Minter v Minter
Case
•
[2000] NSWSC 100
•1 March 2000
No judgment structure available for this case.
CITATION: Minter & 2 Ors v Minter [2000] NSWSC 100 revised - 2/03/2000 CURRENT JURISDICTION:
EquityFILE NUMBER(S): SC 1222/95 HEARING DATE(S): 06/05/98, 29/05/98, 13/08/98, 18/08/98, 19/03/99, 09/07/99, 03/08/99, 04/08/99, 05/08/99, 06/08/99, 10/08/99, 21/09/99 JUDGMENT DATE: 1 March 2000 PARTIES :
Beryl May Minter (First Plaintiff/Cross-Defendant)
Phillip Joseph Minter (Second Plaintiff/Cross-Defendant)
Colin James Minter (Third Defendant/Cross-Defendant)
Graham Minter (Defendant/Cross-Claimant)JUDGMENT OF: Santow J
COUNSEL : W G Hodgekiss/W S Johnson (Plaintiffs/Cross-Defendants)
J A Darvall (Defendant/Cross-Claimant)SOLICITORS: Vile & Vile (Plaintiffs/Cross-Defendants)
Kingston Swift (Defendant/Cross-ClaimantCATCHWORDS: EQUITY — Partnership — Real Property — Family dispute in relation to jointly owned old system property including horse stud — Joint tenancy versus tenancy in common where no unity of interest — Joint tenancy at law in equal shares between mother and three sons but tenancy in common in equity as to three-sixths for mother and one-sixth each for three sons — Partnership or activities separately carried out or joint enterprise falling short of partnership — On balance partnership notwithstanding informal accounting and no immediate profit — Remedy of account available even if not a partnership — This is at common law based on involuntary bailiffs in possession or as unjust enrichment or under fiduciary or quasi fiduciary principles or on basis of break up of joint endeavour without attributable blame save in the exclusion of cross-claimant. LEGISLATION CITED: Conveyancing Act 1919 (NSW); s26
Partnership Act 1892 (NSW); s1, s2CASES CITED: Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321
DCT v Tuza (1995) 31 ATR 211 and on appeal; (1997) 35 ATR 32
Ferguson v FCT (1979) 9 ATR 873
Forgeard v Shanahan (1994) 35 NSWLR 206
French v Styring (1857) 2 C B (Ns) 357; 140 ER 455
Hitchins v Hitchins (1999) 47 NSWLR 35
Hope v The Council of the City of Bathurst (1980) 140 CLR 1
Jones v Dunkel
Lake v Craddock (1732) 3 P Wms 158; 24 ER 1011
Muschinski v Dodds (1985) 160 CLR 583
Ogier v Booth (1883) 9 VLR(E) 160
Robinson v FCT (1986) 17 ADR 1068
Re Ruddock (1879) 5 VLR 51
Re Spanish Prospecting Co. Ltd [1911] 1 Ch 92
Re Speck (1993) 51 BCLR 143
Thomas v FCT 3 ATR 165
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR
Walker v Dubord (1992) 92 DLR (4th) 257
Re Estate of Wells 380 NW 2d 615 (1986) (FC SC Nebraska)DECISION: Accounting ordered.
1 March 2000
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITYSANTOW J
No. 1222/95
BERYL MAY MINTER
First Plaintiff
PHILLIP JOSEPH MINTER
Second Plaintiff
COLIN JAMES MINTER
Third PlaintiffGRAHAM MINTER
Defendant
GRAHAM MINTER
Cross-ClaimantBERYL MAY MINTER and PHILLIP JOSEPH MINTER and COLIN JAMES MINTER
Cross-Defendants
JUDGMENT1 This is a family dispute between Mrs Minter and two of her sons Philip and Colin as Plaintiffs and the remaining son, Graham Minter, as Defendant and Cross-Claimant. The matters in dispute include the ownership of the house property used as a horse stud, the nature of the relationship between the parties and in particular whether it constitutes the partnership and if so on what terms; finally as to the balance of account between the parties and the resolution of various monetary claims for, on the one hand, alleged unpaid contribution by Graham Minter, and on the other, his cross-claims in detinue and conversion in respect of certain goods and chattels and for a claimed one-quarter share in the alleged partnership. 2 Set out below are the essentially agreed facts identifying in certain instances matters in dispute and how I have determined them. Any remaining factual issues are then dealt with under “Resolution of the Legal Questions and Issues”.
Table of ContentsPageINTRODUCTION AND OVERVIEW
INTRODUCTION AND OVERVIEW
ESSENTIALLY AGREED FACTSThe various accounts and contributions to them
LEGAL QUESTIONS AND ISSUES
RESOLUTION OF LEGAL QUESTIONS AND ISSUESQuestion 1
Conclusion
Question 2
Question 3
Question 4
Question 4(a)Conclusion — Question 4(a)
Question 4(b) and 4(c)Conclusion — Question 4(b) and 4(c)
Question 4(d)Conclusion — Question 4(d)
Question 5
ConclusionORDERS AND COSTS
3 This is a dispute between family members over the ownership and contributions towards a small horse stud property in Maitland; the Amended Statement of Claim filed on 27 July 1995 sets out the Plaintiffs’ case and the Amended Cross-Claim of 3 August 1999 the Defendant’s. 4 All four parties are members of the one family, the Minter family, comprised of the mother, Beryl Minter; two sons, Philip and Colin (the Plaintiffs and Cross-Defendants) and the other son, Graham Minter (the Defendant and Cross-Claimant). 5 In 1990 the four parties in joint ownership purchased at auction on 19 November 1989 a house property, 6 Trappaud Road, Maitland, for $120,000.00. It was Old System not Torrens when purchased. It was subsequently brought under the Real Property Act as the title record reveals (DX10). It was originally intended to fund the purchase at least in part from Mrs Minter’s divorce settlement, but that was delayed, necessitating ANZ Bank finance, as explained below. The actual property settlement in relation to that purchase took place on 2 March 1990. 6 Because of delays in that settlement, the ANZ Bank at first provided the whole of the purchase monies to the parties by means of a housing loan account (“the housing loan account”). On 2 March 1990 the bank advance in relation to its purchase (and purchase costs) of $126,000 was thus debited to that loan account. The amount lent by the bank was secured by a mortgage dated 26 March 1990 and registered. 7 It was essentially a “family” arrangement. The mother and father, Mrs Minter and her husband, had originally owned the property as joint tenants (DX19 attaching conveyance of 2 March 1990). It had been the family house property since 1974. As a result of a divorce settlement, the property was to be sold. It was sold by auction on 19 November 1989 (see Graham Minter affidavit 25 June 1998 paras 28 and 29). At the time of the divorce settlement, the property was still jointly owned by Mrs Minter and her former husband. They became the vendors of the property to the four purchasers (including Mrs Minter). 8 A later contract of sale replaced that originally signed by Philip Minter at the auction (as the father would not have sold to Graham Minter (see Graham Minter affidavit 25 June 1998 paras 28 and 29). The replacement contract was not prepared by Vile & Vile the solicitors for the vendors (that is, the solicitors acting for Mr Minter Snr and Mrs Minter) but by Garland Seaborn acting for the purchasers and briefed by Graham Minter. Garland Seaborn were advising Mrs Minter on her divorce. Under the replacement contract, the purchasers were described as taking title as ‘joint tenants”. They were so described also in the subsequent conveyance dated 2 March 1990 (see DX19) and therefore did take title as joint tenants. 9 There was a conference of the parties held at the Maitland branch of the ANZ Bank on 17 January 1990 (‘the bank conference”) post-dating the replacement contract. The bank manager’s diary note of that date however referred to the property being purchased as “tennants (sic) in common” in “4 names as above”, and referring earlier to a “50/50 split or 60/40 split in favour of Mrs Minter”. 10 The four purchasers became obliged to the bank under the mortgage, with the bank having also their personal covenants. 11 There was an understanding that the money Mrs Minter received as vendor would, in turn, be promptly applied in the reduction of the mortgage. 12 There was also an oral agreement at the time of the bank conference that each of the four purchasers would pay into the bank an amount of $120.00 per week in reduction of the bank loan and in payment of interest on that loan. This was except for the plaintiff, Mrs Beryl Minter, who was to make lump sum payments in fulfilment of her obligation, but which payments were to cease when she received and paid over a cash settlement from her former husband. 13 This cash settlement actually occurred on or about 21 March 1990. Mrs Minter paid into the bank loan account an amount of $23,014.54, doing so on 12 April 1990. This represented her cash settlement. Her obligation to make weekly payments ceased leaving the three sons to continue on a regime of paying $120.00 per week. She claims to have contributed a further $2,700 towards reduction of the mortgage by paying weekly amounts to the Defendant to bank on her behalf, during the period 7 March 1990 to 6 July 1990. 14 Mrs Minter previously owned jointly with her former husband a number of stud horses including Abray the stallion; as part of her divorce settlement she also retained and took over 100% of Tara, Tatler and Rumour. Also as part of the divorce settlement, on 21 March 1990 she acquired for $25,000 the remaining half interest in Abray from her husband. Another horse Abray’s Casey was similarly acquired (for $3,000) to become 100% owned by Mrs Minter (PX1-BM1). Abray was insured for its value of $50,000 in Mrs Minter’s name. It was subsequently the subject of an insurance claim arising from Abray’s death, prior to 18 December 1991. That $50,000 insurance payout was the source of a deposit of $50,000 then put into an account referred to as “the HLIS account” (Housing Loan Interest Savings Account No. 2041 85529). 