Windt v Carabelas No. Scciv-02-861

WINDT V CARABELAS
[2002] SASC 418
Full Court: Doyle CJ, Lander and Bleby JJ

DOYLE CJ. I would dismiss the appeal. I agree with the reasons given by Lander J.
LANDER J. This is an appeal by an unsuccessful plaintiff in proceedings heard in the District Court. I will continue to refer to the parties as they were described in the court below.
The plaintiff’s claim was that the defendant held a property situated at 4 Amherst Avenue, Trinity Gardens on trust for her. The plaintiff claims that the defendant entered into an express trust or in the alternative that the defendant held the property on constructive trust for the plaintiff. Apart from seeking a declaration of her interest in the property the plaintiff sought an order directing the defendant to transfer the property to the plaintiff. She sought damages and consequential accounts.
After a trial before a judge of the District Court the action was dismissed.
On this appeal the plaintiff does not complain of the trial judge’s failure to find an express trust. Such a concession was rightly made. There was no evidence before the trial judge that would have supported a finding of an express trust. Moreover there was nothing in writing to that effect and in those circumstances no interest of that kind could have been created: Law of Property Act 1936 (SA) s 29.
The trial judge made adverse findings on the plaintiff’s reliability and credibility. Those adverse findings are not challenged on this appeal.
In fact none of the trial judge’s findings are challenged.
The only issue on this appeal is whether, upon the findings made by the trial judge, it was appropriate to dismiss the plaintiff’s claim. On this appeal it is the plaintiff’s contention that on the trial judge’s findings he should have proceeded to have determined the respective contributions made by the plaintiff and the defendant in a joint endeavour in which they were involved and imposed a constructive trust in proportion to those contributions.
The plaintiff says that if her contentions are accepted on appeal the matter will have to be remitted to the trial judge for an assessment of those contributions.
The Trial Judge’s Findings
The defendant is a solicitor who was born in 1944 and married his wife in 1967. They have lived together since their marriage. They have three children.
The defendant met the plaintiff in 1972 at the office where they were then both employed. He was a professional person and she was a receptionist/secretary. Shortly after meeting a sexual relationship commenced.
In October 1972 the plaintiff leased a flat in which she continued to live until April 1975. The defendant regularly visited her at the flat and on occasions took her to dinner. Their sexual relationship continued.
In April 1975 the plaintiff moved to a unit owned by the defendant where she remained for about nine months. The defendant provided the plaintiff with money to pay rent to his wife. By this time the plaintiff and the defendant used to entertain people at her flat.
In 1976 the plaintiff moved to Melbourne where she remained for a year. However, the plaintiff and defendant continued to see each other in Melbourne and in Adelaide. In October 1976 the plaintiff became aware that she was pregnant to the defendant and in December 1976 the defendant travelled to Melbourne to bring the plaintiff back to Adelaide.
The defendant’s first child with the plaintiff, Kristiana, was born on 6 May 1977. At first the defendant queried the paternity of the child but that is no longer an issue.
Between March 1977 and about September 1982 the plaintiff lived in premises either rented by herself or owned by her parents. For a short period between late 1977 and the middle of 1978 the plaintiff lived with another man. The trial judge said that the defendant was not troubled about the relationship and during that time the defendant helped with expenses for the child.
After that relationship ended she returned to her parents’ house and the defendant began to visit her and the child again and the sexual relationship between the plaintiff and defendant resumed.
The defendant did not offer any financial assistance to the plaintiff or to the child except for the short period when the plaintiff lived with the other man.
The plaintiff was employed intermittently but otherwise subsisted on a single parent’s pension.
The parties’ second child, Zoh, was born on 10 January 1981. Again the defendant initially queried the paternity but again that is no longer an issue.
Between September 1982 and February 1984 the plaintiff lived in another property owned by her parents. The defendant continued to visit regularly and occasionally he took the plaintiff and the two children out.
In late 1983 the plaintiff was advised by her parents that they needed the property themselves and on 2 November 1983 she applied to the State Bank for a housing loan which was approved. The loan was available for a period of six months after its approval. She never took up the loan.
In February 1984, the plaintiff and the two children moved into the Amherst Avenue property which is the subject matter of these proceedings.
The house was bought by the defendant in January 1984 for $73,000 and registered in his name. It was paid for with the assistance of a mortgage of $60,000. The house was habitable but needed some renovations. After the plaintiff and the two children moved in significant building works were carried out at a cost to the defendant of about $48,000.
