Zekry v Zekry
[2020] VSCA 336
•23 December 2020
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2020 0058
| NAGI ZEKRY | Applicant |
| v | |
| MARGRITTE ZEKRY | Respondent |
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| JUDGES: | TATE, KYROU and NIALL JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 19 October 2020 |
| DATE OF JUDGMENT: | 23 December 2020 |
| MEDIUM NEUTRAL CITATION: | [2020] VSCA 336 |
| JUDGMENT APPEALED FROM: | [2020] VSC 220 (McMillan J) |
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EQUITY & TRUSTS – Common intention constructive trust – Joint endeavour constructive trust – Applicant claimed to have made financial and non-financial contributions to properties – Legal title to properties held by respondent – Whether common intention of applicant (son), respondent (mother) and late husband (father) that 50 per cent interest in properties would be held on trust for benefit of applicant – Whether common intention inferred from parties’ actions – Whether parties entered into a joint endeavour concerning properties – Position of respondent once she became registered proprietor – Muschinski v Dodds (1985) 160 CLR 583, Baumgartner v Baumgartner (1987) 164 CLR 137 applied – Declaration that respondent holds her interest in one property on trust for herself beneficially as to 50 per cent and for the applicant beneficially as to 50 per cent.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr M Gronow QC with Mr A Ford | Victorian Bar Duty Barristers’ scheme |
| For the Respondent | Ms E Konstantinou | Fleming & Rhoden Lawyers |
TATE JA
KYROU JA
NIALL JA:
The respondent is the mother of the applicant. She is the sole registered proprietor of two residential properties in Melbourne. They are 38 Robjant Street, Hampton Park (‘Hampton Park’) and 36 Santa Cruz Boulevard, Roxburgh Park (‘Roxburgh Park’).
On 13 March 2003, Samir Zekry (‘Samir’), the respondent’s late husband, and the applicant’s father, became the sole registered proprietor of Hampton Park. On 9 February 2017, Samir transferred Hampton Park to the respondent, with a stated consideration of ‘natural love and affection’. Hampton Park is currently the subject of a contract of sale, settlement of which was due to take place on 30 March 2018 but which has been delayed due to the current dispute.
On 12 July 2017, the respondent became the registered proprietor of Roxburgh Park, subject to a mortgage in favour of Westpac.
The applicant claims that the respondent holds title to both properties subject to an equitable interest in his favour. At trial, he contended that it was the common intention of Samir, the respondent and the applicant that Hampton Park would be held by Samir and subsequently by the respondent on trust in favour of the applicant as to 50 per cent and, when Roxburgh Park was purchased, that the respondent and Samir would own and live in that property while the applicant would beneficially own and live in Hampton Park. Alternatively, he contended that he was the beneficial owner of 50 per cent of both properties pursuant to a constructive trust that arose because the properties, and some other properties that had been acquired and sold in the interim, had been acquired as part of a joint endeavour between Samir, the respondent and the applicant. This claim was based on the type of constructive trust recognised by the High Court in Baumgartner v Baumgartner.[1]
[1](1987) 164 CLR 137, 147–8; [1987] HCA 59 (Mason CJ, Wilson and Deane JJ) (‘Baumgartner’).
The applicant gave evidence as to an agreement with his parents concerning the properties, and other properties that had also been acquired and disposed of. Although pleaded as a tripartite understanding, the applicant’s evidence painted the respondent as largely a passive observer in the dealings between he and his father. In addition to the conversations, the applicant also said that he had contributed to the deposits to purchase certain properties as part of the joint endeavour and had made regular payments into his father’s account representing mortgage instalments due in respect of various properties. He relied on bank statements of accounts in his name and accounts in Samir’s name.
The judge rejected both claims, essentially because she was not persuaded that the evidence established a common intention between the applicant and his parents that the properties would be held on the trusts alleged. The judge held that the applicant’s evidence as to conversations between he and his parents was vague and unconvincing,[2] and the documentary evidence, which was confined to bank statements, was inadequate.[3] The judge dismissed the proceeding. The judge also ordered that a caveat, which the applicant had placed on the Hampton Park title, be removed as the applicant’s failure to establish his equitable claims meant that he did not have any interest in the property that could support the caveat.
[2]Zekry v Zekry [2020] VSC 221, [93] (‘Reasons’).
[3]Ibid [78]–[79], [95]–[98].
The applicant seeks leave to appeal from the orders dismissing the proceeding. He says that the judge was wrong to reject his claims. He also seeks to broaden his claim in this Court by seeking leave to contend for a resulting trust based on his financial contributions to the acquisition of the properties and the mortgage payments. The respondent opposes leave being given to permit the applicant to argue a ground for the first time on appeal.
The evidence
Before turning to the parties’ evidence, it is useful to sketch the following uncontentious overview in order to identify the sequence of property acquisitions and disposals. It is based largely on the summary filed by the respondent in this Court.
The respondent and Samir married in Egypt and their two children, the applicant and his sister Nermin were born in that country, in 1971 and 1972, respectively. The family arrived in Australia from Egypt in 1986 when the applicant was 15 years old. The marriage was described as a traditional Egyptian marriage in which Samir was the primary income earner and the respondent was more or less fully engaged at home and looking after the children. She had a short period of employment but suffered an injury and was in receipt of social security payments during some of the relevant period.
Samir was responsible for the family’s finances and paid for the weekly groceries. The respondent also received a small amount of money from Samir in case she needed to buy something when he was not with her.
Although the applicant seeks an equitable interest in Hampton Park and Roxburgh Park, he says that he made financial and non-financial contributions towards the purchase and maintenance of five properties in total. Those properties are:
(a) Durang Court, Endeavour Hills, purchased in 1991; sold in 2009 (‘Endeavour Hills’);
(b) Hampton Park, purchased in 2003;
(c) Stud Road, Dandenong, purchased in 2005; sold in 2016 (‘Stud Road’);
(d) Aratula Street, Dandenong, purchased in 2011; sold in 2017 (‘Aratula Street’); and
(e) Roxburgh Park, purchased in 2017.
After a short period of living in rental accommodation, Samir and the respondent purchased Endeavour Hills, the first family home, in 1991.
In 1992, the applicant purchased a block of land in Hallam. The following year, he and Samir purchased an investment property in Dandenong. The Hallam and Dandenong properties were sold in 1999.
Following its purchase, on 13 March 2003, Samir became the sole registered proprietor of Hampton Park.
The applicant acquired in his own name two properties in Dandenong — Heatherton Road and James Street — which he said were purchased in about 2004, although he could not remember the date.
On 13 July 2005, the registered proprietorship of Endeavour Hills was transferred from Samir and the respondent jointly to Samir solely.
Following its purchase, on 5 September 2005, Samir became the sole registered proprietor of Stud Road. The property contained a fire damaged house which was demolished in 2009.
Endeavour Hills was sold on or about 11 February 2009.
Following its purchase, on 14 October 2011, the respondent became the sole registered proprietor of Aratula Street. That property was purchased so that the respondent could be closer to her mother who was in failing health.
In 2014, the applicant sold his properties in Heatherton Road and James Street, Dandenong.
Stud Road was sold on or about 6 May 2016 and Aratula Street was sold on 11 May 2017, after the death of the respondent’s mother.
On 12 July 2017, the respondent became the registered proprietor of Roxburgh Park, subject to a mortgage with Westpac.
Samir died on 14 December 2017.
For the purpose of the proceeding, the two critical acquisitions were Hampton Park in 2003 and Roxburgh Park in 2017. The critical factual issues concern the extent to which the applicant financed the purchase price and mortgage payments with respect to those two properties and, relatedly, whether there was any understanding between he and his parents concerning the basis on which the properties were to be held. However, as already noted, the respondent did not become the registered proprietor of Hampton Park until 9 February 2017. Therefore, any claim by the applicant as to an equitable interest in Hampton Park before that time could only have been against Samir as the registered proprietor. As will appear, the existence of any equitable rights against Samir were not simply passed on so as to become a liability of the respondent when she acquired title. Absent fraud, the respondent obtained an indefeasible title to Hampton Park on registration. Of course, the applicant is still entitled to bring a claim against the respondent seeking to enforce a personal equity. However, because any entitlement in relation to Hampton Park must take the form of a personal equity against the respondent, the focus must be on her knowledge, acts and omissions.
Before examining the judge’s findings, it is useful to summarise the evidence of the applicant and respondent.
Applicant’s evidence at trial
The applicant said that after completing his studies he worked with his father in a computer/electronic goods repair business from 1989/1990 to 1991, when he started his own computer repair business called ‘Amazing Computers’, working full-time. He earned approximately $340 per week. His father also worked full-time in a different computer business and assisted the applicant after hours. He described his father as his best friend and business partner.
The applicant said that he and his father purchased an investment property in Hemmings Street, Dandenong in 1993, which they renovated. He said that property was sold and the applicant went overseas. He returned to Australia in 2001 and said that he and his father agreed, in the presence of his mother and sister, that they would go into a ‘joint venture’.
The applicant said that in 2001 he and his father jointly commenced a business selling new and refurbished power tools. It was put to the applicant in cross-examination that it was in fact his father’s business, that his father had refused to let the applicant join, and that this was a source of conflict between the applicant and his father. The applicant denied this.