15 There is to-day still an outstanding amount on that bank mortgage of approximately $18,000.00 reflecting the monthly payments; see PX22. This is in circumstances where the property is now worth between $130,000.00 and $150,000.00. 16 In June 1993 after tumultuous family conflict, the Defendant left the 6 Trappaud Road property, leaving his various belongings over which there is a cross-claim for damages in detinue and conversion. From July 1993 at the latest, he ceased to reside at the property. It is fair to say that relations between Graham and the rest of the family were such that thereafter he was as a co-owner actively excluded from the joint property; incidents since then bear out that his return would not have been welcomed. Thereafter Graham made no monetary contribution, certainly none of any significance beyond the period March 1990 to June or July 1990, in reduction of the mortgage at $120 per week. He claimed it was agreed in May 1990 by his mother on behalf of all of the Plaintiffs and with their knowledge that he would be excused from monetary contribution in return for his managing a common stud operation on the property for all of them; this is denied by the Plaintiffs. If he were not excused, he would owe some $46,500 towards the mortgage, or that amount less — if he had already made them — four month’s payments at $120 per week ($1,920 approximately) before July 1993. 17 However, I am unable to be satisfied Graham Minter made these payments. The relevant bank statement for the Interest Savings Account does not show any deposits until 8 June 1990 and nothing in the Defendant’s notes in relation to the reconstruction of the Access Saver Account (DX3) shows any payment by Graham for loan repayments in that period. Graham Minter’s evidence is that he made the weekly payments from “when we first made payments on the loan”. Mrs Minter’s evidence is that she did give to Graham payments to be made for her in that period and her notes (BM3) contained in PX1 bear this out.
ESSENTIALLY AGREED FACTS
18 The various accounts at the ANZ Bank to which reference is made in this judgment comprise the housing loan account, the Fully Drawn Advance Account (“FDA account”), the Access Savings Account and the Housing Loan Interest Savings Account (“HLIS account”). As best they can be reconstructed from incomplete records, they were created and contributed to as follows. 19 The original housing loan account No. 2041 80891 was created on or around 2 March 1990, to which the original advance of $126,000 was made, secured by the mortgage. 20 This was reduced first by a deposit of $23,014.54 on 12 April 1990 (being the proceeds of Mrs Minter’s divorce settlement). 21 A further deposit of $33,359.81 was made to that loan account on 28 June 1990 via the FDA account. The latter FDA account consisted of the proceeds of the Fully Drawn Advance (“FDA” account No. 2041 82168) borrowed earlier by the four parties from the Bank to restructure the housing loan back to the Bank’s desired loan amount of $70,000. The FDA derived amount of $33,359.81 which Mrs Minter deposited comprised the sum of $28,000 to fund the amount previously paid by Mrs Minter for her former husband’s half interest in Abray ($25,000) and Abray’s Casey ($3,000), both horses being utilised in the joint stud “activity” (to use a neutral term). The balance of $5,359.81 went to her legal fees on her divorce so that the burden thereof was thereby put on to the three boys to repay. These latter were deducted by her solicitors (PX1 — BM1). 22 Given that these latter costs of $5,359.81 were really for Mrs Minter’s account, the Defendant correctly contends that her actual contribution to that point to their joint four-party arrangements was $23,014.54 plus $28,000 ($51,014.54 not $53,014). The $28,000 is her claimed contribution of her original half interest via the two horses (with the balance of their acquisition funded as above by the ANZ). But if she also contributed, as she claimed, a further $2,400 by way of weekly payments between 7 March 1990 and 6 July 1990 (DX21 bears out at least $960) that is not much short of her claimed $53,014 contribution. In any event I do not consider anything turns on that difference of around $2,000. This was in a family arrangement not carried on with any great precision so far as financial accounts were concerned, though there was some record keeping as I explain. 23 Returning to the FDA account, Mrs Minter did not allege that she had contributed to payments on that loan of $70,000 (in all four names) other than as derived from a payment by the late Mrs Holcombe (her mother). That however is disputed. What is clear is that Mrs Holcombe made a payment of $30,000 out of which a $26,500 reduction to the FDA was effected. (The FDA was further reduced by eleven month’s payments of $380 transferred from the Access Savings Account with the balance of $3,988.77 discharged on 24 January 1992 by a transfer of funds from the HLIS.) What is not so clear is whether the $30,000 was a gift to all four family members equally, as the cheque stub records (T, 34.34) and as the Defendant contends but which the Plaintiffs dispute. If the former, as I consider more likely, the four — Mr Minter and the three sons — used the $26,500 equally between them to reduce the bank loan by that amount. This appears to have some support in the fact that Mrs Holcombe intended taking up accommodation at the Maitland property at or around that time, and did at one time move into Maitland. It was later that she then moved out, settling at the Bowen Old Peoples Home Society, with payments provided out of the fund of $21,000 provided by the four Minters as advance rent; that is not in dispute. 24 The Plaintiffs, via Mrs Minter, claim that despite the cheque stub, the payment was intended to have been for her exclusive benefit, pointing to a handwritten note to that effect (DX5) evidently written out by Mrs Holcombe. There is a dispute as to whether Mrs Holcombe wrote it as “dictated” by Mrs Minter, as the Defendant alleges, or whether rather, as Mrs Minter contends (T, 29-35) she was simply responding to a request to explain the matter. 25 Going against Mrs Minter’s account is her various suggestions that she repaid $21,000 of the money to Mrs Holcombe out of the insurance proceeds following Abray’s death (T, 31.12) when it is clear those insurance proceeds went instead into the HLIS Account and could not have been used for that purpose by being paid to Mrs Holcombe. Further confusion is to be found in Mrs Minter’s evidence at T, 31.42-.47:
The various accounts and contributions to them
26 Graham Minter’s evidence as to the latter is that $6,000 of it represented costs incurred in respect of the purchase of headstones and relocation of Mrs Holcombe to Sydney. There is a conflict between Mrs Minter who claims to have paid $2,527.77 for the cost of the hire of the truck for such transport (T, 40-43) and Mr Graham Minter (T, 303-4) who claims to have paid out the $6,000 inter alia for the cost of the truck hire, producing a detailed breakdown of his expenses, fuel receipts, accommodation at Rockhampton, and the truck rental agreement. 27 I prefer the detailed evidence of Mr Graham Minter on this matter to the confused and in at least some instances clearly incorrect answers from Mrs Minter. Mrs Minter did not assist her case by an undiscriminating attack on Graham Minter’s evidence though he was here supported by documentary evidence. 28 I believe on balance, that the $30,000 was given to all four family members equally, consistently with Mrs Holcombe’s plans (later abandoned) to live at the jointly owned property. If she also merely lent money ($13,000) to improve the bathroom for this purpose (T, 30.29-.34) that is not inconsistent with that first intent. 29 I turn now to the remaining two accounts. I have already described (14 above) how the HLIS account was opened with the $50,000 from the Abray insurance proceeds; see the Defendant’s attempt at reconciliation (DX31). The other account, the Access Savings Account, appears to have been a general trading account for whatever operation was conducted on the Maitland property; the Defendant’s attempted reconciliation is also in DX31. It is framed on the basis, disputed by the Plaintiffs, that there was a partnership for the carrying on of the stud activity, giving rise to a sub-category of transactions which are said to be partnership debts. 30 Turning to the details of the account keeping system, such as it was, the Defendant’s Counsel sets out in paras 36-40 of his written submissions of 23 November 1999 quoted below, the position as it appears from the evidence. His evidence was assisted by a reasonable level of financial sophistication. While that of itself is not enough to accept it, the Plaintiffs do not dispute that account and have produced no competing account. Nor do they dispute the existence of Mrs Minter’s green ledger book, though never produced, beyond pointing out that this evidence (see para 39) necessarily qualifies the Defendant’s submission that all the banking was done by him. Those written submissions, which I would on the balance of probabilities accept, are however that the Defendant was mainly concerned with the banking and associated trading accounts. Here follows the quoted portion:
“Q Is that the $21,000 withdrawn from the home loan interest saver?
