Turvey v Kais

[1994] HCATrans 84

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
              Perth         No P7 of 1994  No C17 of 1993

B e t w e e n -

MARYJANE TURVEY

Applicant

and

DAVID KAIS

Respondent

Application for special leave
  to appeal

MASON CJ
DEANE J
GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON TUESDAY, 25 OCTOBER 1994, AT 3.06 PM

Copyright in the High Court of Australia

MR C.P. SHANAHAN:   May it please Your Honours, I appear for the applicant. (instructed by Butcher Paull & Calder)

MR B.G. BENNETT:   May it please Your Honours, I appear for the respondent. (instructed by Stephen Rando & Co)

MASON CJ:   Yes, Mr Shanahan.

MR SHANAHAN:   Your Honours, it is the applicant’s case that this matter turns on a very simple point, and that is the extent to which an engagement is a non‑ambiguous description of an arrangement entered into between parties in contemporary society.  The point that the applicant suggests is the question which should be considered for special leave is the test as to whether a constructive trust arises with regard to gifts made between partners to a de facto relationship and whether that rests on broad equitable principles or whether it involves a narrow investigation in respect of whether the parties contemplate a de jure marriage.

What the applicant says is that the possibility of a de jure marriage may be part of such an inquiry, but is not decisive and that in this particular matter that the test which was applied by His Honour Mr Justice Ipp in the court below concentrated on the question whether or not the gift made by the respondent to the applicant had been made in contemplation of marriage to the exclusion of a more broad-based equitable inquiry.  The applicant’s case is that that was the nature of the investigation made by the primary judge when he embarked on an investigation of the relationship between the applicant and the respondent.

MASON CJ:   Do you draw any distinction between the sum of $24,954, that is the mortgage moneys, and the sum of $5500, the expense incurred in effecting the improvements?

MR SHANAHAN:   Yes, Your Honour.  The sum of $24,000 was a payment in discharge of a mortgage, and it was characterised by the primary judge as a birthday present, whereas the other amount to which you refer was moneys paid by way of improvement to the unit which the applicant owned when the respondent moved in with her and began the de facto relationship.

MASON CJ:   But are there any differences in legal consequences as between the two expenditures?

MR SHANAHAN:   We would suggest that there are, in the sense that the way in which the payment made in respect of the discharge of the mortgage was presented as a gift, whereas the other payments made by the respondent were found by the trial judge to have been made for a variety of reasons and he actually refers to a series of motivations which he said he found motivated the respondent, which included the respondent’s generosity, the respondent’s pride in the improvements he was making to the unit and the fact that the respondent himself wanted to make changes to the unit, whereas the payment in respect of the discharge of the mortgage was made, as was found by the primary judge, by way of a birthday gift or some type of gift, and that there is an essential difference between those in the sense that the improvements made by the respondent were made by way of a contribution at some level to what he thought the unit should be like, whereas the other one was just an absolute gift, in the submission of the applicant.

In respect of the inquiry that should be embarked upon when considering whether a gift of this nature gives rise to a constructive trust, it is the applicant’s submission that such an inquiry has to go beyond an inquiry as to whether or not the parties were engaged.  It has to investigate the nature of the engagement, it has to go to the equitable principles which relate to the way in which the law will look at property passed between people in these circumstances, and in this situation it is suggested that the engagement which was held between the applicant and the respondent in December of 1988 was an engagement which the applicant entered into, not by way of marriage, but rather it was by way of an avoidance of marriage, and whilst that may seem unusual perhaps to ‑ ‑ ‑

GAUDRON J:   But should we look at her attitude rather than what the respondent took from the situation ‑ when I say “took”, what he understood by the situation?

MR SHANAHAN:   Indeed, Your Honour.  I think both are very important, and it is the applicant’s submission in this case that the applicant had indicated to the respondent, both expressly and by her conduct, that it was not her intention in respect of the engagement in December 1988, that it constituted a promise to marry, and what the applicant ‑ ‑ ‑

GAUDRON J:   It was window dressing entirely, was it?

