Silvia (Trustee) v Williams

Case [2018] FCAFC 194

FEDERAL COURT OF AUSTRALIA

Silvia (Trustee) v Williams [2018] FCAFC 194

Appeal from: Silvia (Trustee) v Williams, in the matter of Williams (Bankrupt) [2018] FCA 189
File number: NSD 435 of 2018
Judges: PERRAM, BARKER AND DERRINGTON JJ
Date of judgment: 14 November 2018
Catchwords:

TRUSTS AND TRUSTEES – common intention constructive trust – whether registered owner held half interest in matrimonial home as constructive trustee for bankrupt spouse – whether bankrupt made indirect contributions to deposit and equity

PRACTICE AND PROCEDURE – whether trial judge should have permitted common intention constructive trust case – whether common intention constructive trust case open on the pleadings – whether respondent prejudiced – where appellant did not seek to amend pleadings

Legislation: Evidence Act 1995 (Cth) s 28
Cases cited:

Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1

Baumgartner v Baumgartner [1987] HCA 59; 164 CLR 137

Betfair Pty Limited v Racing New South Wales [2010] FCAFC 133; 189 FCR 356

Browne v Dunn (1894) 6 R 67

Eves v Eves [1975] 1 WLR 1338

Gissing v Gissing [1971] AC 886

Green v Green (1989) 17 NSWLR 343

Jones v Dunkel [1959] HCA 8; 101 CLR 298

Muschinski v Dodds [1985] HCA 78; 160 CLR 583

Secretary, Department of Social Security v Agnew [2000] FCA 59; 96 FCR 357

Warren v Coombes [1979] HCA 9; 142 CLR 531

Heydon JD, Cross on Evidence (11th ed, LexisNexis Butterworths, 2017)
Date of hearing: 9 August 2018
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 78
Counsel for the Appellant: Mr B L Jones with Ms E Kovacs
Solicitor for the Appellant: Hall & Wilcox
Counsel for the Respondent: Dr C Birch SC
Solicitor for the Respondent: Alexanders Lawyers

ORDERS

NSD 435 of 2018
BETWEEN:

BRIAN RAYMOND SILVIA, AS TRUSTEE OF THE BANKRUPT ESTATE OF GEORGIA WILLIAMS

Appellant
AND:

PATRICK FRANCIS WILLIAMS

Respondent

JUDGES:

PERRAM, BARKER AND DERRINGTON JJ

DATE OF ORDER:

14 NOVEMBER 2018

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The Appellant pay the Respondent’s costs as taxed or agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

THE COURT:

1.    Introduction

  1. Mr and Mrs Williams are a married couple.  On 4 May 2012 Mr Williams exchanged contracts for the purchase of a residential home on Military Rd, Dover Heights, a suburb in Sydney’s Eastern Suburbs not far from Bondi Beach. The home was intended to be, and did become, the couple’s matrimonial home.  The sale was completed in July 2012.  The total purchase price was $2.09 million.  Title to the Military Rd premises was put in Mr Williams’ name alone.  Mr and Mrs Williams presently live in the premises with their daughter.  Subsequent to the acquisition by Mr Williams of the Military Rd premises, Mrs Williams became bankrupt. The present Appellant is Mrs Williams’…

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Silvia (Trustee) v Williams [2018] FCAFC 194
Case
[2018] FCAFC 194
Decision Date

CaseChat Overview and Summary

In the case of Silvia (Trustee) v Williams, the Full Court was called upon to consider whether a common intention constructive trust existed over a matrimonial home purchased in the sole name of the husband, Mr Williams, following the bankruptcy of the wife, Mrs Williams. The appellant, Mrs Williams' Trustee in Bankruptcy, argued that Mr Williams held 50% of his interest in the property on trust for Mrs Williams’ bankrupt estate, a contention that was dismissed at trial. The appellant sought to appeal this decision. The central legal issue before the court was whether the trial judge should have permitted a common intention constructive trust case to be argued, given that the pleadings did not specifically raise such a claim. The court needed to decide whether such a case was open on the pleadings and whether the respondent was prejudiced by the appellant's failure to seek an amendment to the pleadings.

The Full Court held that the case for a common intention constructive trust was not open on the pleadings. The pleadings did not specifically raise the issue of a common intention constructive trust, and the appellant did not seek to amend the pleadings. The court found that the respondent, Mr Williams, was not prejudiced by the appellant's failure to amend the pleadings, as the evidence was clear and the issues were well-understood. The court emphasised that it is generally not appropriate to allow new claims to be raised at the trial stage if they are not supported by the pleadings, particularly if the opposing party could be prejudiced. The Full Court dismissed the appeal and ordered the appellant to pay the respondent’s costs as taxed or agreed.

Orders

Orders of the court

1. The appeal be dismissed.

2. The Appellant pay the Respondent’s costs as taxed or agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Mr and Mrs Williams are a married couple. On 4 May 2012 Mr Williams exchanged contracts for the purchase of a residential home on Military Rd, Dover Heights, a suburb in Sydney’s Eastern Suburbs not far from Bondi Beach. The home was intended to be, and did become, the couple’s matrimonial home. The sale was completed in July 2012. The total purchase price was $2.09 million. Title to the Military Rd premises was put in Mr Williams’ name alone. Mr and Mrs Williams presently live in the premises with their daughter. Subsequent to the acquisition by Mr Williams of the Military Rd premises, Mrs Williams became bankrupt. The present Appellant is Mrs Williams’ Trustee in Bankruptcy. The Trustee claims that Mr Williams holds 50% of his interest in the Military Rd property on trust for Mrs Williams’ bankrupt estate. This contention was rejected at trial (along with a number of other claims which are no longer pressed). The Trustee now appeals to the Full Court. For the reasons which follow, the appeal should be dismissed with costs.2. Facts Before taking up residence at the Military Rd premises, the couple had lived, not far away, at a house in Blake St, Dover Heights. The land had been registered in both their names. Mrs Williams had renovated that house extensively and it had been sold on 24 January 2012 to another couple, Mr and Mrs Pisano. The Pisanos were not satisfied with the quality of Mrs Williams’ renovation works and sued both her and her husband in a proceeding which was eventually heard in the Technology and Construction List of the Supreme Court of New South Wales. The Pisanos were successful: Pisano v Dandris [2014] NSWSC 1070. An appeal by Mr Williams was, however, also successful: Williams v Pisano [2015] NSWCA 177. Mrs Williams nevertheless remained liable and was ordered to pay the Pisanos more than $1 million in damages. On 7 October 2014, prior to the disposition of Mr Williams’ appeal, she had presented a debtor’s petition and been made bankrupt. The sale price for the Blake St premises was $3.35 million and after all expenses and the repayment of a loan, the net proceeds received from the Pisanos were $1.56 million. It was about five months after the sale of the Blake St property, on 4 May 2012, that Mr Williams had exchanged contracts on the Military Rd property. This was well before Mrs Williams’ bankruptcy on 7 October 2014. Although the Blake St property had been jointly owned by Mr and Mrs Williams, no attempt was made in closing submissions at trial to trace the $1.56 million sale proceeds into the Military Rd premises. A forensic accountant, Ms Delbridge, had examined the very many transactions which had occurred between Mr and Mrs Williams. There were a number of accounts and loan facilities; some were in Mr Williams’ name, some in Mrs Williams’ name, and some were in both. The forensic accountant thought that separate accounts had been maintained and that it was not the case that the funds had been treated as, in effect, joint funds (as the trial judge recorded at [70] of his reasons). This made any tracing exercise almost impossible.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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