Soto v Soto
[2013] WASC 211 (S)
•30 MAY 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SOTO -v- SOTO [2013] WASC 211
CORAM: McKECHNIE J
HEARD: 6 - 8 MAY 2013
DELIVERED : 30 MAY 2013
FILE NO/S: CIV 2733 of 2010
BETWEEN: JOSE DOMINGO HERNANDEZ SOTO
Plaintiff
AND
TRINIDAD DEL CARMEN SOTO
Defendant
Catchwords:
Oral contract for the sale of land - Whether terms imprecise - Whether in breach of the Statute of Frauds - Contributions to property by way of mortgage payments - Whether recoverable
Legislation:
Property Law Act 1969 (WA)
Statute of Frauds, s 4
Result:
Order for recovery of mortgage contributions
Category: B
Representation:
Counsel:
Plaintiff: Ms C F Holyoak-Roberts
Defendant: Mr P R MacMillan
Solicitors:
Plaintiff: Templar Legal Pty Ltd
Defendant: Dwyer Durack
Case(s) referred to in judgment(s):
Baungartner v Baungartner (1987) 164 CLR 137
Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360
Muschinski v Dodds (1984) 160 CLR 583
Silvester v Sands [2004] WASC 266
McKECHNIE J:
Overview
In November 1992 the defendant, who is called Trini by her family but to whom I shall refer as Ms Soto, bought a house at 42 Riga Crescent, Willetton, for her mother, Amanda Humilde Hernandes, to live in. Ms Soto is the registered proprietor.
In 2005 Ms Soto was having some difficulty meeting the mortgage repayments and was looking around for a smaller residence for her mother. She discussed the matter with her brother Jose (whom the family called Pepe) and to whom I shall refer as Mr Soto, the plaintiff. Precisely what they agreed is in issue in these proceedings but an understanding was reached that Mr Soto would obtain a half share of the property and that he would take over the mortgage payments. He duly did that and also took over responsibility for the payment of 100% of the rates and taxes. He moved into 42 Riga Crescent, and some years later, so did Ms Soto. They both lived there with their mother in apparent harmony.
Mr Soto had a lady friend, Francie May, whom the family had known for about ten years. In April 2010 there was a bitter dispute between Mr Soto and his mother involving Francie May and as a result Ms Soto told him to leave her house. He did so, returning the mortgage books for her to make payments on the mortgage. Family relationships broke down at that point and have not recovered.
Although Mr Soto asked for their agreement to be put in writing, it never was. Nevertheless, he claims relief in equity pursuant to the understanding which he asserts was an agreement made in 2005. He acknowledges that the family situation is such that a decree of specific performance would not be a realistic solution and seeks instead equitable damages.
As an alternative, he seeks at least the return of the mortgage payments he has made over the years.
For the reasons which follow, I find that the parties did not enter into any enforceable agreement in 2005 of the type pleaded by Mr Soto. As a result, I do not need to conclude whether the agreement breached the Statutes of Frauds s 4 of the Property Law Act 1969 (WA) s 36 or was saved by part performance.
I do find that Mr Soto is entitled to equitable relief in the money which he has expended.
The credibility of the witnesses
Mr and Ms Soto both rely on their memory to recall details of the agreement in 2005. Their brother Juan relies on his memory as to what was spoken about at that time. The divergence in their accounts can be explained by a different recollection. I do not find that any party was either deliberately lying or particularly unreliable.
The same may be said of most of the conversations between the parties subsequent to 2005.
The pleadings: the claim
The agreement as pleaded at par 8 and par 9 of the statement of claim:
8.On or prior to 15 March 2005, the Plaintiff and Defendant reached an agreement (the Agreement) by which the Plaintiff would assume liability for the Mortgage and acquire a 50% beneficial interest in the Property.
PARTICULARS OF AGREEMENT
(1)The Agreement was made orally between the Plaintiff and the Defendant in terms that:
(a)The value of the Property as at the date of the Agreement was agreed at $290,000;
(b)The Plaintiff would immediately acquire a 50% interest in the Property for the sum of approximately $145,000 from March 2005, with the payment by instalment and on terms as follows;
i)The Plaintiff would immediately assume all liability for payment of the Mortgage and all repayments thereto in consideration to pay for 41.3% of the Property;
ii)The balance of the property would be paid for by way of a lump sum payment of $25,216.48 to be made concurrently with the execution of documents evidencing the Agreement including the transfer of land document;
(c)The Defendant would arrange for the Agreement to be documented including preparation and execution of the transfer of land document;
(d)The Plaintiff would reside in the Property rent free;
(e)The Plaintiff would be liable for paying council rates, taxes and water rates for the Property whilst residing at the Property;
(f)The Plaintiff would contribute towards any utility costs incurred at the Property and the cost would be apportioned between himself and any other tenant of the Property;
(g)Notwithstanding the particulars entered on the Certificate of Title, the Plaintiff and the Defendant were, from March 2005, to be the proprietors of the Property as Tenants in Common, in the following agreed proportions;
(i)Plaintiff-50%
(ii)Defendant-50%
(h)Shortly following the Agreement, it was further orally agreed between the parties that 50% of the Plaintiffs total payments of Council rates and Water rates on the Property would be deductible from the Plaintiffs outstanding $25,216.48 lump sum payment to the Defendant referred to at paragraph 8(l)(b)(ii) above.
