Payne v Rowe

Supreme Court

New South Wales

Medium Neutral Citation: Jo Maree Payne v Helen Mary Rowe & Anor [2012] NSWSC 685
Hearing dates: 21 to 24 May 2012; 30 May 2012
Decision date: 25 June 2012
Jurisdiction: Equity Division
Before: Ball J
Decision:
See paragraphs 116 to 122 of this judgment.

Catchwords: REAL PROPERTY - co-ownership - application for appointment of statutory trustees for sale - adjustment of interests - whether non-occupying owner entitled to occupation fee - where there has been no exclusion from the property - consideration of principle in McKay v McKay and Callow v Rupchev - held applicable to "domestic relationship" between brother, sister and mother.
REAL PROPERTY - co-ownership - application for appointment of statutory trustees for sale - adjustment of interests - whether contributions made by associated entity attributable to party.
EQUITY - trusts - resulting trust - presumption of resulting trust based on contributions to purchase price - presumption rebutted where parties have agreed on beneficial interest at time of purchase.
EQUITY - trusts - remedial constructive trust - principle in Baumgartner - application to family relationship - necessity of identifying relevant "joint enterprise" - whether there was "attributable blame" for the failure of the joint enterprise - whether party adequately compensated by a right to contribution - whether respective contributions by parties should be valued according to cost or increase in value of property.
LIMITATION OF ACTIONS - whether claim for imposition of remedial constructive trust subject to limitation period - application of Limitation Act directly or by analogy - distinction between claim for constructive trust and claim for debt or action for money had and received - consideration of when claim for remedial constructive trust accrues.
EVIDENCE - admissibility - inadmissibility of evidence of communications in connection with an attempt to negotiate a settlement of the dispute - whether admissions made in such communications admissible - consideration of exception in s 131(2)(g) - held evidence not admissible simply because it qualifies other evidence adduced in proceedings.
ONUS OF PROOF - general principle - onus is on the defendant if the allegation is not simply a denial of an essential ingredient of the cause of action but a good defence.
Legislation Cited: Conveyancing Act 1919 (NSW)
Evidence Act 1995 (Cth)
Limitation Act 1969 (NSW)
Cases Cited: Atlas Financial International Ltd v Nortbale Pty Ltd [2011] NSWSC 815
Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Co Arrangement)(Deed Administrators Appointed) [2011] NSWSC 1306
Baida Poultry Pty Ltd v R [2012] HCA 14
Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276
Baumgartner v Baumgartner (1987) 164 CLR 137
Bennett v Horgan (Supreme Court of NSW, Bryson J, 3 June 1994, unreported)
Bloss Holdings Pty Ltd v Brackley Industries Pty Ltd [2005] NSWSC 756
Brown v Commissioner of Taxation [2001] FCA 596; 187 ALR 714
Callow v Rupchev [2009] NSWCA 148
Currie v Dempsey (1967) 86 WN (Pt 2) (NSW) 460
Dinsdale bht the Protective Commissioner v Arthur [2006] NSWSC 809
DTC No 1 Pty Ltd v Matthew [2009] NSWSC 1280
Forgeard v Shanahan (1994) 35 NSWLR 206
French v Barcham [2009] 1 WLR 1124
Hill v Hill [2005] NSWSC 863
In de Braekt v Powell [2007] WASCA 55
Lang v Le Boursicot (1993) 5 BPR 11,782
McKay v McKay [2008] NSWSC 177
Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174
Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd [2008] FCA 27
Miller v Sutherland (1990) 14 Fam LR 416
Muschinski v Dodds (1985) 160 CLR 583
Mulkearns v Chandos Developments (No 4) (2005) 12 BPR 22,993
New South Wales (Ambulance Service of NSW) v McKittrick [2009] NSWCA 63
Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135
Rupchev v Callow [2007] NSWSC 1097
Stocking v Montila [2005] EWHC 2210 (Ch)
Sweetenham v Wild [2005] QCA 264
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239
Varma v Varma [2010] NSWSC 786
West v Mead [2003] NSWSC 161
Texts Cited: P Butt , Land Law, 6th Edition (2010), Lawbook Co
Category: Principal judgment
Parties: Jo Maree Payne (Plaintiff)
Helen Mary Rowe (First Defendant)
Jeremy Richard Dawson Rowe (Second Defendant)
Representation: DF Villa (Plaintiff)
KG Oliver (Defendants)
Thomsons Lawyers (Plaintiff)
Reuben George Lawyers (Defendants)

File Number(s): 2011/157795

Judgment

Introduction

The plaintiff, who I will refer to as Jo, is the daughter of the first defendant, who I will refer to as Helen, and the brother of the second defendant, who I will refer to as Jeremy. Until the events giving rise to these proceedings, Jo, Helen and Jeremy were a close family. Jo described their relationship as "extremely close". Now, however, the relationship between Jo and Jeremy has broken down irretrievably and the same may be true of the relationship between Jo and Helen.

Jo was born in 1972 and Jeremy a year later. Their parents separated when they were young and Helen brought Jo and Jeremy up as a single mother, which was a financial struggle, particularly in the early years. Prior to 2000 they had lived together in rented accommodation and, when Jo and Jeremy were old enough and working, they paid Helen board.

On 15 March 2000, Jo, Helen and Jeremy bought as joint tenants an 11 acre property at Ourimbah on the Central Coast. The purchase price of the property was $450,000, although obviously there were other costs associated with the purchase, including stamp duty and conveyancing costs. The property is approximately 750 metres long and crosses a hill in the Ourimbah Creek Valley. At the bottom of the hill was an existing house. The idea, at the time, was that Jo, Helen and Jeremy would live in the house together initially, but that Jo would build her own studio accommodation in the middle part of the block and Jeremy his at the top of the block. Substantial work was done constructing Jo's studio and work started in the area where it was intended Jeremy would build his accommodation. However, Jo and Jeremy fell out. I will say more about the reasons shortly. Things reached a head in February 2009 as a result of events that are described below and, in September 2009, Jo moved out of property into another house that she had bought. Helen and Jeremy continue to live in the original house on the property.

In these proceedings, Jo makes an application under s 66G of the Conveyancing Act 1919 (NSW) for the appointment of judicial trustees for the sale of the property. Helen and Jeremy do not seriously contest Jo's entitlement to that relief, although they say they should be entitled to buy the property themselves and to offset their own interests against the purchase price. The real dispute between the parties is what interest each holds in the property; and, on that question, there is no agreement between Jo on the one hand and Helen and Jeremy on the other. At a legal level, there is an issue whether the parties hold their legal interests on a resulting or constructive trust for themselves in different proportions to those that are reflected by their legal interests. There is also an issue whether Helen and Jeremy are liable to Jo for an occupation fee for the period following her departure. In addition, Helen and Jeremy say that, to the extent that Jo's claims rely on payments she says she made more than 6 years before commencing these proceedings, those claims are statute barred.

There are also a number of factual issues. The parties agree that the arrangement was that both Jo and Jeremy would be responsible for the costs of building their own accommodation on the property. The parties also agree that it was part of the arrangement that each would have a one third interest in the property and that, if any of them were to die, that person's interest would pass to the others. However, there is an issue whether the parties agreed to contribute one-third each to the costs of purchasing the property (including mortgage repayments) or whether it was agreed that Helen would pay $250,000 towards the purchase price and Jo and Jeremy would each contribute $100,000, or at least that Helen would contribute more than Jo and Jeremy. There is also an issue concerning what contribution each made to the purchase price of the property. Jo essentially says that she paid all but $1,000 of the costs that were not covered by a loan of $360,000 the parties obtained from Aussie Home Loans at the time of settlement. Jeremy, on the other hand, says that he contributed $30,000 towards the deposit. A third issue is whether, apart from a limited number of payments which are not in dispute, Jeremy paid anything towards the mortgage repayments. Jo says that he did not. Jeremy says he gave Jo cash for his share of those payments. A fourth issue concerns the costs Jeremy incurred in improving the property. Jo essentially maintains that Jeremy incurred nothing whereas Jeremy gives evidence that he spent at least $224,000 on improvements to the property.

In addition to the issues raised by Jo's claim, both Helen and Jeremy have filed cross-claims. The cross-claims seek declarations concerning the parties' interests in the property. They also plead that the parties agreed that while all the co-owners lived the property would not be sold except with the consent of all of them as a means of resisting the appointment of judicial trustees under s 66G of the Conveyancing Act, although, as I have said, that claim was not seriously pursued during the hearing. In addition, Helen and Jeremy claim contribution from Jo for amounts they paid towards the mortgage over the property after Jo left. Jeremy also claims that, in the event that Jo is entitled to an occupation fee, he is entitled to offset against that liability various amounts he expended on improving the property. Finally, Helen and Jeremy seek the appointment of alternative trustees to those proposed by Jo in the event the court makes an order under s 66G.

The parties

Before saying more about the evidence, it is necessary to say something about the parties since their credit is important to the resolution of the factual disputes in this case.

Jo and Jeremy could not be more different. Jo currently works in the computing industry as a Lotus Notes administrator. She is highly organised, disciplined, meticulous and precise. She is very careful with money. Perhaps the best illustration of these qualities is her bank statements. It is clear that she goes through them with a fine tooth comb, ticking each item as she goes once it has been reconciled with other supporting documents or she is satisfied in some other way that it is accurate. She then updates a Microsoft money program that she keeps with the new data. At the moment, Jo says that she has fallen substantially behind in this process, but that is an aberration no doubt brought about by the circumstances she currently finds herself in. It is not evidence that undermines the observations I have made.

Jo also gave the impression of having a clear view on what should and should not be done and of expecting people to live up to those expectations and reacting strongly when they do not. Although it is a minor incident in the case, an incident that illustrates these qualities was when Jo returned to the property one day after she had left to find a window of her incomplete studio broken and an old Mercedes parked in it. No one else was at home at the time. Jo says that she tried telephoning Helen and Jeremy, but that neither answered. She then called the police to report the motor vehicle as stolen and what she described as a "break and enter". Jo says that she inferred that the vehicle had been stolen because there was blue and white police tape in it. In my opinion, however, she must have appreciated that the vehicle was Jeremy's and that he had broken the window to gain access. She called the police because she was annoyed that he had done so, since, although she had left the property, she still regarded the studio as hers. She returned to the property about three weeks later to check that the window had been repaired and that the vehicle had been removed and was upset to find that it had not.

If Jo is organised, Jeremy is disorganised in equal measure. He has little interest in finances and keeps no records. It is clear that most of the amounts he owes he pays in cash drawn from various bank accounts, which are either in his own name or in the names of companies he controls or in which he has an interest. For the most part, he does not keep any invoices, or records of which invoices he has paid. Nor does he keep bank statements. Only recently, apparently in response to a notice to produce served by Jo, has he made any attempt to prepare or lodge tax returns for the past 10 years or so. The overall impression he gives is that he has much more important things to concern himself with than such matters. To the extent that Jeremy's finances have been pieced together for this case, that has largely happened through the issuing of subpoenas to banks. Having regard to the time that has elapsed and the fact that Jeremy has little idea of what accounts he and companies associated with him kept, that is an incomplete source of information.