The applicant said that in 2003 he and his father, in the presence of his mother, discussed a property purchase which was prompted by the fact that their power tools supplier had sold its business and they needed to find an alternative supplier. He said that they decided to purchase stock and a property where they could both live and use it to store stock and conduct a workshop to repair power tools. He said that they considered Hampton Park to be suitable because it had a large garage in which to store their trading stock. They decided to purchase Hampton Park, his father used the equity in Endeavour Hills to obtain a loan and the applicant paid a deposit of around $20,000 which he said was withdrawn from his bank account on 14 March 2003. The applicant also referred to the amount being paid for settlement.
We note that a bank statement for a Westpac account in the applicant’s name records a withdrawal of $20,112.45 on 14 March 2003, described as ‘withdrawal for settlement’. We note that in his second further amended statement of claim (‘SFASOC’), the applicant pleaded that he paid a deposit of $24,000 in cash.[4]
[4]SFASOC [4A].
The applicant said that, following its purchase, the garage at Hampton Park was used to store power tools for sale in the business.
The applicant said that he and his father purchased Stud Road in 2005 and that the contract of sale was in the applicant’s name. The applicant said that he paid $500 cash on the day the contract note was signed. He said that pursuant to the contract he nominated his father as purchaser. It appears that a contract note, but not the full contract, was in evidence.
The applicant said that he paid a deposit of $26,500 for Stud Road. The applicant’s bank statement records that he withdrew $25,000 from his account on 16 August 2005. The applicant says that he contributed the money as a deposit.
The applicant said that he contributed a minimum of $60,000 towards renovations or improvements of Stud Road. He said this was contributed between 2005 and 2008 using his credit cards or the credit cards of his father which he would repay. He said that the works involved some minor structural work and replacement or plastering of walls, cornices, architraves, and doors.
The applicant said that although the financial arrangements were with his father, his mother was very much aware of them. He said that although the agreement with his father was on the basis of a 50/50 split, as his father got older, he (the applicant) ended up paying 100 per cent of the loan on Endeavour Hills, Hampton Park and Stud Road. He said that the mortgage payments on Hampton Park were transferred from his account to his father’s loan account.
He said that he arranged for Samir’s existing loans on Endeavour Hills and Hampton Park to be refinanced and consolidated with the loan on Stud Road.[5] He said that he was paying $3,700 and $160 per month on consolidated loans for the mortgages on Endeavour Hills, Hampton Park and Stud Road.[6] The applicant denied that he was transferring funds to his father to pay his own debts.
[5]Reasons [46].
[6]Ibid. In the SFASOC, the applicant claimed that he made monthly payments of about $1,650 towards the consolidated loan. At trial, the applicant said that figure was wrong and that he was paying $3,700 and $160 for the three properties.
The applicant said that paying the loans on the various properties was a strain and at one point he was forced to use an American Express card at 24 per cent interest. He said that Endeavour Hills was sold in 2009 and the funds obtained were paid into the home loan to save interest.
After a hiatus, the applicant said that he started to look for properties until he found Aratula Street which was purchased using money from the loan account. That property was placed in the respondent’s name. He said that the property was purchased for $600,000 and that he paid a deposit of $35,000. He said that they renovated that property using funds borrowed from a friend of his, Ho Way Ginh (‘Ginh’), who lent him $100,000 at bank interest. He said that the house was repainted, walls were reconstructed, the floors were polished and work was done to the kitchen, living area, laundry and garage.[7] He said that the loan was documented in a loan agreement prepared by lawyers in Dandenong. He said that he lived at Aratula Street with his parents until around 2014.
[7]Ibid [64].
He said that with the purchase of Aratula Street, his family again had three properties: Hampton Park, Stud Road and Aratula Street. In 2016 and 2017, Stud Road and Aratula Street, respectively, were sold. The family were then living in Hampton Park. The applicant gave evidence that on 3 May 2016, Samir’s bank statement records a final loan repayment of just under $200,000.
In 2017, Roxburgh Park was purchased. The applicant said that it was funded from the money realised from the sale of his two properties in Dandenong, Aratula Street and Stud Road and with ‘[his] dad’s money’. Somewhat inconsistently, the applicant also said that the loan on Hampton Park was paid off and that they borrowed some money towards Roxburgh Park. In order to obtain the loan, Hampton Park was transferred to the respondent and used as additional security to secure the loan to acquire Roxburgh Park. The applicant said:
We were advised by — by the broker it’s, ah — it’s better to be in a stronger position in the bank to — to be able to borrow so much money in her age. So we were advised to, ah — that she have enough assets so we could purchase under her name.
Roxburgh Park was chosen because, as a result of a fall, the respondent needed a single story home and the property was also closer to Nermin’s home. The applicant claimed that there was an agreement that Hampton Park would be transferred to the applicant once settlement on Roxburgh Park had been completed.
He said that it was agreed that he would stay at Hampton Park and the respondent and Samir would live at Roxburgh Park.[8]
[8]Ibid [66].
During the relevant period, the applicant also owned two other properties, one in Heatherton Road, Dandenong, and another in James Street, Dandenong. He gave evidence that he sold both of those properties in 2014 for $385,000 each. Although he could not remember the date he purchased them, he said that it was around 2004 and agreed that he was servicing loans on these properties from 2004 until 2014, at the same time as he was making loan repayments on the properties registered to Samir and/or the respondent. He also said that he borrowed $364,000 against the equity in his own houses to support his parents’ loans.
Respondent’s evidence at trial
The respondent gave evidence at trial through an interpreter. She described her marriage to the applicant’s father as a traditional Egyptian marriage in which her husband controlled the family’s finances.
She said that initially the applicant had lived with them and their daughter at Endeavour Hills but left when he was about 19 years old. She said that the applicant and Samir had almost no communication with each other for nearly 17 years due to the applicant’s aggressive behaviour. She said that when they were living together at Endeavour Hills, the applicant had started arguing with his father, demanding money, because they could not work well together. She denied that Endeavour Hills was renovated.
She said that prior to Samir’s death, no one was living at Hampton Park and that the applicant had objected when the respondent’s brother went to clean it up. She denied that when the property was purchased there was an agreement between the applicant, her and her husband, that the applicant would own 50 per cent and she and her husband would own the other 50 per cent. She could not remember being present for any discussions between the applicant and his father about this arrangement. She said that she did not know whether the applicant had contributed to the deposit for the property and denied that the applicant had made contributions to mortgage payments or to renovations and repairs on the property.
She gave evidence that Stud Road was purchased because it was close to her mother who was unwell.[9] She said that her husband and the applicant had agreed that they would demolish the house and leave it as vacant land but that she did not have anything to do with that agreement and was not involved in those discussions. She said: ‘the house was burnt down. They bought it for the land. They demolished it, and they sold it.’ She described the relationship between her husband and the applicant as ‘[a]lmost not good’ at the time Stud Road was purchased. She said that was ‘because no one was settling any accounts’. When asked whether she knew anything about the applicant giving her husband the deposit for Stud Road, she responded ‘[m]aybe, yeah’ but confirmed that she did not know for certain.
[9]Somewhat inconsistently, the summary filed by the respondent stated that Aratula Street was purchased in order for the respondent to be near her mother who was ill. This would seem to be most likely as Aratula Street was sold in 2017, after the respondent’s mother had died, while Stud Road was sold in 2016.
She said that her husband made the mortgage payments on the property. When asked if she knew anything about an arrangement between her husband and the applicant that between 5 September 2005 and early 2006, the applicant would make monthly payments on the loan, she said that she had ‘no idea.’ She said that her husband and the applicant had an argument when Stud Road was sold but could not remember what it was about or why the applicant was upset.
As mentioned, the respondent said that Aratula Street was purchased because she wanted to be closer to her mother to look after her. She said that she did not know anything about the applicant contributing to the purchase price or paying for the mortgage. She agreed that some renovations and repairs were done and that the applicant had assisted Samir by bringing in tradespeople.[10] She said that the applicant brought people in to fix the kitchen. She said that she did not have any discussions with the applicant about him owning one half of Aratula Street and she and her husband owning the other half. She did not know whether her husband had had any such discussions with the applicant. She said that she and Samir only lived in Aratula Street for a year or two and, after her mother died, they sold the property and moved back to Hampton Park where her husband still conducted his business.
[10]Reasons [65].
The respondent said that her husband bought Roxburgh Park for her. She could not remember signing any documentation and only discovered that the property was in her name when her Centrelink payments stopped because she owned two properties. In her evidence the respondent was asked: ‘did you ever – did you and Samir ever tell [the applicant] that Hampton Park would be kept for him?’ The respondent replied: ‘No. Up to the moment that Samir transferred the house into my name he wasn’t on talking terms with [the applicant]’.
She could not remember any discussions between the three of them about buying the property or an agreement that she and her husband would have Roxburgh Park and the applicant would have Hampton Park. She said that she never understood that to be the arrangement. She denied that the applicant had made any mortgage payments on Roxburgh Park.
She gave evidence to the effect that the relationship with the applicant had deteriorated over time and that he was estranged from them. She said that the applicant was sometimes violent towards her and that she and her husband had not communicated with the applicant for almost 17 years due to his aggressive behaviour (although she acknowledged that on occasion he had come to their door and spoken to her). She said that on 22 March 2018, the applicant and his lawyer had visited her in hospital and the applicant had pressured her to sign an enduring power of attorney which she cancelled the next day. She said that on 20 June 2018, she swore a statutory declaration in relation to an intervention order against the applicant.
In 2005, the respondent transferred her interest in Endeavour Hills to Samir. The effect was that, by September 2005, Samir was the registered proprietor of Endeavour Hills, Hampton Park and Stud Road. At around the same time, the respondent placed a caveat over the three titles, claiming an equitable interest. When asked about the caveat, the respondent said she knew nothing about it and that ‘[p]ossibly my husband is the one who has done all of this. I don’t know’.
