Ormos v Ormos
[2023] QDC 153
•5 September 2023
DISTRICT COURT OF QUEENSLAND
CITATION:
Ormos and Anor v Ormos [2023] QDC 153
PARTIES:
GABRIELLA ORMOS
(first plaintiff)and
GLEN WOOD
(second plaintiff)v
LESLIE ORMOS
(defendant)FILE NO.:
1839/18
DIVISION:
Civil Division
PROCEEDING:
Trial
DELIVERED ON:
5 September 2023
DELIVERED AT:
Brisbane
HEARING DATE:
7 and 8 June and 30 August 2023 (written submissions on 9, 13 and 14 June 2023)
JUDGE:
Rosengren DCJ
ORDERS:
1. I SHALL HEAR THE PARTIES AS TO THE FORM OF THE ORDERS.
2. I DIRECT THE PLAINTIFFS TO FILE AND SERVE A WRITTEN OUTLINE ON THE ISSUE OF COSTS BY 15 SEPTEMBER 2023, WITH THE DEFENDANT TO RESPOND BY 27 SEPTEMBER 2023.
CATCHWORDS:
CONTRACT – ORAL AGREEMENT – CREDIBILITY FINDINGS – where the plaintiffs allege that the first plaintiff and defendant orally agreed that the defendant would purchase the Property in his name and transfer it to the plaintiffs when they were in a position to obtain finance in their own names – where the defendant contends that the agreement was for him to obtain finance so that he could purchase the Property as an investment for himself and the plaintiffs would rent it from him
EQUITY – TRUSTS AND TRUSTEES – RESULTING TRUSTS – where the plaintiffs live on the Property that was purchased by the defendant through a loan and registered in his name – where the plaintiffs assert that the Property is held on resultingtrust for them – where the basis of the alleged trust is the rebuttal of the presumption arising from the payment by the plaintiffs of mortgage repayments and other outgoings with respect to the Property –whether resultingtrust ought to be ordered
EQUITY – TRUSTS AND TRUSTEES – CONSTRUCTIVE TRUSTS – COMMON INTENTION – where the plaintiffs alternatively contend the defendant holds the Property under a common intention constructive trust – whether there was an actual or inferred common intention of the parties as to the plaintiffs’ beneficial interest in the Property – whether the plaintiffs acted to their detriment in reliance on the common intention – whether it is unconscionable for the defendant to assert that the Property is held free of any beneficial interest on the part of the plaintiffs
INTEREST – RECOVERABILITY OF INTEREST – AWARD OF INTEREST ON DEBTS AND SUMS CERTAIN where the plaintiffs paid out the defendant’s personal debts to facilitate the bank approving the defendant’s application to loan the money for the purchase price of the Property – whether interest is payable by the defendant to the plaintiffs on this sum in accordance with an agreement between the parties, or alternatively pursuant to s58 of the Civil Proceedings Act 2011 (Qld).
Civil Proceedings Act 2011 (Qld) s 58
Allen v Snyder [1977] 2 NSWLR 685
Calverley v Green (1984) 155 CLR 242
Carlton v Goodman [2002] FLR 259
Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353
Grant v Edwards [1986] 2 All ER 426
Green v Green (1989) 17 NSWLR 343
Higgins v Wingfield [1987] VR 689
Iman Ali Islamic Centre v Iman Ali Islamic Centre Inc [2018] VSC 413
Irvine v Scaysbrook [2005] NSWSC 565
Muschinski v Dodds (1985) 160 CLR 583
Shepherd v Doolan [2005] NSWSC 42
Staatz v Berry (No 3) (2019) 138 ASCR 231
Vlahos Pty Ltd v Vlahos [2017] VSCA 166COUNSEL: L Copley for the plaintiffs
R Tooth for the defendantSOLICITORS: Shand Taylor Lawyers for the plaintiffs
Bennett Carroll Solicitors for the defendant
Introduction
This is a protracted and acrimonious dispute that primarily concerns the ownership of a property in Greenbank (‘the Property’). The first plaintiff is the defendant’s daughter. She and her de-facto partner, who is the second plaintiff, have been living at the Property with their children since it was purchased in August 2017. The defendant took out a loan with St George Bank (‘the bank’) for the purchase of the Property and it is registered in his name. The plaintiffs paid the defendant’s personal debts of $76,987.55, for his loan to be approved by the bank. They have also made mortgage repayments and other financial contributions to the Property and undertaken some work on it.