9.From March 2005 onwards it was the common intention of the Plaintiff and Defendant that the Plaintiff would acquire a 50% beneficial interest in the property by virtue of the Agreement and the Plaintiffs share would be held in the Defendant's name until the transfer of land document was registered with Landgate.
The plaintiff has pleaded particulars of the common intention part performance:
10.In part performance of the agreement the Plaintiff has:-
a)made principal and interest payments of the mortgage;
b)made payments of council rates and water rates and taxes on the property;
c)moved into and resided in the property;
d)contributed towards the utility costs accrued on the property.
The defence
The defence accepts there was an agreement but in somewhat different terms:
7.The Defendant denies paragraph 8 of the Statement of Claim, including the particulars, save to admit that an agreement was reached between herself and the Plaintiff in or around March 2005 ('The Property Agreement') but says that the terms of the Property Agreement were or on a proper construction the terms were:
(a)any interest that the Plaintiff was given in the Property was subject to Their Mother's right to live in the Property during Their Mother's lifetime;
(b)the Plaintiff could live in the Property provided that he was respectful of Their Mother;
(c)the Plaintiff would receive 50% of the net proceeds of the sale of the Property upon the sale of the Property, such sale to occur after the death of Their Mother ('Proceeds of Sale') if he paid half of the agreed value of the Property, by paying:
(i)all of the money owing pursuant to the ANZ Loan including interest ('Mortgage Payments') at that time being $119,783.52 and such interest as was payable pursuant to the terms of the ANZ Loan; and
(ii)the Defendant $25,000.00 upon her demand ("The Lump Sum Payment").
8.It was a term of the Property Agreement that it was within the discretion of the defendant whether the plaintiffs conduct, whilst he was living in the Property, was respectful of Their Mother.
9.The term pleaded in paragraph 8 is:
(a)to be inferred;
(b)implied on the basis that it is reasonable, obvious and necessary to give business efficacy to the Property Agreement.
10.Further, the Defendant states that on or around May 2005, the Plaintiff and the Defendant varied the Property Agreement ('The Variation') in that they agreed orally that the Plaintiff was to pay 100% of the council and water rates for the Property.
Particulars of the Second Variation
(a)The parties made the Second Variation in the pergola outside the kitchen of the Property;
(b)The Plaintiff, the Defendant and their brother Juan Agustin Soto were present.
Was there a term of respect?
There is a dispute between the parties as to the basis of and nature of the altercation in April 2010 which led to the family breakdown. It is neither necessary nor particularly helpful to resolve quite who said what in that dispute.
If there was a 'respect' term as a condition of the agreement, it would be unenforceable, imprecise and void for uncertainty. Moreover, such an implication as advanced by the defendant is not necessary for the business efficacy of the contract. I would not imply such a condition into the agreement. It is far too uncertain. The effect would be that the contract could be brought to an end entirely on the opinion of one party that the other was being disrespectful to a third person, whatever that may mean.
But that is not why the condition fails. Ms Soto conceded in cross‑examination that such a condition was never a condition of any arrangement between she and her brother as to his share of the property. It was only a condition of his residence within 42 Riga Crescent and whatever other arrangements they had concerning the property were unaffected.
The plaintiff's evidence
Background to the agreement
The plaintiff is employed as a cleaner, having migrated to Australia from Chile in about 1998. His last marriage ended in divorce in about 2000. He was aware of the arrangement between his mother and his sister and following his migration in 1998 lived for about five months with his mother before finding his own rental accommodation. He regularly visited his mother and it appears sometime in the early 2000s that he introduced Francie May to the family. She was a married woman and this fact was not disclosed to his mother, or to Ms Soto, until his sister Loreto told his mother at the beginning of 2010.
Mr Soto's version of the agreement
20.In or about mid March 2005, a couple of days after talking to my mother, I went to visit my sister at her rented unit in Booragoon to ask what was happening in relation to the Willeton property.
21.I stayed for about 1 to 1.5 hours and had a series of discussions in my sisters lounge room about the property which were in relation to;
a.Each others reasons for buying and selling the interest in property;
b.The mortgage as at the time;
c.The current value of the property;
d.The purchase price for a 50% interest in the property;
e.I'd move into the house and
f.My taking over the payments on the mortgage and the house bills and
g.how I would pay for the balance of my 50% share of the property. These discussions are set out below.
