Pazman v Paras - [2021] SADC 22

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
PAZMAN v PARAS
[2021] SADC 22
Judgment of her Honour Judge Deuter
12 March 2021
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL - PARTICULAR CASES
The Applicant applied for an order that the time for removal of a caveat over a property at Unit 6/70 Ladywood Road, Modbury North ('the property'), be extended until his claim has been determined by the Magistrates Court of South Australia.
The Respondent purchased the property in her sole name in May 2018. She is the adult daughter of the Applicant’s former defacto partner. The Respondent’s mother was the sole trader in a business buying and selling cars. The Applicant worked in the business and received no salary. The Respondent’s mother was paid an annual income. On 19 December 2016 the Applicant deposited $286,215.44 into the business account. These were the net proceeds from the sale of a property owned by him. The car selling business suffered significant losses and was wound up in 2019. The Respondent purchased the property by way of a large bank loan, savings and a cash gift from her mother.
The Applicant asserted that he contributed to the purchase of the property as a result of the funds he had provided to the used car business owned by the Respondent’s mother. The Applicant also deposed that these funds were used to purchase stock for the used car business. He asserted that the Respondent’s mother was only in a position to gift monies to the Respondent for the purchase of the property from the used car selling business account as a result of his capital contribution.
The Respondent never worked in the car selling business; worked full-time elsewhere; and at times loaned monies to the business.
HELD:
1. That the Applicant has not established a prima facie case with sufficient probability of success that he has any equitable interest in the property.
2. That caveat no. 13206987 should be removed from the title of the property.
Partnership Act 1891 (SA) s 1(1), referred to.
Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198; Paringawood Nominees Pty Ltd v Baulderstone [1999] SASC 380; Australian Broadcasting Corporation v O'Neill [2006] 227 CLR 57; Re: Baumgartner (1987) 76 ALR 75; Li v Wang [2020] SADC 97; Muschinski v Dodds (1985) 160 CLR 583; Piroshenko v Grojsman & Ors [2010] 27 VR 489; Eng Mee Yong [1980] AC 331; Magna Alloys & Research Pty Ltd v Coffery [1981] VR 23, applied.

PAZMAN v PARAS
[2021] SADC 22

Introduction

The Respondent, Majel Paras, is the registered proprietor of a property situated at Unit 6/70 Ladywood Road, Modbury North South Australia, comprised in Certificate of Title Register Book Volume 6017 Folio 395 (‘the property’).
The Applicant, George Pazman, claims an equitable interest in the property. On 19 November 2019, he caused a caveat to be lodged on the property (‘the caveat’). The Respondent warned the caveat, and on 14 December 2020 the Applicant issued an Application (‘the Application’) seeking orders extending the time for removal of the caveat until after related Magistrates Court proceedings had been resolved. The application was opposed by the Respondent.
On 16 December 2020, an order was made in this Court extending the time for the removal of the caveat until further order to allow time for an argument on the Application. A timetable was set for affidavit evidence and submissions to be filed.
Four affidavits have been filed and read:
·Affidavit on behalf of the Applicant prepared by his lawyer, Elizabeth Densley, sworn 9 December 2020 (FDN 3);
·Affidavit of the Applicant, George John Pazman, sworn 1 February 2021 (FDN 8);
·Affidavit of the Respondent, Majel Paras, sworn 18 February 2021 (FDN 9); and
·Affidavit of the Respondent’s Mother, Eva Paras, sworn 18 February 2021 (FDN 10).
The matter came on for argument on 23 February 2021. In addition to the affidavit material, I have had regard to the written submissions of both parties and the oral submissions put at both the interlocutory application 16 December 2020 and at the argument.
Overview of the Facts
The Applicant is a retired second-hand car dealer. He commenced a relationship with the Respondent’s Mother, Eva Paras (‘Eva’), in 2011. She was living in the Philippines and moved to Australia to live with the Respondent in early 2013. They lived together in the Applicant’s home at Linden Park (‘the Linden Park property’).