The plaintiffs claim the following relief:
(i)A declaration that the defendant holds the Property on trust for the plaintiffs, or alternatively in accordance with their respective contributions to the Property.
(ii)An order that the defendant pays to the plaintiffs the sum of $76,987.55.
(iii)Interest on $76,987.55 in the amount of $860 per month since February 2018, or alternatively, pursuant to s 58 of the Civil Proceedings Act 2011 (Qld).
(iv)Costs.
Pleaded cases
In paragraph 7 of the statement of claim, it is pleaded that shortly after 7 June 2017, there was an oral agreement between the first plaintiff and the defendant that:
(i)the defendant would:
(a) purchase the Property in his name;
(b) enter into a loan and mortgage to finance and purchase the Property;
(c) not be required to pay any amounts in respect of the Property; and
(d) would transfer the Property to the plaintiffs, at a time when they were able to obtain finance in their own names for the Property to assume the loan and mortgage, or pay it out.
(ii)the plaintiffs would live on the Property and would be responsible for the payment for all loan and mortgage repayments, rates, insurances, maintenance, upgrades and other costs associated with the Property (‘the oral agreement’).
The defendant denies the existence of the oral agreement in the terms alleged. Rather, he asserts that the agreement was for him to obtain finance so that he could purchase the Property as an investment for himself. It is further asserted by the defendant that the plaintiffs would rent it from him and the monthly rent payable by them was to equal the total of all expenses relating to the Property. This included mortgage repayments, water, other utilities, and maintenance.[1] He denies there was any agreement for the plaintiffs to pay rates, insurances or the expenses incurred in ‘upgrading’ the Property. The defendant contends that the plaintiffs were not permitted to make any upgrades to the Property. He denies that there was any discussion about transferring the Property to the plaintiffs.
[1] Paragraph 3(d)(i) of the defence.
As to the payment by the plaintiffs of the defendant’s personal debts of $76,987.55, it is pleaded at paragraph 10 of the statement of claim, that during telephone conversations between 8 and 11 June 2017, it was agreed between the first plaintiff and the defendant that:
(i)it would be a loan repayable when the defendant had the capacity to do so, or on demand (‘the loan agreement’); and
(ii)the defendant would pay $860 per month in interest, until such time as the $76,987.55 was repaid (‘the interest agreement’).
The defendant denies the existence of the loan and interest agreements. He asserts that the plaintiffs paid the $76,987.55 of their ‘own volition’.[2] He claims to have made monthly payments of approximately $860 between 1 September 2017 and 31 January 2018 as unilateral transfers by him, as a gift to help the first plaintiff and her family move and settle into the Property.[3]
[2] Paragraph 9(b)(iv) of the defence.
[3] Paragraph 13 of the defence.
Uncontested facts
The first plaintiff is the daughter of the defendant and immigrated from Hungary to Australia in 1993. She has been in a de-facto relationship with the second plaintiff since 2005 and they have four children together. They have lived in Brisbane, apart from a
14 month period commencing in early 2014, when they lived on Norfolk Island.
On their return to Brisbane in March 2016, the plaintiffs first rented a property at Springfield. They then moved to another rental property at Greenbank and the first plaintiff liked living in the area. Their weekly rent at this property was approximately $440. In early 2017, the first plaintiff was desirous of buying a property for the family to live in, however they were not a financial position to do this. They had only recently returned from Norfolk Island and were making mortgage repayments on a property they owned there. Further, the first plaintiff had only just started a new job as a bus driver and the second plaintiff was in the process of growing his metal fabrication business.
Prior to this time, the first plaintiff and the defendant had been estranged. She had remained close to her mother. It was around this time that her mother reconciled with the defendant. The first plaintiff began to have increasing contact with the defendant.
He owned some land on Russell Island and a property in Sydney, where he and the first plaintiff’s mother lived. This property was subject to a mortgage.
By mid-2017, the first plaintiff and the defendant were having discussions regarding the defendant obtaining a loan to purchase a property in the Greenbank area for the plaintiffs to live in. On 5 June 2017, the first plaintiff forwarded the defendant several links to various properties, including the Property. This was in the context of her telling him that she was looking at them. She inspected the Property on 7 June 2017 and again two or three days later. She was very interested in it.