The applicant’s counsel asked whether the respondent knew that she had lodged a caveat against the three properties while she was married. Her counsel objected to the question on the basis that she ‘has given evidence that she has no knowledge of property matters or financial matters and she has also given evidence that her husband has organised such matters’, thus she was not capable of answering the question. The judge did not allow the question.
Other evidence at trial
The applicant’s sister, Nermin, was called by the applicant and gave evidence at trial. She said that the applicant and his father were ‘always working together’ and she had heard from them that they did ‘everything in half’. She said that it was usually her father who talked about the ‘fifty-fifty’ arrangement but that the respondent had also told her this, stating: ‘when my dad was alive, ah, she was agree and, ah, never, never, never say anything opposite.’ When asked how she knew that the respondent agreed, she said that the respondent said: ‘Yes, he — he owns this place, he help us with this place’. She accepted that she was not present for the conversations when the agreements were formed. She did not give evidence about what properties these conversations related to, however, when asked: ‘Because these happened in 2003?’, she responded: ‘That’s right. It could be.’ She also said that her brother ‘probably’ paid the deposit for Hampton Park.
The applicant also relied on evidence from a friend, Ginh, an accountant. Ginh gave evidence that she loaned $100,000 to the applicant in 2011 because the applicant ‘said he need money … for his parents for … buying the house and the — the renovation.’ Ginh said that the applicant had not repaid the loan.
Documentary evidence
At trial the applicant relied on a number of bank statements and summary documents that he had prepared which, he submitted, evidenced his financial contributions towards the properties. Two summary documents consisted of one which related to transfers to Samir’s home loan account (‘the transactions table’)[11] and one which related to transfers to Samir’s credit card.
[11]Titled ‘Transactions From Nagi’s Account to Samir’s Loan Account’ and described in the Reasons as ‘the transactions table’.
The judge did not allow the credit card transfers list into evidence.
The documents were provided late into the trial. The respondent’s counsel did not have a chance to inspect them in detail before submissions were made about them. The respondent did not challenge the accuracy of the payments shown in the transactions table but submitted that without any loan documentation they lacked probative value. The judge held that the transactions table had ‘no probative value’ although her Honour did not make any specific findings as to its accuracy.[12]
[12]Reasons [78].
At trial the applicant did not adduce any home loan documentation, documentation regarding his working arrangements with his father or his income such as tax returns or payslips, or any invoices relating to repairs or renovations on any of the properties.[13]
[13]Ibid [51], [75], [79].
The parties’ cases at trial
The applicant pleaded his case on the basis that he and his parents shared a common intention with respect to shared ownership of Hampton Park, Stud Road, Aratula Street and Roxburgh Park. The applicant’s case based on common intention was summarised by the judge as follows:
(a)Between 2003 and 2009, he made financial and non-financial contributions towards the Endeavour Hills property, including a contribution of $40,000 towards repairs and renovations to the property.
(b)At the time that the Hampton Park property was purchased in 2003, a common intention was formed that the beneficial interest in the property would be split 50 per cent in favour of the plaintiff and 50 per cent in favour of the defendant and Samir, alternatively in fair proportions according to their financial and non-financial contributions (‘the 2003 common intention’). Between 2003 and 2018, in reliance on the 2003 common intention, the plaintiff made financial and non-financial contributions to the property including: a contribution of $24,000 towards the deposit; contributions to subsequent loan repayments, including paying $500 a month between 2003 and 2005; and a contribution of $40,000 towards repairs and renovations.
(c)At the time that the Stud Road property was purchased in 2005, a common intention was formed that the beneficial interest in the property would be split 50 per cent in favour of the plaintiff and 50 per cent in favour of the defendant and Samir, alternatively in fair proportions according to their financial and non-financial contributions (‘the 2005 common intention’). In reliance on the 2005 common intention the plaintiff made financial and non-financial contributions to the property between 2005 and 2016, including: a contribution of $26,500 towards the deposit; contributions to subsequent loan repayments including a payment of $40,000 when the loan fell into arrears; a contribution of at least $60,000 towards renovations to the property between roughly 2005 and 2008; and payment for the demolition of the house on the property in 2009.
(d)At the time that the Aratula Street property was purchased in 2011, a common intention was formed that the beneficial interest in the property would be split 50 per cent in favour of the plaintiff and 50 per cent in favour of the defendant and Samir, alternatively in fair proportions according to their financial and non-financial contributions (‘the 2011 common intention’). Between 2011 and 2016 the plaintiff made financial and non-financial contributions towards the Aratula Street property, including a contribution of $35,000 towards the purchase price, and a contribution of approximately $60,000 to renovations to the property.
(e)At the time that the Roxburgh Park property was purchased in 2017, a common intention was formed that Samir and the defendant would reside in and own the property beneficially and the plaintiff would reside in and own the Hampton Park property beneficially (‘the 2017 common intention’). The purchase price for the Roxburgh Park property was said to have been paid with the proceeds from the sale of the Stud Road and Aratula Street properties.[14]
[14]Ibid [25].
The applicant also pleaded that there existed a joint endeavour in which the parties would contribute to the acquisition and sale of properties to be held equally.
The respondent sought to meet the claims by focusing explicitly on the factual matters that were pleaded. She contended that the applicant had failed to prove the pleaded facts concerning his contributions to the acquisition, financing and maintenance of the properties. Further, she contended that whatever may have been the understanding between the applicant and Samir, she was ignorant of those matters and played no role in the alleged arrangements. She said that the applicant was estranged from the family and that it was Samir who had purchased the properties and, with some assistance from her, made the mortgage payments. However, as noted, she did accept, albeit equivocally, that the applicant had contributed to the deposit for Stud Road.
Before turning to the judge’s reasons, it is useful to set out the relevant principles.
Principles
The applicant seeks orders from the Court recognising that he holds an equitable interest in Hampton Park and Roxburgh Park. The respondent is the sole registered proprietor of both properties. As the registered proprietor, her title is indefeasible other than in the circumstances provided for in s 42 of the Transfer of Land Act1958, which includes a ‘case of fraud’. Fraud, for the purposes of s 42, means actual fraud or moral turpitude.[15] Such an allegation must be distinctly pleaded and proved. No allegation of fraud was pleaded in this proceeding.
[15]Stuart v Kingston (1923) 32 CLR 309, 329; [1923] HCA 17 (Knox CJ); Bahr v Nicolay [No 2] (1988) 164 CLR 604, 614 (Mason CJ and Dawson J); [1988] HCA 16 (‘Bahr’); Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, 169 [192]; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) (‘Farah’); Sze Tu v Lowe (2014) 89 NSWLR 317, 355 [210]–[211]; [2014] NSWCA 462 (Gleeson JA).
It is well recognised that taking title in the knowledge that registration would defeat an existing, unregistered interest is not, without more, fraud.[16] In other words, it is necessary to show more than that the registered proprietor knew, at the time of registration, that another person held an unregistered interest in the land.
[16]Bahr (1988) 164 CLR 604, 613 (Mason CJ and Dawson J), 630 (Wilson and Toohey JJ), 653 (Brennan J); [1988] HCA 16.
Although the title held by a registered proprietor is indefeasible, it is also well established that a person holding an equitable interest in land may, in certain circumstances, enforce that equity against the registered proprietor. The indefeasibility conferred on a registered proprietor ‘in no way denies the right of a plaintiff to bring ... a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant.’[17]
[17]Frazer v Walker [1967] 1 AC 569, 585; Breskvar v Wall; (1971) 126 CLR 376, 384–5; [1971] HCA 70 (Barwick CJ).
However, that can only occur where the party seeking the benefit of the interest can bring the claim within certain established equitable or legal principles.[18] Two clear examples are a constructive trust of the kind considered by the High Court in Baumgartner and a resulting trust.
[18]Farah (2007) 230 CLR 89; [2007] HCA 22.
At trial, the applicant did not put his case against the respondent on the basis of a receipt-based liability. In Farah, the High Court held that the ‘knowing receipt’ limb of Barnes v Addy,[19] in which a party knowingly receiving trust property in breach of trust must account to the beneficiary, is inapplicable to a claim in respect of a registered title.[20]
[19](1874) LR 9 Ch App 244.
[20]Farah (2007) 230 CLR 89, 169–71 [193]-[195]; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).
In Farah, the High Court drew the clear distinction between the case in which the registered proprietor is ‘the primary wrongdoer, attempting to ignore an obligation to share or convey the land with or to the plaintiff’[21] and the circumstance where the registration was achieved honestly but the registered proprietor has notice of an earlier interest. The latter does not give rise to an obligation in equity.
[21](2007) 230 CLR 89, 171 [195]; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).
As the basis for relief is an equity owed by the registered proprietor to the party claiming a beneficial interest in land, the critical focus must be on the knowledge and conduct of the registered proprietor. It must be accepted that the conduct and knowledge of the registered proprietor before he or she becomes registered may be relevant to whether or not, once registered, he or she is liable to share or convey the land to another party pursuant to a constructive trust. The context in which the person became the registered proprietor, including whether he or she did so as a volunteer, will also be relevant to any assessment of whether a subsequent denial of a beneficial interest would be unconscionable.
A constructive trust has been found where the registered proprietor’s conduct involves ‘some form of acknowledgment of the unregistered interest, or an agreement or undertaking to act in accordance with it, from which the registered proprietor later resiles.’[22]
[22]Sze Tu v Lowe (2014) 89 NSWLR 317, 359 [229]; [2014] NSWCA 462 (Gleeson JA). See also Bahr (1988) 164 CLR 604; [1988] HCA 16.
