Szymanska v Szymanski (No 2) - [2015] SASC 191

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SZYMANSKA v SZYMANSKI (NO 2)
[2015] SASC 191
Judgment of The Honourable Justice Blue
9 December 2015
REAL PROPERTY - PARTITION OF LAND
REAL PROPERTY - PARTITION OF LAND - PARTITION OR SALE IN PARTITION ACTION OR SUIT - SALE IN LIEU OF PARTITION
REAL PROPERTY - PARTITION OF LAND - PARTITION OR SALE IN PARTITION ACTION OR SUIT - COMPENSATION FOR IMPROVEMENTS
An order was previously made for the sale of the property owned by the plaintiff and the defendant as tenants in common.
In 2000 or 2001, the plaintiff moved out of the property. The defendant continued to reside in the property, paying the rates, taxes and other outgoings and undertaking repairs.
The defendant contends that he acquired an additional 19.1% or 16.8% interest in the property in February 2000 by reason of a payment to the plaintiff of $16,810.39 when it was worth $88,000 or $100,000. Alternatively, the defendant claims interest on the payment. The defendant claims contribution for rates, taxes and other outgoings paid and repairs undertaken by him.
The plaintiff seeks to offset against the defendant’s claims an occupation fee for the value of the defendant’s sole occupation of the property.
Held:
1.       The defendant did not acquire an interest in the property by reason of his payment of $16,810.39 to the plaintiff (at [52], [59]).
2.       The parties entered into an implied contract in 2001. Terms of the contract included that the defendant would reside in the property rent free, the plaintiff would have the benefit of the loan interest free and the defendant would pay the rates, taxes and other outgoings and maintain the property (at [68]).
3.       Pursuant to the contract, the plaintiff and defendant are entitled to share equally in the net proceeds of sale of the property subject to the plaintiff paying to the defendant out of her share $16,810.39 (at [70]).
4.       Alternatively, on an equitable accounting as between co-owners, the plaintiff and defendant are entitled to share equally in the net proceeds of sale of the property subject to the plaintiff paying to the defendant out of her share $16,810.39 (at [91]).
5.     The parties are entitled to 50% of the net proceeds of sale of the property. The defendant is entitled to payment of $16,810.39 out of the plaintiff's share of the net proceeds (at [93]).
Guardianship and Administration Act 1993 (SA); Law of Property Act 1936 (SA), s 26, s 29, s 30, s 31; Mental Health Act 1993 (SA), referred to.
Maddison v Alderson (1883) LR 8 App Cas 467, discussed.
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; Chatterton v Chatterton (1989) 52 SASR 337; Cooney v Burns (1922) 30 CLR 216; Croghan v Grosvenor (1991) 57 SASR 545; Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Australia) Pty Ltd (1988) 5 BPR 11,110; Kanak v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] SASC 191
Decision Date: 9 December 2015

CaseChat Overview and Summary

Joanna and Tomasz Szymanska and Szymanski were co-owners of a property at Kilburn. The dispute before the court centred on the division of the property and whether Tomasz had acquired a proportionate interest by paying Joanna $16,810.39 in February 2000. Joanna contended that this payment represented the purchase of her interest in the property, while Tomasz denied this agreement and claimed there was no contract in place. The court was tasked with determining whether a contract existed, the respective interests of the parties, and the compensation due for improvements and other contributions.

The central legal issues were whether Tomasz's payment to Joanna constituted a purchase of her interest in the property and, if not, the appropriate division of the proceeds from the sale of the property between the parties. The court also needed to assess whether the parties had an agreement governing their rights and duties as co-owners and, if not, how the assets should be equitably divided. Additionally, the court had to determine if Joanna was entitled to any compensation for the improvements she made to the property.