The plaintiff has continued to live in the property since 1984. Both of her children lived in the property until they left home. Kristiana had a child, James, and that child lives with the plaintiff in the property.
At or about the same time as the defendant purchased this property the defendant told his wife of his relationship with the plaintiff. His wife was extremely distressed but the marriage survived. His wife’s distress did not prevent the defendant continuing the relationship with the plaintiff and he continued to visit the plaintiff and the children. The trial judge found that the sexual relationship between the plaintiff and the defendant continued until 1985 at which time it ceased except for an isolated incident in 1993.
The defendant continued to visit the plaintiff and the children but his visits became less frequent in the late 1980s and eventually they ceased altogether. The trial judge found that the defendant rarely visited the house after early 1997 and has not visited since January 2000, when Zoh turned 19.
The trial judge was unimpressed by the plaintiff’s evidence. He believed that she lacked candour and offered two examples.
The plaintiff’s case was that she did not pay any rent to the defendant for the use of the property and indeed there was never any suggestion by him that she should. On the other hand the defendant asserted that it had been agreed that she would pay rent but instead of paying it to the defendant she would keep the rent as a contribution by him towards the upkeep of the children.
Two rent books were tendered. The first recorded monthly entries between March 1984 and July 1995 and the second, from July 1995 to April 1999.
It was the plaintiff’s case that the defendant suggested that she should get a rent book and entries should be made. She said there was never any discussion about her retaining rent as maintenance for the children. She was receiving a single parent’s pension which included rent assistance and the defendant had suggested keeping a rent book so that she could get that rent assistance.
The trial judge did not believe that account. Between 1983 and 1994 the plaintiff was a member of the Army Reserve. The plaintiff acknowledged in cross examination that during this period she was receiving a regular army income and not a single parent’s pension. In those circumstances the trial judge found that her explanation for keeping the rent book could not be accepted.
The second matter upon which the trial judge thought the plaintiff lacked candour related to her leaving her parents’ property. She said that whilst she had been advised by her parents that they wanted the property she was under no pressure to move out in 1984 because they did not in fact move into their premises until May 1985. However, the trial judge said that it became clear that the parents’ property needed major refurbishment and this work commenced within a few months of the plaintiff moving out. The trial judge found that the reality of the position was that the parents wanted the property in early 1984.
On the evidence there was a dispute about circumstances in which the plaintiff moved to the subject property.
It was the plaintiff’s case that the defendant offered to look around for somewhere for the children and her to live.
She said that in late 1983 he had been looking around for some time but in January she was telephoned by the defendant who told her that he had already bought a house. She said she went to see it within a couple of days and thereafter the property was always referred to as her house.
The defendant however asserted that in late 1983 he became aware that the plaintiff’s parents needed the Campbelltown house. He then discussed with the plaintiff where she might live and whether he could help her to find a house to rent in the Campbelltown area so that she could be near her parents. At that same time the defendant became aware of the subject property which he inspected from the outside in late 1983. He bought the property with the intention of demolishing it to build units or maisonettes. He did not view the inside of the house before purchasing it.
Both parties agreed that in late 1983 the plaintiff and their children needed to find other accommodation. The defendant purchased the property without first giving the plaintiff an opportunity to view it. Having regard to the volatility of their relationship it might have been that he thought it was better to make the decision and require her to commit herself one way or the other to the property.
The trial judge accepted the defendant’s account and found that he bought the property so that the plaintiff and the children had somewhere to live. He said that the defendant had not previously offered to buy a property for her and his purchase of the property was consistent with the type of purchase he had made before and after, namely as an investment. The trial judge relied on the defendant’s application for a loan on the house from the Adelaide Permanent Building Society in which he described the purpose as an “investment unit”.
Specifically the trial judge rejected the plaintiff’s claim that the defendant bought the house for the plaintiff and his children thus rejecting her claim that an express trust was created.
He said it was also consistent with their relationship that the defendant would offer her the use of the house on a pro-tem basis. He found that the defendant did not commit himself to any permanent long term relationship at that time.
In early 1985 the defendant employed an architect to design improvements to replace the back section of the house and renovate the bathroom and kitchen. Those works were carried out over a period of about 15 months at a cost to the defendant of $48,000.