MR SHANAHAN:   Well, I do not think so, Your Honour.  In her evidence before the primary judge she gave evidence that it was one way that she could perhaps be attached to the respondent without making a commitment to marriage.  In this particular instance, the applicant had just finished a previous marriage, and she gave evidence in respect of that marriage that she was not prepared to immediately go from one situation, in which she had been married, into another, and that that had made her reticent with regard to her relationship with the respondent.

It may well be that this is an arrangement which is unlikely to ‑perhaps a point of view with regard to an engagement which developed in the past in respect of the Full Court’s investigation of the relationship between the respondent and the applicant, many of the cases which were cited with regard to the law given in contemplation of marriage were decided in the 19th century and the early portion of this century, and it is the applicant’s case, with regard to its application for special leave this afternoon, that the meaning of “engagement” has changed; that it has become euphemistic, that there are circumstances in which de facto couples enter into an engagement, or represent themselves to the world as having been engaged, where their actual relationship is not based on a promise to marry, and that therefore, when it comes to an investigation of a division of property with regard to the gifts given between the parties, that it behoves the court to investigate the nature of their engagement to determine what exactly the parties mean when they say that they are engaged.

It is the basis of the applicant’s application this afternoon that in this particular instance, when the applicant said to the respondent in December 1988 that they were engaged, what she meant was that they were together in a de facto relationship, that she did not intend marriage and that until what is characterised in the applicant’s outline of argument as the second engagement in September of 1989, there was no basis on which a court could infer a promise to marriage, and that is based on the authority of Skipp v Kelly, referred to in the applicant’s argument, that the court will not infer a promise to marry unless there has been both the gift of an engagement ring and also an arrangement of a date to be married.

The applicant’s case is also based on evidence given before the primary judge that the respondent continued to ask the applicant to marry him during the intervening period between the first engagement and the second.  The difficulty that the applicant has, in respect of this application, is that it encourages incredulity amongst those perhaps who believe that an engagement constitutes a promise to marry, and if the Court does not accept that the meaning of “engagement” now has an ambiguous meaning with regard to these matters, then the applicant cannot succeed in respect of its argument that, in this particular instance, the court should have investigated the nature of the engagement between the parties.

There was substantial evidence accepted by the primary judge with regard to the relationship between the parties in which he found that the gift given by the respondent had been given by way of a birthday present.  He accepted that the statement had been made by the respondent, despite the respondent’s denials.  He accepted the applicant’s evidence with regard to the nature of her relationship with the respondent generally, and it is the applicant’s submission that, as in Baumgartner v Baumgartner, where the Full Court of the New South Wales Court of Appeal made factual findings by the primary judge, which were consequently corrected by this Court, that this is a similar instance where the nature of the primary judge’s findings were based on a broad equitable inquiry as to the nature of the relationship between the applicant and the respondent, and that the reason that he did not engage himself in a similar investigation to that conducted by His Honour Mr Justice Ipp in the Full Court, was because, having conducted that investigation as regards the relationship between the parties, he was satisfied that there was no promise to marry; that there was not the possibility of the gift being given in contemplation of marriage.

The applicant says that this matter is different from Muschinski v Dodds and Baumgartner v Baumgartner,

in the sense that the property was purchased after the relationship was entered into, that there was not a relationship between the parties in the nature of a joint venture, that what we are suggesting this afternoon is that the payments made by the respondent were based on his desire to be married to the applicant and that he made those payments more by way of an incentive, if you like, to use a commercial analogy, rather than a joint venture; that he was seeking to persuade the applicant to marry him.  The applicant would submit that that is substantiated by the fact that the respondent continued to ask the applicant to marry him in the period between the first and the second engagements.

