Wade v Davie
[2010] VSC 211
•24 May 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 1639 of 2010
| RUSSELL WILLIAM WADE | Plaintiff |
| v | |
| ANITA GAYE DAVIE and another | Defendant |
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JUDGE: | Mukhtar AsJ |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 19-21 May 2010 |
DATE OF JUDGMENT: | 24 May 2010 |
CASE MAY BE CITED AS: | Wade v Davie |
MEDIUM NEUTRAL CITATION: | [2010] VSC 211 |
TRANSFER OF LAND ― Caveat ― Interest necessary to support caveat ― Arrangement between father and daughter for occupation of property ― Whether intention to confer proprietary interest ― Intention to create legal relations ― Whether facts give rise to express trust or constructive trust ― Whether caveator has good arguable case or reasonable prospects of success― Balance of convenience
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REASONS FOR DECISION
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S R Grahame | Maskew Pitts & Co |
| For the Defendant | Mr J Arthur | Impex Lawyers |
HIS HONOUR:
This is a piteous case. The plaintiff is a 78 year old retired accountant who in early 2007 was diagnosed with Alzheimer’s disease. He is the sole registered proprietor of a residence, which he has never occupied, at Unit 11, 16 Eastcote Street in Sunshine North. The defendant [1] is his 41 year old daughter, the youngest of his four children to his first wife, now deceased.
[1]She is the actually first defendant. The second defendant is the Registrar of Titles who plays no active part. For convenience, where I say “the defendant” I mean the first defendant.
On 24 March 2010, the plaintiff signed a contract to sell the unit, which is mortgage free, for $270,000. The contract is due to be completed at 3:30pm this afternoon. There is no suggestion the sale is suspect or that the purchaser is not bone fide.
The defendant lodged a caveat on 24 November 2009 claiming an equitable estate in fee simple. Her grounds were stated as being “Pursuant to a constructive trust”. The plaintiff sought to remove the caveat on application to the Registrar of Titles under the out-of-court procedure in section 89A of the Transfer of Land Act. But some peculiar circumstances arose, to which I shall refer to later, which made the plaintiff bring this application under section 90(3) of the Act to remove the caveat by an order of the Court.
The defendant is unwilling to enable the sale to proceed on condition that the net proceeds be preserved. She insists her rights in the whole property should be preserved in specie. She seeks nothing less.
There are two issues. First, did the plaintiff, her father, make a legally enforceable agreement to give the defendant, his daughter, a right to live in the unit for her life, and the right to receive the rent for her life should she cease living in it, and then to have it absolutely on his death? If not, would equity intervene under the law of estoppel or constructive trust (the two are related) and prevent the father as legal owner from treating the property as his to the exclusion of his daughter? Posing the questions in such legal terms understates the powerful human dimension of the facts of this case in what appears to the Court at least to be a relationship between a most loving and supportive father and the troubled life of his daughter.
On statutory application such as this, the Court’s power is discretionary and the caveator bears the onus that there is a serious question to be tried that she does have the estate or interest in the land claimed. Further, even if she does establish the serious question to be tried, she must further establish that the balance of convenience favours the maintenance of the caveat until trial: see Goldstraw v Goldstraw [2].
[2][2002] VSC 491 at [30] (Dodds-Streeton J).
I have come to the conclusion that the caveat ought be removed by means of a notice of withdrawal of caveat signed by the defendant forthwith to enable the settlement to proceed this afternoon. I have had substantial argument on the facts and the law, and I think the defendant’s case is weak. Whether that weakness informs the balance of convenience or not, I conclude the balance of convenience favours the removal of the caveat. It is just and convenient that the sale proceed. The defendant does not need to live in the unit any more, but she wants the rent derivable from it. The only question is whether the net sale proceeds, or some part, ought to be paid into Court pending the final hearing of the defendant’s claim, which will now be for moneys worth.
The Court was presented with many affidavits containing widespread facts and assertions, and is often the case with family disputes that degrade to the point of litigation. I will not go into the facts in detail, but only selectively try and marshal the evidence on both sides on the matters that count. There is a lot of inadmissible material in the form of opinion, commentary and mere assertion. If I had to make an allocation, it is the defendant’s case that mostly suffers from that evidentiary problem.
