Purnell v Purnell

[2024] QDC 79

DISTRICT COURT OF QUEENSLAND

CITATION: 

Purnell v Purnell [2024] QDC 79

PARTIES: 

DAVID JOHN PURNELL
(Plaintiff)

v

DONNA GAYE PURNELL
(Defendant)

FILE NO:

5/21

DIVISION:

Civil

PROCEEDING:

Claim

ORIGINATING COURT: 

District Court

DELIVERED ON:

23 May 2024 (ex tempore)

DELIVERED AT:

Gympie

HEARING DATE: 

23 May 2024

JUDGE:

Porter KC DCJ

ORDERS:

THE COURT DECLARES THAT:

The defendant holds legal title to the property at Lot 78 on Registered Plan 157641, Title Reference 15748014 (the “Glenwood Property”) on constructive trust for the plaintiff and the defendant as tenants in common in equal shares;

THE COURT ORDERS THAT:

1.   The plaintiff pay the defendant $3500; and

2. Pursuant to section 114(3)(a) Land Title Act 1994, David John Purnell and Donna Gaye Purnell be recorded as registered proprietors of the Glendwood Property as tenants in common in equal shares.

CATCHWORDS:

EQUITY – TRUSTS – CONSTRUCTIVE TRUST – Where the plaintiff alleges he contributed purchase money to the acquisition of a property by the defendant – where the Property was bought pursuant to an understanding as to joint ownership and use – where the agreement as to ownership and use was vague and was frustrated by subsequent events – whether a resulting or constructive trust arose

COUNSEL:

Mr P Hanlon for the plaintiff

The defendant appeared in person

SOLICITORS:

L&S Lawyers for the plaintiff

The issues

1. The plaintiff, Mr Purnell, and the defendant, Ms Purnell, are brother and sister. On or about 25 June 2018, Ms Purnell settled on a contract to acquire a property at Lot 78 Pine Ridge Road at Glenwood (the Property). Glenwood is a township, about 40 kilometres North of Gympie. The purchase price was about $46,000. Even allowing for the passing of time, it was a modest purchase. However, it was common ground that since June 2018, the unimproved value of the land has increased to at least $170,000.

2. Although, Ms Purnell was the registered proprietor, her brother resided on the Property from time to time. In about February 2021, Ms Purnell informed her brother she had sold the Property, and he was given three days to vacate. Mr Purnell lodged a caveat and refused to vacate, and on 1 April 2021, Mr Purnell commenced these proceedings to make good the interest asserted in the caveat.

3. Mr Purnell’s caveat asserts an interest in the Property pursuant to an implied resulting or constructive trust. By these proceedings, Mr Purnell sought:

   (a)A declaration that he was entitled to remain living on the Property;

   (b)A declaration that he is the beneficiary of an implied, resulting or constructive trust as to a two-thirds interest in the Property; and

   (c)Consequential orders for him to be registered as proprietor of a two-thirds interest in the Glenwood Property as tenants in common with the defendant.

4. In submissions Mr Hanlon (who appeared for Mr Purnell) had abandoned the application for the first declaration. No such declaration could, or would, ever have been made.  Mr Hanlon also varied the terms of the trust sought, contending that the Court should find Ms Purnell held the Property on trust for her and her brother as tenants in common in equal shares. There was no discussion in submissions of the consequential order sought, but if I the trust is declared, consequential orders for registration of legal title consistent with the declared equitable interests should be made.

5. There are three principle matters of fact which are said to support the claim.

6. The first is that Mr Purnell alleges he reached an agreement with his sister at about the time of the purchase in terms that:

   (a)Each would pay $23,000 to the purchase price.

   (b)Ms Purnell would pay certain transaction costs by way of a repayment of a debt she owed him of $3,200.

   (c)Ms Purnell would be the purchaser under the contract of sale, but hold legal title beneficially for both of them, although, no proportions were specifically described in the pleading.

   (d)Rates would be paid equally.

   (e)Mr Purnell would occupy the Property and construct improvements.

7. Ms Purnell, in her pleading, alleged a different and inconsistent agreement. She alleged in her pleading, by way of defence, that she agreed her brother could live on the Property, paying rent of $100 a week and half the rates.

8. The agreement between the parties at the time of entry into the contract, if any, is the first major factual dispute on the pleadings.

9. The second major factual dispute is that Mr Purnell alleged he paid $23,000 in cash to his sister in accordance with the agreement he alleges by giving her that sum in cash for use for purchasing the Property, and that, in fact, she used those funds to settle the contract. Ms Purnell’s defence denies any such money was paid, although I note her case ultimately at trial was that $5,000 was paid.

