Santos v Stephenson

[2020] NSWSC 90

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Santos v Stephenson [2020] NSWSC 90

Hearing dates:

12, 13 and 14 February 2020

Date of orders:

14 February 2020

Decision date:

14 February 2020

Jurisdiction:

Equity

Before:

Parker J

Decision:

See [67]

Catchwords:

EQUITY – equitable interest in property – agreement for equal ownership of property – not recorded on title – contributions to property –– account for share of proceeds of sale

 

EQUITY – general principles and maxims – they who seeks equity must do equity – false claim Commonwealth rental assistance – repayment of monies, interest and penalties as a condition of relief

  EVIDENCE – Jones v Dunkel inference – failure to produce witnesses – equally available to both parties

Legislation Cited:

Defence Service Homes Act 1918 (Cth)

Cases Cited:

Baumgartner v Baumgartner (1987) 164 CLR 137
Jones v Dunkel (1959) 101 CLR 298
Nelson v Nelson (1995) 184 CLR 538

Category:

Principal judgment

Parties:

Lourdes Santos (Plaintiff)
Olga Stephenson (Defendant)

Representation:

Counsel:
J McIntosh (Defendant)

 

Solicitors:
Diaz & Diaz (Defendant)

  In person:
L Santos (Plaintiff)

File Number(s):

2018/389003

Publication restriction:

Nil

Judgment – EX TEMPORE

Revised and reissued 19 February 2020

1. These proceedings arise out of a family dispute concerning the proceeds of sale of a property at Rooty Hill in Western Sydney.

2. The plaintiff, Lourdes Santos, is the aunt of the defendant, Olga Stephenson. The property which is the subject of the dispute was acquired in Ms Stephenson's name in December 2008, and was sold by her in May 2017 netting a profit of several hundred thousand dollars. Ms Santos lived in the property throughout and contributed to the mortgage costs and other expenses. In these proceedings, she claims that as a result of arrangements agreed at the time the property was acquired, she was entitled to half the “equity” in the property, and thus is entitled to half of the surplus on the sale.

3. The critical issue is whether in fact the parties agreed for Ms Santos to have a half share in the property. There was no defence based on the statute of frauds or indefeasibility. Counsel for Ms Stephenson accepts that if Ms Santos' allegations are sustained on the facts, she would be entitled to equitable relief in the nature of an account.

4. Should Ms Santos succeed in establishing the agreement for which she contends, potentially a number of different equitable doctrines could be engaged. There would also be a question as to the precise nature of the relief to which Ms Santos would be entitled. I will address these questions should Ms Santos succeed on the factual issue in the case.

Summary and analysis of evidence

Chronology of key facts

5. Both Ms Santos and Ms Stephenson were originally from the Philippines. Ms Santos came to Australia at some point before the mid-1980s. She is unmarried but has always taken a keen interest in promoting the welfare of her family. In 1985, she sponsored her sister, Adelina Aracan, together with her sister's husband and son, to migrate to Australia as skilled migrants. In 2006, she likewise sponsored Ms Stephenson, who is her niece through another sibling, to come to Australia under the skilled migration program. She paid for most, if not all, of the expenses that Ms Stephenson incurred in making the application and travelling to Australia.

6. At the time, Ms Santos was living in rented accommodation at North Ryde with another sibling, her brother, Macario Santos. Mr Santos' full name is Macario D Santos Junior, and he is known in the family as “Junior” or “Jun”. When Ms Stephenson arrived, Ms Santos arranged for her to live at the North Ryde property as well.

7. Ms Stephenson obtained work in Australia, and after a while, she developed an interest in acquiring a property in Sydney for herself. This appears to have been suggested to her by a cousin who is a real estate agent. In 2007 and the first half of 2008, Ms Stephenson looked at various properties in Western Sydney. At the time, she did not have a driver's licence, and Ms Santos drove her around to enable her to inspect properties and deal with agents. There is a dispute between the parties about whether at this time there had already been some sort of agreement about the property being acquired jointly.