In applying the above principles here, two points may be made. First, it is necessary to observe that the respondent did not become the registered proprietor of Hampton Park until 9 February 2017 and of Roxburgh Park until its purchase in July 2017. However, both the pleading and the argument appeared to proceed on the basis that prior to that date, Hampton Park was held subject to a constructive trust that bound the respondent. Thus it was suggested that the respondent was bound by a common intention or was party to a joint endeavour from 2003. However, until she became the registered proprietor in 2017, she held no legal title in the property which she could have held on trust for the applicant. Similarly, when it was purchased, there was no common intention that the respondent would hold title to Hampton Park. The transfer of Hampton Park to the respondent only came about in the context of the purchase of Roxburgh Park in 2017; as mentioned above, Hampton Park was transferred to the respondent to be used as additional security on the loan used for her to acquire Roxburgh Park in her own name.[23]
[23]See [40] above.
It necessarily follows that before 9 February 2017, to the extent that the applicant held any equitable interest in Hampton Park by reason of a common intention trust, joint endeavour constructive trust or resulting trust, it was a right against Samir who was then the registered proprietor. However, establishing such a claim would not in itself bind the respondent as a subsequent registered proprietor. When the respondent became the registered proprietor of Hampton Park, she acquired title by registration.[24] Even though she was a volunteer, in the sense that the property had been transferred to her for a stated consideration of love and affection, her title was indefeasible.[25] As we have stated, the applicant has not pleaded any fraud on her part in relation to the registration of Hampton Park or Roxburgh Park. However, her knowledge and conduct at the time she became the registered proprietor are relevant to whether it would be unconscionable for her to hold her title free of the equitable interest claimed by the applicant.
[24]Deguisa v Lynn [2020] HCA 39, [4] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ); Breskvar v Wall (1971) 126 CLR 376, 385–7 (Barwick CJ), 391 (McTiernan J), 397 (Menzies J), 399–400 (Windeyer J), 406 (Walsh J), 413 (Gibbs J); [1971] HCA 70.
[25]Farah (2007) 230 CLR 89, 172 [198]; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).
The common intention trust
The judge said that in order to establish a common intention trust, a claimant needed to establish the following:
(f) there is an actual or inferred common intention of the parties as to their beneficial interest in a property;
(g) there has been detrimental reliance on that common intention by the claimant; and
(h) it would be an equitable fraud on the claimant to deny his or her interest in the property.[26]
[26]Reasons [82].
Such a trust has been referred to in a number of decisions in the Trial Division of this Court, including the decision of O’Bryan J in Hohol v Hohol.[27] The overlap between a common intention trust and proprietary estoppel has been the subject of comment.[28] Given that overlap, and because constructive trusts of the kind recognised by Deane J in Muschinski v Dodds[29] exist independently of common intention, it may be, as Leeming JA observed in Bijkerk, that the common intention constructive trust no longer survives in Australia.[30] However, no argument was advanced that put the possible existence of such a trust in question and the case should not be decided on that basis.
[27][1981] VR 221, 225 (O’Bryan J). See also Sobey v Sobey [2014] VSC 373, [44] (Almond J).
[28]See Bijkerk Investments Pty Ltd v Bikic [2020] NSWSC 1336, [116] (Leeming JA) (‘Bijkerk’).
[29](1985) 160 CLR 583; [1985] HCA 78 (‘Muschinski’).
[30]Susan Jacqueline Barkehall Thomas, ‘Proprietary Estoppel and Common Intention Constructive Trusts: Is it Time to Abandon the Distinction?’ (2014) 2014(1) Singapore Journal of Legal Studies 168.
Joint endeavour constructive trust
In Muschinski,[31] the High Court considered how equity should respond in circumstances where one member of the domestic relationship contributed some 90 per cent of the purchase cost of a property which was registered in the name of both parties as tenants-in-common in equal shares. It was intended at the time of acquisition that the 10 per cent contributing partner would, after acquisition, contribute by funding a ‘kit’ home to be erected on the land and renovations and improvements to the existing property. It was the common intention of the parties that the initial 10 per cent contribution would be augmented subsequently and the property would be held equally.
[31](1985) 160 CLR 583; [1985] HCA 78.
For a variety of reasons, for which neither party was at fault, the exercise failed and the subsequent contributions were never made. The question was whether the 10 per cent contributing partner was entitled to retain the 50 per cent interest in the property which the title recorded.
There was no room for a resulting trust or for any argument based on the common intention of the parties, in favour of the 90 per cent contributing partner, because it was always intended that each partner should enjoy, from the time of purchase, an immediate and unconditional legal and beneficial one-half interest in the property. The High Court held that the 10 per cent contributing partner held his interest on the basis of a constructive trust for the 90 per cent contributing partner, it being ‘inequitable for him to retain his interest without crediting to Mrs Muschinski the contributions which she made to the acquisition and improvement of the property’.[32] Deane J identified the organising principle as one which prevented a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct. More specifically, he said:
[T]he 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 specially 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.[33]
[32](1985) 160 CLR 583, 599; [1985] HCA 78 (Mason J).
[33]Ibid 620 (citations omitted).
The unconscionable conduct arose because the purpose of the joint endeavour failed without fault and it was unconscionable to refuse to recognise the existence of the equitable interest. A refusal to recognise the unequal contributions at the time the joint endeavour failed would mean that one party would be left as half-owner, having made only a derisory contribution and on a basis that had never been contemplated.
The approach taken by Deane J was endorsed by Mason CJ, Wilson and Deane JJ in Baumgartner.[34] In doing so, their Honours emphasised two points. First, the trust is imposed regardless of actual or presumed agreement or intention.[35] Second, the requirement that the assertion of interest be unconscionable does not import idiosyncratic notions of what is just or fair but must be informed by equitable principle.[36]
[34](1987) 164 CLR 137; [1987] HCA 59.
[35]Ibid 148.
[36]Ibid.
The pooling of resources in pursuit of a common endeavour, which comes to an end at a point where contributions do not reflect the legal title, provides a context in which equity may intervene. Unlike a resulting trust, the issue does not turn on intention and does not always admit of mathematical precision. For example, in Muschinski,[37] the constructive trust took into account the proportion of contributions to the purchase price, but the parties joined in the increase in the value of the property in equal shares.
[37](1985) 160 CLR 583; [1985] HCA 78.
In her reasons,[38] the judge referred to the following passage from a judgment of Kyrou J in Sivritas v Sivritas,[39] which captures the range of matters that might be taken into account:
a court can take into account direct financial contributions to the purchase price of the property and incidental costs such as stamp duty, registration fees, solicitors’ fees and bank fees … the pooling of financial resources, other financial contributions even in the absence of pooling, contributions of labour, and non-financial contributions or contributions in kind such as homemaking and parenting contributions. Further, the inquiry into whether the assertion by a party of his or her legal rights would be unconscionable can encompass events that occurred after the property was initially acquired. Expenditure on repairs and renovations of the property by a person asserting a constructive trust in respect of the property, where the expenditure is accepted by the legal owner of the property in the knowledge that it would improve the home and add to its value, can be considered as a contribution in quantifying the first person’s equitable interest under the constructive trust.[40]
[38]Reasons [89].
[39](2008) 23 VR 349; [2008] VSC 374.
[40]Ibid 374 [132] (citations omitted).
Resulting trust
In Vlahos Pty Ltd v Vlahos,[41] Kyrou JA summarised the principles in respect of resulting trusts in the following way:
[41][2017] VSCA 166.
Where A purchases property in the name of B, or in the name of A and B, and B does not financially contribute to the purchase price, there is a presumption that A is beneficially entitled to the interest in the property held by B.
Where two or more parties make equal financial contributions to the purchase price, but the property is conveyed into the name of one party only, there is a presumption that the parties take a beneficial interest in the property as tenants in common in equal shares.
Where two or more parties make unequal financial contributions to the purchase price, but the property is conveyed into the name of only one of them, or in all their names, there is a presumption that the parties take a beneficial interest in the property as tenants in common in shares that are proportionate to their respective financial contributions to the purchase price.
Payment of stamp duty and registration fees can be treated as a financial contribution to the purchase price for this purpose.
The onus of establishing the payment(s) giving rise to a presumption of resulting trust lies on the party who is asserting the existence of the trust.
When a presumption of resulting trust arises, it performs a similar function to the civil onus of proof by requiring the person against whom the presumption applies to adduce evidence, or to point to other evidence in the case, that rebuts the presumption.
Where the party claiming the benefit of the presumption of resulting trust contributed the entire purchase price, the presumption can be rebutted by evidence that the party had a contrary intention at the time the contribution was made, such as evidence of a gift or a loan.
Where two or more parties financially contribute to the purchase price and the legal title does not reflect their respective contributions, the presumption of resulting trust can be rebutted by evidence that, at the time the contributions were made, the parties had a common intention that the beneficial interests are to be the same as the legal interests. Ordinarily, whether a common intention existed at that time is not to be determined by reference to the subjective, uncommunicated intentions of the parties. Rather, it is to be inferred by reference to the parties’ words and conduct and the prevailing context at that time, including the relationship that then existed between the parties. Evidence of subsequent statements or conduct, as distinct from those which are contemporaneous with the relevant transaction, will only be admissible as admissions against interest.
The strength of any presumption of resulting trust will vary from case to case, as will the weight of evidence required to rebut the presumption.