...
39.We orally agreed the properties current value at time (March 2005) as $290,000. I made a hand written note of this agreement and some of the other matters we discussed at the time we agreed it on the rear cover of the ANZ Deposit book that Trini first handed me that day (Document 55 Page 448-TriaI Bundle).
40.The Note in my handwriting (Page 448) in the rear of the ANZ deposit book says 'valor casa-$290,000', which is my recording of the agreed total value of the property. Valor casa means 'value of house'.
41.It is my recollection that the way we arrived at the 'value of the house/valor casa' of $290,000 was to average the 3 written appraisals from the real estate agents that existed at that time.
The defence pleads that the agreed value of the property was $300,000. In cross‑examination Ms Soto was not prepared to support that amount and was prepared to allow the amount of $290,000 as that which was agreed. I gained the impression she did this more because she did not regard the difference as important than as necessarily conceding that the amount of $290,000 was what had been agreed between them. This simply highlights the difficulty in the plaintiff proving the precise terms of any agreement:
42.Following agreement of the current value on the property, my sister and I went on to work out the current 'duena' or 'equity' Trini had in the property as a result of the proposal that I take over the mortgage.
43.I recorded that Trini, my Sister, was the owner of 58.7% of the property (Trini es duena del 58.7%) which was the value of Trini's equity at that time arising, being the sum of $290,000 less the mortgage.
44.I also recorded that I ('Yo') was the owner of 41.3% of the property as a result of agreeing to pay the mortgage. (Document 55 page 448- Trial Bundle. The percentage value was calculated by dividing the reported value of the loan at the time ($119,783.52) by the purchase price($290,000) to arrive at a figure of 41.30%;
45.Its my recollection we agreed to the property being 'cincuenta/cincuenta' (go 50/50) as I was nearly at 50% by taking over the mortgage. I told Trini 'It will be easy to make 50 and 50 [as I had 41.3% of the mortgage]' and she agreed by saying 'ok "or words to this effect.
46.My sister and I talked about my purchase of a 50% interest in the property in her Booragoon living room. We both referred to the agreed ownership of the property as 'cincuenta/cincuenta' or 'going 50/50'.
47.We agreed the purchase price of $ 145,000 as half of $290,000. I suggested this figure and Trini agreed by saying 'OK' or words to this effect.
48.A brief further discussion took place about how I would pay the $145,000 for my 50% share through a combination of paying the existing mortgage and cash payments. I recall that I was relying on her say so in relation to one mortgage payment of $900 and may have agreed to pay $145,683.52 if this payment had not been made. I told her 'I will pay the property mortgage'.
49.By way of explanation, the intention was that I would immediately acquire 50% interest as a result of a promise to pay a further $25,000 in cash to take my interest from 41.3% (for the mortgage to 50%.
50.We arrived at an agreed cash value of $25,000 by deducting the difference between $145,000 (purchase price) and $119,783.52 ($25,216.48). This cash sum was rounded down to $25,000 on the day and in all my subsequent dealings with Trini, but I accept that the amount agreed as owing on March 2005 was $25,216.48 to make the full purchase price of $145,000.
...
53.In relation to the timing of this cash payment, I recall a conversation in which there were discussions about the timing by me saying words to the effect that 'I couldn't pay the $25,000 at that point in time but if there was a way that I could pay it, I would'. I recall Trini suggested that I 'pay the $25,000 after I had finished paying off the entirety of the mortgage'. I recall that I made a statement against my interest saying something like 'no that's not fair, because $25,000 won't be worth anything then'.
54.It was then suggested by me that I would pay $25,000 'when I had the capacity to do so' ('cuando pueda') and Trini indicated her agreement by saying OK or words to this effect. I understood I was to pay Trini a cash sum of $25,000 to 'top up' my interest to 50% equity in the property when I was able to.
Ms Soto's version of the agreement
20.In about late February 2005 Jose came to see me at the house I was renting at 4/37 Engler Street, Booragoon and I remember having a conversation with him in the living room. Jose said to me words to the effect that mum had told him that I was going to sell the House.
21.I explained that I was trying to buy something smaller.
22.Jose said words to the effect that he could help me, because mum didn't want to move.
23.At the time, there was $119,783.52 outstanding on the mortgage for the House. This amount appears on the ANZ Loan Statement of Account for the period of 17 February 2005 to 17 May 2005 at 17 February 2005.
24.I had obtained three appraisals for the House.
...
27.I said words to the effect that he could move into the house if mum said he could and I would not have any objections. I stressed to Jose, if he was going to live in the House, he should never be disrespectful to mum - as the House is mum's home.