The defendant spoke to David Potts, the lending manager for the bank, as to whether the bank would lend him the money to purchase the Property. The first plaintiff commenced negotiating and making other arrangements for the purchase of the Property. By a text sent on 10 June 2017, she advised the real estate agent that it was intended that a conditional offer of between $475,000 and $480,000 would be made for the Property. The first plaintiff explained that she would be purchasing it with her father and that he did not live locally. In an email to the defendant on 11 June 2017, the first plaintiff told the defendant (in Hungarian) that she had looked at the Property and that it was in a very quiet street and would only require minimal cosmetic work. She further said that she thought the Property could be purchased for $480,000. The first plaintiff sent the defendant another email about the Property later that day. On that evening, she sent a further text to the real estate agent raising the prospect of increasing the conditional offer to $485,000. The first plaintiff requested the real estate agent forward any documents in relation to the Property to her email address.
It was on 14 June 2017 that the defendant signed a Contract of Sale for the purchase of the Property. It was subject to finance. It provided that a deposit of $1,500 was to be paid within two days of the contract date. The defendant had not inspected the Property at this time. On the following morning, the first plaintiff sent a text to the defendant telling him that if the bank required any details about the purchase, the deposit could be $25,000 and that she would use a conveyancing firm in Fortitude Valley. The first plaintiff also said that, if required, she would be willing to provide a statutory declaration to the effect that she would be renting the Property from him for approximately $670 per week. A short time later, the first plaintiff sent the defendant a further text indicating that she would pay all insurances (including landlord insurance), rates and water.
On that same day, the defendant again met with Mr Potts to discuss the loan. He was told that the bank could not loan him the money on account of his personal debts.
The defendant relayed this to the first plaintiff and after further discussions he told her that the quantum of his debts was in the order of $70,000. She asked him to come back to her with the precise figure. The first plaintiff was subsequently provided with documents detailing the defendant’s personal debts, totalling $76,987.55 as follows:
(i)$38,059.77 to the bank for a loan;
(ii)$11,260.13 in respect of the defendant’s Volkswagen motor vehicle;
(iii)$17,872.21 to Citibank in relation to a credit card debt; and
(iv)$9,795.44 to ANZ in relation to a credit card debt.
The Contract of Sale was signed by the seller on 16 June 2017. The first plaintiff contacted a conveyancing firm who agreed to assist with the purchase. The deposit of $1,500 was paid by the first plaintiff.
To facilitate the bank approving the defendant’s loan, the first plaintiff offered to pay his debts. She did not have sufficient funds to cover them. For this reason, the second plaintiff took out a loan of approximately $32,000. The defendant’s debts were paid on 29 and 30 June 2017, with the first and second plaintiffs contributing $33,227.78 and $43,759.77 respectively.
On 5 July 2017, the defendant was informed that the bank had formally approved his loan. The following day, he entered into a written loan agreement and mortgage for the purposes of financing the purchase of the Property. The total loan amount was $515,000. It provided for 36 monthly repayments of $2,456 and the remaining 324 monthly repayments of $2,970. The security for the loan was the Property and the defendant’s equity in his Sydney property.
The amount loaned by the bank to the defendant exceeded the purchase price of the Property to enable the plaintiffs to carry out minor repairs on the Property and to pay down some of their credit card debt. The first plaintiff explained that after these expenses had been met, an amount of $12,008 remained. The defendant transferred this balance to her.
On 15 July 2017, the parties executed a General Tenancy Agreement completed by the first plaintiff. It was to commence on 10 August 2017 and was to remain in place for
12 months. It provided for a rental bond in the amount of $1,920 and for the plaintiffs to pay weekly rent of $480 each Friday into the defendant’s mortgage account (‘the tenancy agreement’).
The sale of the Property completed on 7 August 2017 and on the following day the mortgage was registered. The plaintiffs were required to break the lease at the Greenbank rental property and they moved into the Property within days of the settlement.
They have remained living there since. In January 2018, the defendant and the first plaintiff’s mother lived at the Property for approximately a week while the plaintiffs travelled to Norfolk Island. When the plaintiffs returned, there was a falling out over the care of the children. The plaintiffs and the defendant have remained estranged since this time.
In the weeks following the falling out, the first plaintiff forwarded an email to the defendant seeking to clarify the ongoing arrangements in relation to the Property.
