Noordennen v Rofe
[2006] VSCA 253
•29 November 2006
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 3754 of 2005
| CORNELIS JAN NOORDENNEN |
| v. |
| MAVIS ROFE |
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JUDGES: | CALLAWAY, BUCHANAN and ASHLEY, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 5 October 2006 | |
DATE OF JUDGMENT: | 29 November 2006 | |
MEDIUM NEUTRAL CITATION: | [2006] VSCA 253 | |
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Equity – De facto relationship – Property acquired in the name of one party – Contribution to the acquisition and improvement of property by the other party – Common intention – Constructive trust based upon unconscionable conduct – Damages for detinue and conversion – Proof of value of items of personal property.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Ms C.M. Molyneux, Q.C. with Mr A. Narayan | C. McCoy |
| For the Respondent | Ms M.L. Smallwood | Roger O’Halloran & Co. |
CALLAWAY, J.A.:
I agree with Buchanan, J.A.
BUCHANAN, J.A.:
This appeal is concerned with the equitable principles which govern the entitlement by one person to an interest in property acquired in the name of another person as a result of contributions made by the first person to the acquisition or improvement of the property.
The following account of the facts is based upon the reasons of the trial judge. Her Honour said that she regarded the respondent as “truthful and a generally reliable witness”, while the appellant was “a less than satisfactory witness”. Accordingly, her Honour resolved conflicts in the evidence of the parties in favour of the respondent.
The appellant and the respondent met in 1988 and lived together for the next four years in a house at in Wolstencroft Street, Bendigo owned by the appellant. In 1992 the parties separated, although they remained in contact.
In April 1994 the appellant sold the house in Wolstencroft Street and purchased a property at 100 McLeod Road, Carrum at a price of $70,000. The appellant lived in an old house on the land. In July 1995 the appellant and the respondent resumed their de facto relationship in the house at Carrum. The respondent contributed in excess of $100 a week to meet household bills, outgoings such as rates and the cost of food. The appellant failed to match the respondent’s contributions. The respondent also washed and ironed the couple’s clothes and performed the general housework required to maintain the establishment.
The appellant engaged a builder to construct a dwelling house on part of the land, which became known as 100A McLeod Road, at a price of $53,858. On 8 December 1995 the respondent paid $32,314.80 to the builder from the proceeds of compensation she received as a result of a motor vehicle accident. On 24 January 1996, in recognition of the respondent’s contribution, the appellant executed a will giving the respondent a life estate in the McLeod Road property. If the respondent did not wish to reside in the McLeod Road property, the will directed the trustee of the land to sell it and pay 30% of the net proceeds to the respondent. The appellant subsequently paid the balance of the construction cost to the builder. The respondent expended in excess of $8,000 in improvements to 100A McLeod Road, including blinds, a door, a shed and concreting.
The respondent told the appellant that she wanted her contribution to 100A McLeod Road to be recognized. The appellant promised that she would receive half the proceeds of the sale of the property.
The parties lived together in a de facto relationship in the new house from December 1995 to July 1998. In 1996 and 1997 together they demolished the old house.
The appellant borrowed $55,000 from a bank to finance the sub-division of the McLeod Road property and the construction of a house on that part of the land to be known as 100 McLeod Road. At the request of the appellant the respondent agreed to pay $130 a fortnight to the appellant so that he could use the agreement to increase the prospects of obtaining the bank loan. The respondent paid the agreed amount and also met other household expenses.
In December 1998 the appellant sold the land at 100 McLeod Road at a price of $160,000. The respondent asked the appellant to reimburse her the money she contributed to the construction of the house at 100A McLeod Road. The appellant refused. The appellant applied $60,000 of the sale proceeds to extinguish the debt incurred to build the house at 100A McLeod Road and retained the balance of $100,000.
The appellant and the respondent then inspected a parcel of land at 165 Townsend Road, Whittington. The appellant purchased the land at a price of $29,000. He told the respondent that the land would be registered in his name because it was purchased from the proceeds of the sale at 100 McLeod Road. The appellant built a house on the land at Townsend Road at a price of $110,000. The appellant borrowed $55,000 from a bank to help finance the cost of the house.
In December 1998 the appellant sold 100A McLeod Road at a price of $131,000. On the day of settlement of the sale, in the office of the solicitor acting for the appellant, the respondent, who had lodged a caveat on the title to 100A McLeod Road, sought repayment of the money she had contributed towards the improvements made to 100A McLeod Road. According to the respondent, the appellant said that he needed the money to pay the debt secured by the mortgage[1] over the Townsend Road property and said:
“You’re better off going to Geelong because the house is worth more and you’ll get more out of it.”