28.I said to Jose words to the effect that:
(a)he would have to pay the mortgage from March 2005 onwards and I would no longer pay any mortgage. He knew how much mortgage was still to be paid because I told him it was $119,783.52; and
(b)he would also have to pay me $25,000.00 in a lump sum payment. He would have to pay that when I asked him to pay it to me.
29.I said to Jose words to the effect that in return for him paying all of the rest of the mortgage on the House and for paying me the $25,000.00 when I asked for it that he would have the right to 50% of the House but that he would not get that until the House was sold and that would probably be after mum died.
30.I said to Jose words to the effect that the house was for Mum to live in for as long as she wanted.
...
37.Later in about May 2005 at the House Jose and I had a conversation to the effect of Jose would pay 100% of the rates and taxes on the House. I remember arguing with him about this because he only wanted to pay half the rates and I said to him words to the effect that I've paid all of them until now so now you pay. I did not say that the amount he paid for the rates would be deducted from the $25,000.00 he owed me.
I accept that both Mr and Ms Soto are honestly trying to recall what passed between them in 2005. The burden of course is on Mr Soto to establish the terms of the agreement on the balance of probabilities.
Was Mr Soto to get 50% immediately?
It is the plaintiff's case that he was entitled to 50% interest in the property from March 2005 as that is what the parties agreed. The defendant's case is that he would be entitled to 50% of the property in due course when the house was sold. The house was probably not going to be sold until Mrs Hernandez had passed on.
This is a fundamental difference. The arrangement came to an end in April 2010.
I am satisfied that there was an arrangement between the parties, some of the terms of which were (a) Mr Soto would take over the mortgage payments; (b) Mr Soto could live in the house; (c) Mr Soto would pay the defendant $25,000 in cash; (d) Mr Soto would at some point be entitled to a 50% interest in the property.
However, the state of the evidence does not allow me to be affirmatively satisfied that the 50% condition was as Mr Soto describes it. I consider that the 50% condition as Ms Soto describes it is an equally available inference.
That being so, the plaintiff is unable to establish that there was a concluded agreement in the terms pleaded. Nor am I satisfied there was a concluded agreement in the terms relating to 50% conceded by Ms Soto. In the absence of writing (which is why the law insists on writing) and relying solely on the recollections of two people, whose relationship has broken down, I am unable to make any finding.
There was a joint or common intention that Mr Soto would attain a 50% interest in 42 Riga Crescent at some time. That occasion is critical for these proceedings.
Mr Soto, as plaintiff, is unable to prove on the balance of probabilities that as at April 2010 he had any interest in 42 Riga Crescent for which equity would intervene to protect.
At law he is unable to establish that there was a contract, the fundamental terms of which had been agreed.
The payment of $25,000
I am also unable to be satisfied as to the terms of any agreement about the amount of $25,000. There is no dispute that Mr Soto was to pay Ms Soto $25,000. The dispute arises as to when that obligation arose. The parties agreed that it did not arise immediately. Ms Soto says that it arose when she made demand for the money and was not paid.
Mr Soto says that when demand was made he did not have the money and that Ms Soto accepted this. He further says he could raise the money:
78.Within a couple of days of this meeting I approached my sister on a date unknown some years ago. I recall asking my sister in passing in Spanish words to the effect 'for something in writing' (quiero algo en escritd) I recall she said in Spanish words to the effect 'you are changing our agreement [by seeking the agreement in writing], so if you want something in writing you have to pay me now the $25,000'. I recall I was not prepared to pay her the lump sum amount without something in writing. When I asked her for the agreement in writing, it didn't happen.
79.I was working very hard to reduce the mortgage with a view to creating additional equity in the property for myself and pay down the loan as quickly as possible. I worked long days, often not stopping till 7pm and also worked most weekends in order to reduce the interest on my investment. I lived a frugal life and spent nearly all my savings on reducing the mortgage.
80.On a date unknown in 2007, after Trini moved in with us we had a further conversation which was probably in the house about the lump sum payment. I cannot recall the precise words of the conversations but it was my recollection there was words to the effect that a request for money from Trini was made being the balance of a lump sum payment. To the best of my recollection my response was not to reject this, but to request something in writing formalising my agreement with her before parting with my money and it was my suggestion that she make a will and put me there.
...
87.On a date unknown but probably before 23 February 2009, I had a further oral request from Trini for the lump sum amount outstanding under our agreement. It's my recollection there were words to the effect that no time put on the request for money. I told her words to the effect 'I don't have the money at that time' but it was 'no problem to pay her when I had the money if she put something in writing' by using the words quiero algo en escrito.
...
