titles might issue (one for each dwelling). It can therefore be said that the existence of the second dwelling would make it less likely to fail and therefore be more an administrative application.
105Mr Orr noted in his first report that the fourth bedroom in Unit 1 was removed during the renovations to create a larger kitchen/meals area which then flows to the rear sunroom. Mr Orr says that he considers the whole of the property lies in the land value and he does not ascribe any value to the two dwellings. Whilst he concedes that that Property has a rental value, Mr Orr says that it was diminished at the time of the renovation due to the removal of one bedroom and concludes that the renovations appear to be overcapitalisation. Mr Orr provided a valuation of each Unit as at 1 September 2012 and date of inspection (28 January 2020) to be $0. The valuation provided for the purpose of this proceeding is land value only; as the two dwellings are dated and not in good condition. The interior of Unit 1 had been updated to enable it to be lettable, however, his view is that a prospective purchaser would want the property for redevelopment as it was possible to accommodate either a two or three unit subdivision or used for a single significant residence.
106Mr Orr considered that the whole of the property as at the date of inspection had a market value of $1,800,000 and at 1 September 2012 had a value of $1million. Mr Orr agreed with Mr Bigg’s assessment of the total current market value of all of the property being assessed at $1.84m being $2,362 per square meter which falls within the range of levels shown by the recent sales in the area.
107Mr Orr provided an updated report on day one of the trial. He provided for a lesser land area for Unit 1 for any proposed subdivision of the Land. He allowed an area of 292 square meters at $3,000 per square meter resulting in a current market value of $880,000 (rounded) for the Property. He allowed for a smaller land area to enable a turning circle in a shared driveway for both units.
108Mr Orr suggested that the subdivision cost of $10,000 opined by Mr Biggs was inappropriately allocated as a shared cost. In his view, the cost should be solely against the Property.
109Theo conceded Mr Orr’s valuation of 50% of the interest in the Property with an area of 292 square meters at $3,000 per square meter resulting in a current market value of $880,000 (rounded).
110Theo’s alleged detriment is set out above. These items are not quantified save for the receipts that have been tendered by Sue, the conceded bin hire on the bank statements, and an estimate of the cash payments up to the amount of $56,852.50. However, the Court can infer from the nature of these items that they are relatively small and readily quantifiable. In these circumstances, even if Theo was successful in making out his claims, the appropriate remedy is financial compensation, or a share of the proceeds of sale should Georgia sell the Land (for example, in the event that she needs to fund aged care facilities). In Clementi v Rossi,[9] McMillan J stated:
What a court may order depends upon all of the circumstances of the case, and before construing a constructive trust, the court should consider whether there is an appropriate equitable remedy falling short of the recognition of a trust. In cases of proprietary estoppel however: ‘the estopped party can only fulfil their equitable obligation by making good the expectation which they have encouraged. If, however, the promisee has been induced to make a relatively small, readily quantifiable monetary outlay on the faith of the appellant’s assurances, then it might not be unconscionable for the estopped party to resile from the promise on condition that reimbursement be provided to the promisee for that outlay.[10]
[9] (2019) VSC 725 at [262].
[10] Ibid at [262] citing Alderuccio v Alderuccio (n 38) [42] (Derham AsJ), summarising Giumelli v Giumelli (1999) 196 CLR 101, 112 [6], 123–5 [40]–[48] (Gleeson CJ, McHugh, Gummow and Callinan JJ); Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505, 529 [84]–[85] (French CJ, Kiefel, Bell and Keane JJ); McNab v Graham (n 40) [70]
111Georgia conceded in closing submissions that in exercising its equitable jurisdiction it is open to the Court to ‘mould’ or ‘modify’ relief and that equitable compensation is one option. However, she argued that mitigating against an order for payment of the amount Theo paid (of approximately $42,000.00 to $56,000) are the benefits he and his family had from rent free accommodation - noting Theo and Sue were paying rent of $1,690 per month and for the 3 years from November 2012 to November 2015 there was a saving of $60,840.00 which outweighed the amounts paid by Theo. Also, Georgia contends that there was foregone rental by Georgia and Petros, and following Petros’ passing, Georgia alone, from August 2012 to August 2021 in the sum of $93,600. Accordingly, she contends that there should be no such order.
112To the extent that Theo has particularised and proven his loss by reference to the receipts and invoices tendered at trial, they are relatively small and readily quantifiable amounts.
