Marley & Ormonde

Case [2021] FamCA 105

FAMILY COURT OF AUSTRALIA

Marley & Ormonde [2021] FamCA 105

File number(s): SYC 3012 of 2018
Judgment of: MCCLELLAND DCJ
Date of judgment: 11 March 2021
Catchwords: FAMILY LAW – PROPERTY – Equitable interests – Discrete issues – Where third parties to the marriage, the mother and brother of the husband, assert they have an equitable interest in the former matrimonial property of the husband and wife – Consideration given to whether the property is held on express, resulting or constructive trust for the third parties – Consideration given to whether the third parties are entitled to an equitable lien or charge over the property – Consideration given as to whether the husband and/or wife are indebted to the third parties – Where the wife makes an application under s 106B of the Family Law Act 1975 (Cth) that the Court should set aside agreements purportedly executed by the third parties and the husband in respect to monies alleged to be advanced to or on behalf of the husband in respect to the former matrimonial property – Consideration of bona fides of the purported agreements – Where determination of these discrete issues is necessary to ascertain the pool available for distribution between the husband and wife – Declaration made that one of the third parties has a beneficial interest by way of resulting trust in the property – No determination made as to the proportion of that interest – All other claims dismissed.
Legislation:

Family Law Act 1975 (Cth) ss 79, 80, 90AE, 106B

Evidence Act 1995 (Cth) s 149

Real Property Act 1900 (NSW), s. 43

Limitation Act 1969 (NSW), s. 14

Conveyancing Act 1919 No 6 (NSW), s. 23C

Family Law Rules 2004 (Cth) r. 1.04

Cases cited:

Abrath v North Eastern Railway Co (1883) 11 QBD 440

Allen v Snyder (1979) FLC 90-656

Ashton v Pratt (No 2) [2012] NSWSC 3

Australian Guarantee Corp Ltd v De Jager [1984] VR 483

1           Bale v Mills (2011) 81 NSWLR 498

Baumgartner v Baumgartner (1987) 164 CLR 137

Beatty v Australia and New Zealand Banking Group Ltd [1995] 2 VR 301

2           Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37

Briginshaw v Briginshaw (1938) 60 CLR 336

Brown v Brown (1993) 31 NSWLR 582

Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26

Calverley v Green (1984) 155 CLR 242

Chalmers v Pardoe [1963] 3 All ER 552

Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353

Cook v Sirius International Insurance Corporation Australia Branch [2020] NSWSC 1631

3           Director General of Department of Community Services; Re Sophie [2008] NSWCA 250

Dullow v Dullow (1985) 3 NSWLR 531

Elias and Elias (1977) FLC 90-267

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Evans v Braddock [2015] NSWSC 249

GC NSW Pty Ltd v Galati [2020] NSWCA 326

Giumelli v Giumelli (1999) 196 CLR 101

Grant v Roberts; Smith v Smith; Roberts v Smith; Curtis v Smith

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Details
AGLC
Marley & Ormonde [2021] FamCA 105
Case
[2021] FamCA 105
Decision Date

CaseChat Overview and Summary

The case involved Ms Marley (the applicant wife) and Mr Ormonde and Ms Ormonde (the first and second respondents, husband and mother) and Mr B Ormonde (the third respondent, husband's brother). The dispute concerned the beneficial interests in the former matrimonial home, the Suburb F property, which was registered in the husband's sole name. The wife sought to set aside agreements relating to funds advanced by the third parties towards the property, while the third parties asserted equitable interests in the property. The court was required to determine whether these third parties held an equitable interest in the property, either through express, resulting, or constructive trusts, or were entitled to an equitable lien or charge. The resolution of these discrete issues was necessary to ascertain the asset pool available for distribution between the husband and wife.

The court considered whether the husband held portions of his interest in the Suburb F property on express trust for the second and third respondents, and whether the third parties were entitled to an equitable lien or charge. The wife had also applied under s 106B of the *Family Law Act 1975* (Cth) to set aside agreements purportedly executed by the third parties and the husband concerning monies advanced for the property. The court's reasoning focused on the objective manifestation of intention to create a trust, particularly in the context of family dealings, and the evidence presented regarding contributions to the purchase price.

