Ross v Ross

[2010] NSWCA 301

New South Wales

Court of Appeal

CITATION:	Ross v Ross [2010] NSWCA 301
HEARING DATE(S):	23 August 2010
JUDGMENT DATE:	12 November 2010
JUDGMENT OF:	Campbell JA at 1; Macfarlan JA at 2; Sackville AJA at 61
DECISION:	(1) Appeal allowed; (2) Set aside the orders made by Ward J on 31 August 2009; (3) Order the respondent to pay the appellant’s costs of the appeal; (4) Direct the parties to attempt to reach agreement as to the appropriate form of orders to give effect to this judgment, including an order as to the costs at first instance; (5) If the parties are able to reach such agreement, direct that a signed form of consent order be lodged with the Court within 14 days of the date of this judgment; and (6) If the parties cannot reach such agreement, direct: (a) the appellant within 14 days of the date of this judgment to file and serve the form of orders proposed by her together with brief written submissions in support, including as to the appropriate order concerning costs at first instance; (b) within 14 days’ thereafter, the respondent to file and serve his proposed form of orders and written submissions in support; (c) within a further 7 days, the appellant to file and serve any response; and (d) the resolution of any issue as to the form of orders to be made is to be determined by the Court upon the basis of the parties’ written submissions without any further oral hearing.
CATCHWORDS:	FAMILY LAW - de facto relationships - adjustment of property interests - s 41(c) Property (Relationships) Act 1984 - Court's discretion to vary or set aside orders made under s 20 - relevance of various factors to exercise of Court's discretion - REAL PROPERTY - s 66G Conveyancing Act 1919 - scope of discretion to refuse order appointing trustees for sale - whether Court has discretion under s 66G to alter the co-owners' property and other legal or equitable rights
LEGISLATION CITED:	Conveyancing Act 1919 Limitation Act 1969 Property (Relationships) Act 1984
CATEGORY:	Principal judgment
CASES CITED:	Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839; (2008) 14 BPR 149 Callow v Rupchev [2009] NSWCA 148 Forgeard v Shanahan (1994) 35 NSWLR 206 Hogan v Baseden (1997) 8 BPR 15,723 In the Marriage of Simpson and Hamlin (1984) 9 Fam LR 1040 Re Fettel (1952) 52 SR (NSW) 221 Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068 Stephens v Debney (1960) SR (NSW) 468 Williams v Legg (1993) 29 NSWLR 687 Williams v Williams [1979] 1 NSWLR 376
TEXTS CITED:	Professor Butt, Land Law, 6th ed (2010) Lawbook Co R Meagher, D Heydon and M Leeming, Meagher Gummow and Lehane’s Equity: Doctrines and Remedies, 4th ed (2002) Butterworths LexisNexis Australia
PARTIES:	Susan Elizabeth Ross (Appellant) Peter John Ross (Respondent)
FILE NUMBER(S):	CA 2009/298309
COUNSEL:	C M Simpson SC/M Fraser (Appellant) P Smart (Respondent)
SOLICITORS:	Rosen Lawyers (Appellant) Richard Hughes & Co (Respondent)

LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 1441/1990
LOWER COURT JUDICIAL OFFICER:	Ward J
LOWER COURT DATE OF DECISION:	29 May 2009

CA 2009/298309

CAMPBELL JA
MACFARLAN JA
SACKVILLE AJA

12 NOVEMBER 2010

ROSS v ROSS

Judgment

1 CAMPBELL JA: I agree with Macfarlan JA.

:

Nature of case and conclusions

3 From 1975-1977 until 1988 the parties to these proceedings lived together in a de facto relationship. During the subsistence of the relationship they purchased a property at Uki, New South Wales. After their separation the respondent, Peter Ross, remained in occupation of the property and assumed the main responsibility for the care of the parties’ children, being Kristin, born in 1979, and Geordie, born in 1980.

4 On 30 November 1992 Windeyer J made an order under s 20 of the De Facto Relationships Act 1984 (now named the Property (Relationships) Act 1984) (“the Act”) adjusting the interests of the parties in the property and providing for its sale in a certain eventuality. The orders were not complied with, with the result that the respondent still remains in occupation of the property.

