State Trustees Limited v Hassett
[2013] VSC 55
•20 February 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 10853
| STATE TRUSTEES LIMITED (in its capacity as administrator ad colligenda bona of the estate of Rhonda Margaret Hassett) | Plaintiff |
| – and – | |
| SIMON JOHN HASSETT | Defendant |
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JUDGE: | MUKHTAR AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27, 28, 29 November, 6 December 2012 | |
DATE OF JUDGMENT: | 20 February 2013 | |
CASE MAY BE CITED AS: | State Trustees Limited v Hassett | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 55 | |
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TRUSTS AND TRUSTEES ― Trust ― Resulting trust ― Acquisition of land and dwelling by son for as a residence for parents ― Intention ― Title in son’s name ― Mortgage loan in son’s name ― Antecedent arrangement for limited contribution by son to purchase price ― Substantial unborrowed contribution made by parents to price ― Substantial payment by parents of mortgage loan instalments ― Payment of outgoings and improvements by parents ― No mortgage payments by son until parents’ necessary departure ― No intention to confer beneficial ownership to son ― No equitable joint tenancy ― Property always held on resulting or implied trust ― Declaration appropriate ― Equitable adjustment or reimbursement for son’s mortgage payments
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S.E. Marantelli | State Trustees Limited, Legal Branch |
| For the Defendant | In person |
HIS HONOUR:
The defendant, Simon John Hassett, is the 44 year old son of Daniel James Hassett and Rhonda Margaret Hassett, both of whom are now deceased. His only sibling is his younger brother Adrian, aged 39. Relations between the brothers are not good. The plaintiff represents Rhonda’s deceased estate, who in her lifetime had inherited her husband’s estate including his interest in the land which is the subject of this case.
In circumstances to be described in more detail later in this judgment, in 2001 Simon as contracting party purchased an apartment at 1/6 Mitford Street in St Kilda. The price was $261 000. He became registered as owner. But he never lived there. Nor did he ever conduct himself as owner. It was always his parents’ place of residence until his father died in 2009, and was vacated only when his widowed mother later went to an aged care facility in 2010 before dying in 2011. The plaintiff’s case is that Simon bought the property and became registered as owner under an informal family arrangement or expedience in which Simon would arrange a loan as borrower and mortgagor, but his parents by that pre-arrangement: paid the deposit; paid a substantial part of the purchase price for the apartment from their own money, and he did not pay any; paid the periodic mortgage instalments on the moneys borrowed (until his mother went into aged care); lived in the apartment as their only place of residence; maintained and improved the place; and paid the rates and outgoings. It was their home.
The case against Simon is that to give effect to their apparent intention, he should be regarded by the law as having acquired the apartment and as always holding it on trust for the benefit of his parents. That is, although he was the legal owner, he held it on resulting or implied trust for his parents.
Events have occurred which now make this purely a money claim. After the writ was filed on 22 December 2009, Simon’s father died three days later on Christmas Day. By his will, his father gave his very modest estate to his wife Rhonda, meaning that their co-interest in the Mitford Street property became solely hers. She remained living there but moved out in about March 2010 into an aged care facility. Simon then sold the apartment for $470 000 in August 2011. Net proceeds were $357 423.43. Rhonda then died less than a month later and the plaintiff, State Trustees Limited, was granted letters of administration ad colligenda bona of her estate which is a limited and emergency grant of administration given by the Court to enable the collection and preservation of the deceased’s property until a grant of probate can be made.[1]
[1]See Re Cohen [1975] VR 187, 188-9.
As a result of court orders, Simon has paid into Court the proceeds which have slightly reduced to $352 959.43. It is that sum that comes to be paid out or divided according to the Court’s determination of the parties’ rights in this case. In that regard, after Rhonda went into aged care in, mortgage payments continued to be taken automatically out of Simon’s mortgage account for a total of $12 077. The plaintiff contends that beneficial interests are to be determined at the time of purchase of the land, and mortgage repayments do not constitute a contribution to the purchase price. That is a correct legal proposition. It accepts, as it must, that the defendant deserves to be repaid those mortgage payments, but it says that should be subject to a set off for the costs of this case and other financial adjustments all of which will inevitably exceed that amount. Under bequests in Rhonda’s will, Simon was given 15% of her residuary estate, as was Adrian. I gather the proceeds of sale will be the principal asset if the plaintiff succeeds.