In response to this, on 12 February 2018 the defendant notified the plaintiffs that he was intending to sell the Property. By email dated the same, the first plaintiff demanded that the defendant repay the loan monies within seven days. Further, on 20 February 2018, the first plaintiff caused a caveat to be registered over the Property claiming an equitable interest in it, pursuant to an oral constructive or resulting trust.
The following table summarises the agreed payments that have been made by the parties in relation to the Property between August 2017 and the hearing in June this year:
Payments
Plaintiffs
Defendant
Monthly mortgage repayments
$169,740
$16,232
Rates payments
$13,231.13
$7,157.35
Insurance payments
$594
$4,820.80
Total payments
$183,565.13
$28,210.15
It seems that the $16,232 was debited from the defendant’s mortgage account before the first plaintiff transferred those payments from her bank account to the defendant’s mortgage account.[4] This occurred in circumstances where there was a direct debit arrangement in place between the bank and the defendant.
[4] T1-48.
Between 10 February 2018 and 15 February 2023, the defendant redrew $24,754.40 from his mortgage account.
Further, between 1 September 2017 and 31 January 2018, the defendant paid to the plaintiffs $5,164, which equates to approximately $860 per month. This is addressed in further detail below.
The plaintiffs carried out repairs and other work to the Property without the defendant’s permission. While it is pleaded that the second plaintiff paid approximately $35,000 in materials and labour required to carry out this work, there was no evidence led about this at the trial.
Credibility and reliability
Two principal factual controversies require resolution. The first issue is whether it was agreed that the defendant would transfer the Property to the plaintiffs at a time when the plaintiffs were able to obtain finance in their own names or pay the mortgage out.
The second issue is whether it was agreed that the defendant would pay interest of $860 per month on the $76,987.55 until it was repaid.
The competing positions of the plaintiffs and the defendant cannot be reconciled.
It is important that the concepts of the onus of proof and the balance of probability are put correctly into the scales in weighing up the evidence of the witnesses. Much of the plaintiffs’ case depends on the acceptance of the first plaintiff’s evidence as to disputed conversations, in preference to that of the defendant.
Each witness has attempted to recall details of conversations and events that occurred up to six years earlier. There needs to be a cautious approach in resolving inconsistencies between their accounts by placing much reliance on their demeanours. It is necessary to also look to the contemporaneous documents, the objective facts and to the inherent probabilities.
It was my distinct impression that the first plaintiff was credible and reliable. Her version of events was plausible and logical, and in some respects supported by contemporaneous documents. To my mind, her credit on relevant matters was not significantly damaged by cross-examination. It is said against her that the tenancy agreement which she completed, strikes at the very heart of her evidence. I do not agree. Her explanation for the circumstances in which it came about is believable and does not lead me to reject her evidence. She frankly conceded her intention as to the statutory declaration, had it been required.
As to the relationship between the plaintiffs, I am satisfied that the first plaintiff was responsible for managing the finances and was the principal decision maker as to whether to enter into the agreement with the defendant to purchase the Property and to pay out his personal debts. However, the decisions were not made without discussing them with the second plaintiff. She appraised him, at least in a general sense, of her discussions with the defendant. To my mind, the second plaintiff sought to answer questions in a straightforward and direct manner.
On the other hand, I was unimpressed by the defendant as a witness and there are reasons to scrutinise his evidence with care. He seemed to be more interested in putting forward his point of view, than thoughtfully responding to the questions that were asked of him. He gave answers which he considered would be to his advantage. By the end of his evidence, it was my impression that he had provided a somewhat complicated array of disconnected explanations which were not inherently persuasive. His evidence as to the advice supposedly given to him by his accountant in relation to his tax returns was not compelling. I was also unconvinced by his explanations in relation to his regular payment of approximately $860 between September 2017 and February 2018. These are addressed in further detail below. Further, there were occasions where he made gratuitously adverse remarks concerning both plaintiffs, which seemed to be calculated to cause hurt and embarrassment to them.
In my reasons below, I have endeavoured to resolve conflicts on those matters that are significant to a determination of those issues referred to in paragraph 26 above.
Where necessary, I have indicated the extent to which I have accepted or rejected the evidence of witnesses.Otherwise, when I state something as a fact below, I accept the evidence that supports the fact.