A Yes that’s right, for the bathroom money, what Graham had taken out and the $2,000”
31 Mrs Minter gave the earlier mentioned $30,000.00 to Mr Graham Minter for payment to the bank of which only one-quarter should be attributed to her, and one-quarter each to the three sons. About $26,500.00 was paid into what was called the “Fully Drawn Advance Account” with the bank on 17 August 1990 (and the balance of $3,500 was paid to the Access Savings A/c (T 245.10)). (It was thereafter reduced as set out in 23 above.) 32 Mr Graham Minter withdrew from the HLIS an amount of about $22,000.00 in circumstances where he deposited $3,500.00 to it. Having regard to such records as exist, and on the basis set out in 33 below, the solicitors for the parties should attempt to work out to what the $22,000 was applied. 33 There was another account opened, which was the “Access Savings Account” in respect of which Mr Graham Minter withdrew $29,000.00, having deposited $19,000.00. This appears to have been the general trading account for the activities carried on, on the property — jointly in partnership according to the Defendant, but individually and not in partnership according to the Plaintiffs. As I conclude later, I am satisfied these were joint activities, and secondly, these were on balance partnership activities. I have already set out (under 30 above, quoting the Defendant’s Counsel’s written submissions) what I am satisfied was the character of the record keeping and conclude that there was a green ledger book which the Plaintiffs have simply failed to produce, without further explanation. As set out in 41 of the above-referenced written submissions, the solicitors for the parties will need to agree, starting from DX31 and any other records into which category or sub-category the items fall, on the basis, found later, that a partnership subsisted. 34 After leaving the property, Mr Graham Minter failed to make any further payment towards the contribution amount referred to above calculated as an amount of approximately $46,500.00. He has from that time (July 1993) contributed nothing towards outgoings, insurance and the like in relation to the house property (T, 279). While he acknowledges that he left the property of his own volition (T, 273.19) that must be qualified by his being in the minority in the tumultuous family circumstances of the time. Nonetheless on balance I accept the Plaintiffs’ submission that in those circumstances, where he has not been originally ousted from the property though now his return is effectively precluded, he is not entitled to some kind of imputed rental from the co-owners, who enjoy unity of possession though the other view is certainly arguable. I deal later with the legal position applicable as affecting contribution to later outgoings where it would be inequitable to require contribution when effectively denied possession. 35 The first issue to be considered is whether the property was purchased as joint tenants or tenants in common. It is submitted by the Plaintiffs that although the parties are registered as the proprietors of Trappaud Road as “joint tenants”, it was never the intention of all the parties that they be such. Then it is said by the Plaintiffs that even if it had been their unanimous intention, the “joint tenancy” was severed by the conduct of the Defendant and by a Notice of Dissolution of alleged partnership on 28 August 1995 (the date should be checked having regard to the Amended Defence, para 11 which gives the date as 28 August 1995 whereas in submissions it was said to be 28 August 1993). The Defendant’s evidence was that he made no contributions of any kind toward the mortgage payments or other annual outgoings after May 1993. The oral evidence and affidavits of Beryl Minter state that she contributed one-half of the purchase price. Then for the period 7 March 1990 to 6 July 1990 whilst waiting for the proceeds of a settlement arising from a divorce, she paid weekly amounts to the Defendant to bank on her behalf, toward the mortgage over the property with the ANZ Banking Group. The amount was $2,400.00. 36 I turn now to the legal questions and issues set out below.
“36. In order to understand the account keeping system it will be recalled that these schedules were prepared from records including bank statements, bank deposit and withdrawal slips (incomplete), deposit and withdrawal book stubs (incomplete), various accounts and invoices, and some card records kept by the Defendant. (An examination of the dates and page numbers of the invoice book and loose papers of the Defendant, being exhibits DX29 and DX30, suggests that there were at least three invoice books at various times). These records are clearly on their face inadequate to fully explain all transactions, although they have permitted a reasonably extensive explanation of many of the transactions.
37. It should be recalled that a further area of controversy exists concerning the existence of a green ledger the Defendant claims would account for all transactions. Mrs Minter although claiming that no records were kept at least acknowledged that she kept a record in respect of Colin’s payments (the missing original document of which the copy, previously marked BM3 was admitted as part of exhibit PX1). Colin, having referred to only foolscap pages kept as a note by his mother (t/s 164.45) then concluded by noting his mum kept “the book” in her room most times (t/s 180.18).
38. Again in respect of the record a copy of which is part of PX1, Mrs Minter’s evidence was to say the least confusing. At paragraph 38 of her affidavit sworn 5.6.98 Mrs Minter declared that the list was written as it happened. Of course this evidence was inconsistent with exhibit DX14 the access savings account deposit book commencing on or about 16 March 1990 where Mrs Minter’s payments are recorded as received by cheque in the sum of $480 on 17 April 1990, $240 on 17 May 1990 and $240 on 25 May 1990. The document then emerged as a record of Mrs Minter’s own payments to the Defendant on her own account (t/s 106.35). The story then changed to the listing of dates from a calendar and subsequent notation of the amounts actually claimed to have been paid (t/s 106-110). Finally in re-examination she confirmed that she would write the dates down prior to payment and when “paid” would just write off “paid”. It is instructive to note that although Mrs Minter claimed that the Defendant “handled all the banking” (t/s 28.15) deposit slips in the access savings account (exhibit DX14) are completed in her hand for the following dates:
1991: 27 August, 29 October, 20 November, 27 December
1992: 14 & 28 February, 30 March, 3 & 27 April, 25 May, 6, 13 & 22 July, 12 & 19 August, 4, 17 & 25 November, 24 December
1993: 13 April
39. The relevance of the green ledger book was, the Defendant says, that it would clarify the details of all transactions. In the absence of the ledger the Defendant can only explain such transactions as are apparent on the basis of the documents referred to in paragraph 36. On the Plaintiffs case there is no ledger, no-one other than the Defendant was mainly concerned with the bank accounts and transactions, bank statements were never viewed by the Plaintiff’s and the only record Mrs Minter concerned herself to keep was the document a copy of which is part exhibit PX1, which is either a record of Mrs Minter’s payments or Colin’s payments. On the other hand the card system illustrated by the Defendant in the samples he retained, together with the notations in the subsidiary records like deposit and withdrawal books permit the inference that such a ledger did exist and formed part of an accounting record and explanation for the transactions.
40. In the absence of the ledger the Defendant has engaged in an exhaustive attempt to identify the transactions. Whereas Mrs Minter in her sworn affidavit dated 5 June 1998 stated that certain withdrawals had been made without her approval, it is clear from her cross-examination that she either failed to refer to such records as might have assisted her in accurately deposing the facts she deposed, or intended to mislead, and discredit the Defendant.
41. The consequence of the missing ledger is that transactions generally fall into a number of categories. Firstly there are some transactions for which the Defendant can offer no explanation in the absence of the further records. Secondly, there are the transactions for which the Defendant can offer an explanation. Within this category, there are a number of subcategories: transactions for which the Defendant says he was personally liable for credit or debit, transactions which the Plaintiffs acknowledge were in fact authorised or were personal accounts of the Plaintiffs, and finally a subcategory of transactions which are said to be partnership debts, which are denied by the Plaintiffs on the basis that there was no partnership.”
37 I have earlier set out the principal facts concerning the relevant conveyancing documentation for the Maitland property. It will be recalled that while the original contract signed at auction by Philip Minter, as purchaser, showed him as the sole purchaser, this taking place on 19 November 1989 when the auction took place, that contract was replaced by a further contract on 21 December 1989. The four purchasers are there described as “joint tenants” and the reference in para C of that contract has these words in parenthesis:
LEGAL QUESTIONS AND ISSUES
1. Whether the property of 6 Trappaud Road, Maitland was purchased by the Plaintiffs and the Defendant as “joint tenants” or as “tenants in common”.