I shall where convenient use first personal names for ease of comprehension and in accordance with the way the affidavit evidence has been composed.
Anita left the family home in 1987 at the age of 18. There is no suggestion that occurred unhappily or in adverse circumstances. At the time she left she was working. She moved into a townhouse in Box Hill. Her father paid the rent. She then moved into a flat in Toorak. Her father helped her to pay the rent. He did not single her out for preferential treatment for he gave financial assistance to his three other adult children, and was generous to friends.
Anita and her boyfriend (later her first husband) then bought a home in Blackburn South. Her father assisted her with payment of the deposit. Anita divorced in 1996. Between 1988 and 1997 father and daughter had only minimal contact. In 1996 Anita moved to Carlton to “rebuild her life”, she says. Her relationship with another man became violent. She sought protection in a women’s refuge. She says her father helped her to “escape from this man by funding me to move to Queensland”. He assisted Anita with her rent and living expenses there.
She returned to Melbourne in 1997 to work as a legal secretary and commenced a part-time law degree, off campus. She also established a “MusicExpo” business, which failed. Her father paid out $50,000 for her debts to avoid her bankruptcy. According to Anita, debt collectors were calling on her father for nearly a year to pursue her. On her evidence, her father was generous and she would always go to him in times of need, and he supported her in her business ventures. She describes her father as a good role model.
Anita completed her law degree in 2002 and then worked as an articled clerk. She was living in Prahran but then stopped working. Her father paid her rent and some of her personal expenses. Things then went downhill. She became addicted she says to an anti-depressant medication, Xanax, and found it difficult to cope with life. She was in the hands of a psychiatrist.
In 2003 she was charged with burglary and theft. They were serious indictable offences. It arose out of a stormy relationship with a solicitor who was a married man living with his wife, and who has created a part time position for Anita as his personal assistant. The relationship soured, with acts of recrimination. The criminal charges involved her, with two others, entering into the solicitor’s office and stealing equipment and files.
Anita says “I suffered from depression and panic disorder throughout the period of 2001 to 2005 and at times found myself unable to cope with life. Occasionally I was suicidal and the effect of my Xanax addiction was that I lost the ability a lot of the time to think straight and make smart decisions”. Her father deposes that Anita was in a “very bad state” and that he was extremely concerned for her. She had telephoned him on numerous occasions and threatened suicide. He concluded that in her emotional state it was unlikely she would be ever able to return to work and would need his continued support for the rest of his life and after. He was already paying her rent and says he could foresee he would have to do so for the foreseeable future. He therefore decided it would be more sensible to purchase a property that she could live in rent-free rather than waste money on rent.
Accordingly, in December 2003 her father and his second wife, Mary Wade, purchased the unit to provide accommodation for Anita. She moved into the unit in January 2004. Her father had borrowed money from the National Bank, and subsequently paid out the mortgage in August 2005. She did not contribute to the acquisition costs or mortgage payments in any way.
On 30 May 2004 the plaintiff said that Anita rang him asking for the unit to be transferred into her name so that she would feel secure. He refused. The following day he and Mary (the co-registered proprietor) sent a typed letter to Anita saying:
I am confirming the discussion we had yesterday evening regarding your position in relationship to the occupancy of the unit 11-16 Eastcote, Sunshine North which is owned by myself and Mary.
The arrangement regarding this unit is that it is available for your occupancy rent-free on an ongoing permanent basis.
The only financial commitment that you have is to be responsible for the payment of all repairs, maintenance and improvements at your own personal cost.
All other financial commitments which include repayments to the National Bank, City of Brimbank rates and charges, City West Water rates and charges and Body Corporate charges, will be paid for by myself and Mary.
This arrangement regarding the occupancy of the unit in question will continue for the rest of my life. On my death, the unit will be transferred into your name debt free.
Thereafter you will be liable to pay the Victorian Stamp Duty as assessed on the transfer of the property into your name at that particular time and to take responsibility for the above Council, water and body corporate charges.