8. The property which is the subject of this dispute was located in around November 2008. It was a four-bedroom townhouse which had been developed by a company known as Bathla Investments Pty Ltd. A meeting took place with representatives of Bathla to negotiate the price. This meeting was attended by both Ms Stephenson and Ms Santos. There is a dispute about the role that was played by each of them at the meeting, but it appears that a price was agreed for the property of $350,000, subject to a rebate. This was on the understanding that an application would be made under the Government’s first home buyers’ grant scheme which would reduce the amount of purchase money which would need to be found.

9. A copy of the first page of the vendor’s counterpart of the contract is in evidence. It is dated 22 November 2008, and it seems that contracts were exchanged on that day, or shortly afterwards.

10. The sale was completed approximately one month later on 23 December 2008. Ms Stephenson, Ms Santos and Mr Santos moved in a week later on 30 December or thereabouts. The settlement calculations for the purchase are in evidence. They show that against the original purchase price of $350,000, a rebate was allowed of $18,000. A deposit of $1,000 had been paid. There is no evidence as to who paid the deposit.

11. Taking adjustments into account, the balance due on settlement was approximately $331,500, and the total amount payable including purchaser's legal costs and the like was approximately $333,100. The settlement calculations show that $326,000 was to be provided by way of bank finance. This was provided by the Commonwealth Bank of Australia pursuant to arrangements made by Ms Stephenson. The first home buyers grant was $24,000. This gave a total amount available of $350,000 so that approximately $16,900 was left over. The settlement calculations record that a cheque for this amount was provided to Ms Stephenson on settlement.

12. The copy of the settlement sheet in evidence shows that some further calculations were done by Ms Stephenson and Ms Santos. The calculations are noted in handwriting, some of which was written by Ms Stephenson and some by Ms Santos. What the figures show is that a calculation was done so as to split the settlement refund equally between Ms Stephenson and Ms Santos. Some other household and property expenses were also brought to account.

13. For the purpose of the accounting, different categories of expense were treated differently. Insurance and internet relocation and reconnection costs were divided three ways, that is, between Ms Stephenson, Ms Santos, and Mr Santos. The annual fee for the CBA loan was however divided two ways, that is between Ms Stephenson and Ms Santos equally. So too was the cost of a curtain rod purchased for the property. The net result was a figure of $7,935 which appears to have been the amount which was paid to Ms Santos.

14. After Ms Stephenson, Ms Santos and Mr Santos moved into the property, Ms Santos made regular payments of a half share of certain expenses. These were the payments on the mortgage, the bank fees, strata fees, council and water rates, and items of repairs and maintenance. Copies of bank statements from January 2009 and February 2009 confirm this process taking place in those months. In particular, the amount payable under the mortgage as shown on Ms Stephenson's bank account was notified to Ms Santos who paid a half share of that amount to Ms Stephenson. It was common ground that these payments continued thereafter up until 2016.

15. In around mid-2009, Ms Santos lost her job. She appears to have obtained a short-term job at a later point, but by 2010 she had attained the age of 64 and went on the pension. She and her brother stayed in the property, and she continued to make contributions in the way that I have described. From 2009 onwards, she applied for and received rent assistance from Centrelink. Her brother also received a rent assistance benefit at some point.

16. In 2011, Ms Stephenson moved out of the property. She was replaced by a succession of relatively short-term tenants who paid rent and contributions to household expenses on an informal basis.

17. According to Ms Santos (and there appears to be no dispute about this) from January 2009 onwards, Ms Stephenson regularly provided her with copies of her mortgage statements from the bank so that Ms Santos could, if she wished, check the amounts that she had contributed against the amounts being charged by the bank. This practice ceased at the end of 2015. In fact (although Ms Santos did not know it at the time) in 2016, Ms Stephenson refinanced the property with Bankwest. In doing so, she appears to have borrowed additional funds.

18. The relationship between the parties broke down in 2017. As at the end of 2016, Ms Santos was pressing to obtain copies of the bank statements. Ms Stephenson refused to provide them anymore. Ms Santos also ceased to make regular contributions towards the mortgage repayments. According to her evidence before me, this was because of some sort of arrangement under which instead she contributed money towards bringing a brother of Ms Stephenson to Australia. The financial burdens associated with this may have had something to do with the decision which Ms Stephenson evidently made at the time that she wished to achieve a form of financial separation from her aunt. It is not necessary for the purpose of these proceedings to go into the rights and wrongs of how the relationship ended. Ms Stephenson put the house on the market, and it was sold in April 2017 with the sale being completed at the end of May.

