Raso & Raso

Case [2022] FedCFamC1F 336

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Raso & Raso [2022] FedCFamC1F 336

File number(s): PAC 5002 of 2019
Judgment of: HARTNETT J
Date of judgment: 25 May 2022
Catchwords: FAMILY LAW – PROPERTY – Equitable interests – Discrete issues – Where the paternal grandfather sought a section 78 declaration that the husband and the wife hold their real properties on constructive trust for the grandfather – Where the grandfather gave a large sum of money to the husband and wife –– Where the money applied to the purchase of real property in the relevant circumstances and as given to the wife is a gift – No constructive trust in relation to the wife’s property – Where the husband asserts the money given to him from the grandfather was a gift or subject to prior agreements – Where the money given to the husband and wife in respect of property registered in the husband’s name was for the purpose of a joint endeavour between the parties – Pooling of resources – End of joint relationship – Declaration made that the grandfather has a beneficial interest by way of constructive trust in the husband’s property – Husband and wife ordered to pay the grandfather a sum of respecting his interest in the property
Legislation:

Evidence Act 1995 (Cth) s 140

Family Law Act 1975 (Cth) ss 78, 79.

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 10.11(d)

Cases cited:

Bell & Nahos [2016] FamCAFC 244

Baumgartner v Baumgartner (1988) 164 CLR 137

Briginshaw & Briginshaw (1938) 60 CLR 336

Cantarella v Cantarella (1976) FLC 90-056

Charlmers & Pardoe [1963] 1 WLR 677

Cressy v Johnson [2009] VSC 52

Fox v Percy (2003) 214 CLR 118

Grefeld & Grefeld [2012] FamCAC 71

Leane v Dalborn [2020] VSC 461

Lloyd v Tedesco [2002] WASCA 63

Maineri & Anor v Cirillo [2014] VSCA 227

Marley & Ormonde [2021] FamCA 105

Muschinski v Dodds (1985) 160 CLR 683

Warner v Hung; Bellpac Pty Ltd (rec’s and mgrs. apptd) (in liq) (2011) 297 ALR 56

Whisprun Pty Ltd v Dixon (2003) 200 ALR 44
Division: Division 1 First Instance
Number of paragraphs: 137
Date of last submission/s: 21 February 2022
Date of hearing: 20–21 December 2021
Place: Melbourne
Counsel for the Applicant: Mr Breeze
Solicitor for the Applicant:  Prime Lawyers
Counsel for the First Respondent: Mr Levet
Solicitor for the First Respondent: AAT Legal
Counsel for the Second Respondent: Mr Harris
Solicitor for the Second Respondent: Legal Aid NSW Sydney Central Family Law

ORDERS

PAC 5002 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR RASO
Applicant

AND:

MS RASO
First Respondent

MR B RASO
Second Respondent

ORDER MADE BY:

HARTNETT J

DATE OF ORDER:

25 MAY 2022

IT IS DECLARED THAT:

A.The husband holds the title in C Street, Suburb D NSW being the whole of the land comprised in title reference … (“the Suburb D property”) on constructive trust for the grandfather to the…

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AGLC
Raso & Raso [2022] FedCFamC1F 336
Case
[2022] FedCFamC1F 336
Decision Date

CaseChat Overview and Summary

In the case of Raso & Raso, the parties involved were the grandfather, husband, and wife. The dispute centred around the ownership of two properties in New South Wales, one at Suburb J and the other at Suburb M, with the husband and wife claiming sole beneficial ownership while the grandfather argued for a constructive trust in his favour. The matter was heard in the Family Court of Australia.

The central legal issues were whether there was an agreement or arrangement between the grandfather and the husband regarding the construction of a granny flat at the Suburb J property, and if so, what the terms of that agreement were. Additionally, the court needed to determine whether the grandfather's financial contributions to the husband and wife were intended as a gift or as a part of a joint endeavour, and if it would be unconscionable for the husband and wife to retain some part of those funds.

The court found that while the husband claimed to have spent approximately $196,000 on the construction of the granny flat, there was no documentary evidence to support this assertion. The grandfather denied any agreement for reimbursement and stated he had only consented to the construction on the condition that the husband obtained proper approvals. The court inferred from the absence of documentary evidence that it would not have assisted the husband’s case. Regarding the financial contributions, the court concluded that the grandfather's advance of $786,690.49 to the husband and wife was intended as a contribution to a joint endeavour, with some portion also being a gift. The court held that it would be unconscionable for the husband and wife to retain part of these funds, and thus a constructive trust was found in favour of the grandfather.