2. If the answer to 1 is as “joint tenants”, whether:
(a) the notice of 28 August, 1995 (subject to checking the date) severed the joint tenancy; or
(b) whether the conduct of the parties subsequent to 28 August 1995 (subject to checking the date) evidenced the intention of the parties that it be severed.
3. If the answer to 1. be “tenants in common”, what is the share or interest, in the said property, to which each of the said parties is entitled? The Plaintiffs contend three/sixths to Mrs Minter and one/sixth for each of the three sons. The Defendant contends primarily that the interests were as joint tenants. But if misdescribed as joint tenants such that they were tenants in common then the parties contend that there are three possibilities:
(a) If the intention was to hold equally, then they hold one-quarter share each (possibly subject to a charge in favour of the Plaintiffs against the Defendant’s interest, if any adjustment in favour of the Plaintiffs is established).
(b) If the intention was to hold on some other basis than equally, it would follow three/sixths to Mrs Minter and one/sixth to each of the sons (subject, if the Defendant’s submissions were accepted, to a charge in favour of each of the sons against Mrs Minter’s interest in respect of so much of her half of the cost of acquisition of the house as is unpaid it being contended by the Defendant that Mrs Minter has not established that she in fact paid all she owed for a 50% interest), or
(c) such interest as may be found by the Court pro rata to the contributions made or deemed made by the parties to the cost of acquisition.
4. (a) What amount, if any, is the Defendant/Cross-Claimant entitled to as a credit for work done and/or services rendered and/or materials provided by him on or for the benefit of the said property? (See also Question 5 below.)
(b) Whether there existed at any time between 2 March 1990 and 28 August 1995 (or the date of the Notice of Dissolution), a business partnership between the Plaintiffs/ Cross-Defendants and the Defendant/ Cross-Claimant? (See also Question 5 below.)
(c) If there were such a partnership, what were its terms as to:
(i) the sharing of profits and losses; and
(ii) the employment, if any, of the parties
by the partnership?
(d) In the context of any amount the Defendant/Cross-Claimant may be required to pay, what amount, if any, is the Defendant/Cross-Claimant entitled to for work done and/or services rendered and/or materials provided by him on or for any trading business carried on by the Plaintiffs and the Defendant between 2 March 1990 and 28 August 1995 (or otherwise the date of dissolution of any partnership).
5. Is the Defendant entitled by way of cross-claim for damages for
(a) his goods and chattels he asserts were left on the premises and the subject of detinue or conversion on the part of the Plaintiffs, or
(b) his claimed share (one/quarter) in the stock, progeny, purchases and sales of the alleged stud partnership, if it existed, and in respect of his loss of occupancy of the premises (based on a notional rent).
RESOLUTION OF LEGAL QUESTIONS AND ISSUES
Question 1
Whether the property of 6 Trappaud Road, Maitland was purchased by the Plaintiffs and the Defendant as “joint tenants” or as “tenants in common”.
38 Those words follow the earlier reference to tenants in common which has been deleted. But I infer that the reference is intended to reinforce that the joint tenancy is in equal shares, there being in fact no indication otherwise in para C. It will be recalled that this contract was prepared by the solicitors Garland Seaborn whom Graham Minter had arranged to act for the four purchasers, as Vile & Vile were acting for Mr and Mrs Minter as vendors. 39 While it appears that Graham Minter arranged for Garland Seaborn to act, they were clearly acting for Mrs Minter in her divorce and there could be no suggestion that they were therefore acting simply at Graham Minter’s behest. 40 That contract in turn was sent on 21 December 1989 by Garland Seaborn to Vile & Vile (see DX20). There is no suggestion that Vile & Vile subsequently demurred in any way in relation to the matter of joint tenancy specifically drawn to their attention in the first paragraph of that letter which I quote below:
“(in equal shares — unless otherwise indicated in C)”
41 With the same letter was forwarded a “Deed of Conveyance” which again showed the four purchasers purchasing as joint tenants. 42 No evidence was given by either Garland Seaborn or Vile & Vile as to the nature of the instructions received but certainly there is no suggestion between either of the solicitors of any demur at the purchasers being shown as joint tenants in equal shares. 43 The first, and indeed only, suggestion to the contrary in terms of contemporaneous written records is the later file note by Mr Ron Welsh, then Manager of the Maitland branch of the ANZ Bank, on 17 January 1990. It refers to a meeting between Mrs Minter and the three sons on that day and contains the following paragraphs:
“We refer to your letter herein of 24th November and to the writer’s subsequent discussions with you and now enclose herewith for your information a copy of the amended first page of the contract which fully sets out the full names of the purchasers who will be purchasing as joint tenants .” [emphasis added]
44 The file note then deals with the respective assets of each of Beryl, Philip and Graham; it is apparent from Annexure B to Graham Minter’s affidavit of 25.2.1998 that Colin Minter did not have any significant assets and the major assets were Beryl Minter with a surplus of $128,900, Philip Minter with a surplus of $53,220 and Graham Minter with a surplus of $63,409. (There is some contention about whether Graham should have included an insurance claim that he hoped would fructify and which eventually did not, as part of his assets but that does not bear upon present matters.) 45 The then lending proposal was for a loan of up to $70,000 to complete the purchase, though in the events that happened a larger amount was initially required to be borrowed because of the delays in the property settlement. 46 Mr Welsh had no independent recollection of any meetings with the Minters or what transpired there (T, 283.49) nor did he recall any explanation being given as to a difference between the concept of joint tenants and tenants in common. 47 Mrs Minter’s own evidence is set out at para 26 of her affidavit of 6 July 1998 and therein she responds to Mr Graham Minter’s affidavit of 25 June 1998, para 41. Graham Minter’s account is that he has no independent recollection of the exact words used but having looked at the diary note he states that he now recalls Beryl telling him:
“Property has been valued at $120,000 for settlement purposes and family expecting either 50/50 split or 60/40 split in favour of Mrs Minter. Decision will not be known until 29/30 January.
Property will be purchased in four names as above, as tennants (sic) in common.”
48 Mr Graham Minter then says, I specifically recall Beryl saying:
“The property settlement will be either a 50/50 or a 60/40 split my way. But my solicitor has indicated will be more likely be a 50/50 split. We won’t know until the end of January. The property is going to be in the four names, me and the three boys.”
He then refers to Mr Welsh as saying, “how are we going to purchase the property? Is it to be a joint tenants or tenants in common?”. Mr Graham Minter states that he said, “Could you please explain the difference?” He then gives evidence that Mr Welsh, “Gave an explanation the details of which I cannot remember precisely but I do remember him saying: “Jointly means if one of you dies it passes to the other, otherwise you can have separate shares and sell them separately.”
49 To this Mrs Minter responds
“That’s not what we want to do. If there is a falling out where one party wants to sell off their share of the property we don’t want that to happen. For once in our lives we’re going to have a family. We have had the boy (sic) split up all over the place but we’re going to have a family home and breed stock horses and try and make a family income.”