The respondent agreed to remove her caveat. The appellant applied $60,000 from the proceeds of the sale to discharge the mortgage over Townsend Road.
[1]In this Court counsel for the appellant contended at one point that there was no mortgage over the Townsend Road property. While no evidence of a mortgage was led, both parties at trial proceeded on the common assumption that there was a mortgage. In any event, I do not consider that the point could affect the outcome of the proceeding.
In February 1999 the parties moved into the house in Townsend Road. They were no longer in a de facto relationship. The respondent paid rent to the appellant at the rate of $180 a fortnight and contributed to the cost of gas, electricity and the telephone. The respondent paid in excess of $2,000 for light fittings, drapes and curtains for the house.
In July 1999 the appellant and the respondent were registered as joint proprietors of a block of vacant land at 2A Fellmongers Road, Breakwater. They purchased the land at a price of $38,500. Two units were built on the land at a cost of $200,000, which was obtained by a loan of $100,000 by both parties from a bank, $70,000 from the proceeds of the sale of 100A McLeod Road and $30,000 from the sale of a Bendigo property owned by the respondent.
The respondent borrowed $40,000 from a bank to buy a property for her son. The loan was secured by a mortgage over Fellmongers Road. The respondent paid all the interest on the loans of $100,000 and $40,000.
On 9 November 2000 one of the two units at Fellmongers Road was sold at a price of $113,000. From the net proceeds of sale $42,440.76 was paid to the appellant, the loan of $40,000 obtained by the respondent was repaid, $22,737.61 was applied to reduce the loan of $100,000 by the appellant and the respondent and $2,440.77 was paid to the respondent.
For the next six months the respondent lived in the remaining unit at 2A Fellmongers Road. She expended over $3,000 improving the property and paid the rates and all the interest due to the bank. The second unit was sold and settlement was effected on 2 July 2001. The parties calculated the amount spent by the respondent in improving the property and upon settlement the proceeds of sale were divided more or less in accordance with the parties’ entitlements.
In June 2001 the respondent instituted proceedings in the County Court against the appellant. The appellant persuaded the respondent to withdraw the proceedings and move back to Townsend Road. After the plaintiff returned to Townsend Road, she paid the appellant $180 a fortnight, the telephone bill and money for gas used by the respondent.
In March 2003 the respondent was excluded from the house in Townsend Road when the appellant changed the locks. She has not returned.
The trial judge found that the respondent contributed half the cost of acquiring, improving and maintaining 100A McLeod Road at a time when she was in a de facto relationship with the appellant. The sum of $60,000 from the proceeds of the sale of 100A McLeod Road was used to discharge the mortgage on Townsend Road. The trial judge found that the respondent removed her caveat over the title to 100A McLeod Road on the faith of the appellant’s assurance that she would have an interest in Townsend Road. The trial judge also found that the respondent spent her own money on improvements to Townsend Road on the faith of the appellant’s assurance, although her Honour did not bring that expenditure to account. Thus the respondent was taken to have contributed $30,000 to the cost of the acquisition and development of Townsend Road from her interest in 100A McLeod Road.
Her Honour found that the respondent had acquired an interest in 100 McLeod Road as a consequence of paying the appellant $130 a fortnight, helping to demolish the old house on the land and performing housekeeping duties. The respondent’s contribution was assessed as 15 per cent of the cost of acquiring, improving and maintaining 100 McLeod Road. The net proceeds of the sale of 100 McLeod Road amounted to $100,000. Thus the respondent was treated as having acquired a further interest in Townsend Road valued at $15,000.
The total of $45,000 represented 32 per cent of the sum of $139,000 which was the cost of acquiring and developing Townsend Road. Accordingly, it was declared that the appellant held the title to Townsend Road upon trust for the respondent as to 32 per cent.
The grounds of appeal attacked the findings of fact made by the trial judge. Faced with the difficulty of overturning findings based upon an assessment of the oral evidence of the parties, counsel for the appellant mounted a case in this Court that was not advanced below and departed from the grounds set out in the notice of appeal.[2] Counsel for the respondent objected to the appellant’s change of course. The Court said that it would deal with the objection in disposing of the appeal. My conclusions render it unnecessary to rule upon the objection.
[2]As will be seen, an argument developed in oral submissions in this Court was inconsistent with counsel’s written outline of argument.
At the forefront of the appellant’s case on appeal was the contention that the trial judge failed to take into account and weigh all the transactions between the parties. Counsel for the appellant submitted that the respondent received a disproportionate share of the proceeds of the sale of the Fellmongers Road property, and that the benefit she derived thereby was equivalent to the value of her interest in Townsend Road. The appellant was said to have contributed $68,000 to the purchase and development of Fellmongers Road and received $64,000 from the proceeds of its sale, while the respondent contributed $30,000 and received $64,000. Counsel for the appellant submitted that it was to be inferred that the parties agreed that the shortfall in the respondent’s contribution to Fellmongers Road would satisfy any claim she might have had based upon her contributions to other properties. It was said that the trial judge erred in stating in her reasons for judgment that the appellant and respondent contributed equal sums of money to the purchase and improvement of the Fellmongers Road property.