The nature of a constructive trust has developed in Australia over he period since 1986 when Muschinski v Dodds was decided, and Baumgartner v Baumgartner, and its remedial nature has been recognised.  There has been some discussion as to whether constructive trust is given rise to by way of a remedy or whether by way of an institution.  In this case what the applicant suggests is that the institution of marriage, which is represented perhaps by the institution of an engagement, has become so ambiguous that it does not necessarily give rise to a constructive trust where parties who are engaged make gifts to each other, but rather that the court would examine the imposition of a constructive trust by way of a remedy where equitable principle demands it.

Were the test in respect of gifts made between de facto partners to rest on the possibility of de jure marriage, then there would be an unfortunate distinction between those parties to a de facto relationship who had become engaged, and those who had not.  The applicant’s submission that this is a matter which is appropriate for the High Court’s consideration is the proliferation of arrangements between people by way of de facto relationships and the euphemistic use of the term “engagement”.  That is the applicant’s submission.

MASON CJ:   Yes, thank you, Mr Shanahan.  Yes, Mr Bennett.

MR BENNETT:   Thank you, Your Honour.  Firstly I would just like to correct what my learned friend said about the case of Skip v Kelly.  In my submission, he misquoted what that case in fact said.  I think he said or implied that that case is authority for a finding that the court will not infer an engagement unless there is a ring given and a date of marriage set.  That is not what that case said and if Your Honours would like me to read the headnote of that case to you, perhaps I could.  It is (1926) 42 TLR, and the headnote reads:

The plaintiff, who at the time was a married woman, accepted the defendant’s proposal of marriage, provided that she obtained a divorce.  The plaintiff did obtain a divorce, and the defendant then gave her an engagement ring and the date of the wedding was arranged.  Ultimately the defendant married another lady.  In an action for breach of promise of marriage the defendant pleaded that the contract was void in law as being contrary to public policy.

Held, that although the original promise was void yet a new promise, after the plaintiff had become a free woman, could be inferred from the giving of the ring and the arrangement of the date of the wedding, and the plaintiff was entitled to recover.

So that case does not support what my learned friend was seeking to argue; it supports namely that the court will not infer an engagement unless there is both a ring given and a date of marriage fixed.

Your Honours, in our submission, this is a case in which the issues are fairly straightforward and simple:  firstly whether the gifts still in issue in this matter were made in contemplation of marriage, and I qualify that specifically by saying, still in issue in this case.  Initially the case involved questions of gifts which are no longer in issue, namely, the gifts that the respondent was making to the appellant in the form of paying her mortgages, her monthly mortgage payments; those are no longer in issue.  Certain other gifts he made to her like, for example, supporting her and her child, and her evidence was to the effect that he was paying 60 per cent of the expenses, those gifts are not in issue.  The only gifts still in issue are ‑ ‑ ‑

DEANE J:   Well, it is a rather long shot to talk about them as gifts, is it not?  Was he not living there without paying rent?

MR BENNETT:   That is right, and for that reason we would concede that technically they are gifts, but there was a consideration, and that was the consideration Your Honour has just mentioned.

DEANE J:   I mean, it would be more accurate to talk about his contribution to the joint expenses.

MR BENNETT:   Well, that might be so, Your Honour, with regard to the 60 per cent, but I wonder whether the full mortgage payments which he was paying, namely $350 a month, could be said to have been also contributions towards his board there.  Perhaps, and for that reason ‑ ‑ ‑

DEANE J:   Well, you would know better then I would, as to the value of rental premises in Perth.

MR BENNETT:   Yes, and for that reason the respondent does not seek to counter-reply.

DEANE J:   But do not let me take time; it just grated with me as you have spoken these things as “gifts”; they do not sound at all like gifts to me.