Simon’s case was, I am afraid to say, not able to be clearly articulated. It was not much more elaborate than saying that as the property was in his name, it belonged to him and, as he put it, “possession was nine-tenths of the law”. The Court had to labour with him to ensure he understood the issues in the case and to attempt to elicit for itself the grounds, if any, of his opposition to the claim. He has never filed a defence. In the two injunction proceedings to preserve the sale proceeds, he did not file any opposing material. And, as I will show later, not even the amiable intercession of his uncle John Thomas Hassett (a retired County Court judge and an important witness in this case) enabled him to ascertain from Simon the grounds of his resistance.
Despite all that, Counsel for the plaintiff asks the Court not to make any adverse findings about his credibility, that is, his credibility as a witness. I need not do so for the purposes of fact finding or the evaluation of evidence. For my own part I should record that there were many moments when Simon’s faltering or distracted manner in Court, or his perplexing or evasive responses to questions in cross examination, made me unsure whether he was very well in court, or was concentrating. He revealed he suffers from seizures, and he suffered one outside court during the lunch adjournment on the third day of trial requiring him to be rushed to hospital. He assured me he had recovered when proceedings resumed on the fourth day of trial, on 6 December 2012. But lest there be any question about it, I do not regard there to have been any impairment in comprehending the case put against him and what was required of him in a court of law should he wish to oppose the claim made. It was more a case of passive resistance and an insistence that the plaintiff should be made to prove the case.
At the outset, I should state my decision: the plaintiff has proved its case. There are no grounds for denying it. All the objective evidence is supportive of it and justice requires that, with some adjustments in Simon’s way, the plaintiff obtain the nature of the relief that it seeks. This is close to a paradigm case of an implied or resulting trust with no real possibility of a presumption of advancement as between parent and son. The apartment was meant to be for them and it would truly be unconscionable for Simon to assert his legal title to prevail over the intention that his parents be the true owners. He held the property for them.
Further, on the facts, as I find them, there is no evidence to show that the defendant contributed to the purchase price. Hence there is no case of equitable co‑tenancy in the land. The idea (from him) was that he would obtain $7000 from the government’s first home owners’ grant. He got the grant. It was paid into his bank account, but it cannot be shown that it was ever applied to the price one way or another, or in any case, that it was intended that Simon was to gain an interest in the property commensurate with that “contribution”.
There is some equitable accounting to be done concerning the fortnightly mortgage instalments that had to be made by Simon as mortgagor after his mother left the apartment and before he sold it. Even then, there is a question whether that amount should be subject to a set off for costs which will inevitably exceed $12 000, or whether payment should await an accounting of liabilities as between him and the estate as part the administration of Rhonda’s estate after probate is granted. I doubt if there truly is a set off. I shall return to that ultimately.
The facts in detail
Although the amount at stake is not a large sum, the trial had its evidentiary burdens on the plaintiff because of the death of the Hassetts and the need to prove their intentions at the time of acquisition. The facts concerning the personal life of the Hassett family were adduced mainly through the evidence of John Hassett, the defendant’s uncle and Adrian Hassett and not altered by Simon’s evidence. The narrative that follows ought to be treated as findings of fact.
Daniel Hassett and Rhonda McMahon were married on 30 October 1963 in Bendigo. He was born in 1941, she in 1944. The defendant was born in 1968. His brother Adrian (a witness for the plaintiff) was born in 1973. There was an order absolute for the dissolution of the marriage on 6 June 1978. In that year, Rhonda became remarried to James Michael Peters, a marriage that did not last. Dan and Rhonda resumed cohabitation and resumed a life together as de facto husband and wife. James Peters is now deceased and has nothing to do with this case.