McClelland DCJ declared that the third respondent, Mr B Ormonde, held a beneficial interest in the Suburb F property by way of a resulting trust, to the extent of his contribution of $780,000 towards the purchase price. However, the precise proportion of this interest could not be determined at that stage and would require further consideration. All other claims by the wife and the second respondent were dismissed. The matter was listed for directions regarding the further progress of the proceedings.

Orders

Orders of the court

SYC 3012 of 2018

BETWEEN:

MS MARLEY

Applicant

AND:

MR ORMONDE

First Respondent

MS ORMONDE

Second Respondent

MR B ORMONDE

Third Respondent

ORDER MADE BY:

MCCLELLAND DCJ

DATE OF ORDER:

11 MARCH 2021

THE COURT ORDERS AND DECLARES THAT:

1. The Third Respondent is beneficially entitled, by way of a resulting trust, to an interest as a joint tenant with the husband in his right, title and interest in E Street, Suburb F NSW (“the Suburb F property”), being land comprised in folio identifier … to the extent to which the Third Respondent has contributed the sum of $780,000 towards the purchase price of the Suburb F property as may be adjusted by subsequent orders of the Court.

2. The husband’s Application in a Case filed 9 August 2020 is dismissed.

3. Prayer 4 of the wife’s Amended Initiating Application is dismissed.

4. The Second and Third Respondent’s Response to Initiating Application’s filed 9 August 2019 be otherwise dismissed.

5. The matter is listed for directions regarding the further progress of the matter on 23 April 2021 at 9.30am.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

At the commencement of these proceedings, an issue arose as to the admissibility of relevant instruments reflecting what the husband and the Second and Third Respondents contend were the relevant agreements reached between them in respect to funds contributed by the Second and Third Respondents towards the purchase of the Suburb F property and for the payment of stamp duty. By separate judgment dated 18 August 2020,[1] I accepted those instruments into evidence on the basis of relevant undertakings that those documents would be forwarded to the Commissioner for Stamp Duties.BACKGROUND[1] [2020] FamCA 784Brief history of the parties’ relationship In 1968, the husband was born in the United States. He is currently aged 53 years. In 1973, the wife was born in the United Kingdom (“UK”). She is currently aged 47 years. On 9 January 1994, the parties met in the UK and, in November 1994, the parties commenced cohabitation. The parties have five (5) children together:(a)V born in 1995 and currently aged 25 years;(b)W born in 1997 and currently aged 23 years;(c)X born in 1999 and currently aged 21 years; (d)Y born in 2010 and currently aged 10 years; and(e)Z born in 2016 and currently aged four (4) years. On 13 August 2003, the wife and husband relocated to Australia with their children. Prior to moving to Australia, the husband had established a successful business in the United Kingdom. He has since established such a business in Australia. On 13 February 2017, the wife and husband separated on a final basis while living under the same roof. On 12 December 2017, the wife vacated the former matrimonial home, the Suburb F property, and has since resided in rented accommodation with the parties’ two (2) youngest children, Y and Z. The children also spend time with their father. After the birth of the parties’ first child, the wife did not work in paid employment until late 2018, following the parties’ separation.Brief procedural history On 14 May 2018, the wife commenced proceedings in the Federal Circuit Court of Australia. On 28 May 2018, Judge Boyle made the following Order by consent:8.Within 28 days the defacto Husband shall serve copies of his court documents to his mother and brother. On 4 December 2018, the matter was transferred to the Family Court of Australia. On 24 June 2019, Justice Henderson made procedural orders which included the following: 4. The second respondent is to provide to the solicitors for the wife copies of all bank statements she asserts contain proof of monies she provided to the husband and his family from 2012 until the end of 2017 within 28 days.5. The third respondent is to provide to the solicitors for the wife copies of all bank statements he asserts contain proof of monies he provided to the husband and his family from 2012 until the end of 2017 within 56 days. On 9 August 2019, Justice Henderson made the following orders: 3.The Court declares the de-facto wife has a caveatable interest in the Suburb F property and may lodge a caveat over that property.4.Pending further order, the de-facto husband is injuncted and restrained from dealing with the property located at E Street, Suburb F NSW , being the whole of the land contained in Folio Identifier … (“the property) other than by agreement between himself and the de-facto wife, including but not limited to:a. Re-borrowing and using the property as security;b. Extending a line of credit secured the property;c. Increasing debt on the property.…6.In the event the de-facto husband seeks to sell any of the motor vehicles in his possession, he is to give the de-facto wife 7 days’ notice of his intention to dispose of those vehicles and thereafter, disposal of those vehicles is to be by consent of the de-facto husband and de-facto wife.