Over the years, Jeremy has engaged in various business ventures, including sign writing, T-shirt printing, boat building and property development. A number of the businesses have not been successful. More recently, however, Jeremy has developed an interest in bio fuels, and solar energy; and it appears that he has developed a successful business of installing solar panels. I say more about that business later. Nonetheless, he is inclined to overstatement without paying any real regard to the actual facts and to pursue rather grandiose schemes. An example of the former characteristic is the claim he made in these proceedings that Solarsave, a company through which for a period of time he conducted his solar panel installation business, earned income of $2,000,000 per week by early 2010 and employed 105 employees. In an affidavit filed in oppression proceedings concerning Solarsave, Jeremy said that the amount was $1,500,000 per week. Neither claim was supported by financial records; and Mr Mabey, who is a director of Solarsave and at one time was a business partner of Jeremy's, gave evidence, which I accept, that Solarsave had negligible turnover and no employees prior to March 2009 and had total sales of $25 million in the year ended 30 June 2010. An example of Jeremy's characteristic of pursuing grandiose schemes is his decision to build a helipad on the top part of the property, the utility of which might best be described as questionable, particularly in circumstances where Jeremy has not yet built his own accommodation and there is no evidence to suggest that he owns a helicopter.

Helen exhibits none of the extremes of her children. She came across as a direct and practical person. She worked hard to raise her children and made considerable sacrifices to do so. She had an interest in supporting her son's case and in resisting the orders sought by Jo. But there was no suggestion in the evidence that she gave that she harboured any particular bitterness or resentment towards Jo as a consequence of what has happened; and, in my opinion, she did the best she could to give honest answers to the questions she was asked. To the extent that there was tension between Jo and Jeremy over the years, she was inclined to down-play it and to keep as much distance as she could from it. The financial difficulties she faced bringing up two children as a single mother has made her very risk adverse. Nonetheless, her general attitude was that she would do whatever she could financially to contribute to the purchase of the property and its development. Moreover, she trusted her children and largely left it to them to sort out the financial arrangements in relation to the property. So, for example, when they approached her to refinance the mortgage so as to establish a line of credit to be used in the Solarsave business, which was to be secured against the property, she agreed to what was proposed.

The evidence

The idea of buying a property seems to have originated with Jo. There is a dispute about how the parties found the property and the extent to which Helen was enthusiastic about the proposal to buy it. Jeremy says that he was the first to find the property. Jo, on the other hand, says that she first saw it advertised. Characteristically, she has kept a copy of the advertisement that has been circled by her, which supports her version of events. Jo says that Helen was enthusiastic about the idea of buying a property together. Although that might ultimately have been the case, I accept Helen's evidence that she was reluctant at first because of the financial commitment that it would involve. Nothing, however, turns on these matters. The fact is that the parties agreed to buy the property and contracts for its purchase were exchanged in January 2000. The parties also agreed that Helen would have the existing house at the bottom of the property and that Jo would build her studio in the middle of the property and Jeremy his at the top. In addition, as I have said, the parties accept that it was agreed between them that Jo and Jeremy would bear the costs of building their own accommodation. Jo says that these agreements were reached prior to the purchase of the property. Jeremy accepts that early in the discussions it was agreed that he and Jo would be responsible for building their own dwellings, although he says that the precise location of those dwellings was not determined until after settlement.

Jo also says that the parties discussed how the purchase costs would be shared. She says that, early on, they discussed the idea that Helen would pay a greater proportion of the purchase price because she would not have to incur further building costs herself. Indeed, Jo says that Helen may have been the first to raise the issue. Jo says that once they found the property and had agreed a price of $450,000, it was agreed that Helen would bear $250,000 of the purchase price and she and Jeremy would bear $100,000 each. Helen, on the other hand, says that at the time they took out the loan they had not discussed how they were going to divvy it up. She says that she assumed that when Jo had built her studio and moved out of the original house, she would cease contributing to the mortgage payments and that the same would happen when Jeremy moved out. However, according to Helen, that was a matter that was left to be discussed at the time the issue arose, although she could not explain how in practice her understanding of what was to happen could have worked, given that she was not in a position to pay the whole of the mortgage payments herself.

Jeremy accepts that Jo raised the question of Helen making a greater contribution to the mortgage payments. However, he says that Jo did not raise the issue with him until after the property was bought. Indeed, he says that she raised it on a number of occasions and was quite persistent. He says, however, that he rejected that proposal out of hand on the basis that equal contributions to the mortgage payments was their way of repaying Helen for bringing them up.

At some time during the process of purchasing the property, Mr Adam Darke, the parties' solicitor, and Mr Michael Bax, the consultant from Aussie Home Loans who was responsible for arranging the mortgage, raised the question whether the parties wanted to hold the property as joint tenants or tenants in common. On that question, Jo gave the following evidence:

I cannot now recall which one of us, but one of Helen, Jeremy and I said that we didn't want the future partner of anyone being able to claim a one third share in the Property, particularly in the event of the death of one of us. All three of us agreed that if one of us died, we wanted that person's share to go to the other two. I can't recall whether it was Adam, or Michael (or possibly both), but I recall being told that joint tenant was the best option if we wanted to ensure that the surviving owners would retain the property and not have to share it with the other person's surviving partner. So we instructed Adam to record us as joint tenants.

That evidence is not disputed by Helen or Jeremy and is consistent with the fact that they acquired the property as joint tenants.

Jo gives evidence that the parties paid and she contributed the following amounts in connection with the purchase of the property:

Date	Amount	For	Jo's Contribution
07 Jan 00	$600.00	Loan application fee	$600.00
19 Jan 00	$120.00	Pest Inspection Report	$40.00
19 Jan 00	$244.98	Property Inspection Report	$81.66
01 Feb 00	$45,000.00	10% deposit	$45,000.00
01 Feb 00	$6.00	Deposit cheque fee	$6.00
01 Feb 00	$2.25	Deposit cheque postage	$2.25
07 Feb 00	$185.00	Land titles office	$61.66
07 Feb 00	$500.00	Land survey	$166.66
06 Mar 00	$17,125.00	Stamp duty and Mortgage Stamp Duty in one cheque	$17,125.00
06 Mar 00	$6.00	Cheque fee for Stamp Duty	$6.00
14 Mar 00	$669.00	House insurance	$669.00
15 Mar 00	$651.00	Legal fees	$217.00
15 Mar 00	$45,825.46	Balance due on Settlement	$45,825.46
15 Mar 00	$200.00	Settlement	$200.00
Total	$111,134.69	$110,000.69

Helen does not take issue with this table. Jeremy says that he cannot say whether the table is correct or not, except to say that he would not have given Jo precise amounts and that he would have made his payments in cash. In addition, he takes issue with the table in one important respect. According to him, he told Jo before they found the property that he could not contribute more than $30,000 to $40,000 towards the initial purchase price and that, by the time they made an offer to buy the property, he had given Jo cash totalling $30,000 for that purpose. He says that he gave her the cash in a number of chunks, the largest of which was $10,000, and that Jo did not ask him for any further financial contributions to the non-financed component of the purchase price. Jo, on the other hand, denies that Jeremy gave her anything towards the purchase price. According to her, there were a number of sources for the amounts she paid. She says that she borrowed $18,000 from her father and the balance came from money she held in her main operating account or from term deposits which, as they matured, were paid into her main operating account. Jo's financial records support these assertions. Not surprisingly, however, the financial records do not go back far enough to show the sources of the term deposits.

As I have said, settlement occurred on 15 March 2000. At that time, the balance of the purchase price, totalling approximately $360,000, was advanced by Aussie Home Loans. That loan, which was secured by a mortgage over the property, was taken out by Jo, Helen and Jeremy. The loan was initially divided into two sub-accounts. One was for $210,000. The interest rate in respect of that part of the loan was fixed for three years. The other sub-account was for $150,000. The interest rate in respect of that part of the loan was variable. Aussie Homes Loans required the total interest payments to be made by direct debit. Helen and Jo agreed that the direct debit in respect of the variable portion of the loan would come from Helen's account, which was an amount of $1,350 per month, and that Jo would provide an authority in respect of the fixed interest portion of the loan, which was an amount of $1,641 per month. Jeremy, at the time, was working in his own business and his income fluctuated. It was for that reason Jo said that she agreed that the direct debits would be made from her account. Her position, however, is that she owed nothing in respect of the mortgage. She says that she was only liable to contribute $100,000 to the initial purchase price and that in fact contributed approximately $110,000 out of a total cash contribution of $111,000. Her position was that Jeremy was obliged to reimburse her the mortgage payments and, to the extent that that meant that Jeremy would pay more than his contribution to the mortgage, that was a matter between him and Helen.

Jo says that Jeremy paid her $732.15 on 1 May 2000, 19 May 2000, 31 May 2000, 30 June 2000, 31 July 2000 and 31 August 2000 and then stopped paying her altogether. She says in relation to the initial payments that the amount Jeremy paid her was only part of what he owed and that she asked him for the rest and that he said that he would make it up the next month.

Jo says that after Jeremy stopped paying her every month she asked Jeremy for his share of the mortgage payments and that he would reply that he could not afford it that month or that he would catch up next month. She says that that position continued for a period of a number of months after which he would become angry. She says that she became scared of him and that eventually she stopped asking him for money and that Jeremy's and her relationship became extremely strained to the point where Jeremy did not speak to her for a period of three years. Jo then says that, in about August 2007, she asked Jeremy when he was going to start repaying the loan and that to her surprise he gave her $1,000. She says Jeremy then started paying her $1,000 per month and that on each occasion she wrote the payment on a piece of paper, which she asked Jeremy to sign as an acknowledgment of the payment. That continued for a period of six months when he stopped paying again. The result, according to Jo, is that she received total payments from Jeremy of $10,392.90 (that is, $732.15 X 6 plus $1,000 X 6).

Jeremy gives quite a different account of what happened. He says that he regularly gave Jo cash. He says that he agreed to pay Jo one-third of the total minimum mortgage repayments at any given time. He denies that he ever gave Jo the amount of $732.15, since he only dealt in cash and in round numbers, and says that over a long period of time he gave Jo the sum of $500 per fortnight, although for the first two years it may have been $400 or $450 per fortnight. He says the amount increased around the beginning of 2008 to $1,000 per fortnight. He accepts that now and then he was late in paying Jo and that on occasions he paid Jo only part and said he would give Jo the balance later. He says that a source of the cash he paid to Jo was money he earned from work building boats and motorbike fairings and also cash from a bank account in the name of Flesh Pty Ltd, a company of which he was the sole director and shareholder and through which he conducted some of his business activities, and, in 2007 and 2008, cash he withdrew from a Solarsave account.

Jeremy does say that he stopped paying Jo in early 2002 for approximately one year and during that time he set off against his mortgage obligations an account from L-Trax for excavation work on the building site for Jo's studio, a road to the top of the property and the helipad, which he believes was for the sum of $33,000 plus GST. He says that he proposed that Jo pay a third of that account by forgoing his contributions to the mortgage for a year and that Jo reluctantly agreed. He says that he resumed paying Jo $500 per fortnight around about Christmas 2003. Jo denies any agreement in those terms. She says that it took only a day to level the site where she proposed to build her studio and that Jeremy offered to arrange for that to be done at the time he was having other work done. Jeremy also says that, for a time, on Jo's instructions, he paid Helen rather than Jo and then resumed paying Jo at her request. He admits that during this time Jo says they did not speak, the relationship between them was very tense, but he says that they continued to speak when necessary.

Jeremy admits that he signed the sheet referring to payments by him to Jo in 2007. He says, however, that he thinks he signed all 6 entries at the same time and that he is certain he did not sign it at the time he actually handed money to Jo. In addition, Jeremy says that, on 9 November 2007, he paid $1,000 for the windows to be put in Jo's studio and that the costs of doing so were offset against his obligations to reimburse her for mortgage payments. Jo, on the other hand, says that she paid Jeremy separately for that work.