50 However she does not purport to recall any detail of what the Bank Manager at Maitland had said at the time. 51 But there is one further matter of significance. It is clear, as the Defendant contends, that Mrs Minter attended the offices of Vile & Vile, her present solicitors, for the purpose of executing a conveyance of her interest as joint vendor with her husband (T, 129.50). The Defendant contends that as the conveyance and contract had been prepared by the purchasers’ solicitor, one might have expected that the solicitor for Mrs Minter as vendor, would have perused and explained to her the terms of the document he was asking his client to sign. If indeed he did, it would follow that Mrs Minter at least had elected to affirm the joint tenancy. As no affidavit was provided by Mr Vile it can be taken that a Jones v Dunkel inference can be drawn that any evidence he might have given would not have assisted the Plaintiffs’ case. 52 Mrs Minter does not indicate that she contemplates any demand or action against Vile & Vile, so presumably has no complaint about any lack of explanation. 53 As to the characteristics of a joint tenancy, unity of possession, title and time are self-evidently present. The Plaintiffs contend however that there is a lack of the essential unity of interest. This is based on the contention that Mrs Minter was to, and did, contribute half the purchase price, yet under a joint tenancy of equal shares would not have a half interest and indeed would have an interest which would cease upon her death and meantime would not be assignable save if the joint tenancy were severed. 54 The Defendant’s answer to this is first to take issue with whether she contributed half the cost or half the purchase price. On the Plaintiffs’ submissions Mrs Minter contributed $53,014 (or $54,014.54 for reasons explained in 22 above). I disregard the $30,000 received from Mrs Minter’s mother on the basis that it was a gift to the four (and $21,000 was subsequently given back). The purchase price was $120,000 and the sum initially borrowed from the bank was $126,000 to fund the purchase price and costs associated with the purchase. Thus what the Defendant contends is that Mrs Minter, on this analysis, contributed less than half the purchase price. 55 However, as I have earlier set out in dealing with the various accounts it is not resisted by the Defendant that her actual contribution represents the original $23,014.54 from her divorce settlement plus $28,000 comprising what Mrs Minter paid to her former husband for her former husband’s half interest in Abray and Casey which was in turn utilised in the joint stud activity, representing a contribution of $51,014.54. This is not much different from the figure of $53,014 and if, as she claims, she contributed a further $2,400 then the difference disappears, although she still contributed a little less than $63,000 which would be the half of $126,000 originally borrowed. However, not too much should be made of that, as her contribution came in the two lump sums received early on, whilst the sons were slower to contribute paying $120 per week (leaving aside Graham’s contribution which he contends was in kind). 56 The fundamental problem in the way of a joint tenancy is that the evidence is undisputed that, at least so far as the property was concerned, there was to be a 50/50 split (leaving aside the 60/40 split in favour of Mrs Minter that never transpired). Graham himself does not dispute that Mrs Minter said “But my solicitor has indicated it will be more likely be a 50/50 split. We won’t know until the end of January.”; see para 41 of Graham Minter’s affidavit of 25 June 1998. The four unities required for a joint tenancy to be created include “unity of interest”. There can be no joint tenancy between persons holding interests of unequal extent; for example A and B cannot in law be joint tenants where A owns a three-quarter interest and B a one-quarter interest; see Peter Butt “Land Law” (LBC, 1996) at 219 citing Re Speck (1993) 51 BCLR 143 where there could be no joint tenancy where A owned 71% and B 29%. 57 The question of whether her contribution was not equal is not to the point, for the reasons earlier set out. The real issue is the intention of the parties as to the interests they would hold. But the intention of the parties clearly enough is that the split was to be 50/50. 58 Section 26(2) of the Conveyancing Act 1919 (NSW) precludes the application of s26(1) deeming a tenancy in common, where the instrument “expressly provides” that persons are to take as joint tenants. Here, it is undoubtedly the case that the instrument did expressly so provide. This was, furthermore in circumstances where that preceded the bank meeting on 17 January 1990 and where one would ordinarily expect Mrs Minter would have had some explanation from her own solicitor when it came to signing the conveyance. How then is all this to be reconciled, consistent with the expressed intentions of the parties? 59 The answer lies in the position applicable under Old System Title. There parties may be joint tenants at law but tenants in common in equity; see Butt (supra) at 229. Here, I am satisfied that the parties intended the constraint upon disposal of the legal title as flows from a joint tenancy. In that respect I accept the evidence of Graham Minter at para 41 of his affidavit of 25 June 1998 where constraint on sale was important to Mrs Minter. On the other hand, when it comes to the beneficial interest, there is here a purchase of land by several persons for a joint undertaking whether or not a partnership (as to which see later) such that equity would find a tenancy in common of the beneficial interest was created without express words (see, for example, Lake v Craddock (1732) 3 P Wms 158; 24 ER 1011. Note that this principle applies to either a joint business venture or partnership so that in dealing with a difficult question of whether or not a partnership subsisted between the parties, even if one did not, a joint undertaking of a more informal kind lacking the system and continuity or pursuit of profit of a business would still give rise to equities leaning towards a tenancy in common of the beneficial interest. While s26(2) of the Conveyancing Act 1919 (NSW) might superficially appear to countermand that result, I consider that it does not do so. All that s26(2) does is prevent the automatic deeming of a tenancy in common in the construction of any instrument whereby the beneficial interest in any property is disposed of. The effect of s26(2) removes that automatic deeming but allows the rules that prevailed prior to the Conveyancing Act 1919 to continue to operate. That leaves the law to operate upon the legal estate and equity to then modify its application in accordance with the intention of the parties. 60 As Butt describes the situation (at 225):
“as to paragraph 41 of the affidavit, I say that my understanding of the Agreement between me and the three boys was that I was to own a half share of the property and the three boys were to share equally the remaining half. I do not recall agreeing that the property was to be held as joint tenants and I deny using the words attributed to me at the end of paragraph 41 of Graham’s affidavit, half way down page 14. At no time did I ever meet the solicitor who acted for me on the purchase of the property. At no time did any solicitor discuss with me the difference between purchasing as joint tenants or tenants in common. I trusted Graham in all the dealings with the solicitors acting for us on the purchase. The only person who discussed the words ‘joint tenancy’ or ‘tenancy in common’ with me was the Bank Manager at Maitland, in the presence of Graham and Philip ….”
61 It remains for me to deal with one further issue, namely the effect of a Notice of Dissolution of the alleged partnership on 29 August 1995 (assuming that to be its date). The Plaintiffs contend that the “joint tenancy” was severed by the conduct of the Defendant in failing to make the contributions alleged to be required and by the Notice of Dissolution of the alleged partnership. However, the short answer to that is that insofar as a joint tenancy applies to the legal estate, it could not cease to apply by virtue of the Notice of Dissolution of Partnership. Such an act could not constitute the severance of a joint tenancy for
“In such situations, equity would compel the owners, although at law joint tenants, to hold a property on trust for themselves as tenants in common in appropriate proportions. If one died, the survivors held the legal estate by right of survivorship; but equity compelled a trust of the deceased’s beneficial share for those entitled under the deceased’s will or on intestacy47
47 Re Fuller’s Contract [1933] Ch 653; Megarry and Wade, Real Property, p 429. See also Sastrogrom v Uhr (1992) 40 FCR 550.
62 The argument indeed could be turned against the Plaintiffs, insofar as the existence of a joint undertaking or partnership supports there being a tenancy in common of the property. However, as I have said, that support is not essential as it follows from the intended three-sixths interest held unequally with the three sons with their lesser one-sixth interest that is determinative of the tenancy in common of the beneficial interest, though co-existing with a joint tenancy in equal shares with respect to the legal interest.
“a course of dealing in which only one joint tenant makes it clear to the other or others that he or she desires that their shares should no longer be held jointly but in common, does not sever. Similarly, a unilateral declaration (short of actual alienation) by one joint tenant that he or she regards the joint tenancy as severed, or requires it to be severed, does not sever.”
See Butt at 253 and Walker v Dubord (1992) 92 DLR (4th) 257Conclusion
63 The legal interest in the property is held as joint tenants in equal shares but the beneficial interest in the property is held as to three-sixths for Mrs Minter and one-sixth each for each of the three sons, in each case as tenants in common. The incidents of that set of interests are as I have earlier described.
64 The short answer is “No”, for the reasons set out earlier under question 1.
Question 2
If the answer to 1 is as “joint tenants”, whether:
(a) the notice of 28 August, 1995 (subject to checking the date) severed the joint tenancy; or
(b) whether the conduct of the parties subsequent to 28 August 1995 (subject to checking the date) evidenced the intention of the parties that it be severed.
65 The answer is contained under question 1 above. Essentially, the parties’ interests beneficially in the property as tenants in common is three-sixths for Mrs Minter and one-sixth for each of the three sons but with the legal interest held as joint tenants equally between Mr Minter and the three sons. 66 I next set out question 4 dealing with whether a partnership subsisted between the four parties or not and the consequences in either case; it is divided into four related sub-questions (a) to (d).
Question 3
If the answer to 1. be “tenants in common”, what is the share or interest, in the said property, to which each of the said parties is entitled? The Plaintiffs contend three-sixths to Mrs Minter and one-sixth for each of the three sons. The Defendant contends primarily that the interests were as joint tenants. But if misdescribed as joint tenants then there are the three possibilities earlier set out:
Question 4(a) What amount, if any, is the Defendant/Cross-Claimant entitled to as a credit for work done and/or services rendered and/or materials provided by him on or for the benefit of the said property? (See also Question 5 below.)
(b) Whether there existed at any time between 2 March 1990 and 28 August 1995 (or the date of the Notice of Dissolution), a business partnership between the Plaintiffs/Cross-Defendants and the Defendant/Cross-Claimant? (See also Question 5 below.)
(c) If there were such a partnership, what were its terms as to:
(i) the sharing of profits and losses; and
(ii) the employment, if any, of the parties
by the partnership?