90.It was my intention when I had saved the lump sum amount and prior to her going to Chile to offer her the amount in my savings account plus any finance I needed as payment of the lump sum owing and ask her to sign an Agreement in writing. It was my intention to refinance the mortgage to pay any shortfall in the NAB savings.
91.In or about January 2010 my sister commenced planning to leave for Chile in September 2010 for an extended stay. She came to ask me for the money. She said words to the effect 'Im going to Chile and I want the $25,000 you owe me by September 2010'. I told my sister that I 'did not have any problem with paying her $25,00 (sic)'. She did not ask me for the money again in the period from January 2010 to April 2010. It is my recollection of this conversation she told me the exact month and I re-assured her that she would be paid a lump sum amount as per our agreement.
Ms Soto's recollection
38.I asked Jose on 3 separate occasions, for him to pay me the $25,000.00. I can't remember the exact dates or months when I asked. All I recall is that each time Jose would tell me that he could not afford to pay me the $25,000.00.
39.Sometime in 2006, I do recall approaching Jose because I needed some money to fix up my car. He said to me words to the effect that he did not have the money and could not pay me.
40.Sometime in 2007 I again asked Jose for the $25,000.00 that he owed me. He said to me words to the effect that he doesn't have it but he could get it for me if I got him a piece of paper saying that he owned half the house.
...
43.Every time I asked Jose for the $25,000.00, he always said words to the effect that he did not have it.
44.Jose has not paid the agreed $25,000.00 to me.
Juan Agustin Soto, their brother, has yet a different recollection:
3.On or about mid-April 2005 I visited the House on Saturday night for a family dinner. Trinidad and Jose were both there.
4.During the evening I spoke to Trinidad and Jose in the backyard of the House under the pergola. Further Trinidad or Jose said to me words to the effect that they had an agreement that Jose was to pay the remainder of the mortgage and was to pay a lump sum of $25,000.00 to Trinidad when she asked for it in return for a half share in the House.
5.I asked Jose when he intended to pay Trinidad the $25,000.00.
6.Jose said to me words to the effect that he would pay Trinidad when she asked for the $25,000.00.
7.I said words to the effect to Jose that he should move into the House so that he was not paying rent as well as the mortgage payments.
8.Jose and Trinidad did not say anything to me about an agreement being prepared in writing or any transfer of land being prepared.
9.Trinidad or Jose asked me to be a witness and arbitrator to their agreement.
The discussion witnessed by Juan Soto, was after the whatever arrangement between the parties, Mr and Ms Soto, had been concluded. The need for documentation was not a part of the arrangement and the payment of $25,000 was therefore not contingent upon the defendant producing the necessary documentation.
I am not persuaded that it was a term of the agreement as pleaded in par (8)(1)(b)(ii) and par (8)(1)(c) that the payment of $25,000 would be made concurrently with the execution of documents evidencing the agreement including a transfer of land.
In any event, I am persuaded that Ms Soto's recollection of the arrangement about $25,000 is more probable. She had need of the money and despite repeated requests Mr Soto did not pay it to her. If there had been a concluded agreement, Mr Soto was in breach of one of its important terms.
Mr Soto in his witness statement at par 53 and par 54 does not tie the payment of $25,000 to a requirement for documents. He refers to the issue as taking place as an informal chat over a couple of hours, eating, drinking and discussions with the family.
Would the $25,000 have a deduction for rates paid?
The parties are in dispute about par 8(8) of the statement of claim that it was orally agreed following the agreement that 50% of Mr Soto's total payments of council and water rates would be deductible from the outstanding $25,000 sum. I find that no such agreement was ever reached. Although the plaintiff gave evidence of this:
63.I recall Juan took written notes at this meeting of what was discussed. We again spoke about the 50/50 purchase of the property and how it was to be financed. It was my recollection that I was concerned at the necessity of having something in writing, because no documents were signed. It was my recollection of the meeting that the outcome was that Juan agreed to document something in writing for us and that Trini was agreeable to this.
64.I also recall at this particular meeting that Juan was the one who said that 'it was unfair that [I] was paying 100% of the rates and taxes and that [I] should be able to 'offset' these rates and taxes against the $25,000 cash component that I owed. Its my recollection that Trini and I both agreed by saying 'OK' or something similar.
65.It's my recollection that Trini and I agreed with this suggestion and the oral agreement we had was changed in this respect.
Juan Soto's evidence is to the contrary:
19.I said to Jose words to the effect why have you not paid Trinidad the $25,000.00 you owe?
20.Jose replied with words to the effect I do not have that amount of money at the moment.
21.I was irritated by this. Jose had been travelling to Chile, Peru, Singapore and Mexico.
22.I said to Jose words to the effect the agreement was that you would pay Trinidad $25,000.00 on demand.
23.Jose repeated words to the effect that he didn't have any money.