The trial judge also found that from time to time the rent was adjusted. The defendant paid water rates, council rates, land tax, the emergency services levy and the insurance on the property. The trial judge was unable to find, on the evidence, whether or not he paid the contents insurance. The defendant also paid for occasional maintenance but this appears to have been rare. Otherwise he paid for the children’s school fees and some other incidentals.
The trial judge also found that the plaintiff has taken “great care of the property and over the years she has spent a considerable amount of money on it and its contents”. He found that she had spent more than $34,000 on the property and he outlined the extensive list of payments that the plaintiff made. She purchased wardrobes, cupboards, an oven and other kitchen services, carpets, lights, window screens, door screens and water tanks. She also paid for painting, flooring repairs, building repairs, landscaping supplies and for many other expenses associated with the maintenance and repair of the house and property.
The trial judge found:
“62It is clear from photographs that, compared to its desolate appearance shortly after the house was purchased, the back garden has been transformed into an attractive area. I accept that as well as spending money on the garden, the plaintiff has put a lot of personal effort into the property over the years.
63The plaintiff said she spent money on the house without asking the defendant because she believed the house was hers. She said, in evidence-in-chief [TX 83]:
‘I never asked him if I could do anything in the house ... [b]ecause I always believed the house to be mine, and when I saw things needed doing and I had the money to do it, I did it.’
64She said that she was in a position to spend the money because she had received a sizable settlement of injuries suffered in a motor accident.” Windt v Carabelas [2002] SADC 67.
The trial judge did not accept the plaintiff’s evidence that usually she did what she did without reference to the defendant because she believed the house was hers. The trial judge found that there were discussions about things that she did and paid for.
In his evidence the defendant said some of the items were paid for by the plaintiff without any consultation with him and some were paid for by the plaintiff after he refused to pay and some were paid by him.
The trial judge rejected the plaintiff’s evidence that there was never any discussion about who was to pay for these items. He accepted the defendant’s evidence that the position was as he described.
The trial judge specifically found that when work began upon the renovations in 1985 the plaintiff and defendant contemplated that the plaintiff would remain in occupation in the property for a long period.
He further found that when she spent the money on the house she did not believe the property was hers nor was she under any mistaken belief as to that matter. The trial judge was inclined to the view that the plaintiff spent the money on the house to make the house more pleasant and comfortable to live in.
The trial judge found that the plaintiff was under no mistaken belief that she would be entitled to recoup any expenses which she met in relation to the house.
Consequently the trial judge found that there was no conduct on the part of the defendant which could give rise to any estoppel of a proprietary kind or which would allow the plaintiff to recover the amount which she had spent.
Kristiana left school in 1993 and left home for the first time in February 1995. She returned home at the end of 1995 or early 1996 and stayed for a couple of months before leaving again. She again returned home in mid 1996 and eventually finally left home in October 1998. She had James who has lived with the plaintiff at the property since October 1998. The plaintiff obtained custody of James in March 1999.
Zoh left school in 1997 and left home at the end of that year. She also returned home in January 1999 and stayed until he finally left in March 2000.
In early 1997, the defendant suggested to the plaintiff that the property should be sold and that she should look for further accommodation. There were a number of discussions about her leaving between that time and March/April of 2001 when the plaintiff lodged a caveat over the subject property.
It was the defendant’s evidence, which I think was accepted by the trial judge, that the defendant asked her to leave on at least five occasions. The plaintiff refused to leave on the basis that she was staying there because she was looking after James. The defendant said that she had no intention of taking any proceedings to evict her.
It is upon those findings that the plaintiff says that she is entitled to the remedy of a constructive trust which should recognise the contribution she has made in dollar terms and her contribution to the raising of the children.
The Plaintiff’s Contentions
On appeal the plaintiff contended that the plaintiff and the defendant entered into a joint endeavour in 1983/84 agreeing that the property would be purchased as a residence for the plaintiff and the two children.
The joint endeavour required the plaintiff to look after and support the children. The plaintiff said that she was to be the homemaker and primary caregiver of the children, enabling the defendant to earn money to support the family and thus to better his and their, financial position. As part of that joint venture the defendant would provide the property for the plaintiff and their children’s accommodation.
The plaintiff and the defendant would live a quasi de facto life which allowed for the defendant to visit from time to time and in which their sexual relationship could continue.
The endeavour was effectively to raise the children.
It is upon that relationship that the plaintiff relied for the purpose of the remedy of a constructive trust.