Dan Hassett was employed as a hospital nurse. Rhonda was employed as an administrator and secretary at the Law Institute of Victoria. They were of very modest means. Although they had once owned property in Bendigo, they otherwise lived in rented premises together around the bayside area near St Kilda. Prior to moving into the Mitford Street apartment, they lived in rented premises in Beaconsfield Parade, Albert Park with both their sons.
For the plaintiff, direct evidence about the circumstances culminating in the decision to purchase the Mitford Street property came from Adrian Hassett who was personally involved in family discussions, and indirectly from John Hassett to whom Dan had explained the history in early 2009 at a time when John’s help was sought because Dan was ill and wishing to sell the unit and return to Bendigo, but problems with Simon had emerged. That evidence corresponded in substance with Adrian’s evidence and some powerful objective evidence to which I shall return later.
The accounts given by John Hassett were meaningful and credible. They were stated with care and sensitivity for all concerned. I accept them. His evidence was not really challenged, nor was the material evidence from Adrian. More importantly, the defendant did not really dispute his brother’s account of the circumstances and conversations with the parents that informed the decision to buy the apartment.
The starting point is the fact that Rhonda sustained a workplace injury for which she sought compensation. She obtained lump sum compensation in 1999 for something between $180 000 and $200 000. The precise figure is unknown, and does not matter. In intra family discussions, both sons gave evidence that the parents wanted to use that money to purchase a property and not have to rent again for the rest of their lives especially as Rhonda had ceased working. Both sons supported the idea and wanted to see their parents happy in a place of their own in an area they desired. Both sons researched the availability of suitable properties and conducted inspections for their parents. They were asked to find a place near shops and transport, preferably in St Kilda. They eventually discovered the Mitford Street property. Their parents inspected it and wanted it.
The plaintiff’s pleadings speak in terms of an agreement as the foundation of a resulting trust. Of course, in the context of family or domestic matters, it is an agreement in the sense of a consensus or an arrangement rather than a dealing that was intended to create business or legal relations. It seems to me the idea arose out of natural love and affection or at least the desire to see the parents happy. For the purposes of the law of trusts, it is a matter of seeing it as a matter of common intention.
The Hassetts needed mortgage finance in addition to the funds from Rhonda’s compensation payment. Simon, who was working as a programmer in the information technology section of the ANZ Bank, made enquiries about obtaining for his parents a loan to buy the property. He said he was best placed to do so.
According to Adrian (and not disputed by Simon) Simon later told his parents that because of their age and single limited income, they would not qualify for a loan in their own name. Any loan would have to be in Simon’s name. He said he had “shopped around” and decided to obtain a loan from HSBC Bank Australia Limited. Secondly, although Adrian said he did not know about it, Simon told his parents that as named purchaser and borrower, he would also get the first home owners’ grant of $7000.
The evidence is clear enough about the consensus. There was not a distinct occasion when it was discussed. It was more a matter of ordinary family discussion in a household setting. But it was agreed that the obligation to pay the mortgage payments would be the responsibility of the parents, consistent with the idea that it was to be their home. The parents were to pay the rates. They were to maintain the property. There is no evidence that this acquisition was to be for the benefit of Simon or Adrian or to assist them in some way. It was to be the parents’ home.
It is not clear whether the $7000 grant if obtained was intended to be applied by Simon as his “contribution” to the price in the sense of a participation interest; or whether it was more a case of him giving his parents that bounty or him gaining that money for himself as the incidental benefit of him being the purchaser and borrower. Whatever the discussions may have been, I find there was no evidence of an intention that Simon was to have a shared interest of some sort in the property referable to a financial contribution of that amount or any other amount. If there was to be a “contribution” of “his” $7000 then it was to be with no strings attached. The idea was for his parents to have a place of their own, and therefore be responsible for paying for it and paying the mortgage loan and all outgoings as owners. And that is how the matter played out.
By contract of sale made on 22 November 2001, the defendant purchased the Mitford Street property for $251 000. A 10% deposit of $25 100 was payable. The balance of $225 900 was due on completion of the sale on 7 February 2002. There is documentary evidence to show that Rhonda had available to her total funds of about $125 259 in an account designated as “Perpetual Select Super Plan”. There is no doubt that Rhonda’s lump sum payment was to be the major source of funding for the purchase. Simon did not pay anything towards the deposit or any of the costs of purchase such as stamp duty.