5 In 2007 the parties filed Notices of Motion in the proceedings in which the 1992 orders were made. In their subsequently amended forms the appellant, Susan Ross, sought an order under s 66G Conveyancing Act 1919 to give effect to the 1992 orders and the respondent sought an order under s 41(c) of the Act varying the 1992 orders. After a hearing on 29 May 2009 Ward J determined these applications in an ex tempore judgment delivered on that date. The revised form of judgment bears an incorrect date of 29 March 2009. The judge made formal orders on 31 August 2009. She made an order under s 66G but did not make an order under s 41(c).

6 The effect of the order that her Honour made under s 66G was to adjust the parties’ interests in the property by depriving the appellant of her 40 per cent interest, save to the extent of an amount of about $20,000 owed by her to the Legal Aid Commission. For the reasons that appear below, s 66G did not authorise the making of this order, nor in the circumstances of this case, would it have been appropriate for her Honour to make an order under s 41(c) of the Act having a like effect.

The 1992 decision of Windeyer J

7 Windeyer J found that under the general law the parties were entitled to the property in equal shares as they had contributed equally to the purchase price. His Honour found that the respondent was however entitled to an order under s 20 of the Act adjusting his interest so as to increase it to 60 per cent. In reaching this conclusion his Honour had particular regard to funds which the respondent had provided to enable the purchase of an earlier property which the parties purchased with another person. The judge took the view that mortgage contributions and improvements to the Uki property that the respondent had made since the parties separated were balanced out by other factors.

8 The judge made an order that the respondent pay to the appellant the sum of $45,800 within three months, in return for the appellant transferring her interest in the property to the respondent. The sum of $45,800 represented 40 per cent of $114,500 which the evidence indicated was the then net value of the property. The respondent was ordered to pay all mortgage instalments for a period of three months. Thereafter the appellant was to bear the burden of 40 per cent of such payments.

9 Order 5 of his Honour’s orders provided that if the payment of $45,800 and the transfer of the appellant’s interest did not occur within three months the parties should take steps to sell the property by private treaty within a further period of three months, and if the property was not the subject of a contract for sale by then, take steps to have the property listed for sale by auction (see Orders 6 – 11).

10 The payment and transfer did not occur and the parties did not take steps to sell the property within the period stipulated.

The judgment of Ward J at first instance

11 Her Honour noted the following factual circumstances that had occurred since the decision of Windeyer J.

12 In 1993 the Legal Aid Commission notified the appellant that she was obliged to pay it the sum of about $17,000. This related to the appellant’s legal aid expenses for the hearing before Windeyer J. The Legal Aid Commission lodged a caveat on the title to the Uki property to support its claim.

13 In 1994 the respondent applied to the Family Court for an order that the appellant pay lump sum maintenance to him. In his judgment, Underhill J of that Court expressed sympathy for the position of the respondent who he said had “cared for the children, met their needs financial and otherwise, without any assistance, certainly without financial assistance from the [appellant]”. His Honour however adjourned the proceedings “until the needs of the children are put before the court in written evidence and until the property has been sold, [the appellant’s] debts met, and the court is in a position to assess what is the value of her assets”. Ward J recorded that this course was taken “on the basis of an undertaking proffered on behalf of [the appellant] that she would not dispose [of] or deal with the net proceeds of sale of the property (after deductions provided for in order [9(j) of Windeyer J’s] orders except for payment of legal costs to the Commission and legal costs of the application before him)” (Judgment [8]). No further steps have been taken in the Family Court in relation to the maintenance claim. There has been no express release of the appellant from her undertaking.

14 In 1994, after the Family Court proceedings, the respondent offered to pay to the appellant the sum of $45,800 (less arrears due to the respondent for contributions to mortgage repayments) in return for a transfer of the appellant’s interest in the property. The appellant rejected the offer.

15 With the concurrence of both parties the property was listed for sale in late 1994. However it failed to sell. Her Honour said that the evidence suggested that the property “had been listed at an over-value given the market at that time” (Judgment [13]).