The Respondent and her Brother moved to Australia from the Philippines in August 2016. They lived at the Linden Park property with the Applicant and Eva until the property was sold in December 2016. Following that sale, the Applicant, Eva, the Respondent and her Brother moved to a rental property at Oakden. The Respondent’s Brother died in January 2018.
Eva commenced a business buying and selling second-hand cars in June 2015. The Applicant assisted with the running of that business. Eva obtained a second-hand Motor Vehicle Dealers License on 11 June 2015.[1] The business was known as ‘The Car Shed SA’ and registered solely in Eva’s name on 25 June 2015.[2] Eva’s affidavit evidence is that she was a sole trader of that business. This was as a result of the Applicant having closed a previous business, Dalpaz Pty Ltd, with unmet liabilities. All bank accounts and business documents for ‘The Car Shed SA’ were in Eva’s name.[3]
[1] Exhibit EP1 to the Affidavit of Eva Paras (FDN 10).
[2] Exhibit EP2 to the affidavit of Eva Paras (FDN 10).
[3] Exhibit EP5 to the Affidavit of Eva Paras (FDN 10).
‘The Car Shed SA’ was run out of a rental property at Windsor Gardens. Eva relied upon the Applicant and his experience in buying and selling the cars. She was fully engaged in the business with duties including reception, preparing documentation, cleaning cars, cleaning the car yard and collecting and delivering cars.
On or about 19 December 2016 the Applicant deposited the sum of $286,215.44 into a bank account in the name of ‘The Car Shed SA’. These monies were from the sale of the Linden Park property.[4] A sum of $86,414.96 had earlier been deposited into a joint account in the names of Eva and the Applicant.[5] These monies were deposited on 27 November 2015, and were surplus funds following a re-financing of the Linden Park property.[6] I pause to note that the Applicant says that the $86,214.44 was paid into ‘The Car Shed SA’ account in December 2016 as proceeds from the sale of the Linden Park property. I find that he is clearly wrong as the bank documents show that a transfer of $86,414.96 was made in November 2015 into the joint account in the names of Eva and the Applicant. The draft Vendor’s Settlement Statement of 15 December 2016 confirms that the net proceeds from the sale of the Linden Park property were to be paid to ‘The Car Shed SA’.[7]
[4] Exhibit GJP-02 to the Affidavit of the Applicant (FDN 8).
[5] Exhibit EP4 to the Affidavit of Eva Paras (FDN 10).
[6] Paragraph 11 of the Affidavit of Eva Paras (FDN 10).
[7] Exhibits GJP-01 and GJP-02 to the Affidavit of the Applicant (FDN 8).
‘The Car Shed SA’ was not a success and made losses in each of the 2017, 2018 and 2019 financial years. The financial statements (in the sole name of Eva), for the financial year ended 30 June 2019 set out that the total losses carried forward were $328,957.00.[8] By the second half of 2019, the business had been wound up and Eva’s second-hand Motor Vehicle Dealers License was cancelled, as was the business name for ‘The Car Shed SA’.[9]
[8] Exhibit EP5 to the Affidavit of Eva Paras (FDN 10).
[9] Exhibit EP2 to the Affidavit of Eva Paras (FDN 10).
The fact that Eva operated the car selling business as a sole trader is not agreed by the Applicant. The extent of his role in ‘The Car Shed SA’ is an issue in dispute. There can be no doubt, however, that all the business documents were in Eva’s name, and that she was registered as the owner of the business name. There was no formal partnership between the Applicant and Eva. No partnership documents have been provided to the Court. In the running of the business, the Respondent says that he never took a wage from ‘The Car Shed SA’ and estimates that Eva was paid around $50,000.00 annually. The Respondent was never involved in the car selling business. She has worked full time as a technical advisor at Apple since January 2017. I am not told what her income is (or has been) in that role. No documents were provided in relation to the Respondent’s earnings.