Simon obtained a loan facility of $150 000 from HSBC Bank Australia Limited. That is documented. A letter of offer from the bank to him dated 14 January 2002, which was countersigned by him on 30 January 2002, states the essential terms as being: (i) a registered first mortgage over the land; (ii) a 25 year loan at 4.69%; (iii) interest payable fortnightly in arrears; (iv) for the first 13 months the instalment was $392 and thereafter $443 per fortnight; and (v) those mortgage payments would come out of a designated account identified as account No. 001-090042-421 which was an on-line savings account held by the defendant. The financial accommodation was more than was needed for reasons not shown.
Completion of the sale occurred on 7 February 2002. Added to the purchase price of $251 000 there was stamp duty of $10 720. After adjustments, the total acquisition and transfer costs were $262 652. Bank statements show that on that day the bank provided settlement funds of $88 738.76 which is about 33% of the total. Thus, the unborrowed amount was about $173 914. Simon does not say that he actually contributed anything to that sum. He accepted in cross‑examination that Rhonda’s lump sum compensation payment was to be the major source of funding for the purchase, and that in fact it was. Records from Perpetual Investment Management Limited show that Rhonda held an account which was closed on 1 November 2011. But before then, a total of $125 259 was available and was withdrawn.
There is no documentation adduced at all concerning the application for the home grant or its conferral. The only document before the Court is an HSBC bank for Simon’s on-line savings account which shows an entry on 28 February 2002 “FIRST HOME OWNERS GRANT PMT” for $7000. That was the same date as Simon was registered as owner. His vague evidence was that the $7000 “was there as a buffer”. He accepted that this money was not applied in some way as a contribution to the acquisition cost and he cannot say that it somehow made its way as a contribution to the mortgage. It did not.
It is here I refer to the evidence of John Hassett. His evidence is that in early 2009 his brother Dan told him that he had cancer and his health began to deteriorate. In mid 2009 he had told John about the circumstances surrounding the acquisition of the Mitford Street property in 2001. He was told by Dan that he and Rhonda had purchased the property and were the owners of it although the title to the property was in Simon’s name. Dan told him that Simon had said that it would be best if the property were purchased in Simon’s name and that Simon would contribute $7000 from the first home owners’ grant.
John Hassett’s evidence was that by mid-2009, Dan and Rhonda were contemplating returning to Bendigo because of Dan’s illness and they wished to sell the Mitford Street property. It was at about that point that Simon asserted his ownership of the property. Dan and Rhonda attempted to reach some agreement with Simon but a dispute remained. The Hassetts then engaged a solicitor who lodged a caveat on their behalf claiming an interest under a constructive trust. Endeavours to find a solution to the dispute with Simon failed and John Hassett was called in to try and assist but could not. Daniel Hassett made a will on 6 November 2009 the precise terms of which are not material. What matters is that he gave the whole of his residuary estate, being all his real and personal property owned at the day of his death, to his wife absolutely. Thus his interest under the alleged resulting trust as her co-beneficiary would pass to her.
The writ was filed on 22 December 2009 and Dan died 3 days later. Jumping ahead to 2011, there is a critical piece of documentary evidence that near establishes the plaintiff’s case. John Hassett said he really could not ascertain the grounds of Simon’s resistance to his parents’ rights to the property beyond an assertion by Simon that it was his inheritance. He had the prescience to send a most reasonable e-mail letter to Simon designed to ascertain the facts. It was sent on 16 March 2011 directly to Simon and it said (with my emphasis):
Good evening Simon,
Thank you for your phone call in response to my recorded message. It was good to speak to you on Monday evening and to chew the fat. I was pleased that you indicated that you wished to avoid litigation in relation to the flat. I fervently share that wish.
You have previously said to me that you wished to protect your inheritance and I fully understand that wish. However your inheritance is an issue separate to ownership of the flat.