The court ordered that the husband and wife were to account for and return certain sums to the grandfather. Specifically, the husband and wife were directed to repay $686,690.49, less $100,000 that had already been returned to the grandfather, and to account for any benefit derived from the remaining $586,690.49. This amount included funds that formed part of the joint endeavour and those that were gifts.

Orders

Orders of the court

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Background

Background to the litigation

Statements of fact in these reasons are findings of fact on the balance of probabilities.[2] It is not necessary in these reasons for judgment to comment upon the entirety of the evidence including the evidence of each witness, nor to comment on every exhibit tendered. However every piece of evidence relied upon by the parties has been read and carefully considered by me.[3] [2] Evidence Act 1995 (Cth) s 140[3] Bell & Nahos [2016] FamCAFC 244, [28]; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447, [62].RELEVANT BACKGROUND The grandfather was born in 1925 in Country G. He migrated to Australia in 1956. At trial he was aged 96 years. The husband was born in 1982. At trial he was aged 39 years. The wife was born in 1974. At trial she was aged 47 years. Sometime prior to 2002, the husband commenced living with the grandfather and the grandfather’s wife (the husband’s grandmother) at their home situated at H Street, Suburb J in the State of New South Wales (the “Suburb J property”). This property was owned jointly by the grandfather and his son Mr K who is the husband’s father. Mr K was about 12 years old when the Suburb J property was purchased in 1961. He made no contribution to the purchase of this property and lived in it only as a member of his household. Mr K ultimately left the Suburb J property and resides in Sydney. In or around 2002, and with the consent of the grandfather, the husband commenced to construct a granny flat (the “Suburb J flat”) at the rear of the Suburb J property. The husband paid the costs of this construction. Upon its completion, the husband took up residence in the Suburb J flat. In February 2008, the husband and wife commenced their cohabitation in the Suburb J flat. The wife at that time provided the husband with a sum of $10,000 (monies from a redundancy payment as received by her) which he applied to the building of an extra room on the granny flat. The husband and wife lived in the Suburb J flat until 2010, when the husband and wife moved to a property situated at L Street, Suburb M in the State of New South Wales (“the Suburb M property”). The wife, at the time, was pregnant with the husband and wife’s first child. The Suburb M property had been owned by the husband’s mother who sold it to the husband in 2007 or 2006 for $400,000. She secured the debt owed by the husband to her in respect of the purchase, by way of the lodgement of a mortgage in her favour over the property. From the time of his purchase of this property, until 2010, when the husband and wife took up occupation of the property, the husband received rental income receipts in respect of his ownership of the property. No payment of rent or utilities was made by either the husband, or the husband and wife to the grandfather during their occupation of the Suburb J flat and none was sought by the grandfather or the grandmother. Between 2010 and 2012, the Suburb J flat was occupied by Mr N; the grandfather’s grandson and the husband’s brother. The same arrangement as to the non-payment of rental applied to this grandson.