Throughout his evidence, both in his witness statement and in cross‑examination, Mr Soto referred to demands by the defendant for $25,000 and his obligation to pay $25,000, an obligation which, in his view, had not arisen. He did not at any material point indicate that Ms Soto was entitled to something less than $25,000; that is, the difference between what Mr Soto had contributed by way of rates and taxes and the amount of $25,000. I find there was no such condition.
The events of April 2010
It is neither useful to the resolution of the plaintiff's legal claims nor the defence to resolve precisely what happened on 23 April 2010. Nor is it particularly seemly to do so. I heard evidence about it from Ms Hernandes, who gave evidence through an interpreter, and Mr and Ms Soto. Each has a clear, but different recollection.
By way of narrative, in early 2010 Mrs Hernandez found out from Loreto that Francie May was in fact a married woman. She did not approve of the relationship when she found out. An argument developed, triggered by a request for salt, or oil (it matters not which), while Mr Soto and Francie May were outside sitting under the pergola, during which words were exchanged between Mr Soto and his mother which drew the attention of Ms Soto. The result was that Ms Soto ordered Mr Soto to leave the house and within a short time he did.
Mr Soto's version
103.I was very angry at my sister because I considered that she had broken our oral Agreements and said 'I am happy to go, but you must give me my money for the house'. She said words to the effect in response which were 'I will give you the money back when I feel like it'.
104.I also recall saying words to the effect 'see I have nothing in writing and you put me out like nothing'. She said nothing in response and went back inside.
...
110.I stopped making further payments pending clarification of the agreement with my sister and while we were sorting out the dispute in relation to ownership between us. I was concerned at the time my place in the house wasn't secure and that I couldn't make mortgage payments if I also had to pay rent. I wanted the surplus in the mortgage to be utilized to pay the mortgage. I was unable to afford to pay the mortgage of $600 per fortnight and rent.
...
112.On or about 5 May 2010 I asked Trini for an opportunity to discuss the situation and resolve the issue of 50/50 co-ownership of the house and her requests for me to move out. She refused saying words to the effect she 'did not wish to discuss anything with me'. The conversation was animated and very brief and only one or two sentences. I said something like 'you need to repay me from mortgage'. I recall her acknowledging this by saying 'I know' or words to this effect.
Mr Soto gave the deposit books back to Ms Soto and told her to 'start paying the mortgage' (ts 81).
Ms Soto's version
64.After the argument, Jose stopped payment the mortgage but he continued to live in the House for 2 months.
65.A couple of days after the argument Jose gave me the bank deposit book for the mortgage payments and said 'here you start payment the mortgage now' or words to that effect.
66.Jose made mortgage payments between March 2005 and April 2010.
67.April 2010 was the last mortgage payment on the House that he made.
The incident on 23 April 2010 resulted in two events. Firstly, Mr Soto's licence to lodge at 42 Riga Crescent was revoked and he accepted the revocation by moving out.
Secondly, Mr and Ms Soto no longer shared any common endeavour to share ownership of 42 Riga Crescent.
It is not useful to apportion blame. It might be thought that Mr Soto terminated the arrangement by returning the deposit books and in one sense that is certainly so.
But the event which triggered the return of the books arose from domestic circumstances and interactions. The licence to lodge at 42 Riga Crescent was not technically a part of the property arrangement. The family relationship became so dysfunctional that continuation of the property arrangement was, in practical terms, impossible.
All the players acted equally reasonably, or in another view unreasonably, and it is not possible to attribute blame to either Mr Soto or Ms Soto.
Conclusion on plaintiff's claim
Although the parties had an arrangement from 2005, as I have earlier described, I am unable to find that there was a meeting of minds over the precise terms of the arrangement so that it became a concluded and enforceable agreement (subject to the Statute of Frauds). Consequently, when the arrangement dissolved from 23 April 2010, Mr Soto had no crystallised or contingent right to 50% of the property. He has failed to prove important terms of the agreement. As a consequence, there is nothing upon which equity may act. Equity might act to protect his interests in an appropriate case but a minimum requirement is that there exists a concluded agreement or common intention. I have found that such agreement does not exist. While there may have been a common intention that there would be a 50/50 spilt, I am unable to find whether there was a common intention that Mr Soto take up his 50% equity in the property forthwith (Mr Soto's position) or that he share in the proceeds of sale to the extent of 50% following some future event such as the departure of his mother from the house.
Mr Soto's claim for 50% of 42 Riga Crescent fails.
The counterclaim
Much of the counterclaim depends on a finding that the defendant has a beneficial interest in the property. Therefore the counterclaim largely falls away.
The claim for damages for rent
Because I have not been persuaded that the parties entered into an enforceable agreement of the kind pleaded in the statement of claim, the arrangement that Mr Soto would live in the house is not a term of it.