19. The sale price of the property is variously recorded in evidence as $557,000 and $560,000. After deduction of the then current balance under the Bankwest facility, the net proceeds were approximately $120,000 when the sale completed on 29 May.

20. Ms Santos was self-represented in these proceedings. She gave evidence by way of affidavit which she had prepared herself in advance of the hearing and filed in accordance with the Court's directions. There were difficulties with the form of parts of the affidavit, but I permitted Ms Santos to give supplementary evidence in chief. She was cross-examined at some length by counsel for Ms Stephenson.

21. In support of her case, Ms Santos also relied on an affidavit from her sister Ms Aracan who likewise gave evidence by way of affidavit supplemented by evidence in chief, and was cross-examined.

22. For the defence, Ms Stephenson gave evidence by affidavit. In an effort to shorten the cross‑examination I took it upon myself to ask questions of Ms Stephenson in non-leading form about the issues in the proceedings, and in particular about the documents which were in evidence. These included emails between Ms Stephenson, Ms Santos and Ms Aracan which were partially in English and partially in Tagalog. I had Ms Stephenson translate most of these; there was no dispute from Ms Santos as to the accuracy of the translation. After I had supplemented Ms Stephenson’s evidence in this way, Ms Santos conducted a cross‑examination.

23. According to Ms Santos’ evidence, from as early as 2007 it had been agreed that Ms Stephenson would search for a property in which Ms Santos (and her brother Mr Santos) would live and which would be jointly owned between Ms Santos and Ms Stephenson. Ms Santos said that she took the lead in the negotiations with the representatives of Bathla concerning the purchase of the Rooty Hill property. She said that she understood that her name would be on the contract, on the title, and on the loan documents. She said that she was surprised and displeased to learn that Ms Stephenson had obtained loan finance in her own name but that she nevertheless cooperated in the purchase, on the understanding that she would be paying a half-share of all of the costs, because she trusted Ms Stephenson.

24. According to Ms Santos, Ms Stephenson realised shortly before settlement that it would be difficult, if not impossible, for Ms Stephenson alone to meet the costs. Ms Santos said that she discussed this with Ms Stephenson. According to Ms Santos, Ms Stephenson said that she would not have gone ahead with the borrowing had she not understood that Ms Santos would be contributing half of the costs. Ms Santos said that she replied that she would contribute half the costs, but she would have to have a 50 per cent “equity” in the property by way of consideration. According to Ms Santos, Ms Stephenson agreed with this.

25. Ms Santos was unable to identify precisely when the conversation with Ms Stephenson took place, but she said it was definitely before they moved into the property on 30 December, and it may have been before the settlement on 23 December.

26. Ms Stephenson denied some critical aspects of Ms Santos’ case. According to Ms Stephenson the property searches undertaken during 2007 and 2008 were searches for a property which she alone would be buying. Ms Stephenson accepted that there was a conversation prior to moving into the Rooty Hill property in which Ms Santos agreed to pay a half share of the costs, but according to Ms Stephenson that was as far as the conversation went; Ms Stephenson denied that she was ever asked to, or agreed, to give Ms Santos a 50 per cent share.

27. For the purpose of resolving this factual dispute, I now consider various features of the evidence in a little more detail. The first feature to be considered is the dispute between Ms Stephenson and Ms Santos about the nature of any prior arrangements between them going back to 2007, and in the period leading up to exchange of contracts.

28. Counsel for Ms Stephenson pressed Ms Santos in cross‑examination on Ms Santos' claim that she always understood that she would be put on the title as one of the two owners. Counsel pointed out that Ms Santos must have been aware that her name did not in fact appear on the contract or on the title, and yet she did nothing about this. Counsel submitted that this was damaging to Ms Santos' credit, and I should not accept that in fact there was ever any agreement going back to 2007 that Ms Santos and Ms Stephenson would acquire a property together.