As I told you, your mother and Adrian have asked me to take over the conduct of the Supreme Court action on their behalf. I don’t wish to undertake that role because I would like to have the best possible relationship with you, with your mother and with Adrian.
If I agree to take over that conduct I may become liable to pay the charges made by the lawyers which may amount to thousands of dollars. I am loathe to undertake that role and will only do so if I am assured that I have an accurate account on the facts surrounding the purchase of the flat.
My understanding of the facts is as follows:-
1.The flat was purchased by you on 23/11/2001 pursuant to an agreement between your parents and yourself.
2.The substance of that agreement was that the flat was to belong to your parents, that your parents would provide substantially towards the cost of the purchase of the flat, that you would provide the balance of that cost including arranging a loan by way of a mortgage in your name on the property and that your parents would make fortnightly payments in repayment of that loan.
3.The flat was purchased by you for $251,000.
4.Settlement of the purchase took place on or about 21/1/2002.
5.The amounts provided by you were –
(a)$7,000, and
(b)$88,738.76 [that is, the mortgage loan funds]
6. The balance of the purchase price was provided by your parents.
7.From March 6, 2002 your parents made payments of $450 per fortnight towards repayment of the mortgage loan.
8.On May 5, 2008 the amount outstanding on the mortgage loan account was $80,050.67.
Please either confirm the accuracy of those facts or inform me of any suggestions corrections to them.
Regards, John
To that communication, on 22 March 2011 Simon Hassett responded by email in this way –
Hi John,
From your email, it would appear you have a good understanding of the facts which appear correct. Although I cant (sic) confirm point 8 of (sic) the top of my head but it also appears correct so no amending required.
Thanks and Regards John to you and all,
Simon
At trial Simon did not disavow this admission. As for the mortgage payments, there should be no doubt that Dan and Rhonda made all mortgage payments until May 2010. Simon did not really contend otherwise. Their payments were made into Simon’s on‑line savings account which was the conduit or the clearing account from which the fortnightly mortgage payments had their source for payment into a separate mortgage account. The plaintiff has taken the step of investigating all available banking and financial records to give certainty to that conclusion, and I think it certainly has. There is evidence that Dan Hassett held an account with a branch of the Westpac Bank in Balwyn. The bank has confirmed that $450 was transferred on a fortnightly basis from that account to “Simon Hassett mortgage” from 6 March 2002 to 6 March 2006. That corresponds with the HSBC statements of account which show an entry per fortnight of $450 with the narration “MORTGAGE DAN HASSETT”. As from April 2006, those statements narrate a “CASH DEPOSIT” of $450 per fortnight. There is no cross-documentation showing the source of that cash deposit but Simon does not dispute that it came from his parents.
As from March 2007, there are financial statements from “Nurses First” a division of Police & Nurses Credit Society Ltd for a savings account in the name of Dan Hassett. Those statements show that as from 15 March 2007 there was a “Recurring – Transfer Withdrawal – Simon Hassett” for $450 every fortnight. That continued, according to those statements, up to 6 May 2010 when the balance on that account reduced to $131.81. That date is significant because the evidence is by about March 2010 (by which time Dan Hassett had died) Rhonda had stopped living at the Mitford Street property and was admitted into an aged care facility at Napier Street. Bank records from HSBC confirm that the last payment of $450 from D.J. Hassett was on 6 May 2010.
Over their time of occupation, the parents paid for improvements to the property. The facts were not detailed but there is enough to conclude that they paid for painting works, an air conditioner, new carpeting and some improvements to the bathroom. Simon did not really dispute this. There was also no dispute that they paid for the rates and outgoings on the property. Simon sought to assert that he also paid some outgoings but when pressed to identify them he simply could not do so. In the end, he resorted to saying that his contribution was to “manage” the mortgage loan. If by that he means that he incurred the responsibility or legal liability as borrower and mortgagor, then that is plainly so. But he did that faithful to the agreement or consensus he had reached with his parents under which he was to be the person in whose name the loan was to be taken out. Apart from efforts he made to “shop around”, there is simply no basis for saying he incurred some extraordinary burdens in managing the mortgage loan or that he made other financial or non-financial contributions to the acquisition of the property or to the maintenance and preservation of the property. What he did, as I have shown, is to make payments of the mortgage after his mother had vacated the property and up to the time that he decided to sell the property.
