Lloyd v Tedesco

[2003] HCATrans 702

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P36 of 2002

B e t w e e n -

KATHLEEN LOUISA LLOYD

Applicant

and

FRANCESCO TEDESCO

Respondent

Application for special leave to appeal

McHUGH J
KIRBY J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 9 MAY 2003, AT 11.04 AM

Copyright in the High Court of Australia

MR C.P. SHANAHAN:   May it please the Court, I appear for the applicant.  (instructed by Butcher Paull & Calder)

MR K.J. MARTIN, QC:   May it please the Court, I appear for the respondent.  (instructed by Deacons)

KIRBY J:   Mr Shanahan, I should say that I have a non-married relationship in which I do not pool my financial arrangements with my partner, and many Australians in such relationships do not pool their financial position with their partner.  Now, if that causes any embarrassment in the case, I would stand aside and let the other Justices deal with the matter, but it is a factor that is in my mind because of my own position and I thought I should put it on the record.  I do not know if you have any objection, or Mr Martin has any objection, but insofar as that is an issue in this application, that is the position in my own personal case and therefore I thought I ought to disclose it.

MR SHANAHAN:   Certainly for the applicant, your Honour, the applicant has no problem with your Honour sitting in this matter.  I cannot speak for my friend.

MR MARTIN:   Your Honour, we are obliged very much to you for making that clear to us, but we do not wish to raise any point in that regard.  We are certainly content with your Honour to be present as part of the Coram.

KIRBY J:   Thank you.

McHUGH J:   Yes, Mr Shanahan.

MR SHANAHAN:   Thank you, your Honour.  May it please the Court, the basis of this application is essentially the applicant’s contention of two errors in the court below.  They relate to the legal principles upon which a partner to a failed de facto relationship might sue for the benefit of their contributions.

The two errors that are identified by the applicant relate to separate issues of intention and contribution.  In relation to the issue of intention, the error that the applicant relies upon relates to the court below insisting that the applicant prove a joint endeavour in which the parties had an actual intention to pool resources for the purposes of that endeavour.

McHUGH J:   But was that not the way you pleaded the case?

MR SHANAHAN:   That is so, your Honour.  The point that would be made in relation to the pleadings is that it has to be understood in the context of how these matters have been dealt with in Western Australia.  There was an extensive and expensive piece of litigation involving Stowe which resulted in some three decisions regarding the nature of the pleadings that should be brought before the Court in matters such as this, which focused on issues such as pooling and joint endeavour. 

It is the applicant’s contention that the matters pleaded by the applicant in the statement of claim support the relief claimed without the need to prove that joint endeavour, albeit that had the applicant proven a joint endeavour that would have been a basis upon which the relief might have been granted.

KIRBY J:   But if you pleaded in that way and the case is fought in that way, the suggestion is that either (a) that it is unfair now to be asking this Court to be looking at it through a different crucible and (b) it may have affected evidentiary questions that would make it procedurally unfair for the Court now to look at this question in a case where that was not really raised on the way it was pleaded and fought.

MR SHANAHAN:   I understand that, your Honour, and I think that the only answer to that is that the material facts that are required in the applicant’s respectful submission to establish relief in this case were pleaded in the court below and were the subject of evidence, albeit that what the applicant argues for now or contends for now is less than what was argued for at trial.

KIRBY J:   Could I just get it clear.  Is the suggestion that you were in effect forced to plead it in a particular way because of the decisions in Stowe or is it something else?

MR SHANAHAN:   Yes.  Your Honour, I am reticent to make a submission like that.  I think being forced is possibly putting it too high, but certainly ‑ ‑ ‑

KIRBY J:   You can always reserve a point if you want to take it later and should do so if you disagree with - I mean, speaking for myself, I think the notion that equity will only intervene if parties have pooled their financial resources would be so out of touch with the reality of the variety of human relationships in Australia that that would not be a correct statement of the law, and I do not think it is accepted as a correct statement of the law.

MR SHANAHAN:   Yes, your Honour.  In relation to whether or not the applicant was forced to plead it in the way that she did, the answer to that is that as a practical matter there was no other option for her given the decisions in the court below which related to the way in which these matters should be pleaded and pursued the trial.  It may be that the alternative proposition that is being put before your Honours this morning should have been reserved at trial.  It was not.  I do not contend that it was.  The applicant simply says that what was proven at trial was enough to support the relief claimed and should entitle the applicant now to pursue the argument that is before the Court this morning on the basis that it goes to a central element of the law of equity as it relates to the application of constructive trusts and/or other forms of equitable relief.