29. Taken on its own, the criticism of Ms Santos’ evidence on the title point has some force, but I do not think it should be overstated. Ms Santos’ own evidence accepted that a point came when she realised that Ms Stephenson was going to be the sole borrower and the sole titleholder, and that she nevertheless proceeded because she trusted Ms Stephenson.

30. I see nothing inherently surprising or incredible about that evidence. As I have mentioned, there were emails in evidence before me which had passed between Ms Aracan, Ms Stephenson and Ms Santos prior to settlement. In those emails, Ms Stephenson sought reassurance from Ms Aracan that she had done the right thing in purchasing the property, and advice on how to approach her other aunt, Ms Santos, with a view to Ms Santos contributing half of the costs of the property.

31. There was little cross-examination of the witnesses on the emails, and I am unable to reach any firm conclusion about what agreement, if any, had been made between Ms Stephenson and Ms Santos at the time of the emails. However, I do not consider that it is necessary to deal with this any further as the principal thrust of Ms Santos’ case was to rely on the later alleged conversation.

32. The second feature of the evidence concerns the objective nature of the transaction. It involved giving up the rented premises at North Ryde in exchange for living in mortgaged premises at Rooty Hill. What the emails do is show that it was Ms Stephenson's intention, at a point before contracts were exchanged, or at least before the cooling off period expired, to have Ms Santos contribute half the mortgage costs.

33. In cross-examination, Ms Santos put to Ms Stephenson that the mortgage repayments on the Rooty Hill property were considerably more than the rental payments on the North Ryde premises. The point being made by Ms Santos was that there would have been no purpose in her agreeing to pay a higher amount without anything in return. I thought that the way that Ms Stephenson handled this line of cross-examination was somewhat unsatisfactory. She was evasive about how much the rent at North Ryde was, and whether it was less than the amount of the mortgage repayment. I have no doubt that there would have been a considerable difference, and I suspect that Ms Stephenson's evasion reflected an acknowledgment on her part that the point Ms Santos was making was a sound one.

34. All of the evidence before me suggests that Ms Santos is not a person who is particularly concerned to accumulate money to spend on herself, but it also shows that she has dedicated herself to the financial advancement of her family and that she diverts any spare money that she has to that objective. I can see no reason why in those circumstances she would have agreed to pay a half-share of all of the expenses of the Rooty Hill property for Ms Stephenson’s sole benefit. Ms Santos, I am satisfied, had Ms Stephenson's interests very much at heart and wished to see her succeed financially. But by the same token, there were other members of the family that she also would have wished to help.

35. Another objective feature of the transaction which I consider supports Ms Santos’ case is the careful steps taken to divide up the refund on settlement and thereafter to split the expenses. On the evidence before me the calculations were done down to the nearest five dollars. In particular, the division of the refund is entirely consistent with the idea that Ms Santos had a 50 per cent interest in the “equity” in the property.

36. In her evidence Ms Stephenson said that the payment was made simply as a thank you to Ms Santos for all that she had done for her. But if that had truly been the explanation for the payment, there was no need to calculate it in the precise way that it was calculated. The fact that certain categories of expense were split three ways rather than two, and that the expenses which were split two ways were holding expenses and loan expenses rather than living expenses, only reinforces the point.

37. The next feature of the evidence to which I refer is Ms Aracan’s testimony. Ms Aracan gave evidence in her affidavit that she knew of an arrangement between Ms Santos and Ms Stephenson for Ms Santos to pay half of the expenses and to own a half share of the property. According to Ms Aracan, she urged both parties to record the agreement in writing, but they did not do so.

38. In her oral evidence Ms Aracan said that she remembered two conversations before Ms Santos and Ms Stephenson moved into the Rooty Hill property. One of these, according to Ms Aracan, took place at her house on Christmas Day. There had been an earlier discussion between Ms Aracan and Ms Santos, to which Ms Stephenson had not been party. On each occasion, according to Ms Aracan, the agreement was acknowledged, but Ms Santos said that she trusted Ms Stephenson, and there was no need to bother about putting the agreement in writing.