The reference to him “maintaining” the property was, on the evidence, a misconception. As his answer seems to have acknowledged, when he spoke of “maintaining” the property he meant not so much the property but taking responsibility for the mortgage in the sense of obtaining it and being the person liable to pay even though repayments were not made until his mother ceased living in the property. That is, the mortgage was in his name and in that sense he was responsible for it. Otherwise, when he was pressed to identify what he added to the property, financially or non‑financially, directly or indirectly, the most he could say was his indirect contribution was getting the loan in the first place.
If one compares the mortgage debt balance between 6 May 2010 ($86 215.55) and the mortgage debt as at 19 August 2011 ($82 277.95) the differential is $3937. Over that time, HSBC statements of the mortgage account show that fortnightly payments continued to be made, presumably from debits to Simon’s on-line savings account in the following amounts –
(a)$5896.43 for the six month period from May 2010 to November 2010;
(b)$5149.67 for the subsequent six months to May 2011;
(c)$635.55 in June 2011; and
(d)$395.89 in July 2011.
That gives a total of $12 077.54. The figures in June and July lessen because in about June 2011, Simon offered the property for sale by auction. On 3 July 2011 the property was sold for $470 000. Completion of the sale occurred on 19 August 2011. A statement of adjustment shows the balance due to the vendor of $423 861.06. According to bank records, the total pay out figure on the mortgage was $82 577.95.
Rhonda Hassett made a will on 27 July 2011. By this time, of course, these proceedings had been commenced and the property was sold or about to be sold. It was also shortly prior to her death on 4 September 2011. Under that will, she appointed the plaintiff as her executor but more significantly, under clause 5 gave the whole of her estate upon trust for the benefit of six beneficiaries, including the defendant as to 15%, the defendant’s son as to 20% and the defendant’s brother Adrian as to 15%. Thus, when the defendant spoke of the preservation of his inheritance, he and his son stand to benefit 30% of his mother’s residuary estate in any event. If as appears to be the case, the major asset was the Mitford Street property then it comes down to a 30% share of the funds in court.
On 10 August 2011, Hargrave J ordered that the net proceeds of sale be invested by the defendant’s solicitors in an interest bearing Controlled Monies Account and not to be released without an order of the Court or the consent of the parties. As it turned out, those funds were not put into an account until April 2012. That is because, his solicitors say, Simon refused until then to sign bank authorities despite repeated requests to do so.[2] Subsequently, the defendant’s solicitors ceased acting and the apparent disorder with the handling of the moneys led Pagone J to make an order on 4 October 2012 that the proceeds of sale, less an amount of $10 416.72 (which was owed by the defendant to his lawyers for fees) be paid into Court to abide the outcome of these proceedings.
[2]See affidavit of A D Sutton sworn 2 October 2012 at para 7 and 8.
Thus, in the end, on the evidence, the defendant does not dispute positively the plaintiff’s case. He has accepted the essential allegations said to constitute the agreement under which the parents bought the property but did so in his name. The highest his case gets to is that he took the responsibility to arrange the mortgage finance, to apply for the first home owner’s grant, and incurred the legal responsibility of being responsible under the mortgage and ensuring that repayments were made. Until his mother departed the premises, the repayment of the mortgage instalments was occurring as a matter of funds transfers from his parents, and thereafter, there were direct debits from his own account until he sold the property. At no time has there been any assertion by him that the property was bought for his benefit in order that his parents would look after him or his son. I should say for completeness (even though it is not strictly relevant to the issues in this case) has he ever advanced a case or facts to say that he effected maintenance of improvements to the land such as might justify the law’s equitable intervention (under the remedial device of constructive trust) to recognise in financial terms the improvements to or preservation of the property.
The applicable law
This case does not call for anything but an orthodox application of the principles concerning implied or resulting trusts.