The arrangement can be properly described as a licence which may be, and was, revoked by the property owner, Ms Soto.
Mr Soto accepted the revocation, moving out shortly after notice was given.
In the circumstances, he has no entitlement to rent for alternate accommodation (statement of claim par 14.1).
The claim for the return of moneys paid
Paragraph E of the prayer for relief:
In the alternative to D, an award of equitable damages or an order for the sale of the property, with the damages or proceeds of sale being distributed in accordance with:
a.the terms of the Agreement as assessed by the Court and/or
b.the Courts assessment of the Plaintiffs equitable interest in the property or equitable damages arising from the Agreement or joint endeavour, inclusive of any Equitable estoppel, Express Trust, Resulting Trust or contributions based or other Constructive Trust as assessed by the Court.
This is not a case such as Silvester v Sands [2004] WASC 266 as counsel for the defendant suggests. I have not found that there was a beneficial co‑ownership.
Rather, the principle I apply is that found in the judgment of Deane J in Muschinski v Dodds (1984) 160 CLR 583 and approved in Baungartner v Baungartner (1987) 164 CLR 137:
[T]he principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do (cf. Atwood v. Maude, at pp 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 ChD 529, at p 531) (620).
See Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360.
Although the precise terms of the agreement pleaded by Mr Soto fail, I nevertheless have found that there was an arrangement and that that arrangement at the least provided for a joint enterprise whereby Mr Soto would contribute to paying off the property by making mortgage payments, something he did for five years. The arrangement ended without attributable fault It would be unconscionable to allow the defendant to keep the proceeds of the plaintiff's contribution of the joint enterprise. Whether it is necessary to construe a trust in favour of the plaintiff, or grant equitable damages, does not really affect the result as the amount in issue is the same. It is equivalent to the amount of mortgage payments made by Mr Soto.
Mr Soto is not entitled to return of money paid by him for rates. The statement of claim pleads as a fact that he would be liable for paying council rates and taxes and water rates while residing at the property: (par 8(1)(e)).
I see the payment of rates as attaching to the licence to occupy the premises not any agreement to take a share in the property.
The issue of rent
I have decided that Mr Soto is entitled to the return of moneys he advanced during the period of the joint endeavour. Ms Soto does not dispute that Mr Soto is entitled to some return but made a claim for rent retrospectively in 2010. However the re‑amended defence and counterclaim do not raise a claim for rent.
Ms Soto:
74.I attended Dome Southlands with Juan and Jose on 8 June 2010. I said to Jose words to the effect that I did not like his number for payment. I told him I would pay him $26,000.00 because that is all he was due after I deducted rent for the 5 years he lived at the House. Jose said to me words to the effect that he would think about it and the meeting broke up.
Mr Soto:
122....
b.Trini said that the money that I had paid in the mortgage was '$70,200' ($70,200 yo he pagado). I said that I had paid $73,200 to the property mortgage;
c.Trini said from the day that I was in the house to the day of the meeting a demand for $160 rent per week was made which was in the total sum of $44,040 but say $44,000. Trini said 'you must pay rent from the time you moved in or words to this effect'. From 7 June 2010 until I left the house, Trini said they the rent would be $220 per week.
There is no evidence that the parties ever discussed the payment of rent until after the arrangement had come to an end. This was a family arrangement not a commercial arrangement. 42 Riga Crescent was referred to and to all intents and purposes was Ms Hernandez' house, questions of legal ownership aside. There has been no suggestion that had Mr Soto not been living in the house, his room would have been let to a boarder on commercial terms.
The plaintiff is entitled to the return of his mortgage contributions without deduction for rent. The plaintiff's other claims are dismissed.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: SOTO -v- SOTO [2013] WASC 211 (S)
CORAM: McKECHNIE J
HEARD: ON THE PAPERS
DELIVERED : 7 AUGUST 2013
FILE NO/S: CIV 2733 of 2010
BETWEEN: JOSE DOMINGO HERNANDEZ SOTO
Plaintiff
AND
TRINIDAD DEL CARMEN SOTO
Defendant
Catchwords:
Interest on judgment sum - Costs - Calderbank offer - Whether precludes an award of costs - No new principles
Legislation:
Nil
Result:
Interest allowed
Costs order made
Category: B
Representation:
Counsel:
Plaintiff: No appearance
Defendant: No appearance
Solicitors:
Plaintiff: Templar Legal Pty Ltd
Defendant: Dwyer Durack
Case(s) referred to in judgment(s):
Ford Motor Company v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435
Soto v Soto [2013] WASC 211
McKECHNIE J: Following delivery of reasons, Soto v Soto [2013] WASC 211, two issues for resolution remain: Interest and costs.
Each party has made written submissions and are content for a determination on the papers.