Basis on which the plaintiffs were to live on the Property
It is common ground that the Property is registered in the defendant’s name and the plaintiffs are living in it. There is also no dispute that it was agreed between the first plaintiff and the defendant that if the defendant was to obtain the loan from the bank to purchase the Property, he would not be required to pay to the bank any amounts in respect of the loan and mortgage repayments, or other costs in respect of the Property.[5]
[5] Paragraph 3 of the defence.
This leaves for determination the question of whether the plaintiffs have discharged their onus in establishing their version as to the basis on which the first plaintiff and the defendant agreed that the plaintiffs would live on the Property. The respective positions of the parties are summarised in paragraphs 3 and 4 above.
In my view, there are several matters which, taken together, and with my findings that the plaintiffs were credible and reliable witnesses, justify the conclusion that the plaintiffs have discharged their onus in relation to this issue. The matters on which I rely are discussed below.
First, the defendant gave evidence that in early 2017 the first plaintiff was dissatisfied with the property that they were renting in Greenbank. This was asserted to be the impetus for the defendant offering to purchase the Property. Neither plaintiff was cross-examined to this effect, and I do not accept the defendant’s evidence in this regard.
Second, I accept the evidence of the first plaintiff that she was desirous of purchasing a property. While she knew that she was not in a financial position to be doing this at that time, it did not stop her from looking at properties for sale in the Greenbank area.
She was intent on buying a property as soon as they could, as she wanted the security of this for her family. The second plaintiff corroborated the first plaintiff’s evidence in this regard. He said that they had talked about buying a property on an off over time.
He recalled that there was a heated argument between them in about mid-2017, as the first plaintiff was wanting to buy a property and he did not consider that they were in a financial position to be doing so. Shortly after this, he was told that the first plaintiff had looked at the Property. He again voiced his concerns about the financial commitment involved and she raised the prospect of the defendant helping them with it.
In short, I accept the first plaintiff’s evidence that she approached the defendant and asked him for assistance in obtaining finance to purchase the Property.
Third, given the defendant’s financial position, I am not persuaded by his contention that he had been contemplating purchasing an investment property in early to mid-2017.
He still owed $170,000 on his property in Sydney and had personal debts of nearly $77,000. While he owned a block of land on Russell Island, he sold it in January 2020 at a loss and for only $21,500. Further, he was employed as a car warranty promoter earning a modest income. His 2018 tax return confirms that his gross income was $87,939. He was at the back end of his working life, given that he was 60 years of age.
Fourth, the problem with the scenario developed by the defendant, is that there is nothing in the evidence which demonstrated any objective assessment of the plaintiffs’ financial and other personal circumstances, which would lead them to agree to rent the Property from the defendant on the basis he contends for. There was no conceivable benefit in it for them. It involved them breaking their lease on the Greenbank property. They were still going to be renting, but it was going to cost them significantly more to do so. According to the defendant, the mortgage repayments were only part of the rent it was agreed that the plaintiffs would pay.[6] This is even though those repayments alone meant that the plaintiffs would be paying $550 month more than they had been paying to rent the Greenbank property.[7] Further, the contemporaneous documents confirm the defendant’s position that the Property was to be purchased at no cost to him. They show that the plaintiff was offering to pay the defendant more than the mortgage repayments. On 15 June 2017, she sent him a text also offering to contribute $25,000 to the deposit to purchase the Property. She sent him another text a short time later stating “For your security, I’ll be paying all the insurances including landlord insurance if you want to take it out. Also rates water etc”.[8] The deposit required ended up only being $1,500 and this was paid by the plaintiffs.
[6] Paragraph 19 of the defence.
[7] The monthly mortgage repayments were $2,456 and the monthly rent payable for the Greenbank property was $1,906.
[8] Exhibit 12.
Fifth, according to the defendant, the tenancy agreement is the legal document that the parties agreed would govern the rental relationship between himself and the plaintiffs. This does not withstand scrutiny. It was signed by the defendant on 15 July 2017 and provided for a monthly rental payment of $2,080. However, on the defendant’s case the rental payments were to cover the amount of the loan and mortgage repayments.
