Washband v Buck

[1997] QSC 243

IN THE SUPREME COURT

OF QUEENSLAND
  No. 915 of 1992

[Washband v Buck]

BETWEEN:
  CHERYL WASHBAND
  Plaintiff

AND:
  MICHELE BUCK
  Defendant

CATCHWORDS:                 CO-OWNERSHIP - co-owner’s rights in respect of improvements - unjust enrichment

Counsel:J. Curran for the plaintiff

D.J. Campbell for the defendant

Solicitors:Peter Daley for the plaintiff

Hemming & Hart for the defendant

Hearing Dates:             2 June 1997 - 5 June 1997

REASONS FOR JUDGMENT - MUIR J.

Judgment delivered 27 June 1997
Supplementary judgment delivered 19 December 1997

I gave reasons for judgment in this matter on 27 June 1997.  The parties were invited to agree on the terms of the judgment having regard to those reasons.  They failed to reach agreement and the matter was listed for mention before me on 23 July.  On that date Mr Campbell, for the plaintiff, argued that although there was a finding that the plaintiff was entitled to a declaration that the defendant held the sum of $77,273 (which funds were derived from the sale of what was known as "the Boondall property") in term deposit number 759911264 with the National Australia Bank in trust for herself and the plaintiff, there was a difficulty in determining the proportion in which the monies were so held.  He argued that the parties’ respective interests in the fund had to be determined by reference to their respective contributions to it.  It will be recalled that the Boondall property was held by the plaintiff, the defendant and their mother as tenants in common in equal shares.

I have found that, notwithstanding lack of contribution by the plaintiff to the purchase price of the Boondall property, the circumstances were such as to displace the presumption of a resulting trust of the plaintiff's interest in the Boondall property (and of the plaintiff's share of the proceeds of sale of that property) in favour of the defendant.

Mr Campbell further contended that, as the total purchase price for the property (including outlays and improvements) amounted to $80,887 and as $55,404 of that sum had been contributed by the defendant and $25,483 had been contributed by the mother, the mother's percentage share of the term deposit was 31.5%.  It was then submitted that, if there was a gift by the mother to her daughters, each daughter should receive half of 31.5% (the mother’s share) of the term deposit.  The remaining submission was that, as the mother was paid $40,000 by the plaintiff at the time of the family break-up and as the total of her contribution to the family asset was $25,483–

"The mother had been paid out for her share of the money held in the term deposit . . . In these circumstances, it cannot be said that the mother has any share of the money held in the joint account.  It must follow then that the defendant can have no interest in that money."

I accept the plaintiff's evidence that it was proposed by the parties and their mother that the proceeds of sale of the Boondall property would be applied towards the making of improvements on Lot 6.  That property was originally held in the names of all three women.  The proceeds of sale of Boondall were not so applied because they were not available at the time required for the construction of a house on lot 6.  In the result, the defendant contributed more money to the improvement of lot 6 than had been contemplated initially. 

I have already found that at the time of the settlement reached between the three women it was probable that–

·the plaintiff was aware of the existence of the monies in the National Bank account;

·no reference was made to that account in discussion between the three women;

·the wording of the deed of dissolution and the discharge was not sufficiently broad to effect any disposition of the monies in the bank account.

It is highly probable that the plaintiff’s mother was also aware of the existence of the monies.  I infer that a discharge was signed by the mother in terms similar to that signed by the plaintiff.  There is no suggestion that any document brought into existence in respect of the mother's settlement referred to the monies in the bank account.  The paying out by the defendant of the interests of the plaintiff and the parties' mother arguably resulted in an unforeseen detriment to the defendant and a consequent unforeseen advantage to the plaintiff and/or the mother.  However, I see no legal basis for making an adjustment to correct a matter not provided for by the parties in their settlement.

In my earlier reasons I said–

"In my view the expressed basis for purchasing in joint names coupled with the subsequent placing of the proceeds of sale in the names of the plaintiff and the defendant only is sufficient to displace the presumption which would give rise to a resulting trust in favour of the defendant."

I was there addressing the respective interests of the plaintiff and the defendant.  I did not advert specifically to the question of whether the unequal contributions to the purchase price of the Boondall property by the defendant and the mother had the result that, as between the defendant and her mother, shares in the property and hence, in the proceeds of sale, were to be held in proportion to their respective contributions.  In my view, the matters which displace the equitable presumption resulting from there being no contribution by the plaintiff to the purchase price of the Boondall property do not displace the presumption resulting from unequal contributions between the defendant and her mother.  In the latter case, there is no evidence of an intention on the part of the defendant to benefit her mother.  In the former case, there is evidence that the defendant and her mother intended the plaintiff to take a beneficial interest in property despite the fact that the plaintiff was not expected to contribute to the purchase price.  The respective contributions to the actual purchase price of the Boondall property in about October 1982 were–

Mother $25,483

Defendant        $42,017

$67,500

The defendant spent some $12,711.49 on improvements to the property and $10,715 on its upkeep and maintenance.  But both the plaintiff and her mother worked in and about the property on its upkeep and maintenance without remuneration.