10. Third, Mr Purnell alleged he built improvements on the Property at a cost of materials of about $50,000, plus substantial labour. The improvements, he alleged, include clearing, building a cabin, doing some fencing, planning gardens, building chicken and pigeon coops, and so on. He further alleges that Ms Purnell knew he was carrying out those improvements, but did not object, and thereby impliedly consented to the works. Ms Purnell does not admit the improvements. She denied she concurred in their construction. She said she did not know of the work. She said she did not visit the Property.

11. Mr Purnell relies on these three matters as sustaining a resulting or constructive trust in which he has a half interest in the Property in equity. There was also references to an estoppel and unjust enrichment, but they were not pressed. Again, I think correctly.

The witnesses

Mr Purnell

1. Mr Purnell presented as a sensible and forthright witness. The way a witness presents in the box does not necessarily mean that they are reliable. However, Mr Purnell’s evidence was also marked by frank and direct answers to questions, even when the answers did not suit his case. The starkest example was his evidence, given twice, that he commenced building despite Ms Purnell refusing to seek a building approval or development approval; that he just went ahead and built anyway because he was sick of living rough in a shed on the Property and did not want to keep living that way. I am not entirely sure he understood that that evidence fundamentally harmed his case on a claim in respect to the improvements, by demonstrating that he went ahead with his construction because he chose to, despite resistance from his sister, and despite the lack of a DA or a BA. Nonetheless, however, he gave the evidence frankly.

2. Further, on the core issue of the payment of the $23,000, there were substantial corroborating considerations to his evidence.

3. First, I did not think his story that he kept his savings in a paint tin in his parent’s garage was improbable, surprising though that might be to anyone who was not here at the trial. He presented as someone not strong on compliance of any sort, being an unqualified carpenter who happily built on the Property without any approvals. Whatever that might mean for conduct in respect of the Queensland Building Services Authority Act 1991 (Qld), it does tend to corroborate his somewhat unusual story about how he kept his savings. I did not ask myself questions about what the Commissioner might think about the savings.

4. Second, there is the evidence of his son, Dale, and Dale’s photograph of the money in a beanie which was, I accept, taken on the day that Mr Purnell says he met his sister and gave her the money. I saw no reason to doubt Dale’s evidence. And Mr Purnell’s evidence as to why he went to see his son on the way to deliver the money in Gympie sounded likely. I do not think it is odd that Dale decided to take a photograph of something so remarkable as a large amount of money in a beanie, in the circumstances where he thought it was a wise thing to do. It is an unusual thing to see at any time, even for Dale, who was probably used to his father’s predilection for cash.

5. Another aspect about the photograph is that there was not really any reference to it, it seems, by Mr Purnell. Dale said that he only provided it to his father a long time after he took it, and his father did not know about it. And the circumstances that emerged in evidence seemed generally to be consistent with that. There is, of course, the possibility that it was a fraudulent photograph, but I am just not persuaded of any such thing. If it was not an evidence-creation step, then it is an authentic photograph, and there is not much doubt the amount of money in there was substantial.

6. Third, while that alone might not have been enough to persuade me that the amount was $23,000, or that the money was given to Ms Purnell, there is the fact of the cash deposits by Ms Purnell to her bank account after Mr Purnell says he delivered the cash, which coincidentally, are almost identical in amount to the amount that Mr Purnell says he gave his sister.

7. Ms Purnell made the reasonable point that if she had received $23,000, why would it not have been put in all at once. However, both the plaintiff and the defendant seem to like keeping cash around. On any view, for example, Ms Purnell found $4,400 in cash to pay the deposit. While her submission was a reasonable point, I think the other considerations overwhelmingly support the objective conclusion that the cash deposits by her to the bank account represented the cash Mr Purnell gave Ms Purnell.

8. Fourth, I have a very significant difficulty with the credibility of Ms Purnell’s alternative version. As I have said, I will deal with that soon.

9. I therefore am satisfied on the balance of probabilities that Mr Purnell paid some $23,000 on account of the purchase in cash to his sister. Of course, that does not mean he will necessarily succeed in the whole of his claim.

Ms Purnell

1. Ms Purnell on the other hand, I say with respect to her, was an unpersuasive witness. I reached that conclusion even after making a very significant allowance for her self-represented status. I list the considerations which I found unpersuasive, not necessarily in order of seriousness.

2. First, she pleaded in her defence a verbal agreement with her brother to pay $100 per week in rent. She did not give that evidence. I was careful to give her two quite pointed opportunities to give evidence about that in her evidence in chief. She said in examination that she understood her brother was going to live on the Property, and in that context, I twice asked if there were any conditions agreed about that. There was not even a hint about this $100 per week. The instructions for that allegation in her defence could only have come from her.