McHUGH J:   But may it not be that if we were to consider the case in the way you now contend that this Court would be required to consider issues of fact not determined at the trial such as the precise contributions made by the applicant and the increment in wealth of the respondent?

MR SHANAHAN:   Certainly one of the orders sought ultimately in this application, your Honour, would be that the matter be remitted to the court below for that type of assessment.  It is not contended for by the applicant that they would be matters that would be dealt with by this Court.

KIRBY J:   This is a rather modest estate, is it not?  The amount involved in the joint properties is only of the order of $170,000 I think I saw, is that correct?

MR SHANAHAN:   That is so, your Honour.  That was the amount that the trial judge found was the increment in the respondent’s wealth over the nine to ten‑year period of the de facto relationship.  There was also an amount of some $130,000 which was held in trust in relation to a property which the trial judge did not feel that he needed to consider given his conclusions in relation to the facts of the matter.

KIRBY J:   Does it not come down to a question of procedural fairness?  You are in effect asking us to look at the matter on a basis different from that pleaded and fought at trial and on a basis that if we cannot sort it out on the facts that were proved we would send it for a second bite of the cherry.  That would be a very unusual thing for the Court to do.

MR SHANAHAN:   Your Honour, with respect, the applicant is not asking this Court to allow the applicant to mount an argument that was not pleaded.  The point that is made in that regard is that the applicant pleaded all the material facts on which it seeks to rely this morning.  It is conceded that the primary emphasis in the trial court before his Honour the learned trial judge was certainly on the issue of a joint endeavour and a pooling of resources.  What is put in that regard is that that was simply the way in which these matters - Lloyd v Tedesco was following on behind the Stowe litigation.  There was clearly an intention that the two matters proceed in the same way.  There were elements which were argued in respect of the pleadings over a significant period of time in the Stowe litigation which ultimately led to the formulation that was put on behalf of Mrs Lloyd at trial. 

I do not think I can take that matter any further.  I simply make the submission that in this instance, given the nature of the estate, that Mrs Lloyd was effectively left with the case that had been formulated in the course of those interlocutory skirmishes in Stowe. 

The material facts upon which the applicant relies were pleaded in the statement of claim.  Effectively I think what the applicant is saying is that when his Honour Justice Deane in Muschinski v Dodds talks about a relationship or a joint endeavour as failing, effectively what is being argued this morning is that the relationship has failed, that there is no requirement of an intention in order to establish relief on that basis and that the contributions that can be made to that may be domestic indirect contributions.  They are the two points that the applicant seeks to advance this morning.

Your Honours, if I might just take the Court to those matters now.  In relation to intention, effectively what the court required the applicant to establish in the court below, his Honour Justice Murray adopting the principles which were applied by the trial judge – and they are set out at pages 71 and 72 of the application book.

KIRBY J:   What worries me in the case is, if you look at Justice Murray on page 77, it may be that he was simply dealing with the case as it had been fought, but it is replete with references to “pooling”.

MR SHANAHAN:   Yes.

KIRBY J:   And Justice Hasluck agreed with his Honour.  Does Justice Murray anywhere say, “Well, this is what Stowe required and therefore” - I realise on page 77 he is quoting from Justice Miller, but is there anywhere there that the judge has said, “This is how it was fought but this doesn’t necessarily represent the requirement of the law”?  I would not, myself, like to leave authority on the basis that that is the case because I just do not think that is a principle that - it is a relevant factor but it is not a precondition to relief.

MR SHANAHAN:   Your Honour, Justice Murray refers to Stowe v Stowe.  This is the first decision.  There were three decisions in Stowe. The first of those decisions was a Full Court decision in relation to the pleading, and his Honour Justice Murray refers to that at paragraph 5 of his reasons at page 63 of the application book.

KIRBY J:   Yes, he comes back to it at paragraph 14 and 17.  Does he anywhere say anything - perhaps his Honour could say, “Well, I didn’t have to question Stowe or reformulate it or say it didn’t cover all cases” because you did not really put that up either at trial or before the Full Court.  Did you attack Stowe in the Full Court?

MR SHANAHAN:   Yes, your Honour.

KIRBY J:   Well, where does his Honour deal with your attack?

MR SHANAHAN:   Can I just put a rider on that and say that effectively what was put in the Full Court is what is being put today, that they were the arguments advanced on appeal and they were met by the same contentions that my friend puts today that this was not how the matter was fought in the court below.  In that sense Stowe was attacked as being an expression of the same principles that have been applied in Lloyd v Tedesco.