In some circumstances, a countervailing presumption of advancement will operate. That presumption arises in favour of the person in whose name the property is purchased, where the relationship between that person and the purchaser or contributor is such that the latter has a ‘natural obligation to provide’ for the former, such as in a case of a father and child. It will be presumed in such a case that the purchaser or contributor intended to give the other a beneficial interest unless the presumption is rebutted.
If a presumption of resulting trust arises and the relationship between the parties does not give rise to a presumption of advancement, the former presumption will give rise to a trust unless there is evidence that the person who financially contributed to the purchase price had a contrary intention at the time the contribution was made.[42]
[42]Ibid [53]–[63] (citations omitted).
The principles in relation to resulting trusts concern the intention of the parties at the time of acquisition. Mortgage payments after acquisition are treated differently. Except in unusual situations, the subsequent payment of instalments under a mortgage over the property is not regarded as a payment of the purchase price, but rather ‘a payment towards securing the release of the charge which the parties created over the property purchased.’[43]
[43]Calverley v Green (1984) 155 CLR 242, 257–8; [1984] HCA 81 (Mason and Brennan JJ).
New argument on appeal
It is also necessary to refer to the principles that apply in this Court in two respects. The first concerns when this Court should allow a party to argue a point for the first time on appeal. The second concerns the review in this Court of factual findings made by a primary judge.
As to the former, the principles are well settled and they strongly disfavour a party seeking to pursue an argument for the first time on appeal. The trial is the place where evidence is adduced, legal arguments advanced and the issues resolved. The primary role of an appellate court is to correct error; it is not to determine legal and factual issues for the first time. In Metwally v University of Wollongong [No 2],[44] the High Court said:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.[45]
[44](1985) 60 ALR 68; [1985] HCA 28.
[45]Ibid 71 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ).
This Court may entertain arguments for the first time on appeal and will do so to avoid injustice. However, justice is multifaceted and must take into account the interests of both parties and the broader interests of the community that are involved. Those interests include the finality of litigation; the difficulty of persuading an appeal court to consider new facts; the undesirability of encouraging tactical decisions to keep an issue in reserve for an appeal rather than presenting it at first instance; and the need to avoid injustice to a party having to meet new factual or legal issues for the first time on appeal.
It would be contrary to the orderly administration of justice, and the necessary demarcation between trial and appeal, if this Court allowed argument on a new point that could have been met by evidence at trial or which would have resulted in the trial taking a demonstrably different course.
Challenging findings of fact
Finally, this Court is required to conduct a full review of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the judge has erred in fact or law.[46] If this Court is of the view that error is shown, including in the result, then it is the duty of this Court to give effect to its own views, make its own findings, draw its own inferences and conclusions to determine what the correct result should be.[47]
[46]Fox v Percy (2003) 214 CLR 118, 126–8 [25]–[29]; [2003] HCA 22 (Gleeson CJ, Gummow and Kirby JJ).
[47]Devries v Australian National Railways Commission (1993) 177 CLR 472, 479–81; [1993] HCA 78 (Deane and Dawson JJ), cited in Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550, 558–9 [43]; [2016] HCA 22, (French CJ, Bell, Keane, Nettle and Gordon JJ).
This Court must take into account the limitations that exist in an appeal setting and the comparative advantages of the trial judge in the evaluation of the credibility of witnesses. However, the limitations do not extend to inferences drawn by the primary judge; in general, an appellate court is in as good a position as the trial judge to decide the proper inferences to be drawn from the facts in the case.[48]
[48]Lee v Lee (2019) 266 CLR 129, 148–9 [55]; [2019] HCA 28 (Bell, Gageler, Nettle and Edelman JJ); Jadwan Pty Ltd v Rae & Partners (A Firm) [2020] FCAFC 62, [404]–[415] (Bromwich, O’Callaghan and Wheelahan JJ); Phelan v Melbourne Health [2019] VSCA 205, [77] (Tate and Kaye JJA and Zammit AJA). See also Bauer Media Pty Ltd v Wilson [No 2] (2018) 56 VR 674, 736–7 [272]–[273]; [2018] VSCA 154 (Tate, Beach and Ashley JJA).
Judge’s reasons
As noted above, the applicant’s case at trial was that he held an equitable interest in Hampton Park and/or Roxburgh Park pursuant to:
(i) a common intention constructive trust based on a common intention of Samir, the respondent and the applicant, that Samir and the respondent would hold a 50 per cent interest in the property on trust for the applicant; or
(j) a joint endeavour constructive trust based on the fact that the properties (as well as some others) had been purchased as part of a joint endeavour between Samir, the respondent and the applicant.
The judge set out in some detail the oral evidence and noted the paucity of documentary evidence in support of the applicant’s case. She noted that the applicant did not produce any invoices or receipts for the alleged renovations to Stud Road or any ‘planning applications, surveyor invoices or architect plans’.[49] He also failed to produce any loan documents[50] or documentary evidence of the cash payments he claimed that he made towards the consolidated loan.[51] Further, the judge noted that the applicant had not produced his tax returns or documentary evidence as to his earnings.[52]
[49]Reasons [51–[52].
[50]Ibid [40], [47], [79].
[51]Ibid [46].
[52]Ibid [75].
The judge noted that the applicant relied heavily on bank statements which he said evidenced withdrawals from his account and corresponding deposits into his father’s home loan accounts, which was consistent with him paying the loans on the relevant properties.[53] The judge recorded the applicant’s contention that there was no other reasonable explanation for him making those payments.[54] The judge appears to have given no weight to the bank statements or the summaries of them. She said:
However, as the defendant submitted, the transactions table is of itself of no probative value. The table is merely a summary showing payments made from the plaintiff’s bank account, and does not assist the plaintiff in demonstrating that the transfers from his accounts were made for the purposes of financing the relevant properties, were referable to the alleged common intentions or joint endeavour or, importantly, that the defendant was aware of the payments.
There was an otherwise noticeable absence of documentary evidence relating to the plaintiff’s contributions towards the relevant properties. For example, there was no documentary evidence regarding: the loan on the Hampton Park property, the loans the plaintiff had on the properties he owned in his own right, the consolidated loan, the plaintiff and Samir’s working business arrangements, the plaintiff’s income, or of the renovations and repairs said to have been undertaken on the Endeavour Hills, Hampton Park, Stud Road and Aratula Street properties.[55]
Common intention constructive trust
[53]Ibid [76].
[54]Ibid [77].
[55]Ibid [78]–[79].
After considering the law applicable to common intention constructive trusts, referred to above,[56] the judge considered whether the applicant had discharged the onus of proving that the parties had a common intention to share ownership equally which the applicant had relied on to his detriment. The judge was not satisfied that the applicant proved the spoken words with the necessary degree of precision, noting that his evidence was ‘vague and unspecific’ and that ‘[o]n several occasions he was evasive and failed to answer questions put to him.’[57]
[56]Ibid [82]–[84].
[57]Ibid [93].
Despite recognising that there were some inconsistencies in the respondent’s evidence, the judge found her to be ‘a witness of truth’ and accepted her evidence that ‘she was not an active participant in any conversations establishing an agreement concerning the beneficial ownership of any of the properties.’[58]
[58]Ibid [94].
The judge also considered whether the common intention alleged could be inferred from the conduct of the parties, particularly the applicant’s contributions to the properties. The judge found that the applicant ‘was unable to adequately prove that he made contributions to the properties capable of evidencing the alleged common intentions, or that those contributions were referable to any common intention between himself and the [respondent].’[59] Her Honour noted that:
there was a conspicuous dearth of documentary evidence supporting the plaintiff’s oral evidence of his contributions to the properties. Even if it were to be accepted that the payments set out in the transactions table were made, the Court is not satisfied that these payments were made pursuant to a common intention to which the defendant was a party.[60]
[59]Ibid [95].
[60]Ibid [96].
In addition, the judge found that the applicant had failed to prove that he applied cash withdrawals to the properties or contributed to alleged renovations to the properties.[61] Finally, the judge observed that the applicant had not identified any proven conduct of the respondent or Samir which supported the common intention alleged and she identified certain conduct which was inconsistent with it.[62]
[61]Ibid [97]–[98].
[62]Ibid [99].
The judge dismissed the applicant’s common intention constructive trust claim.[63]
Joint endeavour constructive trust
[63]Ibid [101].
The judge found that the applicant’s joint endeavour constructive trust claim encountered the same evidentiary difficulties as the applicant’s common intention constructive trust claim.[64] She was not satisfied that the evidence supported the existence of a joint endeavour which gave the applicant an equitable interest in the properties.[65] In addition, the judge found that the applicant had not established that he made the alleged contributions to the properties and, even if he had made them, he had not established that they were referable to a joint endeavour which involved the respondent or of which the respondent was aware.[66]
[64] ` Ibid [102].
[65]Ibid [103].
[66]Ibid [104]–[105].
The judge concluded by observing that:
as the defendant submitted, on the evidence before the Court, the highest the plaintiff’s claim could be put is that there may potentially be a loan owing to him from Samir’s estate. However, on the evidence before the Court, such a claim would be difficult to establish and, in any event, no such claim is made against the defendant in this proceeding.[67]
[67]Ibid [105].
The judge dismissed the applicant’s joint endeavour constructive trust claim.[68]
[68]Ibid [106].
Proposed grounds of appeal
The applicant prepared proposed grounds of appeal and a written case without the assistance of legal advice. Subsequently, as the result of a referral by a registrar, the applicant was provided pro bono legal assistance by counsel, who prepared substituted grounds of appeal and a written case.
As substituted, the applicant relies on the following four proposed grounds of appeal:[69]
[69]The references that follow are as they appear in the original.