39. In her affidavit, Ms Aracan gave evidence of a subsequent visit to the Rooty Hill property. She said that Ms Stephenson asked Ms Santos whether she wanted her name added to the title and undertook to do that if it was what Ms Santos wanted. According to Ms Aracan, Ms Santos again replied that she trusted Ms Stephenson and there was no need to record the arrangement under which she was to have a 50 per cent “equity” in the property.

40. In final submissions, counsel for Ms Stephenson submitted that I should not accept this evidence. Counsel pointed out that the affidavit had referred to a conversation which post-dated the purchase, and the evidence about earlier conversations only emerged in oral evidence. Counsel also submitted that the evidence Ms Aracan gave of the initial conversation between herself and Ms Santos actually supported the idea that there was no agreement.

5. I do not accept these submissions. It would not be surprising if after all this time, Ms Aracan found difficulty in remembering the precise sequence and number of conversations, but the emails to which I have already referred show that she was involved in talking to both of the other parties in the period leading up to the purchase. It was not suggested that Ms Aracan had any interest in the outcome of the proceedings, or any particular reason to favour her sister over her niece. Her evidence seemed to me to be given in a straightforward way, and I see no reason why I should reject the thrust of it, even if on matters of detail and sequence, it may not be completely reliable.

6. The next feature of the evidence centres on the fact that Ms Santos, from 2009 onwards, was receiving a rental subsidy. This is a benefit which is paid by the Commonwealth government to assist indigent persons with the payment of rent.

7. Mr Santos’ Centrelink form, in which he applied for the benefit, is in evidence, although Ms Santos’ is not. Nevertheless, Mr Santos’ form gives some guidance to the requirements of the scheme. Ms Santos conceded, in cross‑examination, that in her application she represented that she was not an owner of the property and that the amounts that she was paying were payments by way of rent. Understandably, counsel relied upon this in final submissions. Counsel put that the representations made to Centrelink reflected the true position. For her part, in final submissions, Ms Santos acknowledged that she had misled Centrelink, but strongly maintained that I should find that she had given truthful evidence to the Court.

8. Before expressing my conclusion on this point, I should refer some further evidence in the form of emails exchanged between Ms Santos and Ms Stephenson in mid‑2013. It appears that Ms Stephenson was required as the registered proprietors of the property to give some form of certificate to Centrelink. In one of the emails, Ms Santos told Ms Stephenson to record the total rental as $300. She continued that if anyone from Centrelink inquired, Ms Stephenson should tell them that Mr Santos’ and Ms Santos’ rent was $100 each and there was no lease contract because it was a "private rental".

9. To my mind the tone of the email supports the submission that the statements made to Centrelink did not necessarily reflect the reality of what had been agreed between Ms Santos and Ms Stephenson. The impression I get from the email is that Ms Santos was seeking to mislead Centrelink. Her hope was that no inquiry would be made at all and it was only if the inquiry was made that Ms Santos wanted a false statement to be made about rent of $100. Discreditable as this is, on balance I do not think it seriously damages Ms Santos' factual case in these proceedings.

10. The next feature of the evidence to which I refer is a text message which was sent by Ms Stephenson to Ms Santos in January 2017 at the time of the breakdown of the relationship. The text message reads:

I’m not giving you my bank statement. Anyway since we’re both sick and tired with dealing with the house, I will put this on the market and you can have your money and buy your own house. Just finish this mess.

47. In my examination of Ms Stephenson, I asked her what she was referring to when she offered to give Ms Santos “your money”. Ms Stephenson said that this was a reference to the unpaid contributions which Ms Santos owed at that point. Ms Santos returned to the issue in cross‑examination and received a similar answer. Ms Santos then put to Ms Stephenson that the amount of the contribution (at most, a few thousand dollars) would be hopelessly inadequate for the purpose of buying a house. Ms Santos also put to Ms Stephenson that the offer of “your money” was linked to selling the house. The thrust of the cross-examination was clear: the reference to “your money” was to a share of the sale proceeds of the house and this was an acknowledgement by Ms Stephenson that she had indeed agreed that at an earlier point to give 50 per cent of the “equity” to Ms Santos.