Sincerely
Dad & Mary
In July 2004, Anita was convicted in the County Court and placed on a two-year good behaviour bond on condition that she continued consulting her psychiatrist. Her father attended a session with the psychiatrist to better understand her condition. On her own evidence she was not well and in financial dire straits. She says that her father continued to support her including physically assisting in alterations being made to the unit. Sometimes he would help her financially with an overdue bill or to pay for things. She said she had spent her savings, had run up her my credit cards to capacity, and I was struggling to cope financially.
By mid 2004 Anita met Tom Davie. He moved in with her in the unit in late 2004. They decided to marry in May 2005. Without going into details, the materials show that even in this relationship, there were incidents when Anita was still pressing her father to pay various expenses, sometimes being upset and angry. She pressed him to pay for the wedding, and he agreed to pay for things such as the wedding cake and photography.
In October 2005, the plaintiff became sole registered proprietor of the unit after his wife, Mary, transferred her interest to him. It was a non financial transfer and, according to their evidence, occurred because Mary did not wish to be involved with possible problems concerning Anita.
In early 2007 the plaintiff was diagnosed with Alzheimer’s disease. He was still being pressed by Anita to pay her bills or expenses. For example, Tom Davie demanded that the plaintiff pay $2,000 for a hot water service at the unit. There were a variety of other demands, some of which the plaintiff refused.
In August 2007 a child was born to Anita and Tom. Soon after, she wrote to her father saying “It would still be a benefit to us if you signed the ownership of Eastcote Street over to us. Let me know if you are prepared to do this. (We will pay all the associated costs to you and us to do so).” It is to be remembered that this correspondence is occurring after the plaintiff’s affliction with Alzheimer’s disease. In that context, Tom Davie swore an affidavit stating that in August 2007, at a family party, he informed the plaintiff that the unit was not suitable for them and the baby and they were interested in moving to a bigger house. He swears “Russell said this was fine by him and we should look around. At about this time Anita told him that she would also have an estate agent value the unit to see what sort of price it might obtain if it was sold”.
Pausing there, that evidence, which is denied, is largely the evidentiary foundation upon which Anita seeks to contend that there was a variation to the legal relationship established under the letter of May 2004, so that she was entitled to assume that her and her husband could seek a larger home believing that her father had agreed that Anita and her husband would be entitled to the proceeds of sale of the unit or an income stream as rental. They say that induced by that, they decided to look for a family home believing they could depend on the unit as an income producing asset.
In October 2008 a second child was born to Anita, a daughter. The evidence is that Tom’s parents then gave them $50,000 to assist them in buying a home.
In December 2008 Anita visited her father and Mary. He deposes that Anita took him outside alone and asked that she be given the right to receive rent from the unit when she and her family moved out of it. He says that on this occasion he felt vulnerable and thereafter asked Mary to ensure that he was not left alone as he Anita could take advantage of him because of his condition.
In March 2009 Anita paid another visit, after which she asked her father to take out a mortgage for $25,000 to pay off a block of land that she and Tom had purchased in Tarneit. This led to another letter which is significant. On 22 March 2009 he sent a letter to Anita saying –
I wish to clarify my position and understanding of your occupancy of the Unit 11/16 Eastcote Street, Sunshine North.
On the 31st May 2004 I forwarded a letter to you stating that you can occupy the Unit … rent-free on an ongoing permanent basis.
I would point out that in May 2004 there was no commitment or understanding on my behalf that I would ever take out a mortgage as you requested over the telephone last Thursday, or ever sell the capital Unit or make the proceeds available you (sic).
I would remind you that I had retired completely from accounting work and therefore no longer have that source of income.
Furthermore I would remind you that I am approaching 77 years of age, and as you know, I have Alzheimer’s Disease. I am long past being troubled by situations which cause me stress and anxiety.
Sincerely
Dad
Anita moved out of the unit in November 2009 into a new home that she and Tom had built in Tarneit. Her father told her he would be arranging for a new tenant but he subsequently decided he would sell the unit. Anita says she regarded this as a breach of agreement which then led to her lodging the caveat.