A resulting of implied trust arises by presumption of law: see generally Heydon and Leeming, Jacobs Law of Trusts in Australia.[3] It will be presumed where property is purchased and the legal title is vested in someone other than the person who provided the purchase money. The law presumes that the person who paid the price intended to retain the beneficial interest in the land. The presumption may be rebutted if equity infers that the purchase was made by someone under an obligation to support the legal interest holder, such as a wife or child. Where more than one person contributes to the purchase price, but title is in the name of only one of them, there will be a presumption of a resulting trust on an equitable joint tenancy in proportion to their contributions.
[3]7th ed. at [1210] cf.
These presumptions of equity were affirmed by the High Court of Australia in Calverley v Green.[4] Gibbs CJ made the following statement of principle:[5]
Where a person purchases property in the name of another, or in the name of himself or another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the properties put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such – not, e.g., as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money. [citations omitted]
[4](1984) 155 CLR 242.
[5]At 246-7. See also Deane J at 266-7.
Further, the fact that some of the mortgage debt was repaid by Simon is irrelevant to the determination of the beneficial interests. The relevant intention is that which existed at the time of purchase of the property concerned. Gibbs CJ went on to say:[6]
The extent of the beneficial interest of the respective parties must be determined at the time when the property was purchased because that is when the trust was created. The fact that the mortgage debt was repaid by the appellant is therefore not relevant in determining the extent of the interests of the parties in the land, although it may be relevant on an equitable accounting between the parties.
[6](1984) 155 CLR 242 at 252.
I need not repeat the evidence. Applying those principles, it is sufficient to dispose of this case by saying a resulting trust arose because:
(a)there is no doubt that the property was bought for the benefit of the parents but was put in Simon Hassett’s name because, as a matter of expedience, he took out the home loan and mortgage in his name, but his parents were responsible for the repayments;
(b)Simon did not contribute anything to the purchase price and no equity in the land arose in his favour;
(c)as a matter of necessity rather than manifestation of any antecedent intention, he paid the mortgage payments after his mother left the property, but that does not give a beneficial interest, only a claim for reimbursement.
Disposition
The amount that was received into the Funds in Court office on 9 November 2012 was $352 959.43. Although this is now a claim over moneys in Court, it is appropriate for the Court to make declarations of the parties’ rights that legally inform the orders for payment out of those moneys. The moneys are the proceeds of sale of land that was held on trust for the Hassets and now for the plaintiff. Therefore the gross amount belongs to the plaintiff. But, in the result, the defendant is entitled to a reimbursement or indemnification out of the trust estate for his mortgage payments of $12 077.54. I could order that amount of the moneys in Court to be paid directly to him. But Mr Marantelli submitted that the plaintiff, if successful in its case, ought receive all the moneys in Court and ought be given an order for costs. And from there, it was submitted, the reimbursement of $12 077.54 ought be held back from the defendant until the plaintiff’s costs were paid.
It is plain that the plaintiff’s costs will exceed $12 077 as it has been put to much trouble and expense. Questions will inevitably arise whether the executor, once appointed, can also look to recouping costs owing to the estate by deducting them from the defendant’s legacy of 15% under the will. Moreover, it was said the executor will have to consider what steps or action can be taken against Simon Hassett for the $10 416.72 that came to be deducted from the net proceeds of sale for his legal costs. That is, he wrongfully used trust assets to discharge a personal obligation.
As things stand the plaintiff has only a limited grant of administration and until a grant of probate is given by the Court the plaintiff is in no position to begin an administration of the deceased estate. Ultimately it was submitted that in the interests of minimising the prospect of further litigation and expense to a small estate, any order for payment of $12 077 to the defendant ought be stayed until probate is granted and an executor or administrator can consider the state of liabilities as between the estate as creditor and the defendant as debtor as part of the final administration of the estate.