Only nine days earlier he had signed the loan agreement which provided that those monthly repayments would be $2,456. The difference in the two figures is $376. Further, the tenancy agreement provided for a rental bond of $1,920. There is no suggestion from either the first plaintiff or the defendant that there was ever a discussion regarding the plaintiffs paying a bond. I prefer the evidence of the first plaintiff that the tenancy agreement did not reflect any agreement that she had made with the defendant. Rather, it was prepared by her at the request of the defendant, and for his purposes. She also thought it would potentially assist her if she was required to provide proof of her address.
Sixth, the defendant’s tax returns from 2018 to 2022 confirm that since the plaintiffs moved into the Property, he has not declared any rent as income or any deductions for any expenses associated with it. His explanation for this could be described as dubious at best. He would have the Court believe that the accountant who assisted with the preparation of these documents, was aware that he owned the Property as an investment and advised him that it did not need to be accounted for in his tax returns.[9] The reason for this is said to be that the defendant was not making any money on the Property. It is inconceivable that an accountant would provide such advice. It would reflect a very concerning deficit of knowledge in relation to some basic aspects of the taxation system. On the defendant’s version, he received rental income of approximately $22,100 in the 2018 financial year and nearly $30,000 in each subsequent financial year. He also had incurred expenses which could be legitimately claimed as deductions. Further, the tax returns appear to have been otherwise competently compiled by the accountant. They incorporate claims for work related expenses, including for as little as $88 for a pair of work shoes. In addition, the 2020 tax return records a loss for the sale of his Russell Island land.
[9] T2-20, ln 9-14; T2-23, ln 20-38.
Seventh, I accept the second plaintiff’s evidence as to the repairs, renovations, and other work he and others have undertaken on the Property. The nature of the work performed has involved:
(i)excavation works:
(a) for re-contouring the land on both sides of the house;
(b) in relation to multiple tree stumps and their root systems and their removal from the site;
(ii)replacing pumps at the tanks; and
(iii)installation of an underground pipe system.
I do not accept the defendant’s evidence that there had been discussions with either plaintiff whereby it had been agreed that they could not perform any work on the Property without his permission. It defies logic that the plaintiffs would have undertaken the abovementioned work if they had specifically been told by the defendant that they were not to do any work on the Property without his permission, were only renting and there had been no agreement to transfer the Property to the plaintiffs. I accept the evidence of the second plaintiff that the reason they did not seek the defendant’s permission to undertake this work is because they didn’t need to and could “do with the property what we wished”.[10]
[10] T1-82, ln 1-2.
Accordingly, the first plaintiff has persuaded me to accept her version of what transpired during the various discussions with the defendant, as detailed in paragraphs 3 above.
As explained above, there are factors that support this and the difficulties in the defendant’s version are more troubling.
Basis on which the plaintiffs were to pay the defendant’s personal debts
It is the plaintiffs’ case that there were loan and interest agreements in relation to the $76,987.55.[11] The defendant denies the existence of both agreements.[12]
[11] As referred to in paragraph 5 above.
[12] As referred to in paragraph 6 above.
While I accept that the first plaintiff was very keen for the defendant to have his loan from the bank approved, the plaintiffs were not sufficiently flushed with funds to be offering to pay out the defendant’s personal debts, with no agreement that he repay them. This seems even less likely if the plaintiffs were simply going to be renting the Property, as the defendant contends. Relevantly, the second plaintiff had been required to take out a personal loan of $32,000, to pay for some of the debts. Of note, despite denying the existence of the loan agreement, the defendant accepted at trial that he owes the $76,987.55 to the plaintiffs.
As to the six payments of approximately $860 made by the defendant to the plaintiffs between 1 September 2017 and 31 January 2018, the defendant would have the Court believe that they were unilateral transfers by him, as and when he saw fit, in amounts which he solely determined, as a gift to help the first plaintiff and her family move and settle into the Property.[13] This explanation is far from compelling.
[13] Paragraph 13(b) of the defence.
Given that the defendant was so adamant that the purchase of the Property would not cost him a cent, it seems most unlikely that he would have commenced transferring these payments as gifts. It is equally odd that he transferred them without telling the first plaintiff that he was wanting to give them to her as a gift. It is almost inconceivable that the first plaintiff received these regular payments, had no knowledge why they were being made, and at no time raised them with the defendant.