Whilst justice is not usually administered according to a ledger, decisions in the field of domestic relations and constructive trusts involve an examination of the sort of contributions made by a claimant and the benefits received as part of the examination of the whole facts and circumstances. In this case, the Court cannot quantify the father’s contributions to Anita before the unit was purchase in August 2003 and the plaintiff did not seek to bring them to account. But the payments of her rent and expenses must have been significant. Confining myself to approximately six years between December 2003 (when the unit was bought) to the end of 2009 (when Anita and Tom moved out) the careful evidence is that the plaintiff made payments of $57,375 in his daughter’s favour. Evidence from an estate agent establishes that for those six years the property could have earned rent of $76,440 to the financial year ended June 2009.
Anita says there was expenditure of $31,330 by her on repairs, maintenance and improvements at the Unit. None of that expenditure is documented or has been verified. And there is a real question, given her parlous financial condition, whether she spent the money or Tom Davie spent the money. And there is an additional question whether any of the expenditure truly was of a capital nature, or were more in the nature of improvements to amenity or comfort. However, I think it safe to conclude, for present purposes, that she has financially come out well ahead for the six years she was in occupation of the unit.
Moving away from the facts, I turn now to the section 89A application which preceded the current application. According to the evidence, on 28 January 2010 the Registrar notified the plaintiff that the caveator had notified him that the Court proceedings to substantiate the plaintiff’s claim were “on foot” as is required under section 89A(3). Yet, nothing was served on the plaintiff. The plaintiff’s solicitor conducted a search and discovered that Anita had issued a proceeding in this Court on 27 January 2010 seeking in essence a declaration that she had an estate or interest in the land by agreement with the plaintiff, and that the land was held on trust for her. As at this date those proceedings have still not been served. The evidence is that Anita’s solicitor has deliberately not done so presumably on instructions, despite being invited to do so by the plaintiff’s solicitor.
Nevertheless, the statement of claim is significant for present purposes because it is, one would think, a considered basis for Anita and her lawyers to allege the material facts in support of her caveatable interest. She alleges there was an agreement by reason of the letter of 31 May 2004. She alleges she made repairs maintenance and repairs but nothing is particularised. She alleges the land is held on trust. There is no allegation of constructive trust. Most significantly, there is no allegation of any agreement that her father said she could have the rent from the property after she moved out. There is no allegation of detriment by her or her husband in buying land on the faith of that promise. I think this is telling.
It is disquieting, I think, that Anita commenced a proceeding but deliberately chose not to serve it if she truly was asserting a proprietary interest. Why withhold it? This was not explained by her. That left the plaintiff no option but to bring an application for removal under section 90(3). Yet, on the first day of this hearing, much time was spent on the hearing of a preliminary application on Anita’s behalf that the application under section 90(3) was invalid and ought be dismissed. It was submitted that the plaintiff had embarked on the section 89A course and was, in effect, stuck with it, meaning that Anita’s case brought by writ (but not yet served) must be allowed to run its course, and the caveat remain. I rejected that application in a ruling in which I decided as a matter of statutory construction, the two procedures were not mutually exclusive, and that it would defeat the purposes of this part of the Act if Anita could file a writ, deliberately not serve it, stymie the sale, and then object to a section 90(3) application. The prior engagement of the section 89A procedure was a fact, I ruled, that went to the discretion to be exercised under section 90(3).
I cannot discard the possibility, as was urged by the plaintiff’s counsel, that Anita was by design seeking to stultify her father’s dealing with the unit by deliberately not serving the writ and then contending that this application was illegitimate. Mary Wade has sworn an affidavit saying that after the caveat was lodged, Anita telephoned her and with a “very definite and triumphful tone” said that “Dad is too far gone mentally to change his will and the unit will be mine in the end” and that the “matter would be settled without going before a judge”. A caveat is an easy weapon to use, and impairs a proprietor’s freedom to deal with land. It should not be used for a collateral purpose as a bargaining chip.
Anita’s first case (and the case as pleaded in the unserved writ) is that the letter of May 2004 was a legally binding agreement in which, in effect, he bought the property for her. On the objective facts, I think that case is weak. Arrangements in family life are not supposed to, or are not apt to attract legal consequences. The relationship of father and daughter does not preclude the formation of a contract, and there may be cases where the commercial nature of the transaction and the real exchange of consideration might make it manifestly clear that the parties did intend to enter into legal relations. But apart from those rare situations, the question for the Court is whether the parties intended that the arrangement would affect or give rise to legal relations or are to be attended with legal consequences.[3] If it is a domestic arrangement, as this one is, Courts would not normally regard it as creating legal relations: see for example Cohen v Cohen[4].