First, I see no reason why the plaintiff as successful party should not have its costs of this case. There is no disentitling conduct. Even though there is an accounting to be done for the $12 077, in the way the case was conducted by the defendant I do not regard that as partial success for the defendant. He never put in a claim for money. He simply opposed the plaintiff’s case without revealing his grounds. Even before trial the evidence from John Hassett was that he could not tell what the defendant’s grounds were beyond a vague assertion of protecting his inheritance. I cannot help but think that it had something to do with the antipathy between him and his brother. Whatever the explanation, the defence had no merit and the plaintiff had to go to much trouble to ascertain the facts with precision, which included all the bank statements to ascertain how the mortgage was paid, the amounts involved, and the dates. In effect the determination of the reimbursement amount was the result of the plaintiffs own discovery of the facts. The plaintiff must have its costs.
Secondly, I do not think there is a set off at law between costs (not yet quantified) and the $12 077 as there are no mutual liquidated debts between the parties. For an equitable set off, the mere existence of countervailing claims is not sufficient: see generally Spry, Equitable Remedies.[7] What must be established is that the plaintiff’s entitlement to costs is so closely connected to the $12 077 “claim” that it would be unjust for Simon Hassett to collect now without allowing a set off.
[7](Eighth ed) at p 173ff, asp at 176
Ordinarily, it could not be said that costs of litigation have the requisite nexus. But I can see the equity of the plaintiff’s position in the peculiar situation that has arisen here. The defendant has caused the plaintiff to incur the costs in order to ascertain the state of facts because he as trustee did nothing before and during this litigation to reveal facts or to constructively advance the matter, especially as he was a beneficiary under the will. He as trustee under the resulting trust stands to obtain a reimbursement or indemnity for the mortgage payments made for the benefit of the trust estate, yet in the events that have occurred, he has also in my judgment acted irresponsibly and in a cavalier way so as to unnecessarily create cost and expense for the trust estate for which he will be liable. I think, all things considered there is no injustice in ordering a stay of the payment of $12 077. Those moneys can be preserved by the executor, pending a reconciliation of mutual liabilities to be determined as part of the administration of the estate.
Subject to any final submissions or refinements from the parties, I propose making the following declarations, and will invite submissions especially on the proper dates in paragraph 1:
1.The defendant who on 28 February 2002 became registered proprietor of the land (“the land”) known as 1/6 Mitford Street St Kilda Victoria (being the land in certificate of title volume 10162 folio 688), has always held the legal title to that land on trust for the benefit absolutely of –
(a)Daniel James Hassett and Rhonda Margaret Hassett between 28 February 2002 and 25 December 2009; then
(b)Rhonda Margaret Hassett solely between 25 December 2009 and 4 September 2011; and then
(c)the deceased estate of Rhonda Margaret Hassett between 4 September 2011 and 19 August 2011.
2.The moneys paid by the defendant into the Senior Master’s (Funds in Court) office by order of the Court on 4 October 2012 and since held in account No. 76113, which are the remaining net proceeds of a completed sale of the land made by the defendant, belong absolutely to the deceased estate of Rhonda Margaret Hassett as beneficial owner of the land sold, but subject where necessary to the following orders.
Then, I would propose the following ancillary orders:
3.There be paid to State Trustees Limited (ACN 064 593 148) from Common Fund No. 1 and debited to account no. 77113 an amount equal to the balance of account No. 76113, but subject to the retention of a sum sufficient to cover any taxation liability.
4.Upon the payment of a sum equivalent to the balance of the said Account, in accordance with paragraph 3, there also be paid to State Trustees Limited from Common Fund No. 1 and debited to Account No. 10, an amount equivalent to interest accrued on the balance of account no. 76113 from 9 November 2012 at the rate last fixed in respect of Common Fund No. 1.
5.The plaintiff shall pay the defendant the sum of $12 077.54 out of the moneys received from Funds in Court, but there be a stay of this order pending final administration of the administration of the deceased estate of Rhonda Margaret Hassett, deceased, or until further order of the Court.
6.For the purposes of paragraph 5, the plaintiff shall make such arrangements as are effective to isolate and preserve those moneys in an interest bearing account.
7.The defendant shall pay the plaintiff’s costs of this proceeding including all reserved costs.
8.The parties have liberty to apply to the Court for orders and directions for the carrying out or working out of these orders.
Subject to the convenience of the parties, I shall convene a short hearing on Thursday 28 February 2013 at 10am to finalise these orders.
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