48. Again, I thought that Ms Stephenson's attempts to deal with this issue under cross‑examination were unpersuasive. She seemed reluctant initially even to accept the obvious, namely that the unpaid contributions could not possibly be used by Ms Santos to buy a house. Ultimately she had no real explanation for why she expressed herself in the way in which she did in the text message if, as she contended, her aunt had no interest in the property and only an obligation to pay half of all of the expenses. In my view, the text message does strongly support Ms Santos’ case.

49. Next, I should refer to a Jones v Dunkel ((1959) 101 CLR 298) submission made by counsel for Ms Stephenson. Counsel pointed out that Mr Santos did not give evidence. Counsel did not suggest that Mr Santos had been party to the alleged agreement or that he should have given evidence to support the account given by Ms Santos and Ms Aracan; rather, counsel submitted that Mr Santos was an essential witness in Ms Santos’ case concerning the quantum of any relief that she might receive. In view of the way in which I have been invited by both parties to deal with the matter, this question does not strictly arise; but I should record in any event that I consider that the submission is quite misconceived.

50. A Jones v Dunkel inference can only be drawn if, among other things, the court can be satisfied that the witness in question is within the camp of the party against whom the inference is propounded. If a witness is equally available to both parties then no inference can arise because the party seeking the inference could have called the witness himself or herself. That is the case here. There is no evidence that even if Mr Santos had anything relevant to say he would not have been available to be called as witness on behalf of his niece. Counsel's submission therefore goes nowhere.

51. Finally, counsel in final submissions made a general attack on the credit of Ms Santos. As I understood the submission, counsel argued that Ms Santos was untrustworthy and that her evidence showed that she had concealed relevant matters from the Court. Counsel relied in particular on Ms Santos’ inability to explain why she did not take steps to have her name put on the title at the time the contract was exchanged, and the settlement took place.

52. I have already explained why I do not consider there is much significance on the title point. I thought Ms Santos gave her evidence in a straightforward way. It may have been inaccurate in some details, it may at some point have been wrong in its sequencing, but I see no justification whatever for the suggestion that, contrary to her oath, she withheld relevant matters from the Court.

53. I have already criticised Ms Santos’ conduct concerning the application for rent assistance to Centrelink, but I have explained why I do not consider that it is a decisive factor in these proceedings, but it is only right that I should say that I reject counsel's other submissions attacking her credit in their entirety.

54. Taking together all of these features of the evidence which I have discussed, I am satisfied that before Ms Santos and Ms Stephenson (and Mr Santos) moved into the Rooty Hill property, an agreement was made between Ms Santos and Ms Stephenson in substantially the terms alleged by Ms Santos, namely that in return for a 50 per cent contribution to the costs of the property, Ms Santos would be recognised as having a 50 per cent interest in it. Although there is no direct evidence that this conversation took place before settlement, on the probabilities, I think it would have. It is hardly likely that Ms Stephenson would have proceeded to settlement, and to borrowing the money that she borrowed from the bank, without having obtained the assurance, which the evidence shows that she needed, from her aunt. The precise scope of the 50 per cent interest will need to be considered in detail in due course. But for the present purposes, it is enough to say that Ms Santos has succeeded on the critical factual issue in the case.

55. This brings me to the question of what relief should be ordered. The first thing I should say is that the evidence in this case discloses a situation similar to that in Nelson v Nelson (1995) 184 CLR 538.

56. That was a claim for equitable relief in the nature of a resulting trust, where the true nature of the transaction was concealed for the purpose of obtaining benefits under the Defence Service Homes Act 1918 (Cth). The decision of the High Court was that this circumstance did not make the transaction illegal, nor did it provide a reason for refusing equitable relief, but that equitable relief should be made conditional upon repayment of the benefit which had wrongly been claimed.

57. In my view, the present case is the same. Ms Santos is not entitled to any equitable relief from this Court unless it is accompanied, or preceded, by repayment of the rent benefits which she has obtained, together with any interest or penalties which may have accrued. The orders the Court ultimately makes will be conditional on a prior undertaking by Ms Santos to pay these amounts to Centrelink. The orders will be framed in such a way that moneys due from Ms Stephenson will be paid into Court so that the amount due to Centrelink can be paid out of Court and the balance only released to Ms Santos when this Court is satisfied that Centrelink has been fully paid.