16 In August 1994 the respondent sought to pay to the appellant the sum of $45,800 (again less the appellant’s unpaid contributions to mortgage repayments) but was informed by a solicitor who was then, or had recently been, acting for the appellant that the appellant “did not want to settle the matter, as the [the appellant] was not going to receive any money after payment of legal aid expenses and any award that might [be] made for lump sum maintenance” (Judgment [14]).

17 Having recounted these matters, her Honour then said the following:

“15 … The [respondent] has given evidence of the maintenance and improvement of the property and the building up of a dairy goat stud on the property over the period of time since [March 1994]. The [respondent], and I do not believe there is any challenge to this evidence, has paid out the mortgage repayments over that period, at interest rates which varied from between 10 to 18 per cent over the period. The [respondent] has paid rates, taxes and levies in respect of the property and monies in relation to sewerage works over the property. For most of the period the [respondent] has been the primary carer of the children and the evidence is that the [appellant] has not paid the [respondent] any maintenance in relation to the care of the children” (Judgment [15]).

18 The judge then observed that, according to evidence upon which the appellant relied, the present value of the land “together with possibly some of the improvements” was $450,000.

The respondent’s application under s 41(c) of the Act

19 Section 41(c) of the Act is relevantly in the following terms:

“41 Variation and setting aside of orders

Where, on the application of a person in respect of whom an order referred to in section 20 or 27 has been made, a court is satisfied that:

…

(c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order,

the court may, in its discretion, vary the order or set the order aside and, if it thinks fit, make another order in accordance with this Part in substitution for the order so set aside”.

20 The primary judge noted that the appellant argued that s 17 of the Limitation Act 1969 precluded the respondent’s application under s 41(c) because that application constituted “an action on a cause of action on a judgment” brought more than 12 years after the judgment first became enforceable. Her Honour did not reach a final decision on the point and the appellant did not put the argument on appeal. It is therefore unnecessary to consider it.

21 The judge took the view that there had been default in the carrying out of the orders of Windeyer J such as to satisfy the precondition expressed in s 41(c).

22 For the following reasons her Honour then concluded “that it would not be just and equitable” for the purposes of s 41(c) to permit the appellant “now to enforce the orders made in 1992 by Windeyer J without taking into account the circumstances over the past 20 plus years” (Judgment [45]):

(a) The respondent had in this period been the primary carer of the children (Judgment [39]). (This was a particularly onerous responsibility because Geordie had suffered a serious accident.);

(b) The respondent had since 1992 improved the property, although her Honour said that “on the valuer’s evidence it is still only regarded as being of fairly average habitable condition” (Judgment [41]);

(c) The respondent paid the whole of the mortgage payments over this period notwithstanding that the orders of Windeyer J required the appellant to bear 40 per cent of the burden (Judgment [42]);

(d) In 1994 the appellant refused to accept the sum of $45,800 less her share of the mortgage repayments (Judgment [43]); and

(e) Her Honour took the view that in the circumstances as she found them to be it was “inequitable for the [appellant] to be seeking anywhere near the sum of $190,000” (this figure should have been $180,000) which represented 40 per cent of the current value of the property:

“particularly when there is no evidence of any ability of the [respondent] to satisfy such a claim otherwise than by the sale of the property and where the making of such an order is likely therefore to force the [respondent] to be in a position when he is required to, at the age of 56 and having built the dairy goat stud up significantly over a number of years, and in circumstances where it is his intention to leave this for the benefit of his and the [appellant’s] children, now to leave the property” (Judgment [43]).

23 Without deciding whether an order should in fact be made under s 41(c) of the Act, the judge then turned to consider the s 66G Conveyancing Act application made by the appellant. Her Honour appears to have been deterred from making an order under s 41(c) by her view (based upon the decision in In the Marriage of Simpson and Hamlin (1984) 9 Fam LR 1040) that she might, before making the order, have needed to give de novo consideration to adjustment of the parties’ property entitlements (that is, to revisit the matters considered by Windeyer J). I indicate in passing that I do not consider that such reconsideration need necessarily occur. Indeed it would be an exceptional case, of which the present is not an example, in which that would be necessary. Particularly is that so where, as here, neither party suggested that it should occur.