Jo also says that she asked Helen to increase the amount of her payments towards the mortgage. She says that she did that every three or four months and that after a time Helen became angry and upset when she did so. Helen, on the other hand, denies that they argued about her share of the mortgage repayments. She says that she left it to Jo and Jeremy to sort out between them what contribution Jeremy would make. She also says that she recalls a couple of occasions on which Jeremy handed Jo some money and said words to the effect of "here's payment for the mortgage". She also says that from time to time Jo would mention to her that Jeremy had not paid her the money that he owed her.

In addition, Helen says that, in March 2004, when the fixed interest portion of the loan was converted to a variable rate and combined with the other sub account, she agreed to increase her contributions because at that time Jo was starting to spend money on building her studio. At the same time, Jo's contribution reduced from $1,640 per month to $1,100 per month. Helen says that there was no argument or unpleasantness of any kind about the change; and that she does not recall other occasions in which Jo asked her to increase her contribution. In addition, Helen says that she agreed to increase her contributions to the mortgage when the interest rate increased.

Jeremy says that some time after Jo started building her studio he was present at a discussion between Jo, Helen and possibly Nigel, Jo's boyfriend at the time, at which he got the impression that something had been agreed about Helen contributing more. Jeremy says that he disagreed with that and three to six months later expressed the view that he wouldn't stand for it. However, he says he heard nothing more about the matter after that.

For the purpose of these proceedings, Jo prepared a spreadsheet setting out the mortgage repayments made by her and Helen which she reconstructed from relevant bank statements. There was no suggestion that that spreadsheet is not accurate. The spreadsheet shows that, leaving aside some initial payments which are not easy to understand, from 31 May 2000 to 15 February 2004 Jo made payments of $1,641 per month and that those payments then decreased to $1,100 per month until October 2008. In cross-examination, Jo also conceded that she made further mortgage payments of $1,100 per month in November and December 2008 and a payment of $200 in January 2009, after which she stopped paying altogether. In addition, in June and July 2010, Jo withdrew a total of $20,000 from the mortgage account.

The spreadsheet also shows that Helen paid approximately $1,100 per month between 31 May 2000 and 2 April 2001 (the amounts vary slightly over that time) and then from 12 April 2001 to 14 February 2004 paid $1,350 per month, between 12 March 2004 and 14 November 2006 paid $1,450 per month (subject to one unexplained exception), from 15 December 2006 to 15 August 2007 paid $1,500 per month, for the next three months paid $1,550 per month and from 13 December 2007 until 14 October 2008 paid $1,620 per month and from 13 November 2008 to 14 April 2009 paid $1,700 per month.

In December 2003, Jo submitted a development application for her studio. Approval was granted and Jo started building her studio early in 2004. She spent a total of $70,322 on the studio which had been completed to lock up stage but had not been fitted out before she left the property. For reasons which are not clear from the evidence, she stopped work on the studio in 2007.

Apart from building her studio, Jo says that she did other work on the property including repainting, tiling of steps, landscaping and clearing the property of lantana. Helen says that she assisted with that work and Jo concedes that Helen contributed to some of the costs.

Jeremy also did work on the property. Although he never commenced work on his own accommodation, he did do work on the top part of the property, including building the helipad. He also says that he did other work on the property including building two pillars and a mailbox at the entrance of the property, the construction of access roads to the dwelling sites and the surfacing of those roads, landscaping, the construction of retaining walls on either side of the driveway, the laying of underground cabling, the installation of power to Jo's studio and the installation of a solar system and new insulation in the main house. Jeremy also says that he did work on Jo's studio. He says that he assisted Jo with the work that she did between 2004 and 2007 and that he has done extensive work to complete the studio since she left the property. In support of that evidence, Jeremy relies on two bundles of invoices which he said he paid. The first bundle relates to work Jeremy said that he did on the property and totals approximately $224,000. The second bundle is a set of invoices relating to work done on the studio after Jo left. Those invoices were paid by Mr Gibson, a school friend of Jeremy's who Jeremy employed to work on the property. Mr Gibson paid the invoices from an account set up by Jeremy and into which Jeremy paid money. Those invoices total approximately $21,500, although Mr Gibson conceded in cross-examination that two of the invoices, which total approximately $870, do not relate to work on the studio.

Jo takes issue with this evidence in a number of ways. First, she challenges the authenticity of a number of invoices, particularly invoices relating to the installation of power and says that, for that reason, the invoices should not be admitted. Second, she submits that Jeremy was also working on the neighbouring property and that the work described in many of the invoices related to that work and not work on the property. Third, she says that some of the invoices relate to work done on Solarsave's offices; and in support of this submission she relies on evidence from Mr Mabey who says that landscaping and building work was being done at those offices at the times shown on the invoices. Fourth, she says that Jeremy told her not to worry about some of the costs, such as power to her studio, because that work could be done as part of the work on the neighbouring property. Fifth, she says that some of the items claimed by Jeremy, such as insulation for the studio, were amounts she paid herself or, in the case of installation of solar panels, was covered by a government grant, although in relation to this last item there is a dispute about whether that grant was kept by Jo. Sixth, Jo says that some of the work, such as building the retaining walls, was done over her objection, although Jeremy disputes that evidence. Lastly, Jo submits that the invoices were not paid by Jeremy; and to the extent that they were paid by entities associated with him, such as Flesh Pty Ltd or Solarsave, he is not entitled to credit for those amounts.

In November 2008, the property was refinanced with Commonwealth Bank. In her first affidavit, Jo does not explain the circumstances in which that happened. Rather, the evidence she gave was simply that the parties decided to refinance the property and that following that refinance she told Helen and Jeremy that she would no longer contribute towards the mortgage payments.

Jeremy's evidence is that the refinancing was suggested by Jo. Jeremy says that in August 2007 he established a business of installing residential solar electricity systems trading under the name of Solarsave. That business started trading in October 2007. After about six months, a friend of Jeremy's, Mr James Morsley, became involved in the business. The business was incorporated on 3 October 2008 and Mr Morsley became a shareholder. The business grew rapidly and, according to Jeremy, he and Mr Morsley discussed in Jo's presence its success. Jo expressed an interest in being involved and assisted with letterbox drops of brochures and on two occasions wrote editorials for the "New Build Magazine" promoting the merits of renewable energy as well as a submission to a Senate enquiry in 2008. According to Jeremy, in September 2008 Jo asked whether, if she permitted refinancing the property to raise funds to buy a container of solar panels, Jeremy would take her in as a partner. The refinancing was arranged with Helen's agreement and included a line of credit of $250,000, which was opened on or around 17 September 2008. According to Jeremy, Jo cancelled the line of credit on 10 or 11 December 2008 when it became apparent that he was not going to permit her to become an owner of the business. He says that following that, he arranged alternative sources of finance and that the business continued to expand very substantially so that within twelve months it was employing 105 staff and had a weekly turnover of $2,000,000 per week, although, as I have said, I do not accept that evidence.

In her affidavit in reply, Jo gives a quite different account of what happened. She says that Jeremy initially asked her for assistance in the Solarsave business with the paperwork. She says that Jeremy raised with her the question of refinancing the mortgage to provide a line of credit for the business and she reluctantly agreed when she was told that the business would fail without the line of credit. She admits, however, cancelling the line of credit as soon as it became apparent that she would not be a shareholder in the business and she accepts that it was at that time that the relationship between her and Jeremy broke down permanently. She also accepted in cross-examination that it was after that time, in February 2009, that she ceased to make mortgage repayments. She says that at that time she decided that she would leave the property because she could no longer stand the arguments and did not feel safe around Jeremy.

There are two other matters that were the cause of tension between Jo and Jeremy. One was their different attitudes to the way the property should be used. Jo saw it as an idyllic retreat that should be left in its natural state. Jeremy, on the other hand, saw it, at least in part, as a location where he could pursue his interests including boat building and the manufacture of bio fuels. The result was that he cleared a significant part of an area at the top of the property and stored containers and other plant and machinery as well as rubbish there. He also felled a significant number of trees. Another source of tension was that, on four occasions between 2006 and 2009, Jeremy invited others to live in the house for a time without consulting Jo.

Jo says that she told Helen in February 2009 that she intended to leave. Helen, however, says that she was not told until September, when Jo took her to see a house in Tascott that Jo had recently bought.

After moving out, Jo visited the property from time to time. On occasions, she noticed work was being done and complained about that work. For example, on one occasion she arrived at the house to find part of the roof removed so that new insulation could be installed. She complained to Helen that she had not been consulted about that. On another occasion she discovered that the 100 metre driveway had been excavated and that a trench had been dug along its length. Again, she complained to Helen about that. A third occasion was when she visited the property and found the motor vehicle in her studio. Following the last of these events and the calling of the police, Jeremy left an aggressive voicemail message on her phone complaining about her conduct. A recording of the voicemail message itself was tendered in evidence and Jo relies on it as evidence of Jeremy's threatening conduct towards her and as supporting her claim that she was justifiably scared of him. In my opinion, however, the voicemail does not go so far. Jeremy was clearly angry when he left it and he used language that was intemperate to say the least. However, I do not think the tone or the content could be described as threatening.

As I have said, about three weeks after the incident with the Mercedes, Jo went back to the property. At that time, she found the gate and the fence leading to her studio padlocked and that she could no longer get access to the studio without jumping the fence. Helen opened the padlock for her so she could get to the studio, but refused to give her the combination.

Jo sought to lead evidence of discussions and correspondence she had with Helen after February 2009 concerning the terms on which Helen and Jeremy would buy her out of the property. Originally, I excluded that evidence under s 131(1) of the Evidence Act 1995 (Cth). However, Mr Villa, who appeared on behalf of Jo, made an application for me to reconsider those rulings and sought leave to cross-examine Helen and Jeremy on the voir dire to establish that the evidence was admissible. I permitted Mr Villa to take this course.

Ultimately, Mr Villa accepted that the relevant communications were made in an attempt to negotiate the settlement of a dispute and consequently were excluded by s 131(1) of the Evidence Act. However, he submitted that the exceptions set out in paras 131(2)(c) and (g) applied. Those paragraphs provide that sub-s (1) does not apply if:

(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; ...

...

(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communications or document is adduced to contradict or to qualify that evidence; ...

In relation to para (c), Mr Villa particularly refers to evidence given by Jo that she said to Jeremy after taking Helen to visit her new house in Tascott "I'm going to be in a lot of debt until you and mum pay me the money for this place". Mr Villa points out that no objection was taken to that evidence and Helen and Jeremy gave evidence concerning the conversation themselves.

In my opinion, with one possible exception, nothing turns on the evidence to which objection was taken and which I excluded. For the most part, that evidence consists of conversations between Jo and Helen in which Jo asked when she was going to be bought out of the property or Jo and Helen discussed arrangements to meet to discuss that question. It also includes a letter dated 22 March 2011 from Jo's solicitors to Helen and Jeremy in which they say that, if agreement could be reached on the terms on which Jo will be bought out of the property, she will not press her claim for an occupation fee. These communications shed no light on the critical issues in the case. The evidence is not necessary to enable a proper understanding of the evidence that has already been adduced. Nor do I think the court is likely to be misled by evidence that has been adduced if the additional evidence is not admitted. Nothing that emerged as a result of cross-examination on the voir dire has caused me to reconsider the rulings I made.

The possible exception is an email Jo sent Helen on 4 February 2010 and Helen's reply on the same day in which she inserted comments in red on statements made in the original email by Jo. Both emails are clearly communications between persons in dispute which were made "in connection with an attempt to negotiate a settlement of the dispute" and consequently are excluded under s 131(1) of the Evidence Act unless they fall within one of the exceptions in s 131(2). In Jo's email, she says relevantly:

I have been trying to talk to you and Jeremy for years about the money situation but both of you clam up every time I've mentioned it. When we moved in to Ourimbah I'd already paid my fair share of the price considering I paid the deposit and all legal fees ($110,000). I only kept paying the mortgage because Jeremy couldn't afford it and I was scared Aussie would default on the loan. You were supposed to pay the greatest share of the purchase price ($250,000) because you would eventually keep the house and Jeremy and I lesser amounts ($100,000 each) as we would only be buying land and would have to incur the extra cost of building new houses. ...

