Phillips and R E Phillips Nominees P/L v Ten Voorde No. Scciv-03-1468

[2004] SASC 17

PHILLIPS and R E PHILLIPS NOMINEES PTY LTD
v
TEN VOORDE
[2004] SASC 17

Appeal from a Master

1. ANDERSON J.                   This is an appeal from a decision of a Master of the Supreme Court in which it was ordered that the time for removal of three caveats be extended until further order.

2. The substantive claim in this matter is brought in the District Court in which Marion Ten Voorde claims against Robert Phillips and R E Phillips Nominees Pty Ltd (“the appellants”) a declaration that the two individuals were parties in a de facto relationship within the meaning of the De Facto Relationships Act 1996 (“the Act”) from April 1992 until March 2003.

3. There is a further claim for an order for division of property pursuant to s 10 of the Act and a claim that the appellants pay to the respondent the sum of $1,000,000.

4. There is a specific claim for declarations in respect of different properties.  The basis of the claim is that Robert Phillips (“the appellant”) holds each of them upon trust for the respondent to the extent of a one‑quarter share.

5. The appellant admits some of the allegations which are made in the Statement of Claim but does not admit that there was a de facto relationship within the meaning of the Act.  There are obviously many factual matters in dispute which are not relevant to this appeal.  It is clear that both parties enjoyed a relationship over the years which has involved them living together at different times and sharing for some time the same residence.  They have had a sexual relationship during the period from April 1992 until March 2003, the full details of which are irrelevant to this consideration.

6. Amongst other allegations the respondent alleges that she kept house for the appellant and ran the household with money provided by him.

7. In relation to the various properties in dispute it is asserted by the respondent that she has assisted the appellant with the redecoration and renovation of these properties.  She says that she accompanied him on overseas trips at his request.  They have also been involved in the selection of properties for purchase by him and she has assisted him in the setting up of a car‑wash business on Glen Osmond Road, Glen Osmond.

8. She also asserts that the appellant has asked her to marry him on occasions.  There are no children of the relationship.  The relationship ended on 20 March 2003.

9. In essence, the respondent relies upon her joint endeavours with the appellant and says that she has substantially contributed time and effort and some money in relation to these properties.  Some, but not all, of the money has been repaid.

10. When the claim for the extension of the caveats came before the Master, in his reasons he found that the respondent had an arguable case as to the making of an order in her favour in relation to a constructive trust.  The Master concluded that there was therefore a serious issue to be tried and decided that the balance of convenience lay in favour of the respondent.

11. This appeal raises several questions including the form in which the caveat has been lodged. Under s 191 of the Real Property Act 1886 and in particular placitum 1 a caveat is required to be “in the appropriate form”. This in turn is defined in s 3 of the Act to mean “a form approved by the Registrar-General”. In Caravan & General Finance Pty Ltd v Clearview Developments Pty Ltd (1976) 15 SASR 404 at 406 Zelling J adopted the proposition of Ward J in Investment & Merchant Finance Corporation Ltd v Kirkwood Estates Ltd (1975) 5 ALR 191 at 195 that:

    “While the use of the form itself is not mandatory, in my view it is necessary to specify clearly and with sufficient particularity the nature of the interest and the grounds upon which the claim to the interest is based.”

12. The caveats in this matter are expressed in the following way with the caveator claiming “to be beneficially entitled to an estate or interest in fee simple in some (at present) indefinable share or shares having made financial and non‑financial contributions to the renovation, maintenance, and improvement of the said land.”

13. It is this description which the appellant complains about.  It is said in answer by the respondent that it is a sufficient description because of necessity the interest must be described in those general terms, given that the caveatable interest is said to derive from a constructive trust the full details of which have to be unravelled by evidence.  It is said that it is therefore impossible to be any more precise in such a case.  I agree with that submission and find that in the circumstances the caveats were lodged in an appropriate form and did specify, insofar as they could, sufficient particularity.

14. The claim for a constructive trust derives from the High Court’s decision in Baumgartner v Baumgartner (1987) 164 CLR 137. Other cases which deal with this principle are Taddeo v Taddeo & Catalano (1977) 19 SASR 347, Morling v Morling (1992) 16 Fam LR 161 at 163-164, Parij v Parij (1997) 72 SASR 153 and Lloyd v Tedesco (2002) 25 WAR 360.