1.Her Honour’s failures to find that:
a.there was a common intention or joint venture to purchase, maintain and improve real properties[70] over the period 2003 to 2017 as between the applicant, the respondent and the respondent’s late husband (and the applicant’s father) Samir Zekry, or alternatively between the applicant and Samir Zekry;[71] and
b.the applicant made substantial contributions to the joint purchase, maintenance and improvement of the real properties with the respondent and Samir Zekry, or alternatively Samir Zekry,[72]
were in error and contrary to the evidence and the weight of the evidence.[73]
2.Her Honour erred in rejecting[74] the documentary evidence of the applicant’s financial contributions to the joint purchase, maintenance and improvement of the real properties.[75]
3.Her Honour erred in not finding[76] that the applicant’s evidence, including documentary evidence of payments and withdrawals produced by the applicant, and the co-incidence of those payments and withdrawals with payments to Samir Zekry,[77] established that those payments and withdrawals were made for the joint purchase, maintenance and improvement of the real properties.[78]
4.Her Honour erred in not finding that the respondent holds her legal title to the real properties at 38 Robjant Street, Hampton Park, Victoria (C/T vol 08229, fol. 348) and 36 Santa Cruz Boulevarde, Roxburgh Park Victoria (C/T vol 10533, fol. 371) on a constructive or resulting trust for herself and the plaintiff in equal shares or alternatively in proportion to the relative contributions to the purchase, maintenance and improvement of the properties by the applicant and the respondent’s late husband Samir Zekry.[79]
[70]As listed in [2020] VSC 221, at [2].
[71][2020] VSC 221, at [101]–[106].
[72][2020] VSC 221, at [76]-[79], [101]–[106].
[73]See AB, D 83-D 139.
[74]At [2020] VSC 221, at [76]–[79], AB D 83–D 139.
[75]As listed in [2020] VSC 221, at [2].
[76][2020] VSC [76]–[79], [95]–[97].
[77]AB D 83–139.
[78]As listed in [2020] VSC 221, at [2].
[79][2020] VSC 221, at [101]–[106].
Parties’ submissions on grounds 1 to 3
In support of grounds 1 to 3, the applicant submits that he gave uncontradicted evidence of frequent and substantial payments to his father and the respondent which could only have been for the purpose of purchasing, maintaining and improving the relevant properties. In the absence of any other explanation, such as a loan or gift, the payments which were recorded in the bank statements were consistent with the applicant’s case.
He submits that there was a well-established history of jointly purchasing properties between 2003 and 2017 on a ‘fifty-fifty’ basis. He says that the oral and documentary evidence showed that he contributed financially and non-financially to several properties as part of a joint venture, joint relationship or common intention between he and his parents. He points to the coincidence in the withdrawals from his account and corresponding deposits in his father’s accounts which have account descriptions of ‘property loan’ and ‘home loan’.
The applicant submits that his evidence was not expressly contradicted by the respondent and was supported by the evidence of his sister. He submits that the respondent’s evidence was consistent with her not taking an active or direct part in the finances of the family but was equally consistent with the existence of the claimed joint venture or common intention, at least between he and Samir.
He relies on the fact that the respondent agreed that he had contributed to the purchase of Stud Road and that he and Samir had agreed to the demolition of the house. Similarly, the respondent agreed that the applicant had been involved, albeit on her account to a limited degree, in renovating Aratula Street.
Both at trial and in this Court, the respondent sought to confine the applicant to his pleaded case, which relied on establishing the actual intent of the respondent in relation to the ownership of the two properties that are the subject of the proceeding: Hampton Park and Roxburgh Park. The respondent submits that the applicant failed to make out that case because the evidence did not establish any involvement by the respondent in discussions the applicant had with his father or any knowledge of the family’s finances on the part of the respondent.
In that respect, the respondent relies on her evidence that she did not remember having any discussions with the applicant about such matters and her uncontradicted evidence that she was not involved in the family’s finances and relied on her late husband to provide financial security. She points to her consistent evidence that she knew nothing about the alleged agreements or understandings, was not a party to relevant discussions, and did not share the common intention claimed or participate in a joint endeavour with Samir and the applicant.
The respondent submits that the judge was correct to hold that the applicant had not discharged his burden to establish a common intention on her part with sufficient particularity in circumstances where the evidence of her involvement, and the arrangements generally, was vague and unspecific. She submits that in the absence of an actual common intention held by her, the pleaded case must fail. In the absence of actual intent, her conscience was not burdened in a way that would compel her to carry out the intentions of the applicant and Samir.
The respondent submits that it was incumbent on the applicant to prove that it was the actual intention of all three participants, including the respondent, that the properties would be held on trust in the manner alleged and that the Court cannot impute a common intention to conclude what the parties would have intended had they turned their mind to the question.
Putting to one side the lack of evidence concerning her intent, the respondent submits that the applicant’s own evidence was insufficient to establish a common intention. She points to his evidence that he did not keep track of what he was spending on Stud Road because he did not care what he gave his parents, and that Aratula Street was bought to please her and Roxburgh Park was bought for her convenience to assist her rehabilitation after a fall.
The respondent submits that the lack of evidence concerning her intent also affected the applicant’s case on the alleged joint endeavour constructive trust. The respondent points to inconsistencies between the payments recorded in the bank statements and the allegations in the applicant’s SFASOC. She submits that the applicant was specifically cross-examined by reference to the pleaded case and, in many respects, the applicant conceded that his pleading was wrong or inaccurate.
The respondent relied on the judge’s finding that the transactions table had no probative value in the absence of documentary evidence proving the various loans, the financial ability of the applicant to pay those loans or documentary evidence of the costs allegedly incurred in renovating or repairing various properties. Further, the transactions table did not evidence the respondent’s knowledge of the payments or their purpose. She submits that the judge was correct to give no weight to the evidence of Nermin whose evidence did not relate to specific properties and who had no direct involvement in the relevant alleged conversations.
The respondent submits that the judge correctly held that the applicant had failed to positively establish the necessary facts and that it is not open to the applicant to now fix the respondent with ‘constructive notice’ in circumstances where he pleaded a common intention based on conversations involving the respondent and her participation in a joint endeavour.
Parties’ submissions on ground 4
By ground 4, the applicant submits that the judge erred in failing to find a resulting or constructive trust. He acknowledges that he did not plead a resulting trust at trial but submits that the evidence clearly established that he contributed a portion of the purchase price of the two properties. Accordingly, the respondent (as the registered proprietor) is presumed, in the absence of evidence of a contrary intention, to hold the properties on a resulting trust for herself and the applicant in proportion to their respective contributions.
The applicant relies on the evidence which he says shows that on 14 March 2003, he contributed $20,112.45, a withdrawal described as ‘withdrawal for settlement’, towards the purchase price of Hampton Park.[80] The applicant gave evidence that Roxburgh Park was purchased using the proceeds of the sale of Stud Road and Aratula Street, both of which, on the applicant’s case, were purchased using funds contributed by him. He notes that the respondent did not contradict that evidence. Indeed, the respondent supported his evidence that he contributed to the deposit for Stud Road.
[80]See [30] above.
In relation to a constructive trust, the applicant submits that the respondent took her title to the two properties subject to any equitable interests affecting title.
The respondent submits that the applicant should not be permitted to rely on a resulting trust as it was not pleaded and the case would have been run differently had it been advanced at trial. In any event, she submits that the evidence does not support a resulting trust.
The respondent submits that the judge was correct to reject a constructive trust because she took her indefeasible title from her husband as a volunteer without notice. She submits that the applicant cannot now rely on the respondent having constructive knowledge of his equitable interest because this was not run at trial. She submits that she did not acknowledge the applicant’s interest or undertake to hold the titles to Hampton Park and Roxburgh Park on trust for him. Accordingly it is not unconscionable for her to deny the applicant’s claimed interest.
Consideration
In our view, it is wrong to analyse the evidence without regard to the fact that the respondent did not become the registered proprietor of either Hampton Park or Roxburgh Park until 2017. Until that time the respondent could not have held either property on trust for the applicant. Further, as the judge correctly observed, the respondent was largely a passive participant in most of the financial dealings concerning the properties. The legal positon changed markedly when she became the registered proprietor. The issue is whether, when she did so, she held the properties or some interest in them on trust for the applicant. In our respectful opinion, the applicant’s focus at trial on a search for the intention of the respondent in the period surrounding the purchase of Hampton Park, Stud Road and Aratula Street was somewhat of a distraction and led to a blurring between the claim that he had a beneficial interest arising from a common intention trust and an interest arising from a joint endeavour trust.
In order to place the issues in their proper sequence, it is convenient to consider three key questions:
(k) whether there was an agreement or understanding between the applicant and Samir in relation to Hampton Park and Stud Road;
(l) whether there was an agreement or understanding between the applicant and Samir in relation to Endeavour Hills, Aratula Street and Roxburgh Park; and
(m) the position of the respondent once she became the registered proprietor of Hampton Park and Roxburgh Park in 2017.
Agreement or understanding between the applicant and Samir in relation to Hampton Park and Stud Road
We consider that the judge was wrong to dismiss the proceeding. On the evidence we are satisfied that the applicant made financial contributions to the acquisition and financing of Hampton Park and Stud Road. We are also satisfied that the applicant and Samir were engaged in a joint endeavour with respect to the acquisition, improvement and use of those two properties. We also consider that the respondent, while not being aware of all of the details of the joint endeavour between the applicant and Samir, took the benefit of that arrangement, it not being contradicted that the proceeds of the sale of Stud Road were used towards the purchase of Roxburgh Park. By reason of the applicant’s contributions, we are satisfied that Samir, while he was the registered proprietor, owed an obligation of conscience that would have prevented him from asserting full ownership of Hampton Park and Stud Road without regard to the equitable interest of the applicant. We are also satisfied that the arrangement was for Hampton Park and Stud Road to he held equally between Samir and the applicant. Our reasons follow.