The Applicant says that in or around 2017 or 2018, he and Eva started looking to purchase a property to provide stability for the family and the business. However, due to him not earning a salary the bank would only loan monies to the Respondent as she worked full time. Both the Respondent and Eva denied that they had plans to purchase a property with the Applicant. Eva says the Applicant had spoken of buying a property for the two of them from the proceeds of the sale of the Linden Park property. However, this did not occur as a result of the failure of ‘The Car Shed SA’ business. The Respondent purchased the property in her sole name on 31 May 2018. The Applicant did not contribute any funds towards that purchase. The Respondent says that the money to purchase the property came primarily from a loan in her own name from HSBC Bank Australia,[10] a deposit of $20,000.00 from her savings,[11] a gift from Eva of $32,000.00 in cash,[12] and savings generally. The Respondent’s savings were $44,841.33, as noted in her savings account as at 7 May 2018.[13] She said that she also had $20,000.00 in another account.
[10] Exhibit MP3 to the Affidavit of the Respondent (FDN 9).
[11] Exhibit MP5 to the Affidavit of the Respondent (FDN 9).
[12] Exhibit MP8 to the Affidavit of the Respondent (FDN 9).
[13] Exhibit MP5 to the Affidavit of the Respondent (FDN 9).
The Applicant claims that monies from ‘The Car Shed SA’ account were transferred into the Respondent’s bank account to enable her to obtain pre-approval for a home loan. He provided no evidence to establish that claim. The Applicant said that this is because he had no access to any bank records.[14]
[14] Paragraph 16 of the Affidavit of the Applicant (FDN 8).
Both the Respondent and Eva denied the claim that any monies from the business were provided to be used for the purchase of the property. The Respondent said that she in fact supported the Applicant from February 2018 until he was evicted from the property in October 2019. This included paying the rent and all expenses at Oakden and all food, groceries, utilities and his BUPA fees.[15] The Respondent also made several loans to ‘The Car Shed SA’. Between 21 December 2017 and 10 April 2018, the Respondent transferred a total of $49,000.00 to ‘The Car Shed SA’ bank account.[16] The loans were repaid between 1 March 2018 and 20 April 2018, and an additional $9000.00 was provided as a gift.[17] The Respondent said that this gift was provided as she had been financially supporting the Applicant,[18] and denies that ‘The Car Shed SA’ ever made a capital investment towards the purchase of the property.[19]
[15] Paragraphs 9, 10 and 11 of the Affidavit of the Applicant (FDN 8).
[16] Exhibit MP6 and MP7 to the Affidavit of the Respondent (FDN 9).
[17] Exhibit MP8 to the Affidavit of the Respondent (FDN 9).
[18] Paragraphs 30 to 33 of the Affidavit of the Respondent (FDN 9).
[19] Paragraph 34 of the Affidavit of the Respondent (FDN 9).
The Applicant’s Claim
The Applicant claims that he is entitled to an interest in the property, and that the Respondent holds her beneficial ownership on constructive trust for him. This constructive trust arises as a result of the contributions made by the Applicant towards the purchase of the property, described as a joint endeavour or relationship that has failed.
The contributions said to have been made by the Applicant towards the purchase of the property arise out of the Applicant’s relationship with the Respondent’s Mother and the business operated by them. The contribution is claimed to come from:
·The monies provided to the business, ‘The Car Shed SA’, by the Applicant from the sale of the Linden Park property;
·The monies transferred from ‘The Car Shed SA’ account to the Respondent’s bank account; and
·The monies transferred to the Respondent’s bank account used by her to purchase the property.
The Applicant claims that although ‘The Car Shed SA’ was registered in Eva’s sole name, Eva herself has conceded that the parties operated a partnership as defined in s 1(1) of the Partnership Act 1891 (SA). By that definition, a partnership ‘… is the relation which subsists between persons carrying on a business in common with a view to profit …’.
The Applicant submits that Eva agreed that there were mutual interests between her and the Applicant, and that both of them together or separately had an interest in making a profit from the business. He also relies upon the fact that it is not disputed that proceeds from the sale of the Linden Park property were put into the business. The Applicant’s submission is that the only source of capital funds for the business were the proceeds from the sale of his Linden Park property. There is no evidence of Eva having contributed any start-up funds to the business.