58. There remains the question of how to proceed with quantifying Ms Santos’ entitlement to the sale proceeds. Initially I had hoped to deal with all outstanding issues in these proceedings, including that quantification, in the course of this hearing. But it has become clear that the evidence presented at the hearing is inadequate for this purpose.

59. The concept of a 50 per cent contribution to expenses in return for a 50 per cent in “equity” is deceptively simple, but in this case it is complicated by a number of factors. One of those is that Ms Santos, at least from September 2011 onwards, was paying 50 per cent of the amount of the interest being incurred, but in fact Ms Stephenson was paying additional amounts from her own resources. The result is that, although this is not in any way a breach of the obligations of Ms Santos, she did not actually contribute 50 per cent of the amount by which the mortgage was reduced from that period forward.

60. On the other hand, it seems, as I have already observed, that when the loan was refinanced an additional capital sum was borrowed and that was presumably applied by Ms Stephenson for her own advantage. That capital sum would need to be identified and segregated to determine what the proper surplus was in 2017 for the purpose of division between Ms Santos and Ms Stephenson.

61. The evidence before the Court does not allow these calculations to be undertaken. In the end both parties accepted that all the Court can do at this stage is to order an account be taken and the process of calculation will need to be undertaken at a later stage.

(Counsel addressed on form of orders and costs)

62. In formulating the account to be taken, I consider that the most satisfactory approach is to treat Ms Santos’ claim under the rubric of the “common intention constructive trust” recognised in cases such as Baumgartner v Baumgartner (1987) 164 CLR 137. It may be that the agreement which I have found was made between Ms Stephenson and Ms Santos could have been the subject of an order for specific performance or some sort of declaration of express trust. But in my view, the facts of this case would sustain “common intention constructive trust” whether or not that agreement was specifically enforceable.

63. If this claim had been made before the property had been sold, then on my findings an order of the type made in Baumgartner v Baumgartner would have been made in this case. Such an order would have provided for the appointment of a trustee for sale who would have sold the property, repaid out of the proceeds the parties’ respective contributions and divided the surplus between them 50:50.

64. The order the Court makes in this case should be an order requiring Ms Stephenson to account for the proceeds of sale as if she had been a trustee appointed under that order. Thus the order will require Ms Stephenson to calculate the contributions of each of the parties to the cost of acquiring and holding the properties and then to pay Ms Santos half of the difference between the total acquisition and holding costs and the net proceeds of sale. That figure should carry interest at court rates from the date on which the sale was completed.

65. At this stage, I will simply make an order for account specifying the nature of the account and reserving for further consideration the mode of account and the making of orders for the amount due and the interest to be paid into Court.

66. As I have mentioned, Ms Santos represented herself at the hearing but I was informed from the Bar Table that she has incurred, at least, some disbursements. Having succeeded in the proceedings, there is no reason why she should not receive an order for costs in her favour.

67. The orders of the Court are:

On the undertaking of the plaintiff to repay all rental assistance welfare payments received by her in connection with her occupation of Unit 2, 115 Hartington Street, Rooty Hill, together with any interest and penalties associated with such repayments, the Court orders:

1.   The defendant account to the plaintiff for:

(a)   the total amount contributed by the plaintiff to the acquisition and holding, between December 2008 and May 2017, of the said property;

(b)   50 per cent of the difference between:

i.    the net proceeds of sale of the property; and

ii.   the amount in (a) together with the total amount contributed by the defendant to the acquisition and holding, between December 2008 and May 2017, of the said property;

(c)   interest on the total of (a) and (b) from 29 May 2017 onwards at the rate referred to in Practice Note SC Gen 16.

2.   Reserve for further consideration the manner in which the account is to be conducted and the amount, when found due, to be paid.

3.   Order that the defendant pay the plaintiff’s costs of the proceedings to date.

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Amendments

24 February 2020 - [24] change "Mr" to "Ms"

Decision last updated: 24 February 2020