At trial the appellant did not claim that the contributions made by the parties to acquire Fellmongers Road were unequal and, upon examination, the evidence did not establish that the respondent contributed less than the appellant. The appellant’s argument depended upon characterizing the funds derived from the McLeod Road properties and applied to Fellmongers Road as those of the appellant, overlooking the fact that the respondent was entitled to a share of those proceeds.
The monies contributed by the appellant to the acquisition and improvement of Fellmongers Road were derived from the proceeds of the sale of 100A McLeod Road, an amount of $131,000. As the trial judge found, the respondent was entitled to a half share of those proceeds. Part of that share was used to discharge the mortgage over Townsend Road and founded the entitlement of the respondent in respect of that property. The remainder of the respondent’s share, some $35,000, was expended upon Fellmongers Road. With the addition of the sum of $30,000 produced by the sale of her Bendigo property, the respondent’s contribution to Fellmongers Road was approximately equivalent to that of the appellant. Accordingly, it is not surprising that the parties agreed upon an equal division of the proceeds of the realization of the Fellmongers Road property as settling their respective entitlements in respect of that venture.
Counsel for the appellant next submitted that contributions to the cost of acquiring, developing and maintaining particular properties did not give rise to a constructive trust over all the properties of one of the parties to a de facto relationship where contributions have not been made to all the properties.[3] Accordingly, so it was said, the question was whether there was a nexus between the contributions relied upon by the respondent and the property at Townsend Road on which it was sought to impose a constructive trust. It was submitted that the trial judge failed to address the question whether the parties intentionally entered into a joint endeavour with respect to the Townsend Road property.
[3]Baumgartner v. Baumgartner (1987) 164 C.L.R. 137 at 153 per Toohey, J.; Stowe v. Stowe (1995) 15 W.A.R. 363 at 373 per Ipp, Owen and White, JJ.
In my view the trial judge did not simply aggregate the contributions made by the respondent to 100 and 100A McLeod Road and conclude that, as the proceeds of the sale of the properties found their way into the acquisition and development of Townsend Road, thereby the respondent acquired an interest in Townsend Road. Rather, her Honour analysed the evidence relating to the parties’ intentions with respect to the funding of the acquisition and development of Townsend Road.
Her Honour found that the respondent agreed to and did remove the caveat she had lodged over the title to 100A McLeod Road on the faith of the appellant’s assurance that, if the proceeds of the sale of 100A McLeod Road were used to repay the loan secured by the mortgage over Townsend Road, the respondent would be better off as the latter property was worth more and the respondent would get more out of it. In my opinion the findings of the trial judge amply supported the conclusions that the appellant and the respondent entered into a joint endeavour with respect to the acquisition and development of Townsend Road, that the respondent made the contributions to that endeavour recognized by her Honour, that the wealth of the appellant was increased by the joint endeavour, and accordingly it would be unconscionable for the appellant to deny the respondent an interest in Townsend Road commensurate with her contributions.[4]
[4]In his final address counsel for the appellant at trial conceded that, if it was established that the respondent was entitled to an interest in McLeod Road, the interest would “flow to the property on which the money [from McLeod Road] was spent.”
The trial judge’s declaration that the appellant was trustee of an interest in Townsend Road for the respondent was not based merely upon the ground that, having regard to all the circumstances, it would be fair to make such a declaration; nor did it represent the indulgence of idiosyncratic notions of fairness and justice.[5] Rather, the declaration was based upon established equitable principles. The appellant by his words induced the respondent to act to her detriment in the reasonable belief that by so acting she was acquiring a beneficial interest in Townsend Road.[6]
[5]Muschinski v. Dodds (1985) 160 C.L.R. 583 at 608 per Brennan, J. and at 615-6 per Deane, J.
[6]See Gissing v. Gissing [1971] A.C. 886 at 905 per Lord Biplock; Maharaj v. Jai Chand [1986] A.C. 898 at 907; Grant v. Edwards [1986] Ch. 638.
The trial judge found that the de facto relationship between the parties ended in July 1998. The appellant purchased the Townsend Road property on 5 August 1998. Counsel for the appellant submitted that, in the absence of a de facto relationship at the date of acquisition, the respondent could only establish an interest in Townsend Road if she proved that the parties intended to pool their resources. Counsel pointed out that the parties did not pool all their resources: each purchased and kept certain property as their own. The appellant kept a property in Bendigo and the respondent acquired a property in Queensland. In fact no claim was made by the respondent based upon a pooling of assets.