3. Second, she presented a case at trial which was also not even hinted at in her defence. Her case now concedes that she and her brother intended to buy the Property together. That was the fundamental point put forward by her brother as to the agreement, and it was denied in the defence. She also advanced the case at trial that he did pay $5,000. Her pleaded case was to reject that he paid any sum. She said at trial that he still owed her $17,000. That case is diametrically opposed to the defence. I reject her evidence she told her solicitors about those matters. It is difficult to accept her evidence as to the agreement raised for the first time at trial in those circumstances.

4. Third, and in any event, I am unpersuaded that version is true. Notably, Ms Purnell produced two receipt books. One showing a receipt for $5,000 issued to her brother in June 2018. That was randomly included in a defunct receipt book that belonged to her partner. She also produced another receipt from another receipt book – number one, from that book – which was provided to the other side by informal disclosure, at least. She conceded in cross-examination that the receipt in that second book was produced only last year. Though, I do note to her credit, she did not propound it as an authentic document in her evidence-in-chief. What it does is record her version of the agreement given at trial that $5,000 was paid and $17,000 was owing. This reflected a willingness, at least at the time it was produced, to create evidence to support her case.

5. Fourth, I found her evidence about the source of the $23,000 cash paid into her account, post the date Mr Purnell said he paid the cash, to be improbable. She ascribed the four payments as being variously made by her children (cash $5,000), Mr Purnell (his $5,000 in June) and cash she kept at home from sale of plant and equipment from a coffee shop business she had closed in 2017. The plant was said to be a coffee machine and a cold room. There are a series of improbabilities about this. No receipts for those funds were produced nor did they exist according to Ms Purnell. That is despite one being a payment from an established business; and the other a substantial sum, around $8,250 for a cold room, where the buyer did not seek a receipt, but said he knew where she lived, or words to that effect. This is all fairly improbable. Then there is the idea that Ms Purnell had unencumbered and valuable plant leftover from the business, given her apparent modest financial circumstances now. Then there is the fact that the amount received for the two items seem to vary, and never came up to the amount required to make up the cash deposited, even without allowing for the $4,400 cash deposit.

6. It might be accepted that Ms Purnell had some plant and equipment leftover that was unencumbered, and she received some money for it, but I am not persuaded it was anything like the funds required to account for the deposits to her bank account after Mr Purnell says he gave her the cash.

7. Fifth, another problem in her evidence related to her evidence about the agreement she alleged, and the alleged recision of that agreement. In examination, she said the agreement was that Mr Purnell pay $5,000, and he owed her the balance of 17,000 to make up the total. She then says she rescinded that agreement as early as March 2019. However, there was no such suggestion of any such agreement or any such recision in her defence. Even if she was vague or incomplete in her instructions, there is the objective fact that there is no suggestion of any arrangement, or anything like that, in correspondence, nor a formal demand for possession, until early 2021. Notably, there was never a demand for the $17,000, nor reference to it.

8. Sixth, a further problem, to some degree at least, is the text she sent to her brother on 2 December 2020, when she suggests, inter alia, “you pay me out”. That phrase is not one which is consistent with a person who believes themselves to own the whole of the Property. “Pay me out” is language redolent of a suggestion to “pay out my interest”. Ms Purnell struck me as having a good facility with words. I find it hard to dismiss this language as merely infelicitous.

9. There was a debate or a dispute on the evidence about $3,200. I did not find, ultimately, that issue to be of much assistance either way. To the extent that it matters, it seems on balance that Ms Purnell’s version tends to be supported by the partial bank statement which she tendered. I do not think it necessarily impugns Mr Purnell’s evidence in this trial in a material way, even if he was mistaken about that.

Findings

1. I have already made a finding that Mr Purnell contributed some $23,000 to the purchase price in cash, as he alleges. I turn to the circumstances of the purchase of the Property.

2. First of all, I find the Property was purchased pursuant to an agreement between the siblings, but the terms of the agreement were vague. Clearly, both parties intended to buy the Property together and own it together in equal shares. That is Ms Purnell’s case now. They intended that they would share the rates – that is, outgoings - and they had some vague plan about buildings being built on the site. Neither party was very clear about what was intended, and frankly, I think this reflects the fact that neither party had any clear idea about what was going to happen. I certainly do not think they turned their mind to how amounts paid on building structures on the Property would be reflected in any change in beneficial ownership.