MR BENNETT:   Yes.  Well the gifts that are still in issue are quite clearly the final mortgage payment, nearly $25,000; the payment for improvements to the home, $5550, and only those two.  The monthly mortgage payments are no longer in issue.  Now, the question is whether the respondent made those payments, nearly $25,000 and $5550, in contemplation of marriage or not; that is the first question.  Now His Honour the trial judge, did not deal with that question with regard to either of those gifts.  He stopped short at the point of finding, as my learned friend has correctly stated, that the nearly $25,000 payment was a gift of some sort, or a birthday gift, but he did not go into at all, as the Full Court has found, the question of whether that gift was made in contemplation of marriage and, looking at His Honour Mr Justice Ipps’ judgment, page 36 of the application book, Your Honours, he says, at line 18:

I turn now to the facts relevant to whether the gifts made by the appellant were in contemplation of marriage.

And he recites there the history - I do not know whether you want me to go into all of that?

MASON CJ:   No, there is no occasion to do that.

MR BENNETT:   You are probably aware of that.  I just point Your Honours to the bottom of page 37, line 43, where His Honour Mr Justice Ipp says:

The point is, however, that at that stage the respondent did not inform the appellant that she did not ever want to marry him; rather, the position was that she did not want to get married at that time.

And that was at the time before the parties became engaged; that was said at the time that she decided that she did not want to have her baby.  There is absolutely no doubt about the fact, and it is completely common cause between the parties here, that from December 1988 and at least until December 1989, these parties were engaged.  And it is probably arguable that they were engaged for the full period of time from December 1988 until 21 May 1990, when the applicant called off the relationship.  And that, in fact, is stated by the applicant herself as one of the facts at page 51, line 38, of the application book.  It is stated:

The couple became engaged in December 1988.  The Applicant ended the relationship in May 1990 and the engagement was then broken off.

So that is common cause.

MASON CJ:   Granted that you may have a strong case in relation to the $24,000, the discharge of the mortgage, does not the $5550 stand in a separate position, because when you look at the list of the matters on which expenditure was made, for example, at page 43 of the application book, one gets the impression that they were more or less running expenses that arose ad hoc, and therefore have the flavour about them of contribution to the expenses of the home in which the parties were living.  Now that seems to me, at first blush at any rate, to distinguish the character of those payments from the payment in discharge of mortgage.

MR BENNETT:   Your Honour, we would say not; we would say that those payments were made with the intention of improving the unit for the benefit of both the parties when ultimately they became married.  We would argue that in contradistinction to those payments totalling $5550, we can point to the really day-to-day or ad hoc payments which the respondent was paying all the time, in that he had an account which he had given the appellant authority to draw on and, in general, what I might perhaps refer to as the 60 per cent of running expenses of the family household, which the applicant herself acknowledged that the respondent was making, we would argue that those payments, together with the monthly mortgage payments of $350 per month, that those could and should properly be seen in the category to which Your Honour has addressed me.

So, Your Honour, just to summarise that, we would say there is a distinction between the $5550 and the day-to-day expenses which, it is common cause, the respondent was paying to maintain the applicant and her child and to pay the monthly mortgage instalments.

MASON CJ:   It would be a great pity if the Court came to the conclusion that it had to grant special leave in relation to this sum of $5550.

MR BENNETT:   Yes.  I should perhaps point out that, and I have mentioned it somewhere in my summary, that - well, our submission, Your Honour, is that it is not an appropriate matter.  Perhaps if I might just generally refer to the case law.  The case law in dealing with those matters which it distinguishes being of ephemeral value, talks about - like in a case my learned friend has referred us to, Cardinal v Dodich - cases where the person claiming an interest had done things like painting and gardening and making curtains and cooking and sprucing up; those matters we would quite clearly agree, with the implication of Your Honour’s comment, are ephemeral and not substantial improvements, which it would be unconscionable for the recipient to refuse to return, but if that is what the Court feels, that a distinction could and should be drawn between those payments, then that is a decision for Your Honours.  We would submit that that is not the case.