The appellant’s s 66G application

24 Subsections (1) and (6) of s 66G of the Conveyancing Act are in the following terms:

“66G Statutory trusts for sale or partition of property held in co-ownership

(1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
…
(6) In relation to the sale or partition of property held in co-ownership, the court may alter such statutory trusts, and the trust so altered shall be deemed to be the statutory trust in relation to that property”.

25 The “statutory trust for sale” is defined by s 66F(2)(a) in the following terms:

“Property held upon the ‘statutory trust for sale’ shall be held upon trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses, and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners”.

26 The judge found that, assuming that s 17 of the Limitation Act did not prevent the appellant from enforcing the 1992 orders (as to which see [20] above), the appellant was nevertheless prevented from doing so by her “laches, acquiescence or delay” in enforcing the orders and that that would be an appropriate basis for refusing the appellant an order under s 66G of the Conveyancing Act (Judgment [54]).

27 Her Honour expressed her reasons for this view as follows:

“49 The [respondent] maintains his defence to the s 66G application largely on the basis of acquiescence and laches. Acquiescence, in that it is said that I should infer that the [appellant] who was in contact with her sons over the period, was on notice of the fact that improvements were being effected to the property. That may or may not be the case, but nevertheless it does seem to me that this is a case where there has been significant delay on the part of the [appellant] in enforcing her rights in circumstances where the [appellant] was aware that the [respondent] and her children remained on the property. Reliance is placed by the [respondent] on Fitzgerald v Masters (1956) 95 CLR 420 and on Archbold v Scully (1861) 9 HL Cas 360; 11 ER 769 as to the unfairness of the [respondent] being held in suspense over that period of time and being allowed to proceed to incur costs to the property over that period of time. While delay per se may not be sufficient to amount to laches to prevent reliance by the [appellant] on orders of the kind made by Windeyer J, it seems to me that in circumstances where the [appellant] effectively abandoned any defence of the family maintenance application and took no steps to enforce the court orders (in circumstances where her solicitor had advised the [respondent] that she was not seeking any settlement in circumstances where it would not produce any financial result to her), it is unfair that she should wait the length of time that she has waited before asserting her claim in relation to the property” (Judgment).

28 Nevertheless her Honour considered that it was appropriate that she make an order under s 66G because not to do so would leave subsisting:

“the current unsatisfactory position where the [appellant] remains on the title to the property (and the Legal Aid Commission caveat remains on the title to the property) and [would leave] unresolved the very property adjustments which had been intended to be resolved by the orders of Windeyer J in 1992” (Judgment [54]).

29 The judge considered that in making the order under s 66G it would be appropriate “to declare that the statutory trusts upon which the property would be held on such a sale would be such that the interest of the [appellant] would be limited to such amount as is necessary to pay out the Legal Aid Commission so as to effect a withdrawal of that caveat over the property” (Judgment [55]). Her Honour made a declaration in these terms, apparently in reliance on s 66G(6). On the basis of the then estimated value of the property of $450,000, the effect of this order was to reduce the share of the proceeds of sale to which the appellant was prima facie entitled from $180,000 (40 per cent of $450,000) to about $20,000 (the amount due to the Legal Aid Commission).

30 Her Honour did not expressly identify the circumstances that led her to make this declaration but it is implicit in her judgment that she relied upon the circumstances that in her view rendered it inequitable for the appellant now to enforce the 1992 orders (see [22] above) and probably also upon the (largely overlapping) circumstances that she considered established laches, acquiescence or delay on the part of the appellant (see [26] – [27] above).

Determination of the appeal

Section 66G Application

31 The primary judge appears to have approached the exercise of her discretion under s 66G(6) to alter the statutory trust for sale upon the basis that that subsection confers upon the Court a broad discretion to make such alterations to the property interests of the parties determined by principles of law and equity as the Court considers just and equitable. The case authority to which I now refer establishes that that approach was erroneous.