The defendant also incurred outlays of $721 on the purchase of the property.  It was sold for $80,000 in February 1988. 

Accordingly, I find that the total outlay on the purchase of the property was $68,221.  The plaintiff was effectively held out of her share of the sum $77,273 and the interest it would have earned from December 1989.  It would be wrong in principle to take into account the moneys spent on improvements by the defendant in determining the respective interests of the defendant and her mother in the Boondall property and in the proceeds of sale of that property; Calverley v. Green (1984) 155 CLR 242. The plaintiff had a one-third share of the proceeds of sale and thus of the money in the account which amounts to $25,757.67. The respective shares of the defendant and the mother however, fall to be calculated by reference to their respective contributions. I find that the mother’s share of the moneys in the account was $19,242.83 being (two-thirds of $77,273) x 25,483 ¸ 68,221. I propose to order that the defendant pay simple interest for a period of 7 years at the rate of 8 percent. Interest will thus amount to $19,812.29 in total. The plaintiff’s total entitlement is thus $55,191.38.

I now turn to consider the defendant’s right to recover a share of her expenditure in relation to the improvements.  In equity, if a co-owner effected improvements to a property he or she could claim an allowance for any increase in value of the property resulting from the improvements.  The allowance could not exceed the amount expended;  Forgeard v. Shanahan (1994) 18 Fam. L.R. 281 and Squire v. Rogers (1979) 27 ALR 330. The co-owner making the improvements is not entitled to bring proceedings for contribution against his or her co-owner. However, where the recipient of the benefit would otherwise unfairly benefit under an order in equity (including partition or sale of the property) the co-owner effecting the improvements is entitled to an allowance for his or her expenditure on such improvements to the extent to which they result in the present enhancement of the value of the property; Squire v. Rogers per Deane J. at 346. In Forgeard, Meagher J.A. in referring to principles which included one dealing with a co-owner’s right to an allowance for improvements in value effected by him, said at 298–

“All the above principles are applied in partition actions, and cannot be relied on elsewhere, except in administration actions:  Lawledge v. Tyndall (1896) 1 Ch. 923; Boulter v. Boulter (1898) 19 LR (NSW) Eq 135; and in other cases where there is a fund in court eg. because of a resumption: Brickwood v. Young (1905) 2 CLR 387. They should also be applied, as Mr Harris argued, in cases where the court decrees sale under s.66G of the Conveyancing Act, 1919.”

By analogy, in a case such as this, where a plaintiff is seeking equitable relief in relation to the determination of rights and interests in a fund derived from the sale of land, the court has power to grant an allowance for expenditure by a co-owner in order to prevent unfairness to a party, cf. Squire v. Rogers at 346.

The plaintiff’s difficulty is that there is no evidence as to the extent, if at all, to which the improvements effected by the defendant may have increased the value of the property.  Accordingly, no allowance can be made in favour of the defendant pursuant to the principles just discussed.

Mr Campbell sought to meet these difficulties by mounting a claim based on principles of restitution.  He submitted that–

“Generally, a party is entitled to recover `the market value of the services themselves, rather than the amount by which the defendant’s assets have in fact been increased’.  See Mason and Carter Restitution Law in Australia, para.1416".

I have no difficulty in rejecting a submission that the principles of restitution or unjust enrichment required the plaintiff to recompense the defendant in respect of the improvements.  The evidence does not suggest that it was the expectation of the plaintiff or the defendant that rights of ownership in respect of the Boondall property be determined by reference to their respective financial contributions.  As I explained in my earlier reasons for judgment, the contrary is the case.  The defendant made a conscious decision to benefit the plaintiff whose circumstances were such that she had limited ability to make any financial contributions.  The defendant’s position is stronger in relation to the mother’s share.  The plaintiff, the defendant and their mother, in a general way, engaged in a pooling arrangement in respect of their assets which was not greatly dissimilar to the type of arrangement under consideration in Baumgartner v. Baumgartner (1987) 164 CLR 137. In Muschinski v. Dodds (1985) 160 CLR 583 Deane J. (with whom Mason J. agreed) said in relation to the application of general equitable principles concerning the restoration to a party of contributions made by that party to a joint endeavour which fails–

“. . the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that the 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 to so do: cf. Atwood v. Maude (1868) L.R. 3 Ch. App. 369 at pp.374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 Ch.D. 529, at p.531.”

