Weir and Northwood v Deathridge

[2011] VCC 115

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE

CIVIL DIVISION

Case No. CI-09-05822

ROBERT PAUL WEIR	First Plaintiff
and
PETER GEOFFREY NORTHWOOD	Second Plaintiff
v
GARY JOHN DEATHRIDGE	Defendant

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	21 February 2011
DATE OF JUDGMENT:	21 February 2011 (revised 28 February 2011)
CASE MAY BE CITED AS:	Weir and Northwood v Deathridge
MEDIUM NEUTRAL CITATION:	[2011] VCC 115

REASONS FOR JUDGMENT

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Catchwords: TRUSTS – Agreement for the use of a bathing box – defendant denying plaintiffs use of the bathing box – defendant selling bathing box – trust obligations in respect of the proceeds of sale.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr W Gillies	RB Legal
For the Defendant	No appearance	-
HIS HONOUR:

1          This proceeding concerns the interests of the parties in bathing box No. 264 located at Beaumaris Beach. When the matter was called this morning, there was no appearance on behalf of the defendant, Mr Deathridge. The history of the proceeding includes the following.

2          On 23 July 2010, her Honour Judge Davis ordered that the defendant’s solicitors have leave to withdraw as solicitors on the record, and that by 6 August 2010, the defendant must make discovery, failing which his defence would be struck out. Although there appears to have been no specific order striking out the defence, the subsequent history of the matter suggests that I should take it that the defence has been struck out.

3          That subsequent history includes 6 September 2010, the day listed for the trial of the proceeding, when his Honour Judge Robertson adjourned the matter to 23 September 2010. On that date, his Honour Judge Lacava gave the plaintiffs leave to file an Amended Statement of Claim and directed that the proceeding be the subject of an administrative mention.

4          There is on file an Affidavit of Service of Ioana Mihaesi, dated 29 October 2010, proving service of that Amended Statement of Claim.

5          On 9 December 2010, her Honour Judge Davis ordered that the proceeding be fixed for hearing today, 21 February 2011, as an assessment of damages. Service of that Order is proved by the plaintiffs’ solicitor’s Affidavit of Service.

6          I consider that by a combination of those circumstances, I should take it that the Defence has been struck out.

7          On that basis, of the Defence being struck out, the case comes within the ambit of Rules 21.02, 03, and 04 of the County Court Civil Procedure Rules. On one view, if it comes within Rule 21.04, the plaintiffs can move for judgment on the basis of the matters pleaded in the Statement of Claim.

8          In any event, I have received the evidence of both plaintiffs, which is contained in the first instance in the affidavit of Mr Weir of 11 February 2011, and the affidavit of Mr Northwood of 14 February 2011. Both those plaintiffs have given oral evidence confirming that their affidavits are true and correct.

9          I have also received exhibits indicating that Bathing Box 264 was sold pursuant to a contract made in November 2009. I have received other documentation notifying the Bayside City Council of that sale. Mr McKay, the solicitor involved in the sale has informed me that the settlement of the sale did occur. I proceed on that basis.

10        On the basis of the contents of the two affidavits, I make the following findings of fact. The findings also largely reflect the matters pleaded in the Amended Statement of Claim. Those findings of fact are as follows:

(i)	That on 13 August 1991, the first plaintiff, Mr Weir, was registered with, what is now, the Bayside City Council as the licensee of the bathing box.
(ii)	In accordance with the licence granted by the Bayside City Council on 13 August 1991, both plaintiffs went into occupation of the bathing box as tenants in common in equal shares.
(iii)	On 17 December 1991, both the plaintiffs agreed with Mr Deathridge, that he should also become a one-third licensee of the bathing box as tenant in common in equal shares with them. Mr Weir, representing both plaintiffs, sent Mr Deathridge a letter stating, in material respects:

“Further to your conversation with Peter Northwood I confirm that in consideration of your repairing and keeping repaired the bathing box on ‘Dalgetty Rd’ Beach, I will agree to the shed being transferred to your title. I believe that the Council will only transfer the shed upon completion of the repairs. In addition we acknowledge the following:

a) Peter Northwood and I will have unlimited access and use of

the shed with you as one third partners.

b)	For this Peter and I will guarantee payment of the Council rates and site fees for the next three years minimum.
c)	Should one of the parties wish to leave the group then he will endeavour to find a suitable replacement if acceptable to the other parties.”

I accept Mr Weir’s evidence that Mr Deathridge signed and returned a copy of the letter, but that he is unable to locate it.