67 Starting with question 4(a), this question essentially turns on the Defendant’s liability for payment of the $120 per week on the Housing Loan. The Defendant claims that pursuant to an agreement with the Plaintiffs, concluded with Mrs Minter as agent for the other two Plaintiffs and with their knowledge, that in consideration of his performance of the duties of stud manager which he performed between September 1990 and July 1993, that he would be relieved of his liability to make the weekly payments. Alternatively, if it is held that the agreement did not relieve him of the liability for payments, any claims on the quantum meruit basis for the value of the services performed during that period at the rate of $120 per week; (T, 278). 68 At para 49 of Graham Minter’s affidavit of 25 June 1998 he sets out what he says his mother offered in May 1990, the critical sentence being as follows:
(d) In the context of any amount the Defendant/Cross-Claimant may be required to pay, what amount, if any, is the Defendant/Cross-Claimant entitled to for work done and/or services rendered and/or materials provided by him on or for any trading business carried on by the Plaintiffs and the Defendant between 2 March 1990 and 28 August 1995 (or otherwise the date of dissolution of any partnership).
Question 4(a)
69 Graham Minter said (referring to his earlier problems with stress)
It was earlier acknowledged that he basically had no income.
“… I have spoken to Philip and Colin and we have agreed that if you manage the stud which would far outweigh your $120 per week, we are happy to do along with that.”
70 At paras 50 and 51 of his affidavit, referring to the Access Savings Account (“ASA”) Graham Minter said,
“that’s a fantastic idea because my brain isn’t working well enough to go back to fashion and working horses would help me recover, I can do it blindfolded.”
71 Mrs Minter in paras 31 and 32 of her affidavit of 6 July 1998, denied using the words attributed to her and states, “there was no ‘stud’ to ‘manage’”. 72 Before returning to that aspect, I should note that while at para 52 of Mr Graham Minter’s affidavit of 25 June 1998 he states that repairs were paid out of the Access Savings Account, apparently in contradiction to Mrs Minter’s affidavit of 12 May 1998 where she says, “all insurance premiums, rates and costs of repairs on the property have been paid by the Plaintiffs”, that contradiction really turns on whether Graham Minter’s contribution was through his management of the stud or whether in truth there was no such agreement or no stud to manage. It is to that issue I now return. 73 Essentially the issue is an argument over the use of the term “stud”. Collectively, the Plaintiffs denied the existence of the stud. Mrs Minter seemed to consider that the breeding of stock horses for a fee did not constitute stud operations but rather property registration. Further, she contended that something more than “a little four acres” were the qualifying conditions for a stud; T, 34.32. Colin Minter who had maintained stud registration concerned the registration of the property and not the horse, later conceded that his impression was not the subject of any proper inquiry (and indeed he was incorrect in that contention); T, 166.52. Colin Minter later confirmed that there could be small studs and that the activities engaged in at a stud included the maintenance of a the property and the looking after of animals (T, 169.44). Philip Minter defined stud activities as an operation where stallions are stood and take mares to breed, and included the caring of horses, the shoeing of horses, cleaning, maintenance of stables, feeding of horses and exercising of horses (T, 190). 74 I accept that the evidence establishes that these activities were carried out, and were carried out by the Defendant during the period from September 1990 to July 1993; these activities were described in a promotional video (DX2) and they are further reflected in the acquisition of Abray’s male progeny after Abray’s death. 75 I am satisfied that there was a stud capable of management and requiring management, whether or not the stud operation amounted to “the carrying on of a business with a view to profit” so as to satisfy a critical requirement for partnership. The evidence of both Colin Minter and Philip Minter was that they ran their own separate operations on the property and that neither had any financial interest with their mother or brother in common stud operations other than the ownership of a house property, merely helping each other out whenever desirable (T, 134.45). I prefer, on balance, the evidence of Graham Minter that he did in fact carry out these activities jointly with, and for, Colin and Philip, more particularly as Colin was only irregularly at the property being away at various times during the period in question. 76 The Plaintiffs also seek to refute the Defendant’s submissions by denying that Mrs Minter had authority as agent of the other two Plaintiffs to bind each of them to any agreement that their brother would be let off making his mortgage repayments. In assessing the evidence of Graham Minter and Mrs Minter, and their respective creditability, there is undoubtedly now bitterness between them but I am satisfied that at the time of the original arrangements they were on sufficiently good terms to embark on joint ownership and a co-operative endeavour. The tendency Mrs Minter had to deny across the board whatever Graham Minter put, while reflecting that more recent bitterness did not assist the credibility of her case, as for example in her steadfast denial that a small “stud” could constitute a stud capable of management, when clearly enough it could, even if the management was fairly basic.
“50. After that, I managed the stud and paid the proceeds from service fees and the like either into the ASA or if payments were made by cheque and we owed suppliers or the like, I would sometimes endorse the cheques directly to the suppliers.
51. Because Colin’s contributions were irregular, I maintained a ledger card recording the amounts he had contributed and amounts contributed on his behalf. Annexed hereto and marked with the letter “D” is a true copy of one of the cards still in my possession. The entry “500.00 Abbs Insurance paid” on that card is a one quarter apportionment of the insurance premium for the stallion Abray. Annexed hereto and marked with the letter “E” is a true copy of the schedule for the insurance policy relating to that payment.”
Conclusion — Question 4(a)
77 I am satisfied, on balance, that there was a binding arrangement that in consideration of Graham Minter agreeing to manage the stud operation carried on on the property for the mutual benefit of all of the four without further remuneration, he would be excused paying the $120 per week after May 1990 in reduction of the relevant mortgage. That arrangement necessarily came to an end when he left the property in July 1993. If I were wrong in my conclusion as to there being a binding agreement to that effect, I would conclude that on a quantum meruit basis Graham Minter’s services for the period from May 1990 until he left the property in July 1993 should be credited at $120 per week.
78 I now turn to question 4(b) as to whether there existed a partnership at any time between 2 March 1990 and 28 August 1995 (assuming that is the correct date when the Notice of Dissolution of the alleged partnership was served) and its terms (question 4(c)). It is convenient that I deal with these sub-questions together. Question 4(c) is concerned with the terms of any such arrangement as to the sharing of profits and losses and the employment if any of the parties by the partnership. 79 The Defendant contends that there was a partnership at will in respect of the stud operation and that it was a term of the partnership agreement or arrangement that the proceeds of sale of any horses would be used to reduce the mortgage secured over the property. Furthermore, that the parties would share the profits and bear the losses of the partnership equally. Whilst the Defendant’s cross-claim referred to the assets of the partnership belonging to the parties in equal shares, it was not disputed that the freehold property upon which the stud was conducted was not owned equally but, speaking generally, by way of a 50/50 split between Mrs Minter on the one hand and the three boys on the other. As I have already determined, the ownership of the beneficial interest in the property was three-sixths Mrs Minter and one-sixth each for each of her sons, such being held as tenants in common in contrast to the joint tenancy with respect to the legal interest. 80 Just as co-ownership is not definitive as to there having been created a partnership (see s2 of the Partnership Act 1892 (NSW)) so it must follow that where circumstances demonstrate that a partnership has been formed, there is no necessary identity between the ownership interests in assets utilised for the partnership and the actual partnership interests themselves as they apply to the sharing of profits and losses or to other partnership assets. 81 Section 1 of the Partnership Act 1892 (NSW) defines partnership as “the relation which exists between persons carrying on a business in common with a view of profit”. What the present situation poses is a distinction which Lindley Banks on Partnership 16th ed (1990) at 64 describes as: “… not susceptible of an easy answer”. That is, the distinction between mere co-ownership of an individual property employed with a view to profit and the level of activity in the course of that co-ownership that exhibits the characteristics of a business with a view of profit. Had this case been considered a century ago, it as a single venture operation would almost certainly not have been regarded as a business; witness the conflict of judicial views in French v Styring (1857) 2 C B (Ns) 357; 140 ER 455 as to a jointly owned racehorse. To-day, a single purpose joint venture even though it be an isolated activity does not for that reason escape being a partnership if otherwise it satisfies the criteria for a partnership in the sense of a commercial enterprise with the object of gain or profit; see, for example, Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales(Finance) Pty Ltd (1974) 131 CLR 321; United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 per Mason, Brennan and Deane JJ at 11 and Dawson J at 15. 82 Thus a single activity may demonstrate the necessary degree of repetition or continuity of acts as is required for the purpose of “carrying on” a business. Hence the present stud activity, though a single enterprise, would not escape being a partnership if otherwise it satisfied the necessary criteria. But does it? 83 Proof of a partnership lies upon the party who stands to benefit from establishing the relationship; see Laws of Australia, Vol 4.8[7] citing Ogier v Booth (1883) 9 VLR(E) 160; Re Estate of Wells 380 NW 2d 615 (1986) (FC SC Nebraska). Thus the onus lies here upon the Defendant in demonstrating that a partnership did exist. 84 The Defendant (para 45 of his written submissions of 23 November 1999) relies upon the following facts and circumstances as satisfying that onus:
Question 4(b) and 4(c)
85 Thus Mark Harvey in his affidavit of 28 July 1999 attests to knowing the Minter family for over ten years and states at paras 5 to 9 as follows:
“(a) The registration of the name B (or Beryl) Minter & Sons with the Australian Stock Horse Association (t/s 233). Although not a registered business name, constituent membership of the Association was a class of membership reserved for, inter alia, partnerships. It should also be noted that the application for membership was completed in Colin’s writing and was actually signed by Phillip (t/s 46,201.19).