The Trial Judge’s Findings On Joint Endeavour
The trial judge found that there was no joint endeavour undertaken by the plaintiff and the defendant. In fact he found that the plaintiff was “mainly independent of the defendant.”
It must be remembered that the plaintiff had maintained her independence throughout the period until 1984. True it was that the plaintiff asked the defendant to assist to find her accommodation in late 1983 early 1984 but the trial judge was of the view that that did not compromise her independence.
Prior to this time the plaintiff had sought nothing from the defendant by way of financial assistance or otherwise. After finding her the accommodation the relationship continued in much the same vein as it had before. The defendant made some contributions but in the main he left her to subsist on whatever income she could earn, supplemented by whatever entitlements she might receive by way of social security.
The ending of the sexual relationship in 1984 or 1985 is consistent with the plaintiff’s independence.
On the trial judge’s finding there was no joint endeavour of any kind and therefore, for reasons which I will mention, the plaintiff’s claim was bound to fail.
Conclusion On Appeal
In my view even if the trial judge had found that there was a joint endeavour of the kind contended for by the plaintiff the result would have been the same because the joint endeavour contended for by the plaintiff could not have given rise to a proprietary interest of any kind in the property.
The Law
If the law were simply that a constructive trust could be imposed at any time where a trial judge believed it to be fair and just then this plaintiff would have a much stronger claim, but unfortunately, from her point of view that is not the law.
The law in England and Australia in relation to the imposition of a constructive trust where parties have undertaken a joint endeavour in relation to the acquisition or maintenance or improvement of property has diverged: Muschinski v Dodds (1985) 160 CLR 583 per Gibbs CJ at 595 per Deane J at 615.
Gibbs CJ said at 594-595:
“However the view that the court can disregard legal and equitable rights and simply do what is fair is ... contrary to the established doctrine in Australia: Wirth v Wirth (1956) 98 CLR 228; Hepworth v Hepworth (1963) 110 CLR 309; Bloch v Bloch (1981) 55 ALJR 701.”
In this country, a constructive trust is not imposed simply because the imposition of such trust “... is fair and just as a matter of abstract morality”; per Deane J at 621.
In Muschinski v Dodds (supra) the parties were living in a de facto relationship. They purchased a property as tenants in common in equal shares upon the basis that although the woman paid for the property the man would carry out renovations. Shortly thereafter the parties separated and the renovations were never carried out. The woman claimed sole beneficial ownership of the property.

Of the five judges sitting in that case three were of the opinion that the parties held their respective legal interest as tenants in common upon trust after payment of any joint debts incurred in the improvement of the property to repay to each of them their contributions and as to the residue for them both in equal shares. Gibbs CJ reached that conclusion because the parties were jointly and severally liable to pay the purchase price and because the woman had paid all of it she was entitled to contribution as to one half from the man. Mason and Deane JJ reached their conclusion because it was unconscionable after the failure of the joint venture between the parties for the man to assert his legal entitlement without recognising the woman’s payment.
Brennan and Dawson JJ were of the opinion that the woman intended that the man should receive his beneficial interest in one half of the property immediately but that the gift of that half created a personal obligation upon the man. Therefore when the man failed to fulfil his obligation to carry out the renovations he was not liable to forfeit the beneficial interest in the property but might have been liable to pay any compensation sought by the woman. However, they were of the opinion that any proprietary interest in the land claimed by the woman failed.
After discussing both the institutional and remedial aspects of a constructive trust Deane J said at 615:
“The fact that the constructive trust remains predominantly remedial does not, however, mean that it represents a medium for the indulgence of idiosyncratic notions of fairness and justice. As an equitable remedy, it is available only when warranted by established equitable principles or by the legitimate processes of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principles ... Viewed as a remedy, the function of a constructive trust is not to render superfluous, but to reflect and enforce, the principles of the law of equity.”
His Honour went on to say at 616-617:
“Once its predominately remedial character is accepted, there is no reason to deny the availability of the constructive trust in any case where some principle of the law of equity calls for the imposition upon the legal owner of property, regardless of actual or presumed agreement or intention, of the obligation to hold or apply the property for the benefit of another ...”
His Honour concluded the venture, into which the parties had entered, had failed, without blame falling on either party. That left the man as half owner of a property in circumstances to which the parties had never adverted.