A prima facie case is asserted on the basis that the Applicant has an interest in the property, and that there is a genuine dispute between the parties to be resolved in the Magistrates Court. The Applicant argues that it is simply implausible that Eva, who was running a business that she had little or no experience or knowledge of, could raise the funds to gift the Respondent $32,000.00 towards the purchase of the property, if it had not been for the capital contribution of the monies from the proceeds of the sale of the Linden Park property. This argument, however, contradicts his statement that Eva was being paid an annual salary of $50,000.00 by the business.[20]
[20] Paragraph 15 of the Affidavit of the Applicant (FDN 8).
The Applicant also argues that it is implausible that the Respondent was able to purchase the property without the assistance of the Applicant’s funds as deposited through his contribution to ‘The Car Shed SA’. It was submitted that there is no evidence that the Respondent had any savings before her move to Australia, and she provided no information in relation to her annual income from her employment. Despite this, the Respondent was able to pay all the Applicant’s living expenses, rent, outgoings and utilities while the parties lived together. She was able to save approximately $64,000.00 of her own money to purchase the property and save another $49,000.00 to lend to ‘The Car Shed SA’ over the same period.
The Respondent’s Case
The Respondent submits that the caveat should not be extended any further as the Applicant has no arguable case that he has an interest in the property. The Respondent is an adult, and the only familial relationship is a de facto one between the Applicant and the Respondent’s Mother, Eva. The Respondent denies any joint endeavour with the Applicant to purchase the property. It was purchased solely in her name and largely with a bank loan in her name. She submitted that a financial contribution by the Applicant to ‘The Car Shed SA’ in December 2016 does not lead to a finding that the small gift by Eva towards the purchase of the property in May 2018 came from the Applicant or that it was his financial contribution.
The Respondent argued that the Applicant’s financial contribution to ‘The Car Shed SA’ was provided to start a business owned and conducted by Eva. The Respondent was not involved in that business. She also submitted that the Applicant’s financial contribution was subsumed by the significant losses suffered by ‘The Car Shed SA’ that led to the business ceasing to trade. In this regard, Eva deposed that she has been left with a liability to pay the debts and ongoing liabilities of the business, and that this has resulted in financial pressure for her.[21]
[21] Paragraph 14 of the Affidavit of Eva Paras (FDN 10).
The Respondent submitted that the Applicant has not provided any evidence, by affidavit or otherwise, of conduct or an agreement that leads to a sustainable cause of action being identified. The circumstances of, and leading to, the purchase of the property does not give rise to a constructive trust or a resulting trust.
Legal Principles
The Court, on an application for an extension of time for the removal of a caveat, is to apply the same test as that which is applied in the context of an interlocutory injunction. This means that the court must determine whether there is a prima facie case (in the sense set out below) and whether, on the balance of convenience, an order extending the time for the removal of the caveat should be made.[22]
[22] Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198 at 203-204, Paringawood Nominees Pty Ltd v Baulderstone [1999] SASC 380 [4],[10]-[12], [14]-[16].
The onus is upon the Applicant to establish a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at the conclusion of the trial he will be entitled to relief.[23] This does not mean the Applicant must show that it is more probable than not that he would succeed at trial. It is sufficient if the Applicant can show there is a sufficient likelihood of success to justify the preservation of the status quo in the circumstances.[24]
[23] Australian Broadcasting Corporation v O’Neill [2006] 227 CLR 57 at 82.
[24] Ibid.
If a prima facie case is established, there are two further requirements that the Applicant must satisfy this Court of:
·that the balance of convenience is in his favour. That is, that the inconvenience, injury or loss that he would likely suffer if the caveat is not extended, outweighs the inconvenience, injury or loss that the Respondent would suffer if the caveat is extended; and
·that damages are not an adequate remedy.[25]
[25] Ibid at 82.
Caveatable Interest – Does a Prima Facie Case Exist?
It is not disputed that courts will impose a constructive trust where a person that is not the legal owner of the land has ‘contributed to the acquisition, maintenance or renovation of the property pursuant to a joint endeavour or relationship which has failed in circumstances where blame cannot be attached to either party’.[26]
[26] Li v Wang [2020] SADC 97 at [37].