3. Next, and perhaps more important, the joint enterprise began to fail almost from the start. Hardly surprising considering how vague and ill-founded it was. It foundered from at least early 2019, when it was evident that Mr Purnell and Ms Purnell were at odds about construction on the site. I am not satisfied Ms Purnell knew nothing of plans to build. Building was part of the vague joint enterprise. I also accept Mr Purnell’s evidence that he approached Ms Purnell to obtain BA’s or DA’s for that purpose, and that she refused. At that point, in effect, the joint enterprise failed. It also failed because, for whatever reason, the understanding that expenses be jointly funded as to rates foundered in at least March 2019, when Mr Purnell decided that he would not make any more rates contributions because he could not get a receipt. It might also have foundered because any idea of one or both living on the site was inconsistent with council requirements for water, sewage and power before a person could live on the site. This was primarily Ms Purnell’s evidence, but that evidence sounds likely to be true, and exactly the kind of conditions a Council would require for someone to live permanently on an undeveloped piece of bushland.

4. That meant any idea of living on site without investing substantial funds - both for the obtaining of sewage, water and power utilities, and the costs of obtaining development approvals and building approvals - was untenable. Frankly, it is clear neither of the participants, Mr or Ms Purnell, had available funds for those purposes. Again, the vague joint enterprise was frustrated.

Analysis

1. In my view, then, by March 2019, the joint enterprise of buying a property, holding it together, and building structures of some kind on it had failed. In that context, a resulting trust might arise based on a purchase price resulting trust; or a constructive trust as a remedy for the failure of the joint enterprise might arise. To my mind, the better analysis is the latter.

2. Constructive trusts provide the Court with more flexibility in the form of remedial response that equity can make to the unconscientious assertion of legal title in the context of the failure of a joint undertaking.[1] There are a few matters to consider in that regard. The first is easily addressed because of Mr Hanlon’s – in my respectful view – correct concession that little value can be placed, in the remedial analysis of contributions, on the work done on the Property. I think he is right about that because the principal construction, shown on the photographs most recently taken, is the house. It is only partially (albeit substantially) complete and is unapproved. I am not willing to assume that it can be approved. If it is to be approved, it undoubtedly will require considerable expense because I think it is well known that getting approval for something that already has been built can be considerably more difficult than getting approval before construction. I think the days when seeking forgiveness, not permission, in respect of building work done without approvals are over (if it was ever the case).

   [1] Muschinski v Dodds 160 CLR 583.

3. There is also no evidence as to the effect on the value of the Property that the improvements and work have had. There is probably a reasonable basis to infer that the clearing works, creating a house pad, creating areas that can be used, some of the fencing, the gardens and so on, add some value to the land; but it is hard to put to a significant figure on that in the absence of evidence. And lurking in the background is the possibility that the unapproved nature of the principal structure might have a negative effect on the value of the land. In any event, it seems to me that the better course is to treat the improvements as a neutral factor.

1. There is another consideration. It is quite clear in decisions in the High Court on the nature of the constructive trust, that such trusts can be declared with considerable remedial flexibility. Australia does not have “institutional” constructive trusts, at least based on the law in the High Court as I understand it.[2] Rather, there is considerable flexibility in fashioning a remedy.

   [2] Muschinski v Dodds (1985) 160 CLR 583, 613–615 (Deane J); Giumelli v Giumelli (1999) 196 CLR 101, [10], [49]–[50]; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566, [42], John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1, [128]–[129]. And see the Full Court of the Federal Court in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, [509]–[510].

2. Another area where that flexibility needs to utilised is in respect of rates. There was admirable cooperation between the parties in agreeing that there is some $7,000 in rates paid or payable over the period of ownership of the Property. I accept Mr Purnell’s evidence that he made some small contributions, but it seems on balance, given the difficulty in being precise about this, that equality is equity. And in those circumstances, I intend to make an order that the plaintiff pay the defendant $3,500; that being an order necessary to ensure that the ultimate order which I intend to make is consistent with the equities of the case.

3. The concessions made by Mr Hanlon mean it is necessary for me to deal with the various other more improbable claims advanced by the plaintiff, and in those circumstances, the orders I make are:

   (a)I declare that the defendant holds legal title to the property at Lot 78 on Registered Plan 157641, Title Teference 15748014 (the “Glenwood Property”) on constructive trust for the plaintiff and the defendant as tenants in common in equal shares;

   (b)I order that the plaintiff pay the defendant $3500;

   (c)I order pursuant to section 114(3)(a) Land Title Act 1994 that David John Purnell and Donna Gaye Purnell be recorded as registered proprietors of the Glenwood Property as tenants in common in equal shares.

4. I briefly observe that the Court has incidental powers when it is seized of a matter to exercise the jurisdiction of the Supreme Court pursuant to section 69 of the District Court Act 1967 (Qld), and that in a case of this kind it has the powers conferred on the Supreme Court by section 114 of the Land Title Act1994 (Qld).