[3]See Cheshire & Fifoot’s Law of Contract (9th edition) page 217-223.
[4](1929) 42 CLR 91.
In my view the letter from father to daughter is much more likely to be seen, in the light of the facts as I have exposed them, to be a domestic or an emotional assurance from a loving father to his daughter who was suicidal, unemployed, had no money, was single, and likely to have long-term emotional problems, and who had been charged with a serious criminal offence, and needed somewhere to live. To transform that into a legally binding agreement I think misrepresents the human relations and the evident intentions. I would find it difficult to see that the letters of themselves confer a proprietary interest or were intended to do so. He gave her not a proprietary interest but gave her somewhere to live out of love and affection. I think there is objective strength in his case that he was better off buying the unit rather than paying Anita’s rent as he had done for most of her adult life. Accordingly on this basis I would say the weakness of Anita’s case strongly informs the balance of convenience to have the caveat removed.
I would reach the same conclusion when it comes to her case that there was a variation of the agreement subsequently made that she could have the rental income stream from the property. This strikes me as an attempt to create detriment to fashion a case for a constructive trust. It is telling that no such thing was pleaded in the writ. Circumstantially this was said to be an agreement made at a family party at a time when the plaintiff was suffering Alzheimer’s disease. That is hardly a serious occasion for the making of a binding legal agreement. Just because the plaintiff was supportive of the idea that Tom and Anita should have a bigger home does not therefore mean that the law would regard him as having agreed that she could have the income stream from the Unit. What prevails I think is the arrangement at the outset, that is, that the unit was a place for her to live in the situation in the awful situation she was then in. It is apparent to me that come 2009 the marriage to Tom and the change of life for her radically altered the very basis upon which her father was willing to buy the unit in the first place. That is, she was married, supported by her husband and found a new place to live.
Of course, even if there is no intention to create legal relations, equity may intervene under the principles of estoppel and trust, be it constructive trust as a substantial doctrine or as a remedial device. Anita’s case seems to now be that there was an express trust, or if not, a constructive trust. In my view the case for an express trust is very weak indeed. It requires a factual basis for saying that her father bought the property for her absolute benefit. Faithful to my conclusion on the question of an agreement at law, in my view the letter and the circumstances preceding it would demonstrate that he did not buy the unit for her; but bought in order that she may have somewhere to live in her personal predicament. The letters do not confer a proprietary interest.
As for the constructive trust, this is no occasion for a lengthy account of the principles and authorities in this field. A useful account is given in Willis v Western Australia.[5] Each case depends on its own peculiar circumstances. Broadly speaking, a court of equity will intervene, possibly with a proprietary remedy, if a legal owner of property is unconsciously asserting his legal rights in denial of representations he has made or assumptions he has induced that another person will have an interest in that property, where that other person has acted to her real detriment on the faith of that representation or assumption. Generally, the Court construes the facts to find a constructive trust: Giumelli v Giumelli. [6]
[5][2010] WASCA 56.
[6][1998] 196 CLR 101.
In many cases, the Courts have dealt with cases of joint endeavours or undertakings between people in domestic or non commercial situation. It is convenient for me to adopt a compendious statement of the law to be found in Jacobs’ Law of Trusts in Australia[7] (omitting citations) –
The prevailing principle in Australia is the result of the adoption and adaptation in Baumgartner v Baumgartner by Mason CJ, Wilson and Deane JJ of what had been said by Deane J in Muschinski v Dodds. His Honour identified a general equitable principle which restores to any party contributions which that party has made in a joint endeavour which fails, the contributions having been made in circumstances that it was not intended the other party should enjoy them. … Deane J saw the examples he gave as instances of the basis concern of equity to interpose and prevent the assertion or exercise of a legal right in circumstances where this would constitute unconscious conduct. His Honour summed up the position as follows:
“Those circumstances can be more precisely defined by saying that the principle operates 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 the for the purpose of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically 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.”