An example of such circumstance was found in Muschinski v Dodds[27] where an unmarried couple had purchased a property intending it to be used as their home and also as an arts centre. The Appellant (Plaintiff) provided $25,259.45 to purchase the property and the Respondent (Defendant) contributed $2,549.77 towards improvements. Both their personal relationship and the business venture failed. It was found that the parties held their respective legal interest upon trust to repay each other their respective contribution, and as to the residue to them both in equal shares. His Honour Justice Deane at page 623 of the judgment remarked:
The property was acquired in pursuance of the consensual arrangement between the parties, to be held and developed in accordance with that arrangement. The contributions which each party is entitled to have repaid to her or him were made for, or in connection with, its purchase or development. The collapse of the commercial venture and the failure of the personal relationship jointly combined to lead to a situation in which each party is entitled to insist upon realization of the asset, repayment of her or his contribution and distribution of any surplus.
[27] (1985) 160 CLR 583.

In the circumstances of Muschinski an order was made declaring that the property was held by the parties on a constructive trust. In Re: Baumgartner,[28] the High Court, at page 83 of their judgment, stated in relation to Muschinski:
Deane J (with whom Mason J agreed) reached this result by applying the general equitable principle which restores to a party contributions made to a joint endeavour which fails when the contributions have been in circumstances in which it was not intended the other party should enjoy them. His Honour said; ‘…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 in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of that principle is that in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do.[citations omitted][29]
[28] (1987) 76 ALR 75.
[29] Re Baumgartner (1987) 76 ALR 75 at 83.
The test to be satisfied to claim a cavaetable interest in a property was more recently considered by Chief Justice Warren in Piroshenko v Grojsman & Ors.[30] The Plaintiff claimed an unregistrable equitable interest in a property which was in the sole registered name of the defendant. The parties had been in a de facto relationship between 2003 and 2006 and married soon after arriving in Australia from the Ukraine in February 2006. On 18 December 2006, a deposit of $10,000.00 was paid on the property and a contract was signed. The Plaintiff was nominated as the only purchaser on the contract of sale. Before the sale was completed, the parties began living in the property under a licence agreement, and at the end of January 2007 the parties separated. On 6 February 2007, the Plaintiff obtained an interim intervention order against the Defendant restraining him from coming onto the property. On 16 February 2007, the Plaintiff obtained a mortgage from the Commonwealth Bank of Australia and on 2 March 2007 she purchased the property. When the Plaintiff later sold the property, the Defendant lodged a caveat on the certificate of title claiming an implied trust between himself and the Plaintiff based on claims that he had made contributions, including the cost of the Plaintiff’s relocation from the Ukraine to Australia, her living costs, the purchase of chattels for a shared residence and gifts during the course of their relationship. It was also alleged that the deposit paid on the property was paid out of the parties’ joint savings.
[30] [2010] 27 VR 489.
Warren CJ confirmed that the onus fell on the caveator to satisfy the two-stage test applied by the courts when deciding whether to exercise its discretion to grant interlocutory relief. This approach required the caveator to establish that there was a serious question to be tried that they have an interest in the land in question; and having done so to establish that the balance of convenience favours the maintenance of the caveat until trial. At paragraph 18, his Honour said:
… at both stages of the test, attention must be directed towards the relationship between the caveat which has been lodged, and the interest which is being claimed by the caveator’.
In considering the test that the caveator must satisfy, his Honour went on to state:
… he or she must satisfy the court that:
1.there is a probability on the evidence before the court that he or she will be found to have the asserted equitable rights or interest; and
2.that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.[31]
[31] Ibid [18].
He went on further to state:
Finally, it should be noted that the onus which the caveator must discharge is an onus with respect to an interest or rights in land. Caveats are not ‘bargaining chips’. It is not sufficient for the caveator to establish a prima facie case that they have contractual, equitable or statutory rights against the caveatee; their interest or rights must attach to the property with respect to which the caveat has been lodged [emphasis is mine].[32]
[32] Ibid [23].