32 In Re Fettel (1952) 52 SR (NSW) 221 McLelland J said that the phrase in s 66F(2)(a) “for giving effect to the rights of the co-owners” means “for giving effect to the rights of the co-owners as co-owners” (at 228; emphasis added). His Honour then said in relation to s 66G(6):

“I do not think that this provision gives any authority for importing terms into the order of the court which have no relation to the situation of the parties as co-owners. When the respective definitions of ‘statutory trust for sale’ and ‘statutory trust for partition’ are read, it is clear that in their general terms they are not appropriate to meet every set of facts which would arise. In order to deal with the facts of particular cases, it will at times be necessary to make special provisions, to work out the respective rights of the parties as co-owners, or to give the trustees particular powers or duties not covered by the general words of the definition, or to deal with other circumstances. It is such matters with which s 66G(6) is concerned, and the court cannot, in my opinion, import into the statutory trusts conditions to give effect to rights arising quite outside the position of the parties as co-owners” (at 228).

33 To similar effect were the following observations of Bryson AJ in Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839; (2008) 14 BPR 149:

“34 The end point of the definition is that the trustees hold net proceeds upon such trust as may be requisite for giving effect to the rights of the co-owners. The rights of the co-owners are legal or equitable interests in land which have been converted into equitable interests in a fund. The rights of the co-owners do not in my opinion include equitable or legal claims for money payments which co-owners have against each other. Claims like those are not interests in land or aspects of ownership. If one co-owner has a mortgage, or a charge of any kind legal or equitable over the interests of another co-owner which is an interest in land, that is to be given effect under the statutory trust for sale. If a co-owner has a legal or equitable claim against another co-owner for debt, for contribution to a shared obligation which has been discharged or any other claim other than an interest in land, the statutory trust does not give effect to it. See Re Fettell (1952) 52 SR (NSW) 221, Whitehead v Whitehead [2002] NSWSC 486, (2003) NSW ConvR 56-045.

35 It often happens that the Court decides on entitlements between co-owners in proceedings in which property has been or is to be sold under s 66G and the Court is in control of funds in which the co-owners have interests. Where there are two or three co-owners it is usual and appropriate for the Court to decide on any equitable or legal claims between them without paying close regard to whether the Court has gone past enforcement of the statutory trust for sale under ss 66F and 66G and is using its control over funds to enforce rights of other kinds; abridging processes of accounting and execution by directing how funds under its control are to be distributed. If there are enough funds it matters little whether in requiring discharge of a liability out of what would otherwise be distributable entitlement under s 66G the Court is giving effect to an interest in land, or to a personal claim; or to a constructive trust”.

34 The making of a s 66G order in the present case gave rise to a statutory trust for sale under which, prima facie, the appellant should have been entitled to 40 per cent of the net proceeds of sale and the respondent to 60 per cent. In formulating the form of order to be made it would have been appropriate to provide for determination of any claim by the appellant that the respondent pay an occupation fee (as to which, in circumstances where as here there has been a breakdown of a domestic relationship, see Callow v Rupchev [2009] NSWCA 148), for any claim by the respondent for the value of improvements made by him to the property and for payment of any amount to which the Legal Aid Commission was entitled and for which the property was security.

35 It was not permissible however to provide in reliance upon s 66G(6) Conveyancing Act for an adjustment of the legal and equitable rights of the parties upon the basis of what the Court considered to be just and equitable. In the context of the present case, such an adjustment could only have been made by the Court under s 41(c) of the Act. The application under s 41(c) for the variation of the parties’ property interests should therefore have been determined prior to the Court considering the making of an order under s 66G to give effect to the property interests of the parties.

36 I should mention at this point that by his Notice of Contention the respondent contended that the primary judge should have declined to make an order under s 66G by reason of the appellant’s “laches, acquiescence or delay”. This contention must be rejected as the reasons that the primary judge gave (see [28] above) for proceeding to make a s 66G order, notwithstanding the conduct of the appellant that she found, were perfectly appropriate. In any event, the discretion to refuse relief under s 66G is a limited one (Re Fettel at 227 – 228; Stephens v Debney (1960) SR (NSW) 468; Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068; Williams v Williams [1979] 1 NSWLR 376 at 378 – 379; Williams v Legg (1993) 29 NSWLR 687 at 693; Hogan v Baseden (1997) 8 BPR 15,723 at 15,726).