KIRBY J:   Well, this is a modest property and if one were looking at the prospects of success you would be looking down a case where you would face exactly the same contentions if this matter were returned before the Full Court.

MR SHANAHAN:   Yes.

KIRBY J:   If you reserved the point at trial or did something of that kind, then it is a different matter, but if you fight about ‑ ‑ ‑

MR SHANAHAN:   Yes, your Honour.  I did not appear as counsel at trial and, as I understand it ‑ ‑ ‑

KIRBY J:   I am not blaming you and I am not blaming him or her, but I am saying that it makes it difficult for this Court to, as it were, reconfigure the case.

McHUGH J:   And what it means is that the case has to go back for a further hearing to give you an opportunity to make a case that you did not make before.

MR SHANAHAN:   Yes, your Honours.  Can I just take your Honours to paragraph 17 of his Honour Justice Murray’s reasons, page 68 of the application book, where it is clear that his Honour saw the statement of claim formulated by Mrs Lloyd, the applicant, as being an elucidation of the case of Stowe.  It is there that it is seen the influence of Stowe in relation to the pleading.  It is effectively a Stowe pleading. 

On the appeal in the court below the submission was made on behalf of the applicant that effectively what had happened by this stage was that parties were running their cases in Western Australia in somewhat of a formulaic way based on the decisions by the Full Court and by his Honour Justice Owen in various interlocutory decisions in Stowe, and to now allow that to preclude the applicant in this case from seeking to advance an alternative basis upon which she was entitled to relief based on material facts that she had pleaded is a matter that should entitle the applicant to pursue this application for special leave.

McHUGH J:   Yes, Mr Shanahan.

MR SHANAHAN:   Your Honours, I think the two points that are sought to be pursued are reasonably clear.  In Muschinski v Dodds his Honour Justice Deane set out the principles which condition liability or the right of a de facto spouse to pursue issues such as the return of their contributions after the failure of the relationship. In the most significant passage in his Honour Justice Deane’s judgment at page 620, which is actually set out in full in the application book in the reasons of his Honour Justice Murray at pages 64 and 65, his Honour Justice Deane identifies four elements. One:

the substratum of a joint relationship or endeavour ‑

and that is the point that the applicant relies on ‑

is removed without attributable blame ‑

Two:

the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour ‑

no mention of an intention.  It will be argued that the contribution can be domestic, indirect and non-financial, as was found by the Supreme Court of South Australia in Parij v Parij, which is 33 on the applicant’s table of authorities.  Three, that the contributions of the contributing spouse:

would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it.

Here there is an important point to make in the applicant’s contention, and that is effectively that what is being talked about or spoken about by his Honour Justice Deane is an intention or a special provision that the spouse retaining the contribution do so.  In other words, it would be an intentional special provision which relates to the period after the failure of the relationship.  In that sense it is argued that a litigant such as Mrs Lloyd would merely have to rebut the existence of such an intention or a special provision, and that effectively this is a defence that would be proven by the retaining spouse.

In other words, your Honours, what is contended for by the applicant is that the way in which constructive trust of this type is more properly understood is the constructive trust which is based on an absence of an intention to benefit the spouse retaining the contributions rather than a trust which is based on the common intention of the parties.  It was a constructive trust based on a common intention of the parties which appears to be the type of trust upon which the court below relied.  It is that distinction, that difference which the applicant says is the primary error that was made by the court below in relation to the issue of intention in this case.  The fourth element that his Honour Justice Deane refers to is that the retention of the contributing spouse’s contributions by the other spouse after failure “would be unconscionable”.

Your Honours, the first issue therefore is that there was no requirement at law in the applicant’s respectful submission that the applicant be required to prove the existence of a joint endeavour in which the parties had an actual intention to pool resources, and that that is in effect a literal application of the decision in Baumgartner.

McHUGH J:   Yes, Mr Shanahan.

MR SHANAHAN:   The second point that the applicant relies upon is the nature of a contribution which will support relief such as this, and in that instance puts reliance on Parij v Parij, which is a decision of the Supreme Court of South Australia in which their Honours Justices Debelle, Cox and Millhouse, their Honours Justices Cox and Millhouse agreeing with his Honour Justice Debelle that a domestic contribution which is not made specifically for a particular specie of jointly‑owned property, an indirect contribution, a domestic contribution may support a grant of relief of the type sort by the applicant in this instance.  That is not the law which was applied in the court below.