(b) The notice given by Mr vile to the Australian Horse Association in July 1993 for the removal of the Defendant’s name from the constituent membership record, and the subsequent registration of change of name to B Minter in 1995, and with separate registration of Colin for membership.
(c) The four bank accounts in joint names.
(d) The advertisement of Abray in the Australian Stock Horse Association Journal 1991 exhibit DX16.
(e) Trading Accounts such as Kirkwoods produce, upon which all of the parties operated from time to time.
(f) The observations of non-family members as illustrated by the evidence of Christopher Hopkins, Mark Harvey and Michael Brennan [should be “Michael Brennan Smith”].
(g) The video — see transcript for credits t/s 134.25 and 136.50 [describing the co-operation of various “NSW horse properties” including “B Minter & Sons Maitland”].”
86 This evidence was not refuted and attests to the nature of the operations, the joint and co-operative character of them and the system and continuity of the steps taken to improve the facilities. In particular I am satisfied that this was not a series of separate activities of each of the Plaintiffs and the Defendant, but a joint operation though carried out with some degree of informality. This is much as the case in Hope v The Council of the City of Bathurst (1980) 140 CLR 1 per Mason J at 9 in relation to whether certain lands was used for “carrying on the business of grazing”.
“5. From my visits to the property I was aware that it operated as a horse stud and that it had horse training and spelling facilities as well. I would often see horses being trained or broken in. I saw mares on the property that I understood, from what I had been told by both Beryl and Graham, were there for stud purposes.
6. From the time that he moved there Graham spoke of their intention to breed from the stallion by taking in outside horses. Beryl was present during some of those discussions. It seemed to that this was to be a family business. I formed this opinion from the general conversations that would take place when I was there. Over coffee Beryl would talk about their general plans for the place to go ahead as far as horses coming and going were concerned as well as Graham. I can’t remember the exact conversations. An example might be how much the feed was costing them.
7. Graham and Beryl enquired of me regarding extensions to the house, presumably to make it look better for people who came there to leave their horses, to make a better impression.
8. Over time I noticed an improvement in the general standard of the facilities. The yards were renovated and so were the stables. The buildings were painted and the gardens were improved. Graham and Beryl used to point out what they had done and what they were intending to do, once again in general conversation.
9. From what I saw of the general operation of the property it seemed to me that Graham was running the place.
87 I might add that Abray was also advertised under the B Minter & Sons name; see DX16. 88 It is common ground that a partnership by conduct may be inferred notwithstanding that there is no intention to enter into a formal partnership. This is where this can be inferred from their conduct towards one another, taking into account such agreement as may have been formalised, if any; see, for example, Robinson v FCT (1986) 17 ADR 1068; DCT v Tuza (1995) 31 ATR 211 and on appeal; (1997) 35 ATR 32. Thus in Tuza, the Master (confirmed by Barr J on appeal) made a finding that members of a family conducting a family business had no intention to enter into a formal partnership but “the effect of the way in which the business was run, and the way in which the profits were distributed and arrangements entered into on behalf of the partnership” were such that the tax-payer should be considered as a partner at law (at 264). 89 Accepting that all the relevant facts and circumstances bearing upon the relationship between the parties must be considered (see Re Ruddock (1879) 5 VLR 51) the Plaintiffs contend that the onus on the Defendant has not been satisfied, pointing to the absence of any partnership taxation returns or of any individual’s tax returns which might indicate income derived from the partnership. The Plaintiffs in their evidence have also attempted to refute the existence of a partnership. This is by contending that the stud was too small to constitute a business capable of being managed and that in any event there was no joint business but simply a series of separate activities carried on by the four family members with some reasonable co-operation between them as entailed in sharing a common property and the tasks entailed in arranging for a stallion to serve mares brought to the property; see, for example, T, 134-5 and the evidence of Mrs Minter in that regard. Certainly, the records kept by the four family members were not a model of accounting perfection by any means. No profit was ever struck probably because there was none. There was however, as I have earlier set out, an attempt to record expenditures and receipts. That it required further reconciliation as was attempted by the Defendant in DX31 is not decisive and in any event the green ledger book (which I am satisfied existed) would presumably have supplemented these records. 90 I would sum the position up this way. I am satisfied that during the carrying out of the relevant operations records existed which would have permitted the calculation, at least in approximate terms, of a profit or loss, but no doubt because any profit would have been eliminated by interest and other costs no attempt was ever made to strike one. 91 The question then to be answered is whether that state of affairs, in conjunction with the other relevant circumstances would preclude the essential element of the carrying on of a business with a view of profit. 92 Cases considering whether or not a tax-payer has been carrying on a business for income tax purposes afford some useful guidance. Thus whilst the profit purpose has often been an important factor, for example in Thomas v FCT 3 ATR 165, it has not been essential that there be a profit-making motive in the short term: Ferguson v FCT (1979) 9 ATR 873; Thomas v FCT (supra). In horse breeding and racing cases, allowance has been made for the fact that there may be a lengthy lead-in time where profits would not be envisaged; see AAT Case 11,229 (1996) 33 ATR 1240; Case X28 90 ATC 276. That said, a view of ultimate profit is essential in a partnership and it means more than merely allocation of gross returns; see s2(2) Partnership Act 1892 (NSW); Re Spanish Prospecting Co. Ltd [1911] 1 Ch 92. 93 In Ferguson v FCT (supra) at 876-7 the following six elements were considered relevant, in concluding as the Full Court did that the cow breeding scheme showed sufficient system and organisation though it was on a small scale: (i) the nature of the activities, particularly whether they have the purpose of profit making. An immediate purpose of profit making in a particular income year is not essential; a person may be carrying on a business notwithstanding his or her profit is small or even makes a loss. (ii) the repetition and regularity of activities is important. (iii) the organisation of activities in a businesslike manner, the keeping of books, records and the use of a system. (iv) the fact of taxpayer practicing another profession does not preclude a finding that the additional activities may be the carrying on of a business. (v) the volume of operations and amount of capital employed may be significant. (vi) if what is being done “is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, [it] will not be held to be carrying on a business, even though [the] operations are fairly substantial”. 94 Though the taxpayer employed a manager who oversaw the breeding scheme, the system and organisation was demonstrated in the circumstances that the taxpayer read reports and periodicals on the subject, kept accounts and a card index system in relation to the cattle and had a long term project of the herd of two hundred cows. 95 Finally, the cases recognise that a lack of business efficiency may not be determinative of whether an activity is or is not a business. In Thomas v FCT Walsh J determined that a barrister who had planted various types of trees for the production of timber, avocados and macadamia nuts on seven and a half acres of land where he had his residence was carrying on a business for income tax purposes. This was so notwithstanding no profits had as yet been made and the operation had not been conducted on a business-like basis. The anticipation of an eventual annual income of three thousand pounds per annum on a long term basis and the scale of the operation were important factors in the determination. 96 Turning to the facts of the present case, I am satisfied that the parties did carry on regular stud services whereby the four provided a stallion who would in turn serve mares brought to the property for a fee in cash or by way of the foals in kind. I am satisfied that the operations so conducted were more than a mere hobby and involved some skill and know-how, even if it was the kind of know-how that most people in the country involved with horses grow up with; see evidence of Mrs Minter, T, 148. Thus care needs to be taken to ensure that the mare does not injure a valuable stallion by a device put round its legs. There is also the know-how in recognising the signs about when a mare is ready for mating as well as recognising whether things are going wrong such that a vet needs to be summoned; all these were brought out in the video (DX2). 97 The four family members used a common name, B Minter & Sons, registered with the Australian Stock Horse Association and constituting a class of membership reserved for partnerships though not only partnerships. Furthermore, the trading accounts demonstrated that the parties were utilising a joint bank account and customer accounts with the supplier to buy produce for the stud operation. The transactions in question were entered into on a continuous and repetitive basis and while there is no direct evidence that it was for the purpose of making a profit, and the means for recording it were far from adequate, nonetheless I am, on balance, satisfied that the parties did intend to carry on a business with a view of ultimate profit though well into the future. In particular I am not satisfied that the parties were simply carrying on four sets of individual activity upon the common property co-operating on an ad hoc basis. That said, it must be conceded that this case is on the borderline.