In reply to this statement, Helen said:

I agree that was the original agreement but you moved out (incurring yet another mortgage, to add to your existing 3/4 properties), without a word of warning - nor the chance to sit down and talk about finances before you left in an angry state of mind.

The question is whether Helen's statement is admissible under s 131(2)(g). In my opinion, it is not. In Brown v Commissioner of Taxation [2001] FCA 596; 187 ALR 714 at [185], Emmett J said:

It is not appropriate to attempt an exhaustive exposition of the effect of s 131(2)(g). However, I consider that it will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced. Section 131(2)(g) will apply where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding. The fact of, or the contents of, the communications, of which the commissioner now seeks to adduce evidence are not directly relevant in the proceeding before me.

That passage has been approved in a number of subsequent cases including Bloss Holdings Pty Ltd v Brackley Industries Pty Ltd [2005] NSWSC 756 at [4] per Hamilton J; Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd(No 2) [2011] FCA 276 at [52], [55] per Bromberg J; Atlas Financial International Ltd v Nortbale Pty Ltd [2011] NSWSC 815 at [85]-[86] per Einstein J. Although a "broader approach" had been taken to s 131(2)(g) in some earlier decisions of this court (see DTC No 1 Pty Ltd v Matthew [2009] NSWSC 1280 and Mulkearns v Chandos Developments (No 4) (2005) 12 BPR 22,993 at [66]-[67] per Young CJ in Eq), it is now generally accepted that Emmett J's is the correct approach: Barrett Property Group at [54]; Atlas Financial at [87]. In my opinion, I should follow it. The fact that a party is willing to make a concession in without prejudice communications, even if the concession is expressed in the form of a clear admission, is not sufficient to establish that the court may be misled if the admission is not admitted. A party may be willing to make admissions in order to achieve a settlement, even if that admission does not represent that party's true position. That is one reason why evidence of settlement negotiations is not normally admissible. Another reason was given by Einstein J in Atlas Financial at [86]:

The privilege should not be displaced simply because the communication contains evidence which may contradict or qualify evidence that has otherwise been adduced. Should this not be the case, parties may be hesitant to make any admissions or concessions in settlement negotiations less it prejudice them in litigation. This would clearly undermine the policy objectives of the "without prejudice" rule.

None of the evidence given on the voir dire in this case alters the position. Indeed, in that evidence, Helen said that she had misread Jo's email; and that is why she made the concessions she did. Helen's evidence is plausible. Jo's principal assertion is that Helen was to pay the greatest share of the purchase price. Helen does not assert otherwise. As I have said, it was her understanding that she would take over the mortgage once Jo and Jeremy had built their own dwellings.

Factual findings

There are five areas in which factual findings are important to the resolution of this case. The first concerns what agreement, if any, the parties reached in relation to their respective ownership and contributions to the acquisition of the property. The second concerns what contributions Jeremy made to the purchase price of the property. The third concerns what contributions Jeremy made to the mortgage payments. The fourth concerns what contributions Jeremy made to the improvement of the property. The fifth concerns the question whether Jo has been excluded from the property.

What agreement, if any, did the parties reach in relation to their ownership of the property and the payment of the purchase price?

In my opinion, the parties agreed that they would hold a one third share each in the property. That is the evidence given by Jo and neither Helen nor Jeremy contradicted it. The real question is what agreement they reached in relation to their respective contributions. On that question, I prefer Helen's evidence to that of Jo's. Although the parties may have discussed how the costs of acquiring the property would be split between them and although Jo may have had a firm view that those costs should be split in the way she now contends, I am not satisfied that that is something that was ever agreed between the parties. At the time the property was bought, the parties were a close family. As Jeremy pointed out, Helen had made considerable personal and financial sacrifices to bring him and Jo up and I accept his evidence that, in those circumstances, he did not believe that Helen should pay more towards the costs of purchasing the property. The expectation the parties had at the time they bought the property was that they would live on it indefinitely and that if any of them were to die that person's interest would pass to the others. Helen recognised that she was obtaining a benefit from what was proposed and that some adjustment should be made at some stage to take account of the fact that Jo and Jeremy would be responsible for building their own dwellings. Against that background, it strikes me as plausible that the parties did not resolve how to divide the purchase price between them before buying the property.

That conclusion is supported by the way in which the loan from Aussie Home Loans was initially divided up. I accept Jo's evidence that the parties decided to divide the loan up into two sub-accounts so as to create what they thought at the time was an optimal division between fixed and variable interest loans. If the true position is that the parties had agreed that Helen would pay $250,000 towards the purchase price at the time the loan was arranged, it would have been natural to divide the loan into two sub-accounts, one for $250,000 and the other for the balance. Moreover, if the parties had reached agreement in the terms alleged by Jo, it would have been natural at least for Helen to take responsibility for the larger repayments to start with, yet that did not happen until 2004, when Jo started building her studio. It was not suggested that at the time the loan was taken out that Helen did not have the financial capacity to pay the interest in relation to the larger portion of the loan. Rather, Jo said in evidence that it was largely arbitrary that Helen became responsible for paying interest on the variable portion of the loan and Jo took responsibility for the interest payments on the larger, fixed portion of the loan. That evidence is inconsistent with an existing agreement that Helen would be responsible for $250,000 of the $360,000 loan.

Did Jeremy contribute $30,000 towards the deposit?

Before seeking to answer this question, it is necessary to say something about the onus of proof. In Currie v Dempsey (1967) 86 WN (Pt 2) (NSW) 460 at 468 Walsh JA said:

...the burden of proof...lies on a plaintiff, if the fact alleged (whether affirmative or negative in form) is an essential element in his cause of action, e.g., if its existence is a condition precedent to his right to maintain the action. The onus is on the defendant, if the allegation is not a denial of an essential ingredient in the cause of action, but is one which, if established will constitute a good defence, that is, an "avoidance" of the claim which, prima facie, the plaintiff has.

This statement of principle has since been quoted or referred to with approval in a number of cases: New South Wales (Ambulance Service of NSW) v McKittrick [2009] NSWCA 63 at [9]-[10]; Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd [2008] FCA 27 at [112]; Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 at [70] per Basten JA (Beazley and Ipp JJA agreeing). See also Baida Poultry Pty Ltd v R [2012] HCA 14 at [55] n 45.

In the present case, Jo claims an interest in the property by reference to the contributions she made to the purchase price, including the deposit, which she clearly paid. Jeremy seeks to resist that claim in part by claiming that he, in fact, gave Jo part of the deposit. In those circumstances, the onus is on Jeremy to establish that fact.

In my opinion, Jeremy has not discharged that onus. I do not regard Jeremy as a reliable witness in relation to financial matters. I have already given some reasons for that conclusion - in particular, his evidence concerning Solarsave's income and his general indifference to anything financial. Moreover, there is no evidence at all which corroborates Jeremy's evidence and the evidence strikes me as implausible. According to Jeremy, he told Jo that he would be able to contribute $30,000 to $40,000 towards the purchase of the property. However, he gives no explanation of where he expected that sum of money to come from. He does not say, for example, that he had the money in a bank account or that he proposed to raise it by selling assets and, if so, which assets. He gives no evidence of his financial position at the time. He says that he gave Jo $30,000 in chunks of up to $10,000 and that he gave her that money before they found a property to buy. However, he does not explain why he gave her the money in advance. Nor does he explain why he gave it to her in instalments. It would have been more natural for Jeremy simply to have given Jo the full amount when the deposit had to be paid or shortly before settlement. Jo gives evidence of where the money she paid came from, and none of that evidence suggests that it came from Jeremy.

Jeremy relies on evidence from Mr Birch, a neighbour, who says that shortly after Jo and Jeremy moved in he had a conversation with them in which Jeremy said in relation to the property "We all own it. Jo and I came up with the deposit and we all pay our one third share" and Jo added "Yeah. That's right". However, I think that little weight can be put on this evidence. The conversation was a casual one that occurred over 10 years ago. It is unlikely that in those circumstances Mr Birch would remember accurately what was said. Moreover, Jeremy's statement, if it was made, was not accurate, since Helen at that stage was plainly paying more than one third.

Having regard to those matters, I do not accept that Jeremy contributed any money to the purchase price of the property.

Did Jeremy contribute towards the mortgage repayments?

This is a particularly difficult question. It is clear that one or other of Jo and Jeremy have given what must be deliberately false evidence in relation to this question, but there is no obvious means of determining which one has done so. Ultimately, however, I have concluded that Jeremy did give Jo cash towards the mortgage repayments, although I am not satisfied that it was as much as he says it was.

The principal reason I have reached the conclusion I have is based on the nature of the relationship between Jo and Jeremy over the period that they resided at the property together. According to Jo's evidence, she put up with a position where Jeremy had paid her virtually nothing over a long period of time and that things finally reached a head in February 2009. She explains how that came about in these terms in her first affidavit:

117 In February 2009, due to the tension in the house and my frustration at not being able to make any progress with Jeremy and Helen, after nine years, on payment of their contributions, I finally made the decision to leave the Property. I could no longer stand the arguments and I did not feel safe with Jeremy.

118 I could not finish my studio because of all the materials Jeremy had stored on the land above it. The frequent passing of trucks and cars to access Jeremy's materials also meant my studio had no privacy and I did not feel safe living there. I was extremely depressed at this stage as my relationship with Jeremy was at a low point with him alternating between ignoring me and being very aggressive towards me. I was in fear for my safety from Jeremy when he got angry and I felt that I had to walk on egg shells every time he was near.

This explanation, however, strikes me as implausible for a number of reasons. First, in my view, it is clear that things reached a head not as part of some gradual process but because Jeremy was not prepared to agree to Jo becoming a shareholder in the Solarsave business. Jeremy sought to explain Jo's conduct in cancelling the line of credit and in refusing to make any further loan repayments as a means of putting pressure on him to change his mind. But, in my opinion, the likelihood is that it was an over-reaction by Jo because she thought that she had been wronged. That reaction is consistent with her later behaviour when she discovered the Mercedes in her studio.

Second, it strikes me as implausible that Jo would put up with a situation where Jeremy made almost no contribution to the loan repayments for a period of 9 years. More significantly, Jo's account of a long deterioration in the relationship between her and Jeremy is inconsistent with the facts. It appears that within a year of moving to the property considerable tension developed between Jo and Jeremy. However, the position appears to have improved in 2004 until the events of December 2008. Although there is a dispute about the level of assistance Jeremy gave Jo, it is plain that he helped her work on the studio. Jeremy gives some evidence of what he did. It is the type of work that interests him and the likelihood is that he did most of the work on the studio that he said he did. In addition, it is plain that Jo provided Jeremy with substantial assistance in relation to the Solarsave business, including completing applications for government subsidies in relation to installations as well as doing the letter drops and writing the articles and submission I have referred to earlier. In my opinion, it is inconsistent with Jo's personality to have provided that assistance if at the same time Jeremy was contributing nothing towards the loan repayments.