Evidence

Evidence Before The Court

In support of his Application, in a Notice to Admit Facts and Authenticity of Documents filed 9 June 2020, the Third Respondent contended as follows1. The first respondent husband purchased E Street Suburb F NSW (“The Suburb F property”) in his sole name in 2012 for $2,300,000.2. At the time of purchase of the Suburb F property the husband and wife did not have funds of their own sufficient to purchase.3. On 26 July 2012 Mr B Ormonde (hereafter referred to as “[the Third Respondent]”), the husband’s brother, paid a 10% deposit on the Suburb F property being a sum of $230,000.4. At the time of completion of the purchase of the Suburb F property [the Third Respondent] advanced a further $550,000 which was applied to the purchase of the Suburb F property.5. That [the Second Respondent] the husband’s mother paid the sum of $112,000 into the trust account of P Lawyers to the costs of acquisition of the Suburb F property 6. That the applicant wife and first respondent husband used approximately $147,000 of their own funds, accumulated from employment/self-employment undertaken by the husband, towards the purchase of the Suburb F property 7. That the balance of the purchase price of the Suburb F property being an amount of approximately $1,320,000, was sourced by a loan obtained from J Bank secured by way of mortgage over the Suburb F property.8. The total amount advanced by [the Third Respondent] towards the purchase of the Suburb F property was $780,0009. The total amount advanced by [the Second Respondent] towards the purchase of the Suburb F property was $112,00010. That prior to the completion of the purchase of the Suburb F property written agreements were prepared to record the interest of [the Second and Third Respondents] in the Suburb F property 11. That prior to the written agreements referred to in the previous paragraph being signed and after they were signed the first respondent husband showed them to the applicant wife 12. That [the Third Respondent] and the [husband] entered into a deed of agreement dated 20 July 2012 which recorded the interest of [the Third Respondent] in the Suburb F property being a 33.91 % share 13. That on 1 September 2012 [the Second Respondent and husband] entered into a deed of agreement which recorded the interest of [the Second Respondent] in the Suburb F property being a 4.87% share 14. That at no time since [the Second and Third Respondents] paid money towards the purchase of the Suburb F property has that money or any part of it been repaid to them 15. That between May 2016 and November 2017 [the Second Respondent] advanced to [the husband] sums by way of loan totalling $222,600 16. That on 1 May 2016 [the Second Respondent and the husband] entered into a further written agreement, namely a Limited Recourse Loan Agreement and a form of Call Option agreement 17. That pursuant to the Limited Recourse Loan Agreement of 1 May 2016 [the Second Respondent] shall have the right to a further 7.42% interest in the Suburb F property in the event of default by [the husband]. 18. That on 8 June 2018 [the Second Respondent] made a demand in writing for immediate repayment to her in full of monies advanced by her pursuant to the Limited Recourse Loan Agreement of 1 May 201619. That on 15 June 2018 [the Second Respondent] reiterated her demand (in writing) for immediate repayment to her in full of monies advanced by her pursuant to the Limited Recourse Loan Agreement of 1 May 201620. That [the husband] is in default of his obligations to [the Second Respondent] pursuant to the Limited Recourse Loan Agreement of 1 May 201621. Pursuant to the call option agreement of 1 May 2016 [the Second Respondent] is granted a five year option to acquire a 7.42% interest in the Suburb F property EVIDENCE