“Transactions were entered into on a continuous and repetitive basis for the purpose of making a profit. The activity had a permanent character in that it had been carried on without interruption since 1965. The appellant sought customers by advertising and kept appropriate financial records. The land, though small in area, was put to its best potential use and the pastures were improved and facilities including fences were provided for that use. There is nothing in the findings to suggest that the activities were other than genuine and real.”
Conclusion — Question 4(b) and 4(c)
98 I am satisfied on balance that the parties carried on a partnership between 2 March 1990 and 28 August 1995 (or until the Notice of Dissolution was served). Furthermore, I am satisfied that the partnership involved an equal sharing of profits and losses between the four and the employment of the Defendant as stud manager. The business was the carrying on of a horse stud associated with horse training and spelling facilities (as is attested to by the evidence of Christopher Hopkins, Mark Harvey and Michael Brennan Smith in their affidavits of, respectively, 31 July 1999, 28 July 1999 and 23 July 1999). 99 I now turn to question 4(d):
100 This question has essentially been answered in answering question 4(a). However, it is asked in a particular context, namely whether the Defendant should be required to reimburse the Plaintiffs for monies which according to the Plaintiffs constitute a misapplication of funds by the Defendant. I am satisfied that the Plaintiffs have failed to establish that there has been any such misapplication. Insofar as expenditures have been made for the Plaintiffs’ common purposes, these are expenditures of a partnership nature and should be treated accordingly. Similarly, insofar as there are any partnership debts, the Defendant is responsible equally with the Plaintiffs and could not of course escape that liability by leaving the property. Nor is liability escaped by dissolution of the partnership insofar as the liability relates to transactions which pre-date that dissolution. The solicitors should re-calculate DX31 accordingly, preferably co-operatively between the parties. 101 It also follows from what I have concluded, that the Plaintiffs are not entitled to the sum of $23,111.23, as no basis for that amount has been made out. 102 To the extent that the Defendant has not contributed his one-quarter share of all the statutory charges, insurance premiums and costs of maintenance of the property from March 1990 to the date he vacated in July 1993, he should be required so to contribute. On the evidence before me I am unable to conclude one way or the other whether there is any residual indebtedness in respect thereof. 103 After July 1993, though initially leaving voluntarily, it can be taken that he has not been permitted to re-enter the property though equally entitled to possession with the Plaintiffs. In those circumstances, prima facie it would be inequitable to expect him to contribute to such statutory charges, insurance premiums and costs of maintenance as arose after that departure. 104 The further amount that the Defendant owes is however $120 per week from March 1990 to August 1990, being the period during which he had yet to have the advantage of the oral agreement that he be excused from further payment. As I have already concluded that I am not satisfied that he has made those payments in accordance with his obligations in that regard, those payments would now need to be allowed for. 105 So far as the mortgage repayments are concerned, I have already concluded that he is not responsible for the contribution of $120 per week to July 1993, but thereafter he should be responsible equally with the three Plaintiffs for repayment at the rate of $120 per week, so far as arrangements between the Plaintiffs and the Defendant inter se are concerned. Whether that entails selling the property or whether some other arrangement can be made is a matter best left to the parties with their advisers to consider in formulating orders. Prima facie, it would appear that the partnership business would need to be wound up and the relevant assets sold unless some satisfactory arrangement can be made to avoid that course. 106 Even if I were wrong that this was a partnership, close to the line as it is, I consider that the same consequences would follow, in that I am satisfied there would at least have been a joint operation associated with joint ownership of a common property, for which the Defendant, though leaving it voluntarily, is now effectively excluded. In those circumstances as Hitchins v Hitchins (1999) 47 NSWLR 35 per Bryson J at 42-4 recently illustrates, the Defendant is entitled to an accounting on a number of bases, including at common law on the basis that the Plaintiffs are involuntary bailiffs, as unjust enrichment or under fiduciary or quasi fiduciary principles. The underlying principles for such accounting were earlier delineated in Forgeard v Shanahan (1994) 35 NSWLR 206 especially per Meagher JA though it should be now read with the important additions in Bryson J’s illuminating historical analysis. The present circumstances could be fairly equated, either to the break-up of a partnership or in any event, as in Muschinski v Dodds (1985) 160 CLR 583 at 619-20 per Deane J to the breaking up of a joint endeavour without attributable blame, save in continued exclusion of Graham Minter and the wrongful retention of his quarter share in that endeavour and of his own goods and chattels though in circumstances where family conflict have clearly played a part.
(d) In the context of any amount the Defendant/Cross-Claimant may be required to pay, what amount, if any, is the Defendant/Cross-Claimant entitled to for work done and/or services rendered and/or materials provided by him on or for any trading business carried on by the Plaintiffs and the Defendant between 2 March 1990 and 28 August 1995 (or otherwise the date of dissolution of any partnership).
Question 4(d)
Conclusion — Question 4(d)
107 The amounts to be paid as between Plaintiffs and Defendant are as set out in paras 100 to 106 and these consequences do not depend on the finding of a partnership as they are equally applicable to the break up of the joint endeavour carried on, whether or not a true partnership. That in turn requires an accounting in accordance with this judgment preferably worked out between the legal advisers without further formality.
Question 5
108 Continuing with Question 5109 The Defendant as I have already concluded is entitled to a one-quarter share of the relevant stud partnership. But I do not consider he is entitled to any further sum in respect of his loss of occupancy save that he should not be required to contribute to statutory charges, insurance premiums and costs of maintenance of the property for the period after he ceased to be able to occupy the premises. However, insofar as that claimed share is in respect of the proceeds of the sale of any horses jointly owned, I am satisfied that there was an agreement entered into in August or September 1990 orally between the parties, that such proceeds would be applied to reduce the mortgage. I refer here to the sale of Abray’s Casey and Abray’s River Phoenix. Such proceeds when quantified should however be applied in reduction of the mortgage, thus enuring to the benefit of the Defendant to the extent he is responsible for mortgage payments after July 1993. It matters not in that regard that his responsibility is adjusted in the manner that I have earlier set out. 110 Turning to (a) above, there now exists two schedules as attached to the Plaintiffs’ written submissions of 18 October 1999 of property left by Graham Minter at the Maitland property. On the evidence before me, Graham Minter is entitled to return of all his property or damages in conversion or detinue for the value thereof. At this point, I am not in a position to reach any definitive answer as to the value of the relevant items yet to be returned. I strongly suggest that this be a matter for agreement between the parties through their solicitors, and only if that cannot be achieved, then further submissions.
Is the Defendant entitled by way of cross-claim for damages for(a) his goods and chattels he asserts were left on the premises and the subject of detinue or conversion on the part of the Plaintiffs, or
(b) his claimed share (one/quarter) in the stock, progeny, purchases and sales of the alleged stud partnership, if it existed, and in respect of his loss of occupancy of the premises (based on a notional rent).
111 The Plaintiffs’ entitlement is as set out in paras 109 and 110 above.
Conclusion
ORDERS AND COSTS
112 Before making orders, I should pay tribute to counsel and the legal advisers on both sides who have made enormous efforts to try and reach a degree of consensus as to what is truly in dispute in what has been a difficult family conflict and have endeavoured to place the relevant evidence in coherent form. It would be highly desirable for the parties, assisted by the legal advisers, with the benefit now of the determinations in this judgment, to attempt to formulate orders co-operatively giving effect to this judgment. I direct that the parties attempt to do so and in any event to submit draft orders within fourteen days or such further time as is reasonable but not exceeding twenty-one days. I suggest that this be done with the maximum of expedition in order that matters can be brought to a finality. 113 So far as costs are concerned, prima facie these should follow the event and be awarded to the Defendant who has been broadly successful in the principal issues before me. However, I give leave to the parties to address me on costs if they wish and again invite the parties to attempt to agree a resolution of the costs issue if possible.
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Last Modified: 09/25/2000
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Citations
Minter v Minter [2000] NSWSC 100
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