There are a number of notable features surrounding the acquisition of Hampton Park. First, the applicant explained that the purchase met various needs. It had a large garage that was suitable to store and repair power tools for sale as part of the business that he said he conducted with his father, it was an investment property, and although his parents retained ownership of Endeavour Hills which had been the family property for many years, it was also potentially suitable as a family home.
Second, in 2003 when Hampton Park was purchased, Endeavour Hills was jointly owned by Samir and the respondent. Hampton Park was registered solely in Samir’s name. The respondent had no legal interest in Hampton Park until she became the registered proprietor in 2017.
Third, as noted, the applicant’s bank statements record a withdrawal of $20,112.45 on 14 March 2003, described as ‘withdrawal for settlement’. Although in his SFASOC the applicant pleaded a payment of $24,000 as a deposit for Hampton Park and in his evidence he referred to the payment of a deposit by reference to the entry for 14 March 2003, given the time of settlement, it is unlikely that the withdrawal was for the payment of a deposit. Nevertheless, the evidence did not suggest settlement of any other property occurring in March 2003, and it is clearly an available inference that, in the circumstances, it is more than probable that the withdrawal was to partially fund the purchase of Hampton Park.
The applicant’s bank statements for the period of March 2003 to September 2005 are incomplete. Based on the transactions table and bank statements, between 5 October 2004 and 9 May 2005, the applicant made regular payments of $280 or $560 to Samir’s Bank of Melbourne account and Westpac variable rate investment property account, which would support an inference that he was repaying a loan.
The applicant withdrew $25,000 from his bank account on 16 August 2005, which was quite close in time to the settlement of Stud Road which, it may be inferred, took place on 5 September that year, being the date on which Samir became the registered proprietor and a mortgage was registered on title. As he had done in relation to Hampton Park, the applicant says that he contributed the money as a deposit. Given the temporal proximity to settlement, it seems improbable that the $25,000 withdrawn from his account was a deposit. However, it is more than probable that it was paid as part of the purchase price.
Stud Road was purchased in 2005. It contained a fire damaged house which was demolished in 2009. That fact suggests that the purchase was for investment purposes. It appears that the applicant was the purchaser named on the contract note and that he nominated Samir as purchaser.
According to the applicant, when Stud Road was acquired in 2005, the loans on Endeavour Hills, Hampton Park and Stud Road were consolidated and he paid all of the mortgage payments for a sustained period of time.
Bank statements in Samir’s name support the applicant’s evidence of a consolidated home loan. The applicant tendered statements for accounts in Samir’s name titled ‘variable rate investment property loan’ and ‘premium option home loan’.[81] A bank statement for the variable rate investment property loan account shows that an ‘initial drawing of loan’ of $639,000 was made on 26 August 2005. A bank statement for the premium option home loan account shows that an ‘initial drawing of loan’ of $25,000 was made on 29 August 2005. From the names of the accounts, and the amounts debited, it is reasonable to infer that they relate to borrowing for residential property. As at 5 September 2005, Samir was the registered proprietor of Endeavour Hills, Hampton Park and Stud Road. The evidence showed that each property was subject to a mortgage. The bank statements are also consistent with the loans being consolidated so as to cover the three properties around the time that Stud Road was purchased on 5 September 2005.
[81]One page of a bank statement of a Bank of Melbourne account was also tendered. Although the years covered by the statement is unclear from its face, the transactions table indicates that it covers late 2004 to 2005 and we note that the account number corresponds with Samir’s Westpac variable rate investment property loan account.
As noted, between 5 October 2004 and 9 May 2005, the applicant made regular payments of $280 and $560 to Samir’s bank accounts. From 23 September 2005, it appears that the payments to Samir’s variable rate investment property loan account increased to $3,200 or $3,700 per month. The applicant gave evidence that the smaller payments before September 2005 related to Endeavour Hills and Hampton Park and the sum increased when the loans were consolidated to cover the three properties.
The transactions table and bank statements indicate that Samir was meeting the liabilities in respect of the debts by means of payments made from the applicant into Samir’s account. On their face, the bank statements show that payments on the home loans for the three properties were paid from the applicant’s account into Samir’s account. For example, the transactions table and bank statements indicate that between 23 September 2005 and 13 November 2006, the applicant made 10 payments of $3,700 and one payment of $3,200 to Samir’s account. In addition, there is evidence that the applicant made regular payments of $160 to Samir’s premium option home loan account.
In our view, the regular payments made by the applicant to Samir’s mortgage accounts which related to Endeavour Hills, Hampton Park and Stud Road were a significant feature of the evidence. It follows that we are unable to agree with the judge that the bank statements had no probative value. The contrary finding of the judge was focused on what the statements revealed about the respondent’s intention at the time the properties were acquired and in the succeeding few years. It is true that they said little or nothing on that topic. However, the position of Samir as registered proprietor was critical to the applicant’s claim to have an equitable interest in the properties as against Samir. And that was a critical starting point for any subsequent interest against the respondent.
At the least, Samir’s bank statements, together with the evidence of the titles, supported an inference that Samir had substantial borrowing secured over the three properties which the applicant was servicing.
It is true that the applicant did not provide documentary evidence of his income during this period that would have supported an inference that it was his money that went from his account to Samir’s account. Given that the applicant said that he and his father worked together in the power tools business, it is possible that the deposits in that account came from that business and were jointly owned by the applicant and Samir. However, there is little to support such a thesis. The more natural inference was that the applicant was paying the mortgage, in part or in full, on the three properties.
In turn, the bank statements corroborate the applicant’s evidence as to the existence of an arrangement or understanding with his father. It was put to the applicant in cross-examination that the payments into his father’s account were to pay the applicant’s own debts. The foundation for that assertion, which was denied by the applicant, was never established. True enough, the applicant had purchased two properties in Dandenong and was making repayments on them, but there was no reason why his repayments would be channelled through a loan account in his father’s name.
The respondent submitted that it would be an error for the Court to consider what other explanation might exist for the payments from the applicant’s account into Samir’s account because to do so would be to ignore the onus on the applicant to establish the facts supporting the alleged trusts. We do not agree. To test the evidence by asking what other inferences might reasonably be drawn from the established facts is an orthodox, indeed necessary, part of fact finding for any court. The absence of any logical or plausible explanation for the transfers other than the one contended by the applicant strengthens his case. For example, as already observed, it seems improbable that the applicant would pay his own debts through his father’s account. Similarly, the accounts in Samir’s name, on their face, appear to be mortgage accounts and the most compelling inference is that they related to the only mortgaged properties owned by Samir between 2003 and 2011: Endeavour Hills, Hampton Park and Stud Road. Reasoning in that way does not involve any impermissible speculation or shift the onus of proof.
The respondent said in evidence that Samir was paying the mortgage.[82] Putting to one side whether that evidence should be accepted as an expression of the respondent’s belief, at least for the period from 2005, it is difficult to reconcile the evidence with the bank statements. As noted, the correspondence in payments from the applicant’s account and payments into Samir’s account, which appear to relate to discharge of the mortgage, paints a compelling picture of some arrangement between the applicant and Samir. The idea that Samir was paying the mortgage instalments would require a conclusion that there existed other mortgage accounts into which Samir was paying the instalments or that it was Samir and not the applicant who held the funds in the accounts in the applicant’s name. Neither scenario has any foothold in the evidence beyond the respondent’s account which was vague and uncertain at best.
[82]Reasons [48].
The applicant’s evidence of paying part of the purchase price and the mortgage instalments for Hampton Park and Stud Road was supported by the bank statements. However, the applicant’s evidence about expending his money on renovations to Stud Road was not supported by relevant documentation of a kind that might be expected to be available. At trial, he said that the works on Stud Road were paid for out of his credit card or his father’s credit card, which he repaid.[83] As the judge noted, those renovations were not completed and the house was demolished in 2009.[84] The oral evidence regarding improvements to Stud Road was, on its own, weak, but when added to other aspects of the applicant’s evidence that were corroborated, cannot be put out of hand. At this point, it is worth recalling that the judge did not find the applicant to be untruthful.
[83]Ibid [49].
[84]Ibid [52].
The applicant said that when Endeavour Hills was sold in 2009, the proceeds were used to reduce the indebtedness in relation to Hampton Park and Stud Road.
Stud Road was sold in 2016. On the applicant’s account, the proceeds of the sale of Stud Road were used to discharge the consolidated loan. That is more than plausible. That would have reduced the indebtedness on Hampton Park to the benefit of the applicant. There would have been a corresponding benefit to Samir who had a half beneficial share in Hampton Park, and ultimately to the respondent, to whom Samir’s interest was transferred as a volunteer. Since Aratula Street was in part financed out of the consolidated loan, the reduction in debt would have improved the equity position of Samir in respect of the family home. On the respondent’s evidence, the applicant was unhappy with the sale, and had an argument about it with Samir. To an extent, that is consistent with the applicant having an ongoing interest in that property and in the decision to sell it.