Decision

Reasons for decision

Accordingly, I will dismiss that aspect of the wife’s Application. CONCLUSION Accordingly, the only declaration I make in these proceedings is to the effect that the Third Respondent has an interest in the Suburb F property to the extent to which he has contributed the sum of $780,000 towards the purchase price of that property. For reasons which I have set out, it is not possible to calculate precisely the proportion of that interest. That issue will need to be determined at final hearing, at which time the Court will also hear argument as to whether the Third Respondent’s interest in the Suburb F property should be the subject of any equitable adjustment or other adjustment pursuant to s 79 of the Act. I note that the parties have, to date, incurred combined legal fees of $577,202. The Court has a real concern that, if this matter continues on the same litigation trajectory, costs incurred by the parties will exceed the net assets available for distribution between the parties. I respectfully remind the parties and their legal advisers of their obligations pursuant to r 1.04 of the Family Law Rules 2004 (Cth) which requires the parties to have regard to the proportionality of costs that are incurred in proceedings.

Ratio Decidendi

Legal Principle Established

To be clear, however, my preference for generally accepting the accuracy of the evidence of the wife over that of the husband, and the Second and Third Respondents is not based on the mere demeanour of the parties in the witness box. As I will set out further below, my assessment of the evidence provided by each party has been influenced by both the manner in which they gave their evidence and, more significantly, the consistency or inconsistency of each of the witness’s testimony with other evidence presented in the proceedings together with the plausibility of the evidence which they gave. As I will explain, that lack of plausibility resulted in the Respondents failing to evoke in me, as the trial judge, a feeling of “an actual persuasion of the occurrence or existence” of the relevant fact that I will identify as being a fact in issue.CONSIDERATION OF ISSUESThe amount of $112,000Does the husband hold 4.87 per cent of his right, title and interest in the Suburb F property on express trust for the Second Respondent? The wife conceded that, on 26 September 2012, the Second Respondent withdrew from her Westpac bank account the sum of $112,010 (having been referred to a funds transfer document dated 28 September 2012, a Westpac bank statement for account ending #…80 dated 28 September 2012 – see pages 18 and 19 of Exhibit 9) (Transcript 17 August 2020, p.62). The wife further conceded that the amount so withdrawn by the Second Respondent was paid into the trust account of those solicitors, acting on the conveyance, and, on 2 October 2012, those solicitors withdrew from their trust account a cheque made out to the Office of State Revenue for $112,010 and that the amount so paid represented the Stamp Duty payable in respect to the purchase of the Suburb F property (having been referred to a copy of a bank cheques drawn by P Lawyers to the Office of State Revenue and ANZ Bank – see page 20 of Exhibit 9) (Transcript 17 August 2020, p.62). In Grant v Roberts; Smith v Smith; Roberts v Smith; Curtis v Smith [2019] NSWSC 843, Ward CJ in Eq, at [39], usefully summarised the relevant principles in respect to the formation of an express trust as follows:As to the intention necessary to establish an express trust, what is required is a sufficiently certain manifestation of an intention to create a trust. The question of intention is to be determined objectively; some private, subjective, intention being insufficient (see Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at 277 (Gummow and Hayne JJ; at 290 (Heydon and Crennan JJ)). It is relevant, particularly in the family context where the question here arises, to note what was said in Nguyen v Phan (No 2) [2015] VSC 634 (at [237]), by Elliott J, namely that:In order to find an express trust was created, it is not necessary for the plaintiffs to prove the parties specifically and formally turned their minds to the fact that a trust was being created; no special or technical language needs to be used; it is sufficient if the intention to create a trust may be ascertained from what the parties actually agreed or said. The intention is imputed when manifest in what is expressly agreed or declared. That intention must be clear from the language used, as objectively understood in the relevant circumstances of the case, including the relationship of the parties. More than once, Gummow J has observed that the precision that might be expected in arms-length commercial transactions is not to be expected in private family dealings. [footnotes omitted]