After quoting that passage, Mason C.J., Wilson and Deane JJ. said at 148 of Baumgartner v. Baumgartner (1987) 164 CLR 137–

“His Honour pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual presumed agreement or intention `to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principles’.  In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair His Honour acknowledged the general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct and that this being a concept which underlie fundamental equitable concepts and doctrines, including the constructive trust.”

McHugh J.A. pointed out in Hibberson v. George (1989) 12 Fam. L.R. 725 at 742–

“Indeed it is not necessary that there should be a physical pooling.  It is probably enough that by mutual arrangement the parties have each spent moneys for the purpose of their joint relationship knowing that part of it was to be spent in financing the purchase of the home.”

McHugh J.A. continued at 743–

“The relationship has now broken down and the appellant will be deprived of the benefit of the use of the home.  Why should equity permit the respondent to take the whole of the enhanced value of the property?  Why should equity permit the respondent to profit from the expenditure of the appellant which relieved him of expenses for which he was otherwise responsible?

Equity favours equality.  As Mason C.J., Wilson and Deane JJ. said at CLR 149 . . in Baumgartner where the parties have lived together for years and have pooled their resources `there is much to be said for the view that they should share the beneficial ownership equally as tenants in common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind’.”

The principles expressed in Baumgartner and Muchinski are not confined in their operation to husband and wife or defacto relationships.  Bryson v. Bryant (1992) 29 NSWLR 188 at 202. Nor does the principles apply only in cases where the plaintiff’s contribution is monetary in nature. Ryan v. Hopkinson (1990) 14 Fam. LR 151; Comm v. Martusevicius (1991) 14 Fam. LR 751. Work by the plaintiff or someone else on the plaintiff’s behalf towards improvement of property held by the defendant in his or her name has been held to give rise to a constructive trust in favour of the plaintiff, see eg. Bate v. Moran (1984) FLC 91-561 and Booth v. Beresford (1993) 61 SASR 475.

Such principles primarily concern the circumstances in which a trust may be imposed in respect of property in order to prevent unconscionable conduct on the part of the defendant.  In the circumstances under consideration there is no need for the imposition of a constructive trust.  There are long established equitable principles which deal with the rights and remedies of co-owners in the event of improvements being effected by one or more of them.  As I have found, the defendant, after the sale of the Boondall property or in consequence of these proceedings by the plaintiff, had the right to an allowance for expenditure on improvements to the extent to which they resulted in an increase in value of the Boondall property.  If it is unconscionable conduct on the part of the defendant to attempt to gain a share in her mother’s property without recognition of or accounting for the improvements effected by the plaintiff there is no need to impose a trust to circumvent such unconscionability.  It could have been circumvented by the defendant’s pursuing her well established rights, cf. Hibberson v. George per Mahoney J.A. at 731-732.

I leave open the question of whether a co-owner who has effected improvements to property and who has an entitlement to recoupment in accordance with principles expressed in cases such as Squire v. Rogers may also successfully resort to principles such as those expressed in Baumgartner.  In this case there are other matters which make it difficult to find unconscionability to an extent which would justify the imposition of a constructive trust or the giving of other relief.  The mother and the sister also made contributions towards the maintenance of the Boondall property.  Those contributions were largely unquantified and would need to be taken into account if the defendant was to be granted any equitable relief.  There is also the matter, adverted to earlier, of the defendant’s desire to benefit the plaintiff. 

For generally the same reasons I am of the view that application of the principles of unjust enrichment do not assist the defendant.

The failure of the defendant to adduce evidence as to the extent, if any, to which the value of the Boondall property was increased by the improvements may well be explained by the late warning which the defendant had of the plaintiff’s claim for the moneys in the term deposit.  In some circumstances it might be appropriate to permit a party disadvantaged in this way to reopen his or her case and adduce further evidence of value.  However, the sums of money involved in this claim do not make that course a sensible one.  The amount of money involved in the overall claim is too small to warrant litigation of the nature engaged in by the parties.  The aspects of the claim now under consideration are much more modest again. 

I intimated prior to this matter last coming before me that I would receive submissions on costs.  The parties sought to postpone those submissions until the resolution of the issues now decided.  I will now hear further submissions on costs and as to the formal order or orders I should make to give effect to my reasons.