I would perhaps also add to what I have just said that, in our respectful submission, His Honour Mr Justice Ipp made one error which actually favours the applicant, and that error was that His Honour Mr Justice Ipp, when referring to the question of whether the monthly mortgage payments should be taken into account and whether the refusal of the applicant to return or repay those be considered and whether her refusal would be unconscionable or not, His Honour incorrectly said that the retention of those payments should not be seen as unconscionable and that for the reason that those payments were made before the parties became engaged. 

Now His Honour was half right and half wrong, if I may put it that way, with respect to that comment, because the evidence is quite clear, and it is common cause, that the respondent started paying the monthly payments from, I think it was September; September, October, November, December, and then all the way through January, February, March, April 1989, before he, on 2 May 1989, made the final big payment.  So, in fact, the engagement, which we only know as having taken place in December 1988 - we do not have an exact date for when that engagement took place - but that engagement fell right in the middle, as it were, of the monthly payments.  So it would have to be considered by my learned friend that at least January 1989, February, March and April 1989, of those payments, were made after the parties became engaged, and could therefore be said to have been made in the contemplation of marriage, and perhaps argued - but I do not want to split hairs - that maybe December 1988 payment was also made a few days after the parties became engaged, but I am not here to split hairs. 

For that reason, I would say that if the matter were - if Your Honours were to find that this was a proper matter which you should grant special leave, I would have to take instructions on this particular point, but I would not be surprised if the respondent would seek to point out that error and argue that at least four, and perhaps five of his monthly mortgage payments, might have been seen to have been made in contemplation of marriage.

DEANE J:   Well is he going to pay rent or board?  He seems to want everything else, including $40 for a telephone.

MR BENNETT:   No, that, Your Honour, is exactly the point there, and it is for that reason that I would probably advise him that those payments should be seen as having been made in consideration of rent or board, but, on the other hand, if that were all he were paying, Your Honour, if he were only paying the mortgage and she were buying the food and doing everything else, then certainly I would concede with the implication behind your comment, but that is not the fact.  The fact is, he was paying, on her own admission, 60 per cent of the expenses ‑ ‑ ‑

DEANE J:   But this is really getting ridiculous.  I mean, for all we know he had a bigger appetite than the lady.

MR BENNETT:   That is certainly arguable, but the fact is, there was one of him and there were two of her; her and her son.  And the other fact is, which is not in dispute, he was not at the home for a large period of time.  In fact, that forms quite a strong part of her argument, that he was always away working in the bush, so perhaps, Your Honour - I am not saying that is the case - but perhaps it could be argued that his contribution by way of rental or board would not be seen to be required to be as large as if he were living there full time and making no other contribution towards the household expenses.  I simply raise that point in response to Your Honour’s comment about whether there should be seen to be a distinction ‑ ‑ ‑

MASON CJ:   I must say, I do not find it a persuasive answer.

MR BENNETT:   Your Honour is saying there is a distinction between the $25,000 ‑ ‑ ‑

MASON CJ:   Yes.  Prima facie there seems to me to be a clear distinction between the two.

MR BENNETT:   I will not argue with that, Your Honour.

DEANE J:   And how, on any basis, if we are talking about unconscionable retention, can you argue for recovery of the amounts as distinct from improvement in value, if there was any improvement in value by, for example, $300 worth of plants?

MR BENNETT:   Well, I must say, Your Honour, some of those improvements totalling the $5550 could perhaps be said, on the authorities, to be ephemeral, like the matter you have just mentioned, the plants.

MASON CJ:   Well, I think you ought to take a realistic view of this.  These parties, fighting over a sum of virtually $30,000 in all, are now confronted with a possibility of an appeal to the High Court over $30,000, and the consequence is that the costs of conducting the appeal, including this application, are likely to amount to more than the sum that the parties are fighting about.  Now, add to that the very considerable costs that have already been incurred.  It seems to me that somewhere along the line there has been a desertion of common sense.  Now, I do not want to apportion blame; we are not in a position to do that, but that is the reality of this matter.

MR BENNETT:   Yes, Your Honour, that is the reality of the matter, with respect, I agree with you.  The applicants ‑ ‑ ‑

MASON CJ:   Now does that not suggest that the parties ought to come to some agreement about this case?