The application under s 41(c) of the Act

37 As noted earlier (see [23] above), the primary judge did not reach a final conclusion as to whether the application under s 41(c) should be granted. On appeal, the respondent however sought by way of Notice of Contention to support the property adjustment order made by her Honour as a proper exercise of the discretion conferred by s 41(c) of the Act notwithstanding that her Honour purported to act instead under s 66G(6) of the Conveyancing Act. The respondent submitted that her Honour implied that the discretionary matters she saw as justifying an order under s 66G(6) would also in her view have justified a like order under s 41(c) (subject to the need to revisit the decision of Windeyer J: see [23] above). In these circumstances, it is appropriate to examine those matters to see whether they would in fact have justified an order being made under s 41(c).

38 The operation of s 41(c) is conditioned upon the existence of a default in the carrying out of an obligation imposed on a person by the original order. The respondent defaulted in complying with the 1992 orders by failing to pay or tender to the appellant the sum of $45,800 within three months of the making of the orders. However as these orders provided for what was to occur in the event of that default occurring and, in particular, provided by Order 6 for the parties to take steps to have the property listed for sale by private treaty for a further period of three months there was no basis for concluding that, as a result of that default, it was just and equitable to vary the orders of Windeyer J. If, as here, orders provide for what is to happen in the case of default, it will rarely, if ever, be necessary or appropriate to make an order under s 41(c) varying the orders to deal differently with the consequences of the default.

39 There was however further default. Both parties defaulted in complying with Order 6 which became applicable once the respondent did not pay the sum of $45,800 as required. They also defaulted in complying with the consequential orders following Order 6.

40 “[T]he circumstances that have arisen as a result of” those defaults (see s 41(c)) are that the property has not been sold and has continued to be occupied by the respondent. In my view it is implicit in s 41(c) that, before an adjustment order can be made, a chain of causation must be established between the default, the circumstances that have arisen as a result of that default and the need (from the point of view of justice and equity) to vary the original orders. Thus I do not consider that once a default has been proved the Court hearing an application for variation may vary the orders for any reason it considers well-founded in justice and equity. Rather, the need for variation has to arise out of the circumstances caused by the default.

41 As a result, in the present case, it would have to have been shown that the fact that the property had not been sold and had remained in the possession of the respondent (which were the circumstances arising from the default of the parties in compliance with the original orders) made it just and equitable that the original orders be varied. It is thus necessary to consider whether the matters that her Honour impliedly identified as warranting an order under s 41(c) were, as required, ones that arose out of the fact that the property had not been sold and remained in the possession of the respondent.

42 The first matter to which the primary judge referred to was that the respondent was the primary carer of the children (see [22(a)] above). Although, as the appellant pointed out, the respondent was not the sole carer of the children throughout their childhood, the respondent’s description of himself as the prime carer was undoubtedly correct. Significantly, the respondent cared for their son Geordie “on a twenty four hour per day, seven days per week basis” (Combined Appeal Book p 49) after Geordie had a serious accident. The appellant was only minimally involved in his care. The evidence did not however suggest that this role that the respondent assumed was a circumstance that arose out of the fact that the property was not sold in accordance with the orders of Windeyer J, that is, that it arose out of the default in compliance with those orders. It was accordingly not in my view a relevant matter to take into account in considering whether an order should be made under s 41(c).

43 The second matter to which the primary judge referred was that since 1992 the respondent had improved the property (see [22(b)] above). Whilst it is clear that since 1992 the respondent had incurred significant expenditure in relation to the property it is by no means clear that that expenditure added to the property’s value and therefore amounted to more than expenditure on maintenance and repair of the property. This doubt arises from the fact that the valuation report in evidence concluded with the following statements:

“The property is in poor order and would have ‘limitations’ in the market place.
The land is appealing and so would be met with reasonable to good acceptance in the market place. However, the buildings (house and shed) are in poor order and so would have limited value in the market place” (Combined Appeal Book p 122).

44 Nevertheless if the respondent is able to establish that he made lasting improvements to the property, he is entitled, subject to any order made for an occupation fee, to an allowance out of the proceeds of a sale effected pursuant to an order under s 66G (Forgeard v Shanahan (1994) 35 NSWLR 206 at 223, 224).