(iv)     The defendant carried out works on the bathing box as required by the Council.

(v)     On 2 June 1993, the licence to use the bathing box was transferred to the defendant with the consent of both the plaintiffs in accordance with the agreement. It appears from the plaintiffs’ affidavits that it was a requirement of the Council that only one person could be registered as the licensee or permit-holder of the bathing box.

(vi)     Then, for a period of some fifteen years, from June 1993 until in or about January 2006, both the plaintiffs and the defendant used and enjoyed the bathing box pursuant to the agreement. The plaintiffs paid rates and Council’s fees up until the year 2003, notwithstanding that the agreement only obliged them to pay those rates and fees for a minimum of three years.

(vii)   During the period 2003 to 12 May 2005, neither plaintiff paid the rates and levies due on the bathing box, which amounted to the sum of $1,115.25, as they did not receive the relevant assessments. The defendant ultimately had to pay those fees and levies. I interpose that it may be that the defendant’s subsequent attitude to the plaintiffs’ interests in the bathing box was influenced by the non-payment of those rates and levies. However, as the defendant has not attended Court to present his case, I do not regard any issue arising from the non-payment of rates as a reason for preventing the plaintiffs succeeding in obtaining the orders that I propose to make. That is particularly the case, because I find as a fact that the defendant at no time has requested either of the plaintiffs to pay the sum of $1,115.25, although they remain willing to do so, and he has not sought reimbursement from them of this sum.

(viii)  In about January 2006, the defendant changed the locks to the bathing box and took exclusive possession of it.

(ix)    Subsequently, the defendant sold the bathing box, with settlement occurring in about January 2010. The plaintiffs tendered in evidence from the file of Mr McKay, the solicitor involved in the transaction, a Contract of Sale, indicating a settlement date of 26 January 2010, whereby Mr Deathridge sold the bathing box to a Mark and Susan Villanti for the sum of $101,000. I find that that sale has been completed and that settlement has occurred, and that therefore the defendant has obtained that sum of $100,481.49, being $101,000, less legal fees.

11        On the basis of the above the facts, I find that the plaintiffs are each entitled, beneficially, to one-third of the net sale proceeds of the bathing box.

12        The facts which I have found, entitle the plaintiffs to a finding, which I make, that there was an express trust that the bathing box, and the proceeds of its sale, were to be held beneficially by the defendant in the ratio of one-third each to Mr Weir and to Mr Northwood and one-third for him. The trust was evidenced by the letter from Mr Weir to Mr Deathridge to which I have referred.

13        I also find in the alternative, that once the sale proceeds were received by Mr Deathridge, they were subject to a resulting trust on the same terms as the express trust.

14        Again as an alternative finding, as a result of the facts that I have found, I consider that the bathing box and its licence and the proceeds of sale were held by Mr Deathridge pursuant to a constructive trust, on behalf of himself and the two plaintiffs on the same terms as the express trust. The imposition of the constructive trust is justified by the sharing of the bathing box by the parties between 1993 and 2006 and the payment of rates and levies by the plaintiffs for many years.[1] The defendant’s assertion of a sole entitlement to the sale proceeds constitutes unconscionable conduct, making it appropriate to impose a constructive trust in the same terms as the express and resulting trusts.

[1]             Cf Muschinski v Dodds (1985) 160 CLR 583 , 619-620

15        I therefore will declare that the plaintiffs held the bathing box and the licence as equitable tenants in common with the defendant, with each of them entitled to one-third share of the bathing box, the licence and the proceeds of sale.

16        I find that the defendant has failed to account to the plaintiffs for their shares of the proceeds of sale. I therefore order that the defendant pay to the plaintiffs the sum representing the net value, after legal costs, of their shares of the proceeds of sale of the bathing box. This is the sum of $66,987.66, which represents two-thirds of the net proceeds of sale of the bathing box.

17        The plaintiffs are also entitled to interest on the sum awarded to them. Interest is sought from the date of settlement of the property, either under s.58 or s.60 of the Supreme Court Act 1958. Interest is appropriately awarded from that date. I am informed by Mr Gillies, counsel for the plaintiffs, that interest calculated from the date of settlement to today’s date is $7,226.41.

18        I will therefore order that there be judgment for the plaintiffs against the defendant in the sum of $66,987.66 plus interest of $7,226.41.

19        The defendant must pay the plaintiffs’ costs of the proceeding, including any reserved costs, to be taxed on Scale D in default of agreement.

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