113However, given my previous findings that Theo and Sue were permitted to live in the Property rent free from the period March 2013 to November 2015 amounting to $27,664 for the Property (or $60,840 for the Thornbury property) in exchange for paying outgoings, there is no order for equitable compensation.
Issue Seven Petros Works
114Whether Georgia and Petros paid for the works alleged at paragraph 5(j) of the defence, and if so, whether Theo is consequently not entitled to the relief sought in the proceeding (or whether that relief should be altered or reduced to some extent).
115Georgia said that Petros wanted some works done in the Property which he paid for. She claims she was aware of these works because they spoke about them and says the works Petros paid for are as follows:
Item Cost Evidence
(a) Bath and shower vanity mirror $1,650 $1,651.20
(b) Gate $1,440 (not pressed)
(c) Heating $590 $590 (admitted)
(d) Plumbing $5,300 $5,250 (not pressed)
(e) Built in cupboard $1,667 $1,667
(f) Back security door $582 $582 (admitted)
TOTAL $11,230 $4,490.20
116Georgia provided a verification of the items of expenditure in her evidence. The revised figure for the contributions made by Petros totalled $4,490.20 and at trial, counsel for Georgia did not press the gate in the sum of $1,440 or the plumbing item in the amount of $5,250.
117Sue’s evidence was that there were some purchases and works which were done to the Property which her father wished to be done, and he either paid for those items by credit card or in cash, or she paid for some and he reimbursed her with cash. The purchases and works she paid for and was subsequently reimbursed by her father include:
(a) Aqua Deluxe inline shower screen $745
(b) Ikea Hemnes Mirror $149
(c) Comfort Heating & Cooling Pty Ltd $590 (admitted)
(d) Reliable Hot Water Plumbing Pty Ltd $350
118Theo’s reconciliations in relation to the above items are as follows:
(a) Bath and shower vanity mirror: he concedes that these items were purchased from Early Settler on the date alleged, and accepts that they were used in the Property. However, he says he was present with Sue when the items were purchased and understood that the money was sourced from the lump sum. He admitted that he does not have any knowledge of the claims or the items for which Petros reimbursed Sue in cash.
(b) Heating and cooling works consisting of the installation of a new grill and associated work: Theo concedes that Sue paid $590 for this work.
(c) Gate: Theo denies that these works were completed on or about September or October 2014. He says the gate was not installed whilst he resided in the Property. He noticed that the gate was installed one day when he dropped off the children. Theo says that it was installed at least a year after he left the Property in November 2015. This item is no longer pressed by Georgia.
(d) Plumbing works: Theo says that these occurred at the rear boundary of the property by E J Kefford, and were situated within Unit 2 and have no relevance to the present proceeding. This item is no longer pressed by Georgia.
(e) IKEA built-in cupboard: Theo concedes that this item was purchased and installed at the Property, but says he paid for both the cupboard and the installation.
(f) Flat pack wardrobe: Theo concedes that this item was purchased and installed at the Property, but says that it he paid both for the wardrobe and the installation himself.
(g) Rear security door: Theo admits this claim. Petros did pay for this item and for its installation.
119In relation to the bath, shower and vanity unit; in my view I accept that Petros and Sue selected the bath, waste & plug from Early Settler Collections on or about 24 October 2012 and a tax invoice no. 1724841 dated 24 October 2012 was made out to Petros. A quotation dated 21 February 2013 was provided by Regency Showerscreens to Petros and Sue in the sum of $745.00 for the supply and install of an Aqua Deluxe shower screen. A receipt was issued by IKEA dated 12 October 2013 for the Hemnes Mirror and I accept that Sue paid for the purchase and was re-imbursed shortly afterwards.
120Similarly the invoices issued by IKEA for the built in cupboard are in the name of Sue.
121Theo argues that the plumbing works were undertaken on Unit 2. The invoices describe the works done and include replacement of sewer shaft on left rear boundary of the property at 3.6m depth on or around 23 September 2013. It is not clear on the material whether the works were required for the Property or both units. Georgia asserts that the works were done behind Unit 1, however, it was unclear on the invoices and the evidence the actual scope of these plumbing works. Counsel for the defendant submits that in the circumstances this item was not pressed by Georgia at trial.
122Georgia said that Petros told her that he would pay for the items set out above and repaid Sue in cash. She agreed that she did not see Petros pay cash.