In our opinion, the evidence, including the bank statements, support the applicant’s case that he made financial contributions towards the acquisition and financing of Hampton Park and Stud Road and, in turn, the conclusion that they were investment properties which were owned by Samir but in respect of which the applicant had made substantial contributions. We acknowledge that there are gaps in the bank statements and in the transactions table. For example, the transactions table does not record any payments to Samir in 2009 and the evidence of payments stops at 2012. Notwithstanding those gaps, we are persuaded that the evidence overall establishes the arrangement between the applicant and Samir. The payments that are demonstrated are regular and do not otherwise have an explanation.
We are satisfied that Hampton Park was acquired as an investment property and to meet the joint needs of the business conducted by the applicant and Samir. The acquisition was part of a joint endeavour between the applicant and Samir to acquire, maintain and improve investment properties for sale. That joint endeavour continued with the purchase of Stud Road. The conduct of the applicant in contributing to the purchase price and instalments was consistent with that endeavour and cannot otherwise be explained. We are satisfied on the evidence that the arrangement was for the applicant to have a 50 per cent interest in those properties.
No agreement or understanding between the applicant and Samir in relation to Endeavour Hills, Aratula Street and Roxburgh Park
In contrast to the position with respect to Hampton Park and Stud Road, we do not consider that the applicant and Samir had agreed to share ownership of Endeavour Hills, Aratula Street or Roxburgh Park. The evidence was simply too weak to support a finding that the applicant made a financial contribution to the acquisition of those properties or that he and Samir shared a common intention in respect of them.
Endeavour Hills was acquired as a family home in 1991. That was long before the applicant claimed to have any agreement or understanding with Samir. The applicant gave some evidence about paying for some renovations to that house, which was denied by the respondent. Even if some contribution of that kind had been made, it would not follow that it was given in the expectation of any interest in the property.
Further, the evidence showed that the agreement or understanding between the applicant and Samir arose out of their business together and with a view to investing in property. The choice of Hampton Park and Stud Road reflected those goals. Although it appears that the mortgage on Endeavour Hills was rolled into the consolidated loan, and was therefore paid by the applicant for a period of time, it will be recalled that Endeavour Hills was used to finance Samir’s contribution to the investment properties. There is simply insufficient evidence to suggest that by doing so, it was understood that the applicant would have an equitable interest in Endeavour Hills. For example, the amount owing on Endeavour Hills at the time the loans were consolidated was not revealed in the evidence.
For similar reasons, we are not persuaded that Aratula Street was acquired as part of the arrangement between the applicant and Samir. Aratula Street was bought as a home for Samir and the respondent and so the respondent could be near her ailing mother.
The applicant’s bank statements were incomplete and there are no statements from Samir’s accounts after 28 December 2011. In other words, there is little to corroborate the applicant’s evidence as to the contributions he made to Aratula Street. The judge noted the applicant’s failure to call the vendor of Aratula Street to whom the applicant said he paid the deposit in cash.[85] Similarly, there was no documentary evidence to support his claim that he contributed $60,000 to renovations. It is true that Aratula Street may have been financed by drawings on the consolidated loan, but that is insufficient to draw a conclusion that the applicant financed its acquisition, particularly because the loan had been reduced as a result of the sale of Endeavour Hills.
[85]Ibid [61], [96]–[98].
The evidence in relation to Roxburgh Park is similarly scant. Roxburgh Park was acquired as the principal residence of the respondent and Samir. At the time, the respondent needed a single level dwelling, following a fall and knee surgery. Although the applicant submits that the proceeds of the sale of Stud Road were used to partially fund Roxburgh Park, the evidence does not permit a finding that would allow tracing of the funds into Roxburgh Park in part because the debt on Hampton Park had been reduced and the evidence did not show a joint endeavour to fund the new family home. We are not satisfied that the applicant contributed to the purchase price of Roxburgh Park.
The position of the respondent post–2017
To recap, in order for the applicant’s case to succeed, he must establish that the respondent’s interests are subject to the applicant’s equity. As the registered proprietor of both Hampton Park and Roxburgh Park, she holds title free of any unregistered encumbrances. To the extent that the applicant has an equitable claim against her, it must be based on her knowledge and conduct.
The judge accepted that the respondent was a witness of truth in circumstances where the judge had the benefit of seeing the witnesses give their oral evidence. The judge accepted that the respondent ‘was not an active participant in any conversations establishing an agreement concerning the beneficial ownership of any of the properties.’[86]
[86]Ibid [94].
However, in substance, the respondent at least partially acknowledged the role of the applicant in relation to the properties and her evidence supported the conclusion that Hampton Park was used for the power tool business and that the applicant was involved in decisions concerning Stud Road. It will be recalled that the respondent accepted, albeit equivocally, that the applicant had contributed to the deposit for Stud Road, saying when asked whether he had done so ‘[m]aybe, yeah’.[87] Of greater significance was the respondent’s evidence concerning the decision to demolish the building and sell the land. As the judge noted, the respondent stated that the house on the property was fire-damaged when it was purchased and that ‘[t]hey bought it for the land. They demolished it, and they sold it.’ When asked who ‘they’ were, she responded: ‘My husband.’[88] Further, the respondent said that the applicant and Samir agreed together to demolish the house and leave it as vacant land, but that she did not have anything to do with that agreement and was not involved in those discussions.[89]
[87]Ibid [45].
[88]Ibid [53].
[89]Ibid [54].
That evidence showed a degree of collaboration between the applicant and Samir in decisions concerning the Stud Road investment and the respondent’s knowledge of that fact. Its significance was twofold. It undermined the respondent’s evidence that the applicant and Samir had been estranged for almost 17 years and rendered her bare denials of any knowledge of financial decisions less plausible. At the same time, it supported the applicant’s case that he and his father had jointly invested in Stud Road. In our view, the evidence established that the respondent knew that there was a financial arrangement between the applicant and Samir concerning the two investment properties, Hampton Park and Stud Road, and that it had been the subject of some disagreement between them.
It is also necessary to consider the circumstances in which the respondent became the registered proprietor of Hampton Park. The respondent was a volunteer and, according to the applicant, the purpose of her becoming the registered proprietor was to assist the purchase of Roxburgh Park in her name. That evidence is plausible and was not denied by the respondent. Admittedly, the respondent was barely taxed in cross-examination, which was extremely brief. However, the respondent did not, in her evidence-in-chief, deny this explanation for Samir transferring Hampton Park to her.
There is nothing to suggest that the transfer of legal title in Hampton Park to the respondent was intended to affect or alter the existing beneficial ownership of that property. The applicant said that he knew the transfer was to occur and did not object to it. Nor did he place a caveat on the title of Hampton Park to record his interest. However, given the purpose of the transfer, to support the obtaining of a loan for the purchase of Roxburgh Park in the respondent’s name alone, there was no reason for the applicant to think that it would affect his beneficial interest. The transfer itself did not constitute an inconsistent dealing with the title, because it did not carry any implication that the applicant’s interest would later be denied by the respondent.
We are satisfied that the transfer was undertaken to assist in the purchase of Roxburgh Park as a family home for the respondent and Samir. It was close in time to the purchase of Roxburgh Park, and the respondent did not give any other explanation for why Samir had decided to transfer Hampton Park to her after 14 years. There was some history of Samir transferring a property between himself and the respondent to meet various financial needs. On 13 July 2005, Samir became the sole registered proprietor of Endeavour Hills and on 17 November 2006, seemingly in response, the respondent placed a caveat over the title to that property, claiming an equitable interest.
For the reasons discussed above, we are satisfied that immediately before the transfer of Hampton Park into the respondent’s name, Samir held the title on the basis of a joint endeavour constructive trust as to 50 per cent for the applicant. The respondent had benefited from the series of property transactions involved in the joint endeavour between Samir and the applicant, in the ways we have described above. We are also satisfied that the respondent was aware that the applicant and Samir had arrangements in relation to the beneficial ownership of both Hampton Park and Stud Road but we are not satisfied that she knew all of the details of those arrangements. However, given the purpose of the transfer of legal title to the respondent as a volunteer was to enable her to use Hampton Park to provide collateral for the loan to purchase Roxburgh Park, it was plainly not intended by Samir, the applicant or the respondent that the transfer would alter the existing beneficial interests in Hampton Park. The respondent obtained the benefit of the purchase of Roxburgh Park. Taking into account all these considerations, it is our view that it would be unconscionable for the respondent to retain Hampton Park without accounting to the applicant for his 50 per cent beneficial interest.
We are conscious that our conclusion differs from that reached by the judge. However, in our respectful view, the judge’s failure to place any weight on the bank records, and to focus on the intention of the respondent at the time each of the properties was acquired rather than when the respondent became registered proprietor, led her not to recognise the existence of a joint endeavour between the applicant and Samir and its implications in respect of the respondent. In our view, the joint endeavour between the applicant and Samir was crucial to understanding the basis on which Hampton Park was transferred to the respondent in 2017.
In the circumstances, the applicant does not need to rely on a resulting trust. In any event, we would not permit the applicant to rely on a resulting trust. He did not make that claim at trial. The respondent deliberately cross-examined the applicant on the pleaded case in a confined way and, in our view, it would be unfair to allow the applicant to expand the case on appeal. Further, it would be wrong for the applicant to be able to rely on the presumption that operates in relation to a resulting trust in circumstances where it was not pleaded at trial.
Conclusion
We will grant leave to appeal and allow the appeal. We will declare that the respondent holds Hampton Park on trust as to 50 per cent for the applicant.
Before leaving this matter, it is appropriate for the Court to record that Senior and Junior Counsel appeared on behalf of the applicant pro bono. Their written and oral submissions were of great assistance to the Court.
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