In my opinion the appellant’s approach does not reflect the manner in which the relevant equitable principles operate. The fundamental question was whether the parties entered into a joint endeavour to provide mutual financial benefits with respect to Townsend Road. If two persons pool their resources with a view to meeting all the expenses and outgoings arising from their living together, including outgoings associated with accommodation, the requisite intention to form a joint endeavour may be inferred.[7] It is not, however, the only circumstance from which such an intention may be inferred. The existence of a de facto relationship provides a context aiding the inference that a joint endeavour to provide mutual financial benefits was intended, but it is not an essential element.[8] There is no rigid formula which prescribes that a claimant must establish either a de facto relationship existing at the moment of acquisition of the property in question or a pooling of resources. In the present case I am of the view that the trial judge was entitled to find the requisite intention upon which to base a constructive trust in the agreement made between the parties in the solicitor’s office and their subsequent conduct.
[7]See, for example, Baumgartner v. Baumgartner, above, at 148-9 per Mason, C.J., Wilson and Deane, JJ.; Lloyd v. Tedesco (2002) 25 W.A.R. 360.
[8]Nor is such a relationship a sufficient element. See Green v. Green (1989) 17 N.S.W.L.R. 343 at 353 per Gleeson, C.J.
In the outline of argument filed on behalf of the appellant, it was submitted that the parties did enter into a joint enterprise in the nature of a commercial venture in respect of the Fellmongers Road property, with equal contributions and sharing of profits, and the contrast with the parties’ arrangements with respect to Townsend Road showed that there was no intention to confer benefits on each other in respect of the latter property.[9] The differences pointed to by counsel for the appellant in my opinion do not detract from the significance of the express agreement between the parties which led to the respondent’s contributions to the acquisition and development of Townsend Road.
[9]The submission is inconsistent with the argument described in paragraph [24] above.
Whether or not there was a trust implied by law based upon the intention of the parties, the same result was to be achieved by employing the concept of a constructive trust in a remedial sense, a broader concept than a constructive trust arising by implication from the common intention of the parties. A trust was to be imposed upon the appellant as a remedy affecting his ownership of the Townsend Road property because the circumstances and the conduct of the parties rendered it unconscionable not to impose a trust. The circumstances in this case met Deane J’s description in Muschinski v. Dodds. His Honour said that the circumstances constituting unconscionable conduct,
“… can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do”.
Finally counsel for the appellant submitted that the respondent’s entitlement to the McLeod Road property could be traced into the Fellmongers Road property, and thus it was not unconscionable for the appellant to maintain his exclusive entitlement to Townsend Road. As I have recounted, the evidence established that some only of the money representing the respondent’s interest in McLeod Road was applied to Fellmongers Road. The sums identified by the trial judge derived from McLeod Road, and to which the respondent was entitled, were applied to the purchase and improvement of Townsend Road.
The respondent also claimed damages in detinue and conversion representing the value of her personal property, which remained in the house in Townsend Road after the appellant changed the locks and excluded the respondent. By letter dated 15 May 2003 the respondent demanded the return of her property. The appellant returned some of the items of the plaintiff’s property, and retained others. So much appears to have been common ground between the parties at trial. The respondent estimated that the value of the goods retained by the appellant was $3,000. In the course of cross-examination the appellant was asked whether he agreed with the respondent’s estimate. The appellant replied: “$3,000? Maybe, maybe.” The trial judge found that the appellant had wrongfully refused to deliver up the goods owned by the respondent and assessed the damages in an amount of $3,000.
It was submitted on behalf of the appellant that the evidence was insufficient to establish the market value of the goods. Counsel relied upon the decision of
Gillard, J. in Giller v. Procopets[10]. A claim in that case was that one of the parties to a de facto relationship detained and converted a number of items of personal property belonging to the other party. The property comprised clothing, a handbag and shoes and a number of dictionaries. The plaintiff valued the items at $4,060. Gillard, J. expressed doubt as to the credibility of the plaintiff and said that on the balance of probabilities he would not be satisfied as to the value of the items based upon the evidence of the plaintiff that she visited shops and made an assessment. In the present case, on the other hand, the trial judge did not doubt the credibility of the respondent, and the appellant agreed with her valuation, albeit grudgingly. In my opinion the trial judge was entitled to proceed on the basis that the market value of the property was $3,000.
[10][2004] VSC 113.
In my opinion it has not been established that the trial judge fell into error. I would dismiss the appeal.
ASHLEY, J.A.:
I agree with Buchanan J.A., for the reasons which his Honour gives, that this appeal should be dismissed.
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