KIRBY J:   What do you say to the suggestion that the principles of equity have to a very large extent and in Western Australia now been overtaken by legislation and, indeed that there has been very substantial recent legislation in Western Australia on this issue, and that insofar as your case might be an appropriate vehicle to deal with the Stowe problem, that that is no longer a problem because the legislation has, as it were, overruled it.

MR SHANAHAN:   Thank you, your Honour.  Your Honour should have an outline filed by the applicant of the new Western Australian statutory provisions.

KIRBY J:   Yes, I saw that.

MR SHANAHAN:   That is a document that was filed pursuant to Practice Direction No 3 of 1996.  Your Honours will see that the situation in the Australian States and Territories is summarised at paragraphs 4 and 5 on page 2.

KIRBY J:   Yes, I did read that before, but what is the answer to my question?

MR SHANAHAN:   The answer to your question, your Honour, is that it only applies to de facto relationships that split on or after 1 December 2002 and there will continue to be cases coming through the Western Australian courts for some time, as has been the experience in other jurisdictions introducing this type of legislation.

KIRBY J:   But is the so‑called Stowe principle being observed in other States of Australia?  Can you point to any other States ‑ ‑ ‑

MR SHANAHAN:   I cannot point to any authority that suggests that, your Honour, no.

KIRBY J:   And would not the courts of Western Australia, in the light of the legislation, as it were, develop the principles of equity in a way that is harmonious with the legislation?

MR SHANAHAN:   That must be so, your Honour, but I think that the point that the applicant made there is that ‑ ‑ ‑

KIRBY J:   I realise this is no real comfort to your client ‑ ‑ ‑

MR SHANAHAN:   Yes.

KIRBY J:   ‑ ‑ ‑ and I have some sympathy for your client’s position, but we have to look at it realistically given the size of estate and the procedural problems and the number of cases of this kind that are likely to come to us.  All of those seem to be points against you.

MR SHANAHAN:   I appreciate that, your Honour.  I think that the answer to some of those points is this, that there will continue to be cases coming before the courts in Western Australia for a period which may approach six years, that the requirements of the legislation put conditions on the

jurisdiction of the court to make orders in relation to de facto relationships which have to subsist for two years or be the subject of substantial contribution by the parties, that there are other instances in which these principles will be applied by the court below. 

Your Honours have recently I think looked at this question in relation to issues about moneys paid and received where there has been a failure of consideration and the prospect of whether that is based on unconscionability or unjust enrichment.  It seems that these principles have a broader application than merely in the narrow confines of de facto relationships.  Were that the only application that these principles had, then the applicant would accept perhaps what your Honour puts in relation to the effect of this new legislation in this State.

There is certainly also the prospect, your Honours, that the Supreme Courts of Western Australia and South Australia are at odds in relation to these principles, and that it is noted that the States of Victoria, South Australia, Tasmania and the Northern Territory will continue to utilise these principles in dealing with applications of this type by litigants from same‑sex relationships.  One of those States will be South Australia and it will continue no doubt to apply the law as it is set out in Parij v Parij.

So the applicant’s response to your Honour is, yes, there is a new statutory regime, yes it will deal with these types of matters in respect of relationships that fall within its terms, but that ultimately there will continue to be cases such as this that come before the courts and that these principles have a broader application.

McHUGH J:   Yes, your time is up.  Thank you, Mr Shanahan.

MR SHANAHAN:   Thank you.

McHUGH J:   The Court need not hear you, Mr Martin.

MR MARTIN:   May it please the Court.

McHUGH J:   Some statements in the reasons of the trial judge in the Full Court have given us some concern because, arguably, they do not appear to give full effect to the principles of law applicable in a case such as the present. 

In fairness to the learned judges who made them, however, these statements reflect or, in all events, appear to have been influenced by the way that the applicant pleaded and conducted her case.  In fairness to the applicant’s legal advisers, this was a consequence of following in a formulaic way, as it was put, the decision of the Supreme Court of Western Australia in Stowe v Stowe (1995) 15 WAR 363. However, the points now sought to be argued were not reserved at the trial or in the Full Court.

Given the way that the case was pleaded and apparently argued and the learned trial judge’s findings of fact, the case is not a suitable vehicle for further elucidation of the principles laid down in cases such as Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137. Moreover, if the applicant was ultimately successful, the case would have to be remitted for a further hearing to determine further facts. That would mean that the applicant would have a second hearing to make a new case that was not argued in the courts below. Accordingly, in all the circumstances, the case is not one for the grant of special leave. Special leave is refused with costs.

The Court will now adjourn to reconstitute.

AT 11.30 AM THE MATTER WAS CONCLUDED