In reciting the facts in Piroshenko, Warren CJ noted that even taking the evidence of the Defendant at its highest the facts as deposed could not be said on any view, to establish that he held any interest in the property by reason of a remedial constructive trust. The Defendant had not contributed any money towards the purchase or maintenance of the property, except for his assertion that he contributed to the deposit. The Defendant did not depose that he had made any improvements to the property while living with the Plaintiff which may have justified the imposition of a constructive trust. Warren CJ also considered it important that the Defendant did not depose to the fact that he had supported the Plaintiff while she saved money to purchase the property, or in any other indirect way provided her with the ability to purchase the property whilst they lived together. He did not depose in his affidavits to the fact that payment of migration costs, or rent upon arrival in Australia, was part of any joint endeavour to eventually purchase a family home. He concluded that he could see ‘… no way in which these matters could be related to any rights or an interest in a property which she purchased many months later, and in any event, after the substratum of the relationship giving rise to the gifts no longer existed’.[33]
[33] Ibid at [29].
Importantly, Warren CJ stated that:
The [first] defendant has not satisfactorily directed his arguments towards the assertion of a constructive trust in the property in the light of any principles known to equity. Leaving aside any question of evidence, he has failed to establish, even were his assertions accepted, that he has such an equitable interest. Therefore, I find that no part of the property is held by the plaintiff for the [first] defendant pursuant to such a trust, nor would the court be able to impose such a trust according to any accepted principles of equity and trust law.[34]
[34] Ibid at [31].
The fact that the deposit paid for the property was paid for by the Defendant was based on a unverified assertion in his affidavit, that it was paid out of joint funds. He was critical of this deposition:
In Eng Mee Yong, when discussing the much lower onus placed on a caveator when deciding applications of this nature under the ‘serious issue to be tried’ test, Lord Diplock said that a caveator’s ‘bare assertion in an affidavit that he was entitled to … [an] interest unsupported by any disclosure and verification upon oath of the facts upon which his claim was based’ would be insufficient to meet the first limb of that test.[35] In this case, while the [first] defendant has disclosed the basis of his claimed interest, he has not verified it even to the minimum standard required to resist an application under s 90(3). He has had adequate time and opportunity to gather evidence to do so.[36]
[35] Eng Mee Yong [1980] AC 331 at 337.
[36] Piroshenko v Grojsman & Ors [2010] 27 VR 489 at [35].
Although the finding was that the Defendant did not have an equitable interest in the property, Warren CJ continued to consider where the balance of convenience fell. Although it was unnecessary for him to determine the issue, he stated that it fell heavily in favour of the Plaintiff:
Put at its highest, the [first] defendant’s case is that he is entitled to a very modest equitable interest in the property. To protect this alleged interest, he has lodged an absolute caveat on the property more than three years after that interest supposedly accrued to him, and more than three years after the parties’ relationship ended. Even were his success at trial certain, such an interest could in no way support a caveat framed in such broad terms, or justify frustrating the contract of sale recently entered into by the plaintiff. The rationale for this is obvious. A caveat is in the nature of an interlocutory equitable remedy, and equity will only permit relief to lie to the extent necessary to protect the Applicant against the unconscionability involved. Insofar, as the caveat is dependant on the imposition of a constructive trust by the court, I note the court’s willingness to impose a lesser remedy in the nature of equitable compensation in cases where the creation of such a trust would prejudice a good faith purchaser of an interest in the disputed property.[37]
[37] Ibid at [39].
A Serious Question to be Tried
The determination of this matter rests on whether there is a finding that there is a serious question to be tried as to whether the Applicant has an equitable estate or interest in the property. By his submissions, the Applicant claimed that the equitable interest was a constructive trust. There was no claim of a resulting trust. In my view, that is the correct position. There is no evidence of any monies being contributed by the Applicant directly towards the purchase of the property.