Interest - at 3% until 23 April 2010
The plaintiff seeks interest on the judgment sum at 3% per annum from 15 March 2005 until 23 April 2010. It will be remembered that those dates are the dates of the first and last mortgage payments paid by the plaintiff during the period for which interest is claimed.
I do not award this interest. The arrangement in respect of the property, which is detailed in the judgment, continued until 23 April 2010. It was only from that date the obligation to repay the mortgage payments crystalized. Any unconscionability on the part of the defendant did not arise until the arrangement came to an end and she did not return the mortgage payments.
Interest - at 6% from 23 April 2010
The ordinary course would be to allow interest at the Supreme Court rate. The defendant opposes this course and argues that interest should be limited to a period from 1 July 2010 (when the plaintiff moved out of the house in June 2010) to 16 November 2010, when a Calderbank offer was made.
In the action I disallowed the defendant's right to effectively set off an amount for rent. For the same reason, I do not exclude interest for the time the plaintiff remained in the house.
Interest should run from 23 April 2010 when the unconscionable conduct commenced.
For reasons which follow, the Calderbank offer does not affect the question of costs. It was reasonable for the plaintiff to continue the action. The defendant made no subsequent offer which matched the judgment sum, let alone a component for interest.
Who should pay the costs?
The usual course is that costs follow the result although the award of costs is always a matter of discretion. The defendant submits:
21.The plaintiff succeeded on the basis of an amendment on the first day of trial as to contributions in the sum of $73,200. The Offer made 15 days after issue of proceedings was for $73,200.
22.The scope of the proceedings was unnecessarily enlarged with costs wasted accordingly. The size of the claims pleaded prior to trial made compromise difficult. Properly handled, given the Offer made 15 days after issue of proceedings, the proceedings including the trial would have been avoided.
23.In all the circumstances, it is appropriate that the plaintiff pay the defendant's costs or a substantial part of those costs.
24.Alternatively, the plaintiff should be deprived of his own costs.
The Calderbank offer
After the issue of a writ, but before defence was filed, the defendant's solicitors wrote to the plaintiff's solicitor by letter dated 16 November 2010, apparently emailed the same date, as follows:
WITHOUT PREJUDICE SAVE AS TO COSTS
Dear Mr Kirchner
Hernandez v Soto
Supreme Court Matter No CIV 2733 of 2010
We refer to the above matter.
In order to avoid further time and expense in defending this matter, and without any admissions on the part of our client, we make the following without prejudice Calderbank offer on the terms set out as follows:
1.Our client pay the plaintiff the amount of $73,200.00 ('Offer').
2.The Offer will remain open for acceptance until 5.00 pm on 22 November 2010, after which time it will expire.
3.We reserve the right to rely on this letter to support an application for indemnity costs from the date of this letter.
We trust your client will give the above Offer due consideration.
Other offers and counter offers made by the parties do not advance the matter because the counter offers were, in this case, significantly less than the amount recovered.
In Ford Motor Company v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, Buss JA (Wheeler JA agreeing), adopted with approval Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 [25] that ordinarily regard should be had to, at least, the following:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree's prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for … indemnity costs in the event of the offeree's rejecting it [19].
The offer allowed the plaintiff from the Tuesday, when it was made, to the following Monday evening to consider it. There is no particular reason for a period less than a week, including a Saturday and Sunday. Moreover, the offer was made at a point before the defendant had pleaded her case. As there had been an arrangement between the parties in respect of the property, until the defendant pleaded her case, as to the plaintiff's entitlement to a half share of the property, it was reasonable for the plaintiff to wait for the filing of a defence before making any decision.
Of lesser significance is the fact that the claim did not include any payment of interest. However, it did not include any offer as to costs. Following the breakdown of negotiations which encompassed a repayment less a deduction for rent, it was reasonable for the plaintiff to have incurred the costs of instructing a solicitor and issuing a writ.
Taking all these matters into consideration, I consider that the plaintiff did not act unreasonably in rejecting the Calderbank offer of 16 November 2010.
The plaintiff succeeded in the action on an amendment which I allowed, over defendant's objection, on the first morning of trial. He otherwise failed to recover that which he had claimed; namely a half interest in the defendant's property. The defendant had not, however, repeated her offer to pay $73,200 following its rejection in November 2010. Nor could the defendant's very experienced counsel and solicitors have been shocked or surprised at what was an obvious amendment.
Although the plaintiff lost on the major part of his claim, it was not necessarily a claim foredoomed to failure. In the absence of a realistic offer subsequent to 16 November 2010 it was necessary for the plaintiff to proceed with the action to judgment.
There has been nothing shown that should displace the general principle as to an award of costs or to persuade me to exercise my discretion in another way.
I hold that the plaintiff is entitled to the costs of the action to be taxed.
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