Another matter that deserves attention is the timing of the last of these payments made by the defendant, which was on 31 January 2018. This was a few days after the falling out between the plaintiffs and defendant, that has continued until this day. It was over the plaintiffs’ concerns regarding the lack of care that had been provided to their children by the defendant and the first plaintiff’s mother, while the plaintiffs were on Norfolk Island between 20 and 27 January 2017. It seems most unlikely that after a falling out of this nature, the defendant would have been continuing to transfer money to the first plaintiff as a gift to her.
Further, I am not persuaded by the defendant’s evidence as to how he arrived at the figure of $860. He initially said that he randomly picked it. He then went on to explain that the number 8 represented the month of his birth and the month that he signed the Contract of Sale, and the number 60 represented his age at the time he signed it.
Finally, it is difficult to accept that there was no agreement for the defendant to pay interest on the loan monies. Not only was it a large sum of money for the plaintiffs to have outlaid, a significant portion of it had been loaned by the second defendant and he would have been paying interest on this loaned amount.
While I am satisfied that it was agreed the defendant would pay interest on the loan monies, in my view the plaintiffs have not established that it was agreed that it would be in the order of $860 per month. The first plaintiff’s evidence about this issue was not particularly clear. Further, I am not convinced that the minimum monthly payments she was referring to, were comprised solely of interest payments. For example, the minimum monthly payments in the statements which are exhibits 4.2 and 4.3 include payments of a principal component as well.
In these circumstances, the parties agree that interest on $76,987.55 is to be calculated pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) (‘the CP Act’) from the date of demand, being 12 February 2018.
Resulting trust
As frequently transpires in these sorts of cases, there was no agreement between the parties about what would happen to the Property in the event of a breakdown in the relationship. It is pleaded in paragraph 32(c) of the statement of claim, that the defendant holds the Property on resulting trust for the plaintiffs.
The general proposition is that trust of a property results to the person who advances the purchase money.[14] There is no dispute that apart from the $1,500 deposit paid by the plaintiffs, the purchase price for the Property was raised by a mortgage under which the defendant is liable. The authorities establish that the assumption of a mortgage liability is generally regarded as a direct contribution to the purchase price and gives rise to the presumption of resulting trust in favour of the defendant.[15]
[14] Carlton v Goodman [2002] FLR 259.
[15] Calverley v Green (1984) 155 CLR 242 at 257-258.
This presumption though must give way to any inconsistent actual intention. The plaintiffs bear the onus to rebut the presumption by direct evidence or inferences drawn from the circumstances. It is necessary for them to establish that at the time the defendant contributed the loaned monies to the purchase price and the trust was created, he intended the plaintiffs should take the Property beneficially. The inference may be drawn from the context at the time, including the relationship that existed between the parties, and from their acts or declarations before or at the time of the purchase, or immediately thereafter.[16] Subsequent conduct which is not contemporaneous with the purchase is only admissible as admissions against interest.[17] The Court ought not to impute to the defendant an intention which he did not possess, but which might be regarded as leading to a fair result.[18]
[16] Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 366.
[17] Vlahos Pty Ltd v Vlahos [2017] VSCA 166 at [59]-[60].
[18] Muschinski v Dodds (1985) 160 CLR 583 at 593.
Irrespective of whether consideration is given to the intention of the defendant, or the common intention of the plaintiffs and the defendant, in my view the proper inference to be drawn from the evidence is there was a clear intention to confer a beneficial interest on the plaintiffs. They took their beneficial interest in the Property, in return for an assurance by them that the Property would not cost the defendant a cent. The plaintiffs were to live on the Property and would be responsible for the repayment of the mortgage and the other costs associated with it, absolving the defendant of any responsibility in this regard. In these circumstances, it would be artificial to say that the money raised under the mortgage for which the defendant is liable, rather than what was intended to be the ultimate source of funding by the plaintiffs, constitutes the purchase price. There is resulting trust in favour of the plaintiffs.
In these circumstances, there is no legal basis upon which the defendant could withdraw $25,754 from the mortgage account for his own use. The plaintiffs contend in their written submissions[19] that an order ought to be made that the defendant pay them the sum of $8,522.40 (being the difference between the amount the defendant has withdrawn from the mortgage account, less the mortgage repayments made by him[20]). However, this does not account for the $11,978.15 paid by the defendant for rates and insurances related to the Property, as detailed in paragraph 21 above.[21]
[19] At paragraph 55(b).
[20] At paragraph 19 above.