Evidence

Evidence Before The Court

The grandfather carries the onus of satisfying the Court as to why it would be unconscionable for the husband and wife to enjoy sole beneficial ownership of each of the separate real properties of which they are the sole legal owner. THE EVIDENCE The Suburb J Property The Suburb J flat The husband’s evidence was that he built the Suburb J flat pursuant to an oral agreement between the husband and the grandfather that it be built by the husband, and that the costs in relation to that construction, together with any increase in value to the property occasioned by the existence of the granny flat, would be reimbursed to the husband when the grandfather sold the Suburb J property. The grandfather denied such an agreement was made, and asserted that he consented to the husband building the granny flat, at the husband’s cost, and on the condition that “he did all the work properly and got the proper approvals from the council”.[12] [12] The grandfather’s affidavit filed 20 November 2020, at [20]. The husband claimed he spent approximately $196,000 to construct the granny flat as follows: (1)$5,000 on plans and owner builder licence;(2)$7,500 on Council fees;(3)$12,500 on encasement of common sewer line beneath the Suburb J flat;(4)$5,000 on soil and rubbish removal;(5)$17,500 on earthworks, steel and concrete; (6)$25,000 on electrical and plumbing;(7)$42,500 on timber, tiles, insulation, roof and ceiling;(8)$10,000 on solar panels; (9)$12,500 on kitchen; (10)$10,000 on bathroom; (11)$12,500 on windows, doors and blinds;(12)$10,000 on other incidental expenses; and (13)$26,000 for the husband’s labour.Total: $196,000. The grandfather claimed that the husband spent approximately $100,000. It was also the wife’s evidence that the husband had told her that he had spent $100,000 on the Suburb J flat.[13] [13] Transcript dated 21 December 2021, p. 103 line 18-21. There is no corroborative evidence before the Court as to the husband’s claimed expenditure including any invoices, receipts, bank transfers or other relevant documents in relation to these expenses. It is logical to expect there would be so, if an agreement existed between the husband and the grandfather that the grandfather would reimburse to the husband, many years later perhaps, the quantum spent by the husband on the costs. The husband asserted that he funded the costs of the construction of the granny flat using $55,000 he had in savings; his weekly income; and borrowed funds from his mother and maternal grandmother Ms S, borrowings he subsequently repaid. There was no documentary or other evidence before the Court as to any savings of the husband at that time, though I accept the husband had some savings. Otherwise, I note the matters referred to in the following paragraph in this regard. Further there was no documentation or other evidence before the Court as to the loans claimed by the husband to have been advanced to him, nor any repayment of any such alleged loans. There was no evidence before the Court from the husband’s mother or maternal grandmother.[14] I infer from the absence of such documentation and/or affidavit evidence that it would not have assisted the husband’s case. [14] I infer that such evidence would not have assisted the husband.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The wife has been solely responsible for repaying the mortgage on the Suburb F property. From late 2018, it was the wife’s evidence that she was also repaying the Suburb D mortgage in addition to paying household bills and for the grandfather’s carer visits as discussed in [66] above. It is agreed by the grandfather and the wife that the grandfather gave the wife $25,000 to be put towards the mortgage on the unit in mid-2018. This was a gift to the wife which was not predicated on any arrangement between the parties nor provided on condition of the husband’s ongoing living arrangements at the Suburb D property. It was monies gifted in the same manner that the grandfather had gifted earlier monies to the wife for the payment of various bills whilst the parties lived in the Suburb J property as otherwise described in these reasons. CONSIDERATION The question as whether there is a constructive trust in favour of the grandfather in the entirety of the circumstances of this case, does not require the establishing of an agreement to that effect between the parties. In Grefeld & Grefeld [2012] FamCAFC 71 the Full Court held at [97] that the court’s inquiry is “not as to the actual or presumed intention of the parties, but whether, according to the principles of equity, it would be unconscionable to allow a legal owner of property to enjoy sole beneficial ownership of that property”. It is clear on the evidence that the grandfather advanced some sums to the parties pursuant to an arrangement where, in return, he would be provided with accommodation in the granny flat on the Suburb D property for so long as he needed to reside in that property. The joint endeavour ended with the grandfather being required to leave the property at that behest of the husband and wife, and in these circumstances and on the basis of the evidence before me, I am satisfied it would be unconscionable to permit the husband and wife to retain some part of those monies so advanced. I find that the sum advanced by the grandfather of $786,690.49 to the husband and wife, encompassed not only the joint endeavour, on the condition that the grandfather would be able to live in the granny flat with no end date and no expectation that he would be required to leave that accommodation, but also other funds as provided by the grandfather independent of the joint endeavour. When the grandfather sought and obtained a return of $100,000 of that advance of funds, those monies acquired a different characterisation. They were monies being returned to the grandfather as earlier foreshadowed by him in his handing over of the $690,340.49. That is, the grandfather had said to the husband that if he needed funds he was to be provided with them. The remaining monies advanced by the grandfather of $686,690.49 (after the deduction of the $100,000) remained in part a contribution to the joint endeavour and pooling of resources. From that sum, I find the sum of $50,000 also did not form part of the joint endeavour but was clearly, on the evidence of the wife, which I accept, a gift to the husband in the same way the grandfather gifted monies to the husband’s brother, for the husband’s care of his grandmother.