[7](7th edition) by Heydon and Leeming at [1352].
There are also cases, more apposite here I think, that have been referred to as the inchoate gift model.[8] They usually involve equity recognising a proprietary interest in a home arising out of repeated assurances and promises to someone, and detrimental actions on the faith of such promises.
[8]See Cheshire and Fifoot, above at [16.74].
In addition to the elements of any case, there is always the question of the appropriate remedy. Depending on the case, equity normally looks to compensate a party for the detriment suffered as a result of representations or assurances given, and do no more than the minimum equity. But there may be situations where the assurances are so unequivocal and the detriment so strong that justice can only be done by making good the assumption or representation: see Giumelli v Giumelli [9] and the discussion in Donis v Donis[10]. As said in Donis[11] there may be cases where the detriment suffered is of a kind and extent that involves life changing decisions with irreversible consequences of a profoundly personal nature. In those cases, it will be beyond the measure of money, such that the equity raised by the promisor’s conduct can only be accounted for by substantial fulfilment of the assumption upon which the respondent’s actions were based. But, where the expectation or assumption is uncertain or extravagant or out of all proportion to the detriment to which the plaintiff has suffered, the Court should recognised that the claimant’s equity may be better satisfied in another and possibly more limited way: Donis[12].
[9][1998] 196 CLR 101.
[10][2007] VSCA 89 at [14-41] per Nettle J.
[11]Above, at [34].
[12]Above, at [20].
Applying those principles to the facts of this case, I think Anita’s case for a constructive trust, or any trust is weak. On the facts, it is difficult to see in the letters an unequivocal assurance that the Unit would be hers. She was given a personal right to occupy. In that sense the unit was “available”. It was available because there was a necessity. But the conditions which led the plaintiff to give Anita shelter at a time of distress changed markedly in late 2009. He has not so much unconscientiously resiled from his assurance of occupancy; rather the situation has changed from the assumed basis on which the unit was obtained in the first place. Estoppels may not last forever. The facts I have already rehearsed them demonstrate I think that she is looking to extend the origins of her father’s generosity beyond what was truly intended.
Furthermore, it is difficult to see any real detriment she has suffered. She has spent, or someone has spent, about $31,000 on improvements to the house, and even then it has not been substantiated. But that is counterbalanced by the far greater amount she received by way of financial or economic benefit in living there. To say she acted to her detriment in taking out a mortgage to buy a house and land in Tarneit has not been well demonstrated. The acquisition of the house and land in Tarneit, ostensibly based upon the representation that she would receive a rental income stream from the unit, may not have been her financial burden. There is the distinct likelihood that her husband Tom bought that property and incurred the mortgage, not her. The best that Anita could put it was to say that the representation from her father induced Tom to go ahead and buy a family home.
To justify an equitable intervention there must be an unequivocal assurance and reasonable reliance. It seems to me that Anita is now looking to transform or equate the original right of occupancy into a right to receive the income from the unit even though she is not occupying it. I do not think the objective evidence supports that.
Apart from this analysis, in my view the balance of convenience favours the removal of the caveat. The sale should not be lost, with possible legal consequences. And it is not as if Anita claims she wishes to live in the unit.
The final question is whether the net proceeds ought be paid into Court pending the final determination of her claim. Taking the view, as I do, that the case for the complete ownership of a unit is weak, the question is whether part of the proceeds should be paid in to approximate on the generous side some measure and moneys worth of what her equity might be (and even then, on the figures, Anita is in a net gain position.) As against that there is the inequity of depriving her father of the full proceeds of sale now that he is elderly and no longer working.
I have come to the view that the removal of the caveat should be unconditional. Anita has filed a writ but chosen not to serve it. Should she wish to contend that the net proceeds of sale might be dissipated by her father and harm her position, it is incumbent on her to decide whether she wishes to proceed with her writ to seriously propound her claim (which will now be monetary). If she does, it is a matter for her to decide whether she should move the Court for any preservation orders. But first she must decide what to do with her writ.
For those reasons I would order that the first defendant forthwith deliver a signed withdrawal of caveat in registrable or appropriate form. I will hear counsel on the precise orders.
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