15. The appellants have submitted that, from the cases, there is an element of what they call “sufficiency” in the consideration of whether a caveatable interest exists.  They refer to Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198: Cox J at page 199 speaks of “a sufficient interest” and at page 201 “some reasonable basis for the existence of the caveat.” Similarly in Galvasteel Pty Ltd v Monterey Building Pty Ltd (1974) 10 SASR 176 Walters J spoke of a “sufficient equitable right.”

16. Clearly there is an element of “sufficiency” involved and each case will be decided on its own facts. The relief by virtue of s 191 placitum 7 of the Real Property Act is of course discretionary.

17. The respondent also relies upon the principle stated by Debelle J in Parij v Parij both in relation to the general considerations of a constructive trust and at page 163 ‑ 164 as to the importance of non‑financial contributions made by one party of the relationship.

18. Debelle J, at page 163, reviewed the decisions in Muschinski v Dodds (1985) 160 CLR 583 and in Baumgartner and said:

    “These decisions establish in unambiguous terms that, when determining whether it is unconscionable for one party to a de facto relationship to retain the sole beneficial ownership of property acquired in the course of the relationship, regard will be had to the manner in which the parties have conducted their relationship and the contributions each have made.  When assessing their respective contributions, regard will be had to non‑financial contributions as well as to financial contributions.  The latter proposition is clear from the references to the ‘practical equation between direct contributions in money or labour and indirect contributions in other forms such as support, homemaking and family care’ in Muschinski v Dodds at 622 and in the references to ‘contributions either financially or in kind’ in Baumgartner at 150.”

19. In my view in this matter there is a serious issue as to the nature and extent of the non‑financial contributions of the respondent and whether those non‑financial contributions were for the joint benefit of both the appellant and the respondent.

20. In the end the Judge in the District Court proceedings will have to evaluate all the evidence to see if there was a common intention that both parties contributed to a joint endeavour.  That is not an appropriate enquiry at this stage.

21. Given the comments in the decisions referred to above it must be said that the respondent has an arguable case and that there is a serious question to be tried.  The serious question is whether the contributions both financial and non-financial can ultimately lead to a finding that the appellants hold certain properties by way of a constructive trust for the respondent.

22. In relation to the balance of convenience it is said by the appellants that they are being restricted unfairly in their current commercial activities by virtue of the caveats.  They operate a business or businesses which require them to maintain a close liaison with the bank.  They have had a close working relationship with the bank over many years and say that they need to be flexible and have the ability to be able to borrow large amounts at short notice.

23. Any potential restriction on the business however has been reduced to some considerable extent by the fact that the respondent, at the request of the appellant, entered into a deed of priority in favour of the bank in the sum of $1.6m.  The appellant has deposed to difficulties by being limited to that figure but I am not convinced on the whole of that evidence that he cannot run his business effectively in a commercial manner, albeit with the bank obviously more cautious in view of its knowledge of the caveats.  There is not sufficient evidence before me to show that $1.6m is not sufficient at the present time to enable him to conduct his normal business operations in a commercial manner.

24. I was also asked by the appellants to take account of the strength of the case for a constructive trust in deciding the balance of convenience.  It was submitted that it was not a strong case.  I cannot really judge on this but it is certainly more than a marginal case on what I have seen, and arguable as I have previously said.

25. It was also contended that it was significant in considering the balance of convenience that the respondent had not sought to avail herself of the provisions of s 14(2) of the Act.  One of the submissions made by the appellant is that there has been no evidence brought forward by the respondent to suggest that there is any danger of him dissipating assets or leaving the jurisdiction.  That being so it seems difficult to envisage how the Court could grant an injunction pursuant to s 14(2) of the Act to restrain the appellant from entering into a transaction.  There is simply no evidence of any such transaction or transactions which might defeat any order or anticipated order for the division of property pursuant to the Act.  I do not believe that this factor should be taken into account in deciding the balance of convenience.

26. In my view therefore the balance of convenience lies in favour of the respondent.  She will lose her security if the caveats are removed.  She has also cooperated and facilitated the appellants’ commercial operations by satisfying requests made by the appellant in relation to the deed of priority.

27. In all the circumstances therefore the appeal from the Master is dismissed.