[21] These admitted figures differ from those pleaded in paragraph 11 of the defence.
Constructive trust
The plaintiffs’ alternative claim for a common intention constructive trust arises in paragraph 32(a) of the statement of claim. While the class of trust has not been expressly pleaded, paragraph 16 of the defence contains a denial to the effect that the defendant holds the Property pursuant to any kind of trust for the plaintiffs. The reasons for this denial are addressed in paragraphs 60 to 63 of the defendant’s written submissions and focus on a common intention constructive trust.
This class of constructive trust may be imposed where there is an express agreement between the parties, or where there is an actual or inferred common intention of the parties as to their beneficial interest in a property. Like resulting trusts, the onus of proving the existence of such a trust rest with the plaintiffs. [22] The intention may be inferred from words and conduct in the context of the surrounding circumstances.
Unlike resulting trusts, it may arise after the Property has been acquired. It will not be inferred from scant or equivocal evidence.[23] It may be inferred from direct or indirect financial contributions to the acquisition of the Property, or meeting expenses in maintaining it.[24]
[22] Iman Ali Islamic Centre v Iman Ali Islamic Centre Inc [2018] VSC 413; Staatz v Berry (No 3) (2019) 138 ASCR 231.
[23] Irvine v Scaysbrook [2005] NSWSC 565 at [64].
[24] Shepherd v Doolan [2005] NSWSC 42 at [38]; Allen v Snyder [1977] 2 NSWLR 685.
The other pre-condition for this type of constructive trust is detrimental reliance on the common intention by the plaintiffs, such that it would be unconscionable for the defendant to assert that the Property is held free of the plaintiffs’ beneficial interest.[25]
It is not sufficient for the plaintiffs to rely on disappointed expectation.[26] The Court needs to be satisfied that the plaintiffs have engaged in conduct that could not reasonably have been expected to have occurred, unless they were to have an interest in the Property.[27]
[25] Green v Green (1989) 17 NSWLR 343.
[26] Higgins v Wingfield [1987] VR 689.
[27] Grant v Edwards [1986] 2 All ER 426 at [648].
Based on my reasons and findings above, I am persuaded that there was a common intention between the first plaintiff and the defendant that while the Property was to be purchased in the name of the defendant, that the plaintiffs would become the owners of it. Those features of the parties’ conduct from which a common intention as to beneficial ownership can be inferred, are the agreement that the Property would not cost the defendant a cent and that the plaintiffs would be responsible for the repayment of the mortgage and the other costs associated with it.The conduct of the parties after this agreement was also consistent with it. They paid the defendant’s personal debts (so that he could secure the loan to purchase the Property), the deposit of $1,500, and have paid just about all the mortgage repayments and other expenses associated with the Property. The other conduct that supports this common intention is the repairs and other work undertaken by the second plaintiff on the Property, as referred to in paragraph 42 above. The fact that there is no evidence as to the cost or value of these works, does not preclude it from being a relevant consideration to the determination of this issue.
I am further satisfied that the conduct of the plaintiffs detailed in the abovementioned paragraph was clearly to their detriment unless they were to have the beneficial interest in the Property. Paying the deposit, the mortgage repayments and other costs associated with the Property and performing the work on it, could not reasonably have been expected to have occurred, unless the plaintiffs were to have an interest in the Property.
A constructive trust exists based on the common intention of the parties.
Estoppel
Given that I am satisfied of the existence of resulting and constructive trusts, it is the position of the parties that it is not necessary to consider the further alternative estoppel claim, as pleaded in paragraphs 35 to 38 of the statement of claim.
Conclusions
The plaintiffs have established an entitlement to a declaration that the defendant holds the Property on resulting and/or constructive trust for the plaintiffs. Having said this, the bank provided the loan to the defendant in the absence of there being any suggestion that there was a trust arrangement in place. Therefore, it will be necessary for the form of the order to ensure that the rights of the bank are not interfered with by making the declaration.
It has also been established by the plaintiffs that they are entitled to orders that the defendant repay the sum of $76,987.55 and interest on this sum, calculated pursuant to
s 58 of the CP Act, from 12 Febraury 2018.
I will hear the parties as to the form of the orders. I will also hear the parties as to costs. I direct the plaintiffs to file and serve a written outline on the issue of costs by
15 September 2023, with the defendant to respond by 27 September 2023.
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