The constructive trust is claimed upon the basis of the capital contribution made by the Applicant to ‘The Car Shed SA’ of over $250,000.00 on 19 December 2016, some of which were later transferred from ‘The Car Shed SA’ bank account to the Respondent’s bank account and applied towards the purchase of the property in May 2018. It was submitted that the Respondent’s Mother, Eva, was in a relationship or joint endeavour with the Applicant by way of the business and that as a result of that joint endeavour, monies contributed to the purchase of the property by Eva should be considered as contributions to the property by the Applicant.
In the Magistrates Court Claim attached to the Affidavit of Elizabeth Densley,[38] the Applicant pleads at paragraph 16 ‘that a series of matters were ‘agreed by conduct’ between the Applicant and Respondent at the time of the settlement of the property. These included that the partnership (being ‘The Car Shed SA’) would contribute to the purchase and acquisition of the property by applying funds in the business bank account to the deposit and purchase costs; the Respondent would obtain finance to complete the purchase of the property for the joint benefit of the Applicant, Eva and the Respondent; that the legal title of the property would be registered in the Respondent’s sole name to enable her to obtain finance; that the parties would be equitable joint tenants (but the Respondent would pay the mortgage on the property); the Respondent could not charge rent or board; the business would pay the rates and outgoings associated with the property; and that the Applicant and Eva would be entitled to live at the property.
[38] FDN 3.
The Applicant did not provide any evidence by affidavit or otherwise to support his claims that the matters in relation to the purchase of the property were agreed by conduct. He does not set out the specifics of any conversation with the Respondent; the dates of any conversation; or any detail of conduct that establishes agreement. The Applicant led no evidence that the business, ‘The Car Shed SA’, at any time paid for rates or other outgoings associated with the property between 31 May 2018 and 10 October 2019. There is no evidence that this occurred. Even if the Applicant does not have bank records, he could have provided detail of when payments were made, and approximately how much was spent. He did not.
The Applicant in his Affidavit does not set out any specific representations made by the Respondent in relation to him contributing to the purchase of the property, or the outgoings thereafter. There is simply an assertion that payments were made. The only detail of any conduct in relation to purchase of a property in the Applicant’s Affidavit was that at some time he made enquiries to the bank about obtaining a mortgage to purchase a property and he was told that they would only lend money to the Respondent if the property was in her sole name as she was the only one of the three who had employment. This enquiry alone is not sufficient to create an equitable trust. There is no evidence as to when those enquires were made, and no evidence connecting them to the mortgage for the property in dispute.
The Applicant did not provide any evidence of any conversation with the Respondent regarding her purchasing the property in her name; obtaining a bank loan in her name solely; the transfer of monies at various times into her account from the business account or the terms of any agreement in relation to any monies that were transferred. He did not depose to any conversations with Eva in relation to those matters. He did not set out any detail of any representation by the Respondent that she would be providing an interest in her property to him, nor are there circumstances set out by which I could infer such an agreement.
Contrary to the submissions put by his counsel, in relation to the reason for placing the proceeds of the sale of the Linden Park property into ‘The Car Shed SA’ account, the Applicant set out at paragraph 11 of his affidavit:
I deposited the money so that the business partnership had access to capital to purchase cars to on-sell to private buyers. I have no other documentary evidence of this capital contribution to the partnership because I do not have access to the bank accounts; all bank accounts were in Eva’s sole name.
This confirms paragraph 3 of the Magistrates Court claim where it is pleaded:
In or around December 2016 the Applicant made a capital contribution of $86,214.44 to the Partnership. These funds were subsequently used to acquire stock with the intention of making a profit for the partnership.
By these statements (which confuse the amount actually deposited in the business account), the Applicant has clearly deposed that his contribution from the sale of the Linden Park property in December 2016 went into the business account for operational purposes, particularly to buy stock for the business.
The Applicant was never in a relationship with the Respondent. She was the adult daughter of the woman he was in a relationship with. The Respondent lived with the Applicant and Eva in several properties from when she came to Australia from the Philippines in August 2016, until the Applicant was evicted from the property in 2019. This does not establish any close familial relationship. It could be no more than the Respondent wanting to live with her Mother.