The events I have described also need to be considered in the light of the actual evidence concerning the loan repayments. Between 31 May 2000 and 15 February 2004, Jo was making payments of $1,641. On Jeremy's own evidence, he contributed no more than half of that and for more than a year paid nothing on the basis that he was entitled to set off part of an amount he had paid L-Trax. However, after February 2004, Jo started paying $1,100 per month towards the loan repayments and the balance was paid by Helen. If, as Jeremy says, he was paying Jo $500 per fortnight by that time, Jo's contribution to the loan repayments would only have been slightly less than $100 per calendar month. That was much closer to her expectation that she should pay nothing in respect of the loan repayments because she had paid the balance of the purchase price and most of the other costs associated with the purchase. It would explain why relations between Jo and Jeremy appear to have improved in 2004 and only took a dramatic turn for the worse in December 2008.

Third, I do not accept Jo's explanation that she lived in fear of Jeremy or that what drove her to leave was the fact that he alternated between ignoring her and being very aggressive towards her. There is no evidence that Jeremy was ever physically violent towards Jo, and Helen's evidence, which I accept, was that Jo could give as good as she got in arguments with Jeremy. Consequently, I do not accept that Jo lived in fear of Jeremy. As I have said, the evidence does not support a case of a long history in which Jeremy alternated between ignoring Jo and being very aggressive towards her. Rather, the evidence suggests that there were periods of substantial co-operation between them. No doubt, there were also periods when they fought over matters such as the way in which Jeremy was using the property. In addition, as I have said, I accept that there were occasions when Jeremy did not pay Jo or paid her late and that would have been a source of tension. But these matters are not consistent with the account Jo gives.

Jeremy seeks to corroborate his evidence that he paid Jo cash from evidence of other witnesses. Some of that evidence I accept, but not all of it; and most of the evidence does not take the matter very far.

I accept Helen's evidence that she saw Jeremy give Jo cash on a couple of occasions, saying that it was for the mortgage.

Jeremy also relied on evidence from Mr Gibson, Mr Birch, and Mr Perdriau, a director of Solar PV Commercial Pty Ltd, one of the companies through which Jeremy now conducts his solar panel installation business.

Mr Gibson gave evidence that he saw Jeremy give Jo money monthly or sometimes fortnightly. However, in my view, Mr Gibson was not a reliable witness. His memory of his own financial affairs was negligible. For example, he purchased a house in 1999 but he could not remember for how much or from whom he had borrowed the money or the fact that he gave a further mortgage to the lender after two years. He said that he saw Jeremy give Jo cash in 2002 and 2003, but on Jeremy's own evidence he stopped giving cash to Jo for the mortgage in 2002 and did not resume until about Christmas in 2003.

Mr Birch gave evidence that he recalls 10 or 12 occasions when he was with Jeremy in a vehicle picking up materials and Jeremy stopped at an ATM and said "I've got to pull cash for Jo" and came back with a bundle of $50 notes. Mr Birch says that he was struck by the amount of money Jeremy withdrew and remarked on the fact on one of the early occasions he saw it happen. I admitted this evidence provisionally; and in my opinion it should be admitted under s 64(3) of the Evidence Act. That section applies "in a civil proceeding if a person who made a previous representation is available to give evidence about an asserted fact": s 64(1). Section 64(3) provides:

If the person who made the representation has been or is to be called to give evidence, the hearsay rule does not apply to evidence of the representation that is given by:

(a) that person; or

(b) a person who saw, heard or otherwise perceived the representation being made.

Mr Birch's evidence provides some corroboration of Jeremy's evidence.

Mr Perdriau lived at the property for a period of time. He gave evidence of some co-operation between Jo and Jeremy and evidence that he never heard Jeremy raise his voice. He also gave evidence that he saw Jeremy withdraw large amounts of cash from ATM machines. However, in my opinion, none of this evidence is significant. I accept that Jo and Jeremy co-operated on occasions. I also accept that Jeremy mostly paid of the money he owed in cash. The fact that Mr Perdriau did not see Jeremy raise his voice does not mean that it did not happen.

Jo sought to undermine Jeremy's evidence that he paid her cash by taking issue with the evidence given by Jeremy concerning his own financial position. One example is the evidence Jeremy gave concerning the income of Solarsave, which was clearly exaggerated. Another example is the income disclosed in Jeremy's tax returns. Jeremy says that he cannot recall why the tax returns were prepared, but it seems obvious that it was because Jo had served a notice to produce requiring their production. The tax returns for 2006 and 2007 each disclose a taxable income of $32,000. The return for 2008 discloses a taxable income of $33,000 and the one for 2009, $156,211. Jeremy says the returns are accurate. But if that is so, Jo says that casts doubt on whether Jeremy had sufficient income to make the contributions he said he did to the loan repayments, at least in 2006, 2007 and 2008. A third example, connected to the second, is evidence that Jeremy claims he made a director's loan to Solarsave of $100,000, which is difficult to reconcile with his taxable income. When cross-examined on that loan, Jeremy said that he had many assets which he had built up over a long time which he could have sold in order to raise money. However, it is unclear what those assets were; and this evidence does not sit well with his evidence that he told Jo at the time they bought the property that he could only contribute $30,000 to $40,000. These points demonstrate the general unreliability of Jeremy's evidence concerning his finances. However, that sheds little light on the question whether Jeremy paid Jo cash of $500 per fortnight. The bank records of Flesh Pty Ltd and Solarsave show large and frequent ATM withdrawals. Jeremy was the only person to have access to Flesh Pty Ltd's bank account. Those withdrawals are consistent with Jeremy's claim that he made cash payments to Jo at least from late 2005. Indeed, the fact that Jeremy was making cash payments to Jo helps to explain the size and frequency of the withdrawals. In the light of that evidence, the other evidence concerning Jeremy's financial position is largely irrelevant.

There are several other matters which provide some support to Jeremy's claim. First, the parties shared normal household expenses such as electricity, home insurance and council rates. Jo accepts that Jeremy contributed his share of those expenses. It would be odd in those circumstances for him to refuse flatly to contribute to the loan repayments. Second, Jo accepts that Jeremy paid for the windows for her studio. She says that she reimbursed Jeremy for those costs. However, in my view, that evidence is implausible if the true position was that Jeremy had, at the time, only made 6 payments towards the loan. Third, Jeremy did contribute to the loan repayments when Jo ceased to do so. Fourth, Jo also took the position that Jeremy contributed nothing towards the improvement of the property. I will say more about that shortly. There is certainly a question concerning how much Jeremy contributed, but I do not think it can seriously be asserted that he contributed nothing. The fact that Jo was prepared to make that assertion casts doubt on her assertion concerning the loan repayments.

It is not easy to see how the document that Jo got Jeremy to sign when she says he started to resume paying her in 2007 fits with the conclusions that I have reached. I accept that that document provides some evidence that Jo only received the payments recorded on that document. However, if that is the case, it is also difficult to understand why Jeremy would have stopped paying her; and if Jo really had been meticulous in keeping records of what she was owed, she might have been expected to ask Jeremy to sign IOUs rather than a document acknowledging payment. In the end, therefore, I do not think any real weight can be placed on that document.

The question remains how much Jeremy contributed. Necessarily, the answer to this question involves some guess work. Jeremy himself only gives an estimate in the early years. He cannot recall whether he paid $400 or $450 per fortnight and he does not say when in 2002 he stopped paying Jo. Nor does he give a precise time when he started again to pay her. For a time he says he paid Helen rather than Jo. As I have said, he was not a reliable witness in relation to his own finances and I think the likelihood is that Jo frequently had to chase him for payment and that there were occasions when he did not pay her. In my opinion, that was one of the causes of tension between them. In addition, Jeremy says that he started paying Jo $1,000 per fortnight in the beginning of 2008. However, he gives no explanation of how that came about. At that time, Jo was only paying $1,100 per month towards the mortgage. It is quite inconsistent with Jeremy's case that he paid Jo a third of the mortgage up until February 2009.

Taking these matters into account, I think that it is reasonable to conclude that Jeremy paid Jo $500 per fortnight from the beginning of 2004 until the loan was refinanced. Having regard to the conclusions I have reached, I accept that it is likely that Jeremy paid Jo some additional amounts between 2000 and 2003. Jo accepts that he made 6 payments of $732.15, although Jeremy - plausibly, in my opinion - denies that he made payments of those amounts. However, consistently with the conclusions that I have reached, there are other occasions when it is likely that Jeremy did not pay Jo. In addition, Jeremy accepts that he did not pay Jo from some time in 2002 to the end of 2003 and that for some period of time he paid Helen rather than Jo. I do not think Jeremy should be entitled to offset part of the amount he paid to L-Trax against his obligation to contribute to the repayment of the loan. I am not satisfied that an enforceable agreement to that effect was reached with Jo. Moreover, looking at the photographs of the site where Jo built her studio I am inclined to accept Jo's evidence that Jeremy has exaggerated the amount of excavation work that needed to be done; and it seems to me preferable to deal with that payment in the context of the improvements Jeremy claims that he made to the property. Nor should he and Helen get the benefit of payments Jeremy made to Helen. Any payments Jeremy did make between 2000 and 2003 which are disputed by Jo need to be offset against payments that Jeremy is likely to have failed to make in later years. In my view, a reasonable and practical way of doing that is to assume that Jeremy paid Jo the sum of $500 per fortnight from January 2004 until October 2008, making his total contribution to the mortgage payments made by Jo to be $58,000.

According to the spreadsheet prepared by Jo, her contributions to the mortgage payments (after allowing for the $20,000 she withdrew in June and July 2010 and the amounts she says she did receive from Jeremy totalling $10,392.90) was $110,531. On the conclusions I have reached, her contributions to the mortgage payments after taking account of the further amounts I have found she received from Jeremy plus the additional contributions of $2,400 she now accepts she made after October 2008 was $65,323.90.

Did Jeremy incur costs in improving the property?

In my opinion, the answer to this question is that he did. He clearly constructed the helipad, the pillars at the entrance of the property and driveways and retaining walls. As I have said, he describes work that he did to assist Jo in building her studio and, for the reasons I have given, I accept that evidence. It was not seriously disputed that Jeremy has done further work on Jo's studio since Jo left and, although I do not think Mr Gibson generally was a reliable witness, I accept his evidence that the invoices paid by him were paid from money provided by Jeremy and that the invoices he identified related to work done on the studio.

As I have said, Mr Villa submitted that Jeremy should not get the benefit of payments made by associated entities. I do not accept that submission. In my opinion, it is sufficient if the payment was made on behalf of Jeremy or for his benefit. For example, in Rupchev v Callow [2007] NSWSC 1097, Ms Callow had asserted that Mr Rupchev was not entitled to contribution because the mortgage payments which he was claiming were made by his company RUP Constructions. This argument was rejected by Bell J at [32], where her Honour noted:

Mr Rupchev's evidence was that RUP Constructions made the loan repayments on his behalf. As I have noted, RUP Constructions' ledger account records the sums debited to it's St George Bank account by way of repayment of the loan in a loan account in Mr Rupchev's name. Mr Rupchev was indebted to RUP Constructions in respect of the payments debited to its account and which were applied at his direction in repayment of the loan. It is not correct to say that the repayments were made by a third party.

The Court of Appeal did not challenge this conclusion in Callow v Rupchev [2009] NSWCA 148, noting at [18] that "[n]othing was established in the argument on the appeal to upset her Honour's finding."

The principle applied by Bell J was expressed more broadly in Stocking v Montila [2005] EWHC 2210 (Ch). That case involved a taking of account in a partnership action where a number of the items being claimed by Mr Montila were in fact expenditure made by companies he controlled. In relation to the question whether Mr Montila should receive the benefit of those payments, Rimer J said (at [42]):

One point that was made by way of challenge was that certain of the expenses were apparently paid by Montila companies rather than Mr Montila personally, but...this makes no difference to the position. Either the companies were reimbursed...or they were able to claim reimbursement from Mr Montila, who had incurred a liability to them for such expenditure.