MR BENNETT:   I think there have been attempts, Your Honour, and they have not been successful.

DEANE J:   Does it not at the least suggest that you should get instructions and offer an undertaking to the Court that if leave is refused your client will not pursue the claim for the $5500, in respect of which I would say his prospects of ultimate success are very, very grim?

MR BENNETT:   Certainly I can take instructions on that point, Your Honour.

MASON CJ:   Well, is that not the obvious course to pursue?

MR BENNETT:   Except that it has not been put to the respondent in that way ‑ ‑ ‑

MASON CJ:   No, but in the light of the expressions of opinion here, is it not necessary to obtain instructions from the respondent in the light of what has fallen here?

MR BENNETT:   Because of the comments that have just been expressed by both of Your Honours, that certainly would be the sensible approach ‑ ‑ ‑

GAUDRON J:   You may take it, I think, that the comments would be shared by all three of us.

MR BENNETT:   All three of Your Honours.  And that being so, perhaps the Court could adjourn the application for a few minutes or a short period ‑ ‑ ‑

MASON CJ:   We will stand it down to the end of the list today.  That should give you sufficient time to ascertain instructions and to talk to Mr Shanahan.

MR BENNETT:   Thank you, Your Honour.

MASON CJ:   The matter will stand down to the end of the list.

AT 3.41 PM THE MATTER WAS ADJOURNED
UNTIL LATER SAME DAY

UPON RESUMING AT 4.19 PM:

MR BENNETT:   I apologise to the Court.  I have now been able to take instructions, Your Honours.  My client instructs me that he will give an undertaking not to pursue the effect of the judgment in the court below to the extent of $5500.

MASON CJ:   Yes, thank you, Mr Bennett.  Mr Shanahan, what do you wish to say in reply?

MR SHANAHAN:   Your Honours, I would merely point out that some of the points made by my friend with regard to the mortgage repayments which he was talking about in the earlier portion of 1989, the monthly mortgage repayments commenced prior to the engagement, and it does not seem to have been a motivating factor in the respondent’s intentions in regard to those payments, that the parties were engaged.  They commenced prior to that time. 

In respect of the $5500, the applicant takes notice of what Your Honours have had to say with regard to the nature of those payments and would merely echo that.  Other than that, the applicant has no further submissions to make, perhaps, except in regard to costs.

MASON CJ:   Yes.  With respect to the Full Court’s decision concerning the lump sum amount paid in discharge of the mortgage this Court is not persuaded that there was any error of principle on the part of the court below.

With respect to the decision concerning the sum of $5500 the Court notes the undertaking given by the respondent through his counsel that the respondent will not pursue the judgment below in respect of that amount.  Upon that undertaking, the application for special leave to appeal is refused.

Now, there remains only the question of the costs of this application.  Prima facie, it would seem that there should be no order as to the costs of this application.  Do the parties wish to make any submissions about that?

MR BENNETT:   Yes.  I seek an order for costs.

MASON CJ:   You seek an order for costs?

MR BENNETT:   Yes, on the basis that the application, subject to the undertaking, has been unsuccessful, but more importantly, with regard to the substantive issues in dispute here, if I may separate them into, in round terms, the $25,000 payment and the $5000 payment, effectively the respondent has been substantially successful in and up to today and on that basis he seeks an order that the applicant pay all of his costs in this Court.

MASON CJ:   What do you say, Mr Shanahan?

MR SHANAHAN:   The applicant would suggest, Your Honour, that the applicant would be content with no order as to costs.  We would say that if we had not made the special leave application today that the applicant would be poorer by $5500, that the applicant has been successful at some level.  We would oppose the request made by the respondent and indicate that we are content with an order as to no costs between the parties.

MASON CJ:   There will be no order as to costs.

AT 4.28 PM THE MATTER WAS ADJOURNED SINE DIE.