45 Further, any expenditure by the respondent by way of maintenance or repairs should be relevant in assessing the benefit that the respondent obtained from occupation and therefore the amount of any occupation fee for which the respondent might be held to be liable: see Professor Butt, Land Law, 6th ed (2010) Lawbook Co at [14 40].

46 Account may be taken of these matters in formulating an order under s 66G (see [32] – [33] above). In my view the fact that the respondent may have made improvements to the property is not a factor supporting the making of a variation order under s 41(c) of the Act as, to the extent that the facts support his claim, he already has an equitable right which the Court is able to protect through the exercise of its powers under s 66G of the Conveyancing Act. There is thus no occasion, in this respect at least, to adjust the property interests of the parties by making an order under s 41(c) of the Act.

47 The third matter to which her Honour referred was the fact that the respondent had made the whole of the mortgage payments (see [22(c)] above). In light of the parties’ 60 per cent/40 per cent co-ownership of the property, the respondent had an equitable right to contribution from the appellant to the extent of 40 per cent of the payments that he made (Forgeard v Shanahan at 224F), other than in respect of the first 3 months after the orders were made, for which period he was to bear the burden of the whole of the payments. Whilst this right is not a property right and is thus something to which effect is not able to be given under the statutory trusts for sale under s 66G of the Conveyancing Act, as Bryson J pointed out in Arrow Custodians v Pine Forests (see [33] above), it is “usual and appropriate” for the Court to take such legal or equitable claims into account when “directing how funds under its control are to be distributed” (at [35]). As put by Professor Butt in Land Law, “… for pragmatic reasons and to facilitate speedy resolution of disputes, the court hearing a case involving the application of the proceeds of sale will calculate any adjustment to which the parties are entitled in equity” (at [14 106]).

48 Therefore in respect of this factor also, a relevant equitable right exists and is adequately protected in the s 66G proceedings. Accordingly this factor does not support the making here of an order under s 41(c) of the Act.

49 The fourth matter that her Honour relied upon was the making by the respondent of an offer in 1994 and its rejection by the appellant (see [22(d)] above). This also was not in my view a factor supporting the making of an order under s 41(c). Section 41(c) authorises the variation in certain circumstances of an order made under s 20 of the Act. Section 20 of the Act authorises such adjustment of property rights as to the Court seems “just and equitable”, “having regard to” contributions of the following type:

“(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and

(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely:

(i) a child of the parties,

(ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties”.

Implicitly, a court making an adjustment order under s 41(c) must do so “having regard to” contributions of the type described in s 20.

50 Neither the respondent’s offer nor the appellant’s rejection of the offer was a “contribution” of this character. Whilst circumstances other than contributions may be of relevance to the justice and equity of making an order, a s 20 order (and any varied order made in reliance on s 41(c)) must at least primarily be founded upon consideration of the contributions described in s 20(1). Section 20 orders having been made here, of necessity, upon the basis of an assessment of the parties’ relevant contributions as described in that section, matters such as the making and rejection of the 1994 offer unallied with evidence of subsequent additional or changed contributions or any submission that default in compliance with the s 20 orders has required a reassessment of the contributions earlier made do not in my view support the making of a variation order under s 41(c).

51 Similarly, I do not consider that the matters fifthly considered by her Honour (see [22(e)] above) were in the circumstances capable of supporting a s 41(c) order. The property rights of the parties were established by the 1992 orders. Any further legal or equitable rights acquired by the parties as a result of occupation of the property, improvements to the property or mortgage payments were adequately protected in the manner described above (see [44] – [48]). In some circumstances, for example by application of the equitable principle of proprietary estoppel (see generally R Meagher, D Heydon and M Leeming, Meagher Gummow and Lehane’s Equity: Doctrines and Remedies, 4^th ed (2002) Butterworths LexisNexis Australia at [17-075] – [17-115]), a beneficial owner such as the appellant might lose his or her property rights by application of general law principles. However, in the absence, as here, of such a result being established or even alleged, it would not be appropriate to use s 41(c) of the Act to deprive a person of a property right where that deprivation was not based upon the making by the other party concerned of contributions of the nature described in s 20.