Similarly, in Miller v Sutherland (1990) 14 Fam LR 416, Cohen J held that the plaintiff was entitled to the benefit of contributions made by her parents (Mr and Mrs Miller) toward the renovation of a property in her de facto partner's name. In relation to the work undertaken by Mr Miller, a builder by trade, Cohen J stated at 421:

There was no suggestion at any time that the work done by Mr Miller at the weekends would be charged to the defendant or would be paid for by him other than the payments for material and other out-of-pocket expenses.... These facts lead me to the conclusion that the parties anticipated that the plaintiff through her father and her own work would contribute to improving and extending the house. It was a project which required considerable work to be done and a large amount of that work was clearly going to fall upon the plaintiff and her family, as in fact it did.

Then at 424:

On the facts here there was an intention expressed in a general way that the plaintiff should have an interest in the house, albeit less than one-half. Even if this was not expressed by the defendant at the time of the purchase, or shortly afterwards, it was acknowledged by him on later occasions. The plaintiff was certainly under the belief of having an interest and on that belief she expended her own time and work and caused her family to do the same on her behalf. [emphasis added].

In my opinion, the payments made by entities associated with Jeremy should be treated as payments made on Jeremy's behalf out of money to which Jeremy was entitled either as the payment of a salary or directors fees or as dividends. Alternatively, they should be regarded as loans to Jeremy or other payments for which he is liable to account. In either case, they were payments for Jeremy's benefit. Those payments were clearly not intended to benefit Jo or Helen; and it is difficult to see why Jo should be entitled to share in the benefit of them when as between Jeremy and the relevant entity, Jeremy is either entitled to the benefit or liable to account for it, even if that liability has not been enforced.

For reasons which will become apparent, in my opinion, it is not necessary to determine the precise amounts paid by or on behalf of Jeremy on the property. Moreover, during the course of the hearing I indicated that, even assuming I concluded that an order should be made under s 66G of the Conveyancing Act, I would not make that order immediately but would give the parties an opportunity to see whether they could reach agreement on consent orders having regard to the conclusions that I expressed. During closing submissions both Mr Villa and Mr Oliver, who appeared for Helen and Jeremy, submitted that it would also be appropriate to defer a determination of the precise amount that Jeremy spent on the property until after I had delivered my judgment and that, depending on the results and on the question whether the parties could reach agreement on that issue, it may be necessary to refer the matter for an inquiry on that question. That submission was put in a context where Mr Villa had challenged the authenticity of a number of invoices relating to electrical work, in particular. In response, Mr Oliver sought towards the end of the hearing to read an affidavit from the person who is said to have issued the invoices deposing to their authenticity. Mr Villa objected to that affidavit on the ground of late service and on the ground that he would not be able to cross-examine the deponent. Rather than finally ruling on the admissibility of that evidence, I accepted the submissions of the parties that it would be better to deal with question of the precise amount Jeremy spent on the property later. For those reasons, I do not deal with it further in this judgment.

Has Jo been excluded from the property?

In my opinion, the relationship between Jo and Jeremy has broken down to the point where it would not be reasonable to expect Jo to resume living on the property. Helen admitted that the relationship between Jeremy and Jo was such that it was best if Jo did not go to the property and that she did not want Jo near the property because of the tension it caused. However, I do not think it could be said that Jo was forced to leave the property. She stayed there until September 2010 even though relations between her and Jeremy had broken down in February 2009. She chose to leave when she did because she had by then bought alternative accommodation. Nor do I think it could be said that Jo has been excluded from the property. It is true that the gate to her studio was padlocked and that Helen refused to give her the combination. But that was one occasion which occurred shortly after Jo had called the police and I do not think that that in itself establishes that Jo has been permanently excluded.

Against the background of those conclusions, it is now possible to turn to Jo's claims.

The claim based on a resulting trust

The relevant legal principles concerning resulting trusts are not in dispute. They were helpfully summarised by Brereton J in these terms in Dinsdale bht the Protective Commissioner v Arthur [2006] NSWSC 809:

[10] The prima facie position that the beneficial ownership of real property is commensurate with the legal title [Currie v Hamilton (1984) 1 NSWLR 687 at 690 (McLelland J)], is displaced by the presumption of a resulting trust arising from payment of the purchase price, unless that presumption is in turn rebutted by a presumption of advancement, or by evidence [Martin v Martin (1959) 110 CLR 297; Calverley v Green (1984) 155 CLR 242]. Where parties contribute unequally to the purchase price of property, they are presumed to hold it beneficially pro-rata to their contributions to the purchase price [Martin v Martin (1959) 110 CLR 297; Calverley v Green (1984) 155 CLR 242 at 246 and 258-259]. As Deane J said in Calverley v Green (at 266-267):

Where two or more persons advance the purchase price of property in different shares, it is presumed that the person or persons to whom the legal title is transferred holds or hold the property upon resulting trust in favour of those who provided the purchase price in the shares in which they provided it.

[11] For these purposes, the "purchase price" includes costs, fees and disbursements incidental to the acquisition of the property [Ryan v Dries [2002] NSWCA 3 at [52]-[53]]. If the purchase price is funded in whole or in part by moneys raised on mortgage, the mortgage moneys are treated as a contribution by the person who is liable to repay them; where purchasers jointly borrow funds on mortgage loan, they are to be regarded as contributing the part of the purchase price so raised equally [Calverley v Green (1984) 155 CLR 242 at 251 (Gibbs CJ), 257-258 (Mason and Brennan JJ), 267-268 (Deane J)]. Although the presumption of a resulting trust may be rebutted by evidence [Napier v Public Trustee (Western Australia) (1980) 32 ALR 153 at 158 (Aickin J, with whom Gibbs CJ, Mason, Murphy and Wilson JJ agreed)], it is a presumption which is not displaced by slight circumstances [Shepherd v Cartwright [1955] AC 431 at 445; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365; Brown v Brown (1993) 31 NSWLR 582 at 596].

In this case, Jo submits that a resulting trust arises because she contributed (leaving some minor payments aside) the whole of the purchase price that was not funded by the loan and she was liable equally with Helen and Jeremy to repay the loan.

I do not accept that submission. The parties specifically agreed that they should hold a one third interest each in the property. Jo's own case is that different contributions to the purchase price were not reflective of different interests in the property. She became a party to the mortgage because she was a joint tenant. She agreed that part of the loan repayments would be deducted from her account because Jeremy's income at the time was irregular. The fact that Jo agreed to those things was not intended to alter the agreement the parties reached that each should have a third share.

The claim based on a constructive trust

Relevant legal principles

In Baumgartner v Baumgartner (1987) 164 CLR 137, the High Court held that where benefits are conferred on a party in connection with a joint endeavour that fails, the court may impose a constructive trust in respect of those benefits where it would be unconscionable to permit the person on whom they were conferred to retain them. Mason CJ, Wilson and Deane JJ, quoting from Deane J in Muschinski v Dodds (1985) 160 CLR 583, expressed the principle in these terms (at 147-8):

Deane J (with whom Mason J agreed) reached this result [the imposition of a constructive trust] by applying a general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. His Honour said [160 CLR at 620]:

"...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 the 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 to do so...".

His Honour pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention "to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle" [160 CLR at 614].

Although Baumgartner involved a case where property was acquired by one member of a couple in a de facto relationship, the principles stated in the case can apply to a domestic relationship which does not involved de facto spouses, including a domestic relationship between parent and child: Sweetenham v Wild [2005] QCA 264; Hill v Hill [2005] NSWSC 863. There is no reason why it should not also apply to a domestic relationship between a brother and a sister, and their mother.

The principle applies where the relationship fails "without attributable blame". That expression has a broad meaning in this context. As Bryson J explained in Bennett v Horgan (Supreme Court of NSW, Bryson J, 3 June 1994, unreported) at 11:

The concept of attributable blame must be understood and applied with some tolerance; in my view it does not call for a judgment attributing blame among members of a family for the continuing relationship becoming intolerable, unless perhaps in particularly gross cases. Such judgment would be difficult and unreliable, as it is rare indeed that something or other which could be said to be a ground for blame cannot be identified and laid to the charge of each of the persons concerned. Leaving gross cases involving criminality or similarly reprehensible behaviour on one side, it should usually be understood, in my opinion, that where personal relationships deteriorate and the sharing of a dwelling becomes intolerable to some or all of those concerned, there is, within the meaning of Deane J's expressions, no attributable blame and the case is one for an equitable adjustment.

This statement has since been quoted with approval a number of times, most recently by Campbell JA (with whom Meagher and Barrett JJA agreed) in Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 at [73].

In applying the principle, it is necessary to identify clearly the joint enterprise which is said to have failed. For example, in Dinsdale bht the Protective Commissioner v Arthur [2006] NSWSC 809, the defendant was the former de facto spouse of the plaintiff's daughter. The plaintiff and defendant bought a property together as tenants in common. They made unequal contributions to the purchase price and the mortgage repayments. The plaintiff claimed that there was a resulting trust in respect of his unequal contributions to the purchase price. He also claimed that there should be a further adjustment to the beneficial interests of the parties as a result of the unequal contributions to the mortgage repayments based on the principles stated in Baumgartner. Brereton J accepted that there was a resulting trust. However, he rejected the second limb of the plaintiff's argument. His Honour accepted that contributions to mortgage payments may, in principle, be treated as part of the parties' contributions to a joint endeavour for the purposes of a Baumgartner constructive trust: see Baumgartner at 148; see also West v Mead [2003] NSWSC 161 at [60] per Campbell J. However, his Honour rejected the conclusion that a constructive trust should be imposed. The imposition of a constructive trust was not necessary to prevent the unconscionable retention of a benefit. Any unconscionability was remedied by the imposition of a resulting trust and the allowance of a claim for contribution in respect of mortgage payments made by the plaintiff: at [14]. Moreover, the mortgage payments were not made as part of some joint enterprise:

There is no evidence in this case of a joint endeavour between the parties, in which expenditure is shared for the common benefit, or even of a pooling of resources [cf Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-8; Parianos v Melluish (2003) 30 Fam LR 524 at [35]-[36], [55]-[58]]. There is no reason to suppose that each was no pursuing their own separate interest, albeit through investing in one property which each could use for his own advantage.

Where mortgage payments are taken into account, what is important is the proportions in which the contributions are made, not their absolute value: West v Mead [2003] NSWSC 161 at [61] per Campbell J.

Where the contributions one of the parties has made are improvements to the property, there is a question of how those improvements are to be valued. One possibility is to measure the value of the improvements by reference to their cost. Another is to measure them by reference to the increase in the value of the property they produce. In the case of the former approach it is once again necessary to consider the relative contributions that each makes, not their absolute value. In the latter case, it is their absolute value which is relevant. Normally, the former approach seems preferable since what is important is the ascertainment of the parties' relative contributions to a joint enterprise. However, the latter approach may be appropriate where it is not possible to determine the parties' respective contributions or where their respective contributions are not a reasonable measure of the unconscionability that would arise if one party or the other were entitled to retain the benefit of them.

The issues

Mr Oliver sought to resist the claim for the imposition of a remedial constructive trust in this case on three grounds. First, he submitted that the failure of the joint enterprise did not arise without attributable blame. It arose because Jo decided to leave the property after Jeremy refused to give her an interest in Solarsave. Second, he submitted that Jo was adequately compensated by the rights of contribution she had in respect of the payments she made. Third, he submitted that, to the extent that Jo claimed contribution in respect of payments made more than 6 years before the proceedings were commenced, that claim was statute barred. Similarly, Mr Oliver submitted that even if Jo was entitled to the imposition of a constructive trust, contributions made more than 6 years before the proceedings were commenced should be ignored because the claim for those amounts was statute barred.