The court held that there was no contract for the sale of Joanna’s interest in February 2000, despite Tomasz's payment. Joanna and Tomasz each held a 50% interest in the property. The court found that the payment of $16,810.39 was not a purchase of Joanna’s interest but rather a loan. Joanna and Tomasz were entitled to 50% of the net proceeds from the sale of the property. Tomasz was also entitled to be repaid the $16,810.39 from Joanna's share of the net proceeds. The court noted that the occupation fee exceeded the sum of the rates, taxes, and maintenance undertaken by Tomasz, leading to no net amount payable by either party. The court would hear further submissions regarding the final orders to be made.

The court ordered that Joanna and Tomasz each held a 50% interest in the property. Tomasz was to be repaid the $16,810.39 from Joanna's share of the net proceeds of sale. The court would determine the final orders after further submissions from the parties.

Orders

Orders of the court

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Background

Background to the litigation

The following issues arise:1.Did Tomasz acquire a proportionate interest in the property by reason of his payment of $16,810.39 to Joanna in February 2000?2.Did the parties enter into a contract upon or before Joanna’s departure from the property governing their rights and duties as co-owners?3.If not, to what amounts are the parties entitled on an equitable accounting as between co-owners?Background In July 1989, Joanna and Tomasz inherited the property from their father upon his death. They continued to live in it together with their mother, who moved into a retirement village in July 1999. It was not transferred into their names until December 2000 when they became registered proprietors as tenants in common. In 1999, Joanna started looking to buy her own house. Joanna gave evidence that she had several discussions with Tomasz in which she said that she would need money to help her to buy a house and furniture and that the Kilburn property was worth around $100,000. She asked Tomasz if he would like to buy her interest for $50,000 or would agree to their selling the property and he would not agree to either course. Tomasz gave evidence denying any such discussions in 1999 or 2000 but saying that there was a discussion in 1989 after their father died about the possibility of his purchasing Joanna’s interest. I address this difference below. In February 2000, Joanna located a land and house package at Walkley Heights that she wished to purchase. The total cost was about $172,000. She told Tomasz about it and said that she would need to borrow money on mortgage which she would be paying off for a long time. Joanna gave evidence that she again asked Tomasz if he would buy her interest in, or would agree to their selling, the property and he would not agree to either course. Tomasz gave evidence denying any such discussion in February 2000. I address this difference below. Shortly thereafter, during a further discussion, Joanna asked Tomasz if he would assist her financially to buy the house and furniture. At that time, Tomasz had approximately $16,000 in a term deposit. On 21 February 2000, he cashed the term deposit and was given a bank cheque in return for $16,810.39 intending to give it to Joanna. He did not give it to her immediately. On 23 February 2000 Joanna executed a building contract with Statesman Homes to construct a house on the Walkley Heights land for $115,205. In February 2000, during the course of an argument, Tomasz screwed up the bank cheque and threw it at Joanna, who caught it. Joanna used the money mainly towards furniture for the Walkley Heights house. On 18 March 2000, Joanna signed a land purchase agreement with the developer to purchase the Walkley Heights land for $56,950. On 18 April 2000, Joanna settled on the purchase of the Walkley Heights land. On 18 April 2001, Statesman Homes issued a certificate of practical completion of the house at Walkley Heights. It is in dispute when Joanna moved out of the Kilburn property. Joanna gave evidence that it was in May 2001. Tomasz gave evidence that it was in or before February 2000. I address this difference below.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On an equitable accounting, leaving aside the principal sum of $16,810.39 which is payable in any event pursuant to the February 2000 contract and the liability to pay which is acknowledged by Joanna, there is no net amount payable by either party to the other because the occupation fee exceeds the sum of the rates and taxes paid and maintenance undertaken by Tomasz and any loan fee that might be credited in favour of Tomasz.Conclusion Joanna and Tomasz have a 50% interest in the property. There was no contract to convey and no conveyance of a proportionate interest in the property in February 2000. Joanna and Tomasz are entitled to 50% of the net proceeds of sale of the property. Tomasz is entitled to payment of $16,810.39 out of Joanna’s share of the net proceeds. I will hear the parties as to final orders.

Ratio Decidendi

Legal Principle Established

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