His Honour said at 620-621:
“In these circumstances, the operation of the relevant principle is to preclude Mr Dodds from asserting or retaining, against Mrs Muschinski, his one-half ownership of the property to the extent that it would unconscionable for him so to do. In assessing whether or to what extent such an assertion or retention of legal entitlement by Mr Dodds would constitute unconscionable conduct, one is not left at large to indulge random notions of what is fair and just as a matter of abstract morality. Notions of what is fair and just are relevant but only in the confined context of determining whether conduct should, by reference to legitimate processes of legal reasoning be characterised as unconscionable for the purposes of a specific principle of equity whose rationale and operation is to prevent wrongful and undue advantage being taken by one party of a benefit derived at the expense of the other party in the special circumstances of the unforeseen and premature collapse of a joint relationship or endeavour.”
The specific principle which drove Deane J to his conclusion is “the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them; Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148.
In Baumgartner v Baumgartner (supra) the parties to a de facto relationship pooled their incomes for living expenses and fixed commitments. Initially they lived in a unit owned by the male partner which was sold and a house was bought and placed in his name. The nett proceeds of the sale of the unit was used for the purchase of the house and the purchase price was supplemented with the aid of a mortgage which was also in the name of the male partner.
The parties aggregate earnings were pooled in the proportions roughly 55 per cent to the male partner and 45 per cent to the female partner. The parties separated and the male partner asserted that he was entitled both legally and beneficially to the property.
The majority, Mason CJ, Wilson and Deane JJ said at 149:
“In this situation it is proper to regard the arrangement for the pooling of earnings as one which was designed to ensure that their earnings would be expended for the purpose of their joint relationship and for their mutual security and benefit. To the extent which the pooled funds were the source of payment of mortgage instalments by the appellant, the pooled funds contributed not only to present accommodation expenses but also to the security of the parties’ accommodation in the future. In this context it would be unreal and artificial to say that the respondent intended to make a gift to the appellant of so much of her earnings as were applied in payment or mortgage instalments. There was no evidence which would sustain a finding that the respondent intended to make a gift to the appellant in this way.
The case is accordingly one in which the parties have pooled their earnings for the purposes of their joint relationship, one of the purposes of that relationship being to secure accommodation for themselves and their child. Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant’s assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent.”
In both those cases the parties had contributed in money or kind to a joint endeavour which contemplated and included the acquisition, purchase, maintenance or renovation of property.
In both cases the joint endeavour failed in circumstances where blame could not be attributed to either party. The parties had not contemplated how the property would be dealt with in the event that the joint endeavour concluded without attributable blame.
In those circumstances it was unconscionable for the party who held the legal title to assert that they were entitled to the property to the exclusion of the other party. In those circumstances equity intervened to impose a constructive trust. However, the intervention of equity depended upon the parties in each case having equitable rights not because of any notions of fairness or justice.
In this case the trial judge concluded that there was no joint endeavour. That finding is not attacked and because that finding is allowed to stand the plaintiff’s case must fail.
However, even if there had been a joint endeavour of the kind contended by the plaintiff, in my opinion, that would not support a further finding that it would be unconscionable for the defendant to fail to recognise any proprietary interests of the plaintiff in the subject property.
In my opinion, the joint endeavour did not include the purchase, acquisition, maintenance or renovation of the subject property and therefore no proprietary rights attached to the plaintiff which would have made it unconscionable for the defendant to assert that the property was his alone.
In those circumstances, even if the trial judge’s finding did not stand, the plaintiff’s claim must fail.
The law in Australia is clear. Proprietary rights between parties are not to be adjusted by reasons of fairness or justice but only by reference to legal and equitable principles. Whether any personal rights exist, which might be enforceable by the plaintiff against the defendant, again is not a matter for decision in this case, because no personal rights were asserted. The only rights asserted were proprietary rights.
On the basis of the trial judge’s findings, the plaintiff is not entitled to any charge on the property for her contributions to the renovation or maintenance of the property. On his findings these contributions were made in the knowledge that the property was the defendant’s. If her expectation was that the defendant would provide a house for her and the children that expectation was met. The defendant provided such a home. The findings, however, do not allow for a conclusion that her contributions formed a basis for her to occupy the property indefinitely.
In my opinion, the trial judge’s decision was right for the reasons which he gave and this appeal should be dismissed.
BLEBY J. I agree that the appeal should be dismissed. I have nothing to add to the reasons of Lander J.

[2002] SASC 418

13 December 2002