I do not accept Mr Oliver's submissions.

Was there attributable blame?

In my opinion, Jo was not to blame for the breakdown of the relationship between her and Jeremy in the sense required by Deane J. The immediate cause of the breakdown in the relationship between them was Jeremy's refusal to give Jo an interest in Solarsave. Jo had provided Jeremy with assistance in relation to that business. She had agreed to refinance the property to provide the business with a line of credit in circumstances where she had paid all of the purchase price of the property that had not been borrowed. In those circumstances, she might reasonably have expected that Jeremy would agree to give her an interest in the business in return for the contributions to the business that she had made. There were already other sources of tension between them. Even if Jo's conduct was an over-reaction to what had happened, it could hardly be regarded as reprehensible. Rather, the parties' differing expectations caused a break down in the relationship between them which made it intolerable for them to continue to live together. As Bryson J pointed out in Bennett v Horgan, a breakdown of a relationship in those circumstances should not be seen as involving attributable blame.

Is Jo adequately compensated by a right of contribution?

Implicit in Mr Oliver's second submission is the submission that there was no joint endeavour between the parties with the result that they should be left to their claims for contribution. That submission should not be accepted. The parties plainly bought the property as a joint endeavour which would enable each of them to live on and enjoy the property for an indefinite period of time. The fact that they chose to acquire the property as joint tenants supports that view. Each of them made contributions to that joint endeavour in circumstances where it would be unconscionable to permit one or more of them to retain the benefit of contributions made by the others following the breakdown of the relationship between them. The result is that it is appropriate for the court to impose a constructive trust.

Is there an applicable limitation period?

In my opinion, there is no merit in Mr Oliver's submission based on the limitation period. Jo's claim is for the imposition of a remedial constructive trust arising from the failure of the parties' joint endeavour and the unconscionability of permitting Helen and Jeremy to retain benefits contributed by Jo to that joint endeavour. But Jo is not seeking to recover those benefits. The fact that she made those contributions is only part of the events which give rise to her claim.

There is a question of how long the limitation period in respect of a claim for a remedial constructive trust is, and when that limitation period begins to run.

As to the first question, s 27(2) of the Limitation Act 1969 relevantly provides:

...an action on a cause of action to recover land is not maintainable by a person other than the Crown if brought after the expiration of a limitation period of twelve years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

Section 36 provides:

(1) Subject to section 23, this Act applies to an action on a cause of action to enforce an equitable estate or interest in land in like manner as it applies to an action on a cause of action to recover land by virtue of a legal estate or interest in land.

(2) For the purposes of this Act, but without limiting the generality of subsection (1), a cause of action to enforce an equitable estate or interest in land accrues in the like manner and circumstances and on the same date as a cause of action to recover the land would accrue if the estate or interest were a legal estate or interest.

Section 23 provides that various other provisions of the Limitation Act "do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction or for other equitable relief".

Mr Oliver submitted that Jo's claim was analogous to an action for debt or an action for money had and received and that consequently a 6 year limitation period applied by analogy as a result of s 23. In support of that submission, he referred to the decision of McLelland J in Lang v Le Boursicot (1993) 5 BPR 11,782 and the decision of Buss JA in In de Braekt v Powell [2007] WASCA 55. But in my opinion, neither of those cases is on point. Lang v Le Boursicot concerned an equitable claim for contribution between co-guarantors. McLelland J held that a 6 year limitation period applied because the claim was analogous, in effect, to a claim for restitution. The decision in In de Breakt concerned an application for an extension of time for leave to appeal against the dismissal of an application for summary judgment based on the expiration of what was said to be an applicable limitation period in respect of a claim based on an express or constructive trust. The application was refused. At issue was s 47 of the Limitation Act 1935 (WA), which has no real equivalent in the New South Wales Act.

In my opinion a claim based on a remedial constructive trust is not analogous to a claim for a debt or an action for money had and received. The remedy of a constructive trust would give Jo an interest in the property which is sufficient to remedy the unconscientious retention of a benefit provided by her. An action for recovery of a debt or for money had and received, assuming it was available, would be an action to recover amounts paid: see The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 at [9273] per Owen J.

There is a question of when a claim for a remedial constructive trust first accrues. In my opinion, it cannot accrue before the conduct said to give rise to its imposition occurred - that is, the retention of the contributions of one party by another in circumstances where it would be unconscionable for them to do so: see In de Braekt v Powell [2007] WASCA 55 at [26]; Varma v Varma [2010] NSWSC 786 at [507] per Ward J; Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Co Arrangement)(Deed Administrators Appointed) [2011] NSWSC 1306 at [126] per Ward J. In any event, the limitation period is either 12 years as a result of s 36 of the Limitation Act or there is no limitation period. Consequently, even if it could be said that the cause of action accrued at the time the money was paid, the limitation period has not expired.

How are the parties' respective interests to be determined?

That leaves the question of how the parties' respective interests are to be determined. In Baumgartner, Mason CJ, Wilson and Deane JJ said (at 150):

The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries which will result in relative insignificant differences in contributions and consequential beneficial interests.

Applying that approach, so far as the purchase price and mortgage are concerned, in my opinion, the fairest method is to treat the contributions to the initial purchase price and the mortgage repayments separately. Doing that takes account in a practical way of the fact that Jo made the greater proportion of her contribution at the time when the property was bought, whereas Helen and Jeremy made their contributions over time.

On that basis, and leaving aside any improvements to the property, the cash paid in respect of the purchase price was 111/471 of the total purchase price and Jo is entitled to 110/111 of the value of the property referable to that component of the purchase price. That is, Jo's interest in the property referable to her initial contribution towards the purchase price is 110/111 X 111/471 - which is 23 percent.

In respect of the remaining 361/471 share, and again leaving aside any improvements to the property, Jo is also entitled to the proportion that her contributions to the mortgage payments bears to the total amount paid in respect of the mortgage payments. Jo's total contributions to the mortgage payments (rounded to the nearest $100) were $65,300. Jeremy's total contributions to the mortgage payments up until October 2008 were $58,000. According to the spreadsheet prepared by Jo, Jeremy made further contributions to the mortgage payments of $76,000 up until the end of February 2011 and Helen has made total contributions to the mortgage repayments (rounded to the nearest $100) of $174,100 up until the end of February 2011. The evidence is that since May 2009 Jeremy and Helen have paid $3,400 each month in respect of the mortgage repayments. Assuming that they have continued to pay that amount each month since February 2011, they have paid a further $47,600 up until the end of June 2012, taking their total payments in respect of the mortgage to $356,300. On that basis, the total amount paid by the parties in respect of the mortgage is $421,600. Jo's proportionate share of that contribution is 653/4,216 and consequently her share in the property referable to the mortgage payments she has made is 653/4,216 X 361/471, which is 11.9 per cent.

That leaves the question of how to deal with the other contributions that Jo and Jeremy in particular made to the property. As I have said, normally there is no reason why those contributions should not be treated in the same way as mortgage repayments. However, there are 3 reasons for not following that approach in this case.

First, there is no easy way of determining the amount Jeremy has spent on the property. The amount claimed by Jeremy is disputed for various reasons and the position the parties reached during the course of the hearing was that that amount should be determined subsequently and, if necessary, as part of an inquiry. It is obvious that such an inquiry would be expensive and it is doubtful that the costs of conducting it would be warranted having regard to the amount in dispute that turns on its outcome. A detailed investigation of the amount each party actually spent on the property would also be contrary to the approach which Mason CJ, Wilson and Deane JJ said in Baumgartner the court should adopt.

Second, in this case, the parties agreed that Jo and Jeremy would bear their own costs of constructing their dwellings on the property and that the fact that they would do so was not to affect the interest that each held in the property. One way of looking at this aspect of the parties' agreement is that it was a limitation on the scope of the joint enterprise. That is, it was never part of the joint enterprise that an adjustment would be made to the parties' interests in the property depending on the expense they incurred in building their own accommodation on the property. Consequently, it is not unconscionable if the parties take the benefits of those improvements in accordance with their agreed shares in the property rather than in proportion to their contributions.

This analysis, however, does not apply to all of the improvements. A substantial amount of the costs claimed by Jeremy relate to work unconnected with the building of his dwelling, such as the work on the driveways. In addition, Jo gave evidence that she did work and incurred some costs in painting the original house and landscaping around it and that Helen contributed to that work and those costs, although much of that work is properly regarded as maintenance rather than improvements to the property. Moreover, Jeremy did work on Jo's studio. Some of that work was done to assist Jo. In my opinion, consistently with what I have said, any costs that Jeremy incurred in doing that work at most should only give rise to a personal claim against Jo. On the other hand, a substantial part of the work on Jo's studio was also done by Jeremy after Jo left the property. It is difficult to see why Jo should be entitled to the benefit of that work.

Third, although according to Jeremy he spent a substantial amount of money on improvements to the property, it is not clear that those improvements have increased the value of the property; or, at least, it seems arguable that the costs of the improvements are disproportionately large compared to the increase in value that has resulted from them. Moreover, I am not satisfied that many of the improvements were undertaken with Jo's agreement. Indeed, one of the causes of tension between Jo and Jeremy was that Jo wanted to preserve the property much as it was when they bought it whereas Jeremy appears to have been keen to develop it. An obvious example of this point is the construction of the helipad. There must be a real question whether that has added any value to the property; and it is not suggested that it was built with Jo's consent, although it may be regarded as something which was built in connection with the construction of Jeremy's own dwelling so that it was something which fell outside the joint enterprise in any event. Another example, however, is the construction of the driveways and retaining walls and the pillars at the entrance of the property. I am not satisfied that Jo agreed to the construction of those improvements. In addition, there is a real question whether the costs of those improvements are reflected in an increase in the value of the property. In those circumstances, in my opinion, it would be inappropriate to treat the costs of those improvements as an appropriate measure of the benefit that has been conferred on Jo.

Before considering how to deal with these issues, however, it is appropriate to say something about Jo's claim for an occupation fee.

The claim for an occupation fee

Historically, a co-owner of land was only entitled to claim an occupation fee from an owner who occupied the land if either the co-owner had been excluded from the land or the owner in occupation claimed an allowance in respect of improvements to the land. Meagher JA (with whom Mahoney JA agreed) explained the principles in these terms in Forgeard v Shanahan (1994) 35 NSWLR 206 at 223:

Turning to the liability of a co-owner in occupation to pay an occupation fee, the position at law is fairly clear. He was not liable unless he excluded his co-owner, in which case he rendered himself liable in ejectment and for mesne profits, or if he constituted himself a bailiff, in which event he would be liable in an action of account, like any other bailiff: Re Tolman's Estate (1928) 23 Tas LR 29 at 31; Rees v Rees [1931] SASR 78 at 80-81. Indeed, the whole bias of the law against making a co-owner in occupation liable to account is precisely based on the rationale that if such a liability were to exist a co-owner could, by abstaining from entering into occupation, turn his co-owner into an involuntary bailiff. As far as equity is concerned, an occupation fee will be exacted in at least two circumstances: first, in a partition suit (or related litigation): if there has been an exclusion, the tenant in occupation will be charged with an occupation fee (see, for example, Pascoe v Swan (1859) 27 Beav 508, 54 ER 201) this is an example of equity following the law; and secondly, if the owner in occupation claims an allowance in respect of improvements effected by him, equity will permit such an allowance only on terms that he is accountable for an occupation fee - this is an example of he who comes to equity having to do equity: see Teasdale v Sanderson (1864) 33 Beav. 534, 55 ER 476.