123Georgia does not say these works add any value to the part of the Property, relying on Mr Orr’s valuation. It is simply said those expenses were paid by Petros which assisted Sue and Theo who did not pay for these items.
124The quantum of the works undertaken by Petros amounts to $4,490.20.
125However, given my previous findings, it is unnecessary to apply this sum in any quantification of Theo’s entitlement to relief.
Issue Eight Estoppel or Laches
126Whether, as a consequence of the matters pleaded at paragraph 7 of the Defence, the plaintiff is estopped (or barred by laches) from bringing the present proceeding (or obtaining the relief sought in the proceeding).
127Equity has its own exclusively equitable doctrines, of laches, acquiescence and delay.
128Georgia says that Theo never made any claim that he had an interest in the Property until sometime well into his family law proceeding when he raised it in an affidavit sworn 5 September 2018.
129It is common ground that Theo and Sue separated on or around 8 November 2015. Theo left Unit 1 and Sue and their children remain living in the Property.
130Georgia relies on the following matters:
(a) On 23 March 2017, Theo filed an Initiating Application in Federal Circuit Court of Australia (“the family law proceeding”). No claims were made against Petros and Georgia.
(b) On 5 September 2018, Theo filed an Amended Initiating Application in the family law proceeding. No claims were made against Petros or Georgia.
(c) On 12 April 2019, Theo filed a Further Amended Initiating Application in the family law proceeding seeking to join Petros and Georgia but does not specify any orders sought against them and claimed expenditure of $120,000.
(d) On 1 May 2019, Judge Harland dismissed Theo’s application to join Petros and Georgia.
(e) On 3 June 2019, Theo commenced the present proceeding as a general indorsement with no particulars as to quantum.
(f) On 12 November 2019, Theo filed a statement of claim providing for the sum of $75,582.29 in expenses for the works.
131The delay and prejudice suffered by Georgia in the family law proceedings was in the context of the effect the joinder would have on the trial date, which had already been vacated once before.[11] The defendant submits that in the family law proceeding, Theo had three opportunities to amend his statement of claim and join Georgia and Petros. Theo’s joinder application was denied and Judge Harland noted that Theo had had ample opportunity to particularise his claim and seek to join Georgia and Petros. Theo then issued a general indorsement in this court. There is no issue estoppel as the family law proceeding application was an interlocutory hearing in relation to a joinder application.
[11] Karabagias v Katopodis [2019] FCCA 1133 at [42] per Harland J.
132In closing submissions, Georgia did not press the defence of laches. Had Theo maintained in his evidence that he and Sue were promised the Property after the works were completed (noting completion occurred in early 2013), then this issue would arise. However, if I had to decide this issue, in my view, in circumstances where Theo left the property around 8 November 2015 and then sought to join Petros and Georgia as respondents to the family law proceedings and subsequently these proceedings, a period of 4 years and 5 month and 7 months respectively has elapsed. Theo is not estopped from obtaining relief in the present proceeding. Any mere delay is not sufficient, there must be something more that is prejudicial to Georgia. That is not this case.
Issue Nine Caveat
133Whether caveat AR378102M ought to be removed from the title to the Land.
134On 23 August 2018 a caveat was lodged on behalf of the Defendant to Counterclaim (Theo) over the title of the Land at the offices of Land Victoria in dealing no. AR378102M ("the caveat"). The caveat claims an interest under an 'implied, resulting or constructive trust'. Georgia contends that Theo does not have a caveatable interest in the Property or the Land and it is bad in law.
135As noted above, the constructive trust asserted by Theo is remedial in nature and arises out of Court orders. Unless there is a Court order, the alleged beneficial interest on the part of Theo does not give rise to any caveatable interest in the Property.
136Given my findings set out above, Caveat AR378102M should be removed from the title to the Land.
Conclusion
137For the foregoing reasons, the plaintiff’s claim is dismissed. There is judgment for the defendant by way of declaration that the plaintiff does not hold a caveatable interest in the Land. I further order that Caveat AR378102M be removed from the title to the Land and that plaintiff pay the defendant’s the costs of and incidental to the proceeding.
- - -
Certificate
I certify that these 35 pages are a true copy of the judgment of Judge Burchell delivered on 17 August 2021
Dated: 17 August 2021
Simon Bobko Associate to
Judge Burchell
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