52 The same comments apply to the matters referred to in [27] which her Honour described as amounting to “laches, acquiescence and delay” on the part of the appellant (see [26] above). As pointed out above (see [51] above), it was neither established nor even contended by the respondent, that under some applicable general law doctrine the appellant had lost the whole or part of her beneficial interest in the property. In these circumstances, evidence of “laches, acquiescence and delay” on the part of the appellant could not of itself, and in particular in the absence of evidence of contributions that had not given rise to general law rights, provide the foundation for an order under s 41(c) depriving the appellant of the whole or a part of her property rights.

53 In these circumstances, the respondent’s contention that the primary judge’s order, although based upon s 66G of the Conveyancing Act, should be found to have been justified by s 41(c) of the Act should be rejected.

Section 18 of the Act

54 Before concluding consideration of the Act, I should refer to the appellant’s contention that the respondent faced an additional difficulty in his contention that the primary judge’s order could be justified under s 41(c). The appellant submitted that an order under s 41(c) could, by reason of s 18(1) of the Act, only be made if application for such an order was made within two years after the date on which the relationship between the parties ceased or if the court granted leave to apply outside the two year period, taking into account the criteria specified in s 18(2) of the Act. The present application was made well after the expiration of the two year period.

55 The issue does not appear to have been raised before Ward J, who made no finding as to whether the respondent needed leave to apply outside the two year period or whether, if he did, leave would be granted. As I have decided that on other grounds an order under s 41(c) was not justified, it is not necessary to consider these questions.

Conclusion and orders

56 The effect of the order that the primary judge made under s 66G of the Conveyancing Act was to deprive the appellant of her 40 per cent interest in the proceeds of sale of the subject property save to the extent that the sum of $20,913.80 was to be paid out of those proceeds to the Legal Aid Commission. For the reasons I have given this order was not justified by s 66G nor, on the alternative basis upon which the respondent sought to uphold it, by s 41(c) of the Act.

57 The result is that the s 66G order made by the judge should be reformulated to reflect the principles to which I have referred in this judgment. Depending upon the parties’ contentions, the form of order may need to deal with claims for an occupation fee, the expenses of improvement and contribution to mortgage payments. Based on what the Court was told at the hearing, it may be that the parties can agree as to these matters. The parties should bring in appropriate short minutes of order.

58 As discussed at the hearing of the appeal, it will be necessary for the parties to provide to the Court evidence of the agreement of the Legal Aid Commission to limit its claim to the amount referred to in the primary judge’s order (that is, $20,913.80). If that is not forthcoming, steps will have to be taken to join the Commission as a party because it appears that the Commission has, or may have, a proper claim to portion of the proceeds of sale of the property.

59 I note in conclusion that the evidence indicated that the respondent’s application to the Family Court remains unresolved and that there was no evidence that the appellant has been discharged from the undertaking that she gave to that Court concerning the disposition of her share of the proceeds of sale of the subject land (see [13] above). This Court is not in a position to express a view as to whether it is still open to the respondent to proceed with that application but I note that the substantial burden that the respondent undertook in caring for the parties’ children would appear to be relevant to that application if it were still able to be pursued.

60 I propose the following orders:

(1) Appeal allowed;

(2) Set aside the orders made by Ward J on 31 August 2009;

(3) Order the respondent to pay the appellant’s costs of the appeal;

(4) Direct the parties to attempt to reach agreement as to the appropriate form of orders to give effect to this judgment, including an order as to the costs at first instance;

(5) If the parties are able to reach such agreement, direct that a signed form of consent order be lodged with the Court within 14 days of the date of this judgment; and

(6) If the parties cannot reach such agreement, direct:

(a) the appellant within 14 days of the date of this judgment to file and serve the form of orders proposed by her together with brief written submissions in support, including as to the appropriate order concerning costs at first instance;
(b) within 14 days’ thereafter, the respondent to file and serve his proposed form of orders and written submissions in support;
(c) within a further 7 days, the appellant to file and serve any response; and
(d) the resolution of any issue as to the form of orders to be made is to be determined by the Court upon the basis of the parties’ written submissions without any further oral hearing.

: I agree with the orders proposed by Macfarlan JA and with his Honour’s reasons.

**********