There was a joint endeavour between the Applicant and Eva in the business of buying and selling used cars. This business was spectacularly unsuccessful and suffered significant losses until it was wound up in 2019. This cannot be, and was not, a joint endeavour with the Respondent. The Applicant provided no evidence that the Respondent worked in the business, received a wage from the business, or was in any way involved in the business. The Respondent’s own evidence was that from January 2017 she has been in full time employment elsewhere. The Respondent’s full-time employment is agreed by the Applicant in paragraph 4 of the Magistrate’s Court claim.[39]
[39] Exhibit ED-03 to the Affidavit of Elizabeth Densley (FDN 3).
The Applicant has not established that the deposit for the purchase of the property came from any contribution from him. In his own pleadings in the Magistrate’s Court Claim, at paragraph 5, he set out that the Respondent purchased the property for $420,000.00 in her sole name. He pleads that a deposit of $20,000.00 was paid, additional costs of $21,707.40 to settle were paid; and that a loan in the Respondent’s sole name was obtained from HSBC Bank Australia of about $400,000.00. The Applicant claims that the amounts of $20,000.00 and $21,707.40 were a capital investment in the property from the business bank account, being the account of ‘The Car Shed SA’. It is upon this basis he claims that sum of $41,707.40 as damages.[40] No evidence of those payments being made by ‘The Car Shed SA’ was provided by the Applicant. The Respondent’s bank records clearly show the $20,000.00 deposit being paid from her Maxi Saver account held with Bank SA on 18 April 2018.[41]
[40] Paragraph 6 of Exhibit ED-03 to the Affidavit of Elizabeth Densley (FDN 3).
[41] Exhibit MP5 to the Affidavit of the Respondent (FDN 9).
The Respondent deposed to the fact that from the time she moved with the Applicant and Eva to a rental property in January 2018 until October 2019, she paid for all of the Applicant’s living expenses including his health insurance, in addition to the rent and other expenses associated with renting that property. This is consistent with the Applicant’s evidence that he earned no wage while operating ‘The Car Shed SA’, and also with the significant losses set out in the financial statements of the business. There is no evidence that the Applicant provided any financial support to the Respondent while she saved monies to pay a deposit, or any other expenses for the purchase of the property.
The Applicant submitted that he had difficulty preparing his case as he has not had access to bank records due to there being an intervention order in place against him. However, his Affidavit is slim on detail, and does not attempt to set out dates and times when he spoke with the Respondent in relation to the purchase of the property and the monies coming from ‘The Car Shed SA’ account that may have contributed to that purchase. This is despite the Applicant having over eight weeks to prepare the affidavit material once the matter was listed for argument and over four months from when the Magistrate’s Court claim was filed. His claim is based solely on his contribution to ‘The Car Shed SA’. That contribution was made 18 months before the property was purchased, and there is no evidence at all that it was part of a joint endeavour between the Applicant and Respondent to purchase the property.
Conclusion and Orders
I find on the Applicant’s claim that he has constructive trust that gives him an equitable interest in the property, that he has failed to satisfy me that he has a prima facie case, which has sufficient probability of success to justify the caveat being maintained on the property.
Any cavaetable interest in a property must be an interest attached to the property with respect to which the caveat has been lodged. In this case, the Applicant’s financial contribution to a failed business (in which the Respondent was not involved and had no interest) 18 months before she purchased the property in her own name does not create any interest or right that is attached to the property. I do not accept that a financial contribution to an unrelated business can be later related to any rights, or an interest, in a property purchased many months later and where there is no personal relationship between the Applicant and Respondent. I cannot find that the Applicant contributed to the acquisition, maintenance, or renovation of the property in question. There is simply no evidence upon which I can do so. The Applicant has not established any equitable interest in the property.
Having found that the Respondent has failed in respect of the equitable trust he alleges that he holds in the property, it is unnecessary to consider the balance of convenience.[42]
[42] Magna Alloys & Research Pty Ltd v Coffery [1981] VR23 at [29].
I order that caveat number 13206987 be removed from the title of the property.
I will hear the parties regarding any consequential orders.