In the latter case, the allowance "is not a reimbursement of the amount expended, but an allowance in respect of the amount by which the value of the property has been increased, not exceeding the amount expended ..." (ibid).

More recently, it has been held that, upon the breakdown of a domestic relationship, if it ceases to be reasonable or practicably sensible to expect the partners to co-occupy the one property, the one who remains in possession may be taken to do so to the exclusion of the other, and to be liable to pay an occupation fee: McKay v McKay [2008] NSWSC 177 at [51] per Brereton J; Callow v Rupchev [2009] NSWCA 148 at [59]-[60] per Beazley and Basten JJA and Handley AJA. This is best seen not as a case of exclusion or ouster but as an independent ground on which the court may compensate a co-owner for the exclusive occupation enjoyed by another co-owner: Callow v Rupchev at [46].

There is a question of how far the principle extends. In Callow v Rupchev the parties were in a de facto relationship. However, the court described the case as one where there had been a breakdown in a "domestic relationship"; and held that, in order to claim an occupation fee it was necessary for the party making the claim "to demonstrate affirmatively that it was unreasonable to expect him or her to return to the premises during that period [that is, the period for which the fee is claimed]" (at [74]). It was the fact that it was unreasonable to expect the party who had left to return that made it appropriate for the party who remained in occupation to pay a fee. Both the language used and the rationale advanced are not confined to cases where the parties are in a matrimonial or de facto relationship.

P Butt states the principle more broadly still in the latest edition of Land Law, 6th Edition (2010), Lawbook Co, at [14 38.1]:

Logically, this "new" principle should not be limited to matrimonial or domestic relationships. Its underlying rationale is that the occupying co-owner cannot be liable for an occupation fee where the non-occupying co-owner is free to take up occupation but chooses not to. If, in the circumstances, it is unreasonable to expect the non-occupant to take up occupation, then fairness requires the occupying co-owner to compensate the non-occupant for the fact that one has enjoyment of the property but the other has not. [footnote omitted]

The extension of the principle beyond matrimonial or similar relationships has also been accepted in England in French v Barcham [2009] 1 WLR 1124, where Blackburne J held that a trustee in bankruptcy was entitled to an occupation fee from the bankrupt's wife for her continued occupation of the property after the making of the bankruptcy order. As Blackburne J stated at [34]:

The essential point, in my view, is that when on inquiry it would be unreasonable, looking at the matter practically, to expect the co-owner who is not in occupation to exercise his right as a co-owner to take occupation of the property, for example because of the nature of the property or the identity and relationship to each other of the co-owners, it would normally be fair or equitable to charge the occupying co-owner an occupation rent...

In my opinion, there is much to be said for the position taken by P Butt. However, it is doubtful that the Court of Appeal went so far in Callow v Rupchev and it is not necessary to resolve the question in the context of this case. I have already concluded that Jo was not excluded from the property. She chose to leave because the relationship between her and Jeremy had broken down. However, I think that the relationship between Helen, Jo and Jeremy was a domestic one of a type that is covered by the principle stated in Callow v Rupchev. Helen, Jo and Jeremy had lived together as a family. They had bought the property with a view to that continuing indefinitely. It is true that they had intended eventually to occupy separate parts of the property. But that does not alter the fact that they intended to occupy the property together. Having regard to the breakdown in the relationship between Jo and Jeremy, I do not think that it would be reasonable to expect Jo to return to the property.

Even if the conclusion in the previous paragraph is wrong, Jeremy makes a claim for improvements he made to the property. That claim includes a claim for work done on Jo's studio after Jo left and for work done on areas apart from the area where it was agreed Jeremy would build his own dwelling. Jo is entitled to set off the occupation fee claimed by her against that claim. The parties agree that the value of Helen's and Jeremy's occupation of the property since 29 September 2009 is $500 per week. Jo's share of that fee is $167 per week, making a total for the 143 weeks to the end of June 2012 of $23,881.

Conclusion in relation to the parties' interests

In my opinion, Jeremy and Jo are entitled to the value of the improvements that each has made to the property and Jo is entitled to set off against the improvements claimed by Jeremy an occupation fee of an amount that should be rounded up to $24,000. The most practical way to take those improvements into account is for the improvements to be valued and to be deducted from the total sale price of the property after making an allowance for the occupation fee. In determining the question of value the object should be, to use the words of Mason CJ, Wilson and Deane JJ in Baumgartner, "to strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries". If the parties cannot reach agreement on how that should be done, I will hear further submissions before making a final decision on what orders should be made.

It is, however, worth making two points now. First, my initial view is that the increase in value of the property arising from the construction of the studio should be split between Jo and Jeremy in proportion to the costs they incurred in constructing the studio. For the most part, those costs are not in dispute.

Second, on the conclusions I have reached Jo is entitled to a 34.9 percent interest in the property, which is very close to her legal interest. Jo is also entitled to an occupation fee and the increase in value of the property attributable to the contribution she made to the cost of building the studio. Jeremy, on the other hand, is entitled to the increase in value of the property brought about by the contribution he made to the costs of building the studio, particularly after Jo left, and the other improvements he made to the property. There is a real question in my mind whether, taking these matters into account and giving effect to the notion of practical equality, the most appropriate conclusion is that the parties' beneficial interests, and any rights to an occupation fee, are reflected in the legal interests that they hold. However, as I have said, before reaching any final conclusion on this matter, I will hear further submissions from the parties.

Other orders

As I have said, Helen and Jeremy do not offer any real reason for why an order should not be made under s 66G of the Conveyancing Act.

Section 66I(1) of the Conveyancing Act provides:

On any sale under a statutory trust for sale the court may allow any of the co-owners of the property to purchase whether at auction or otherwise on such terms as to non-payment of deposit, or as to setting off or accounting for the purchase money or any part thereof instead of paying the same, or as to any other matters as to the court seems reasonable.

In my opinion, there is no reason why the parties should not be entitled to purchase the property. In addition, if any of them do, there is no reason why they should not be entitled to set off their interest against the purchase price.

There is an issue of who the trustees should be. In my opinion, it is appropriate to appoint the trustees proposed by Jo. The trustees proposed by Jo and those proposed by Helen and Jeremy have indicated that they intend to charge the same fees. The trustees proposed by Jo are based in Newcastle and consequently are likely to have some local knowledge. On the other hand, the trustees proposed by Helen and Jeremy are based in Sydney and Melbourne. Moreover, the likelihood is that Helen and Jeremy, not Jo, will seek to buy the property. In those circumstances, it seems to me more appropriate, other things being equal, that the appointed trustees be those nominated by Jo.

The matter should stand over for a period of 6 weeks to give the parties an opportunity to reach agreement on the orders that should be made having regard to what I have said in this judgment. If the parties can reach agreement, they should bring in short minutes of order to give effect to that agreement. If not, I will list the matter at 9.30 am on 3 August 2012 or some other time convenient to the parties for the purpose of making directions for the determination of the outstanding issues in the case. I will also hear the parties in relation to the question of costs at that time.

**********

Decision last updated: 26 June 2012

[2012] NSWSC 685

25 June 2012

Key Legal Topics

Areas of Law

Property Law

Equity

Legal Concepts

Co-ownership

Presumption of Resulting Trust

Rebuttal of Presumption

Remedial Constructive Trust

Joint Enterprise

Limitation Periods

Admissibility of Evidence

Onus of Proof

Medium Neutral Citation:	Jo Maree Payne v Helen Mary Rowe & Anor [2012] NSWSC 685
Hearing dates:	21 to 24 May 2012; 30 May 2012
Decision date:	25 June 2012
Jurisdiction:	Equity Division
Before:	Ball J
Decision:	See paragraphs 116 to 122 of this judgment.
Catchwords:	REAL PROPERTY - co-ownership - application for appointment of statutory trustees for sale - adjustment of interests - whether non-occupying owner entitled to occupation fee - where there has been no exclusion from the property - consideration of principle in McKay v McKay and Callow v Rupchev - held applicable to "domestic relationship" between brother, sister and mother. REAL PROPERTY - co-ownership - application for appointment of statutory trustees for sale - adjustment of interests - whether contributions made by associated entity attributable to party. EQUITY - trusts - resulting trust - presumption of resulting trust based on contributions to purchase price - presumption rebutted where parties have agreed on beneficial interest at time of purchase. EQUITY - trusts - remedial constructive trust - principle in Baumgartner - application to family relationship - necessity of identifying relevant "joint enterprise" - whether there was "attributable blame" for the failure of the joint enterprise - whether party adequately compensated by a right to contribution - whether respective contributions by parties should be valued according to cost or increase in value of property. LIMITATION OF ACTIONS - whether claim for imposition of remedial constructive trust subject to limitation period - application of Limitation Act directly or by analogy - distinction between claim for constructive trust and claim for debt or action for money had and received - consideration of when claim for remedial constructive trust accrues. EVIDENCE - admissibility - inadmissibility of evidence of communications in connection with an attempt to negotiate a settlement of the dispute - whether admissions made in such communications admissible - consideration of exception in s 131(2)(g) - held evidence not admissible simply because it qualifies other evidence adduced in proceedings. ONUS OF PROOF - general principle - onus is on the defendant if the allegation is not simply a denial of an essential ingredient of the cause of action but a good defence.
Legislation Cited:	Conveyancing Act 1919 (NSW) Evidence Act 1995 (Cth) Limitation Act 1969 (NSW)
Cases Cited:	Atlas Financial International Ltd v Nortbale Pty Ltd [2011] NSWSC 815 Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Co Arrangement)(Deed Administrators Appointed) [2011] NSWSC 1306 Baida Poultry Pty Ltd v R [2012] HCA 14 Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276 Baumgartner v Baumgartner (1987) 164 CLR 137 Bennett v Horgan (Supreme Court of NSW, Bryson J, 3 June 1994, unreported) Bloss Holdings Pty Ltd v Brackley Industries Pty Ltd [2005] NSWSC 756 Brown v Commissioner of Taxation [2001] FCA 596; 187 ALR 714 Callow v Rupchev [2009] NSWCA 148 Currie v Dempsey (1967) 86 WN (Pt 2) (NSW) 460 Dinsdale bht the Protective Commissioner v Arthur [2006] NSWSC 809 DTC No 1 Pty Ltd v Matthew [2009] NSWSC 1280 Forgeard v Shanahan (1994) 35 NSWLR 206 French v Barcham [2009] 1 WLR 1124 Hill v Hill [2005] NSWSC 863 In de Braekt v Powell [2007] WASCA 55 Lang v Le Boursicot (1993) 5 BPR 11,782 McKay v McKay [2008] NSWSC 177 Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd [2008] FCA 27 Miller v Sutherland (1990) 14 Fam LR 416 Muschinski v Dodds (1985) 160 CLR 583 Mulkearns v Chandos Developments (No 4) (2005) 12 BPR 22,993 New South Wales (Ambulance Service of NSW) v McKittrick [2009] NSWCA 63 Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 Rupchev v Callow [2007] NSWSC 1097 Stocking v Montila [2005] EWHC 2210 (Ch) Sweetenham v Wild [2005] QCA 264 The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 Varma v Varma [2010] NSWSC 786 West v Mead [2003] NSWSC 161
Texts Cited:	P Butt , Land Law, 6th Edition (2010), Lawbook Co
Category:	Principal judgment
Parties:	Jo Maree Payne (Plaintiff) Helen Mary Rowe (First Defendant) Jeremy Richard Dawson Rowe (Second Defendant)
Representation:	DF Villa (Plaintiff) KG Oliver (Defendants) Thomsons Lawyers (Plaintiff) Reuben George Lawyers (Defendants)
File Number(s):	2011/157795