Zubcic and Zubcic & Ors (No 2)

[2016] FamCA 922

FAMILY COURT OF AUSTRALIA

ZUBCIC & ZUBCIC AND ORS (NO 2) [2016] FamCA 922

FAMILY LAW – PROPERTY – INTERIM ORDERS – Determination of  dispute as to beneficial ownership of the Suburb C property – Where the wife’s parents have been added as respondents to the proceedings – Where the wife’s parents claim that they have legal and beneficial entitlement to 50 per cent of the proceeds of sale of the Suburb C property – Where the husband argues that he and the wife purchased the wife’s parents’ 50 per cent share in the property – Where the husband claims that he and the wife are entitled to the whole of the purchase price – Where a Declaration is made that the wife’s parents are beneficially and legally entitled to 50 per cent of the proceeds of sale and that the husband and wife are beneficially and legally entitled to the remaining 50 per cent.

FAMILY LAW – PRACTICE AND PROCEDURE – Application by the husband to vacate the hearing – Discussion of the principles in Aon Risk Services Australia Limited v Australian National University – Consideration of undesirable effect of further delay – Where the husband’s conduct in the proceedings has caused delay – Where the effects of the delay to the other respondents to the proceedings cannot be remedied by way of a costs order – Where the adjournment application is dismissed.

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175

Conveyancing Act 1919 (NSW) s 23C, 54A

APPLICANT HUSBAND: Mr Zubcic

RESPONDENT WIFE: Ms Zubcic

2^ND RESPONDENT: Mr B Zubcic

3RD AND 4TH RESPONDENTS:	Mr and Ms Gomes
5TH RESPONDENT:	The Commissioner of Taxation

FILE NUMBER: SYC 6290 of 2013

DATE DELIVERED: 2 November 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 26 – 27 October 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sansom SC for the application to adjourn

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers for the application to adjourn

THE APPLICANT: In person for the substantive hearing

COUNSEL FOR THE RESPONDENT: Mr Connor

SOLICITOR FOR THE RESPONDENT: Argyle Legal

2^ND RESPONDENT: No Appearance - excused

COUNSEL FOR THE 3RD AND 4TH RESPONDENTS:	Mr Schonell SC
SOLICITOR FOR THE 3RD AND 4TH RESPONDENTS:	Abrams Turner Whelan Family Lawyers
COUNSEL FOR THE 5TH RESPONDENT:	No Appearance - excused
SOLICITOR FOR THE 5TH RESPONDENT:	Australian Government Solicitor

Orders

IT IS DECLARED

1. That the 3^rd and 4^th respondents, Mr Gomes and Ms Gomes, are beneficial and legal owners as joint tenants as to one half share in the proceeds of sale of the property at H Street, Suburb C.

2. That the husband and the wife are beneficial and legal owners as joint tenants as to one half share in the proceeds of sale of the property at H Street, Suburb C.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Zubcic & Zubcic and Ors (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER:

Mr Zubcic

Applicant

And

Ms Zubcic

Respondent

And

Mr B Zubcic

2^ND Respondent

And

Mr and Ms Gomes

3^rd & 4^th Respondents

And

Commissioner of Taxation

5^th Respondent

REASONS FOR JUDGMENT

1. On 24 August 2016, directions were made for the hearing, on 26 and 27 October 2016, of a discreet issue in a long running property settlement between Mr Zubcic (“the husband”), Ms Zubcic (“the wife”), and the wife’s parents, Mr and Ms Gomes (“the 3^rd and 4^th respondents”).

2. The background to these proceedings has been set out in Reasons for Judgment delivered on 24 August 2016. It is not necessary to repeat here what was said in those reasons.

3. On 24 August 2016, the husband was represented by senior counsel. Directions were made for the filing of a Statement of Claim by the husband which would particularise his claim, as against the 3^rd and 4^th respondents, that they held their half share of a property at H Street, Suburb C (“Suburb C”) on trust for the husband and the wife.

4. The property has been sold, settlement having occurred on 13 September 2016 and the dispute is now about the ownership of the proceeds of sale.

5. The orders which were made are set out below:

   IT IS ORDERED

   (1)That within 28 days the husband file and serve a Statement of Claim setting out his claim against [Mr and Ms Gomes] (“the 3^rd and 4^th respondents”), and any evidence upon which he seeks to rely in relation to that claim.

   (2)That by 4pm on 12 October 2016, the wife file and serve all affidavit material upon which she seeks to rely in relation to the claim of the 3^rd and 4^th respondents.

   (3)That the issue of the beneficial interest of the respective parties in the proceeds of sale of the property at [H Street, Suburb C] be listed for hearing for two days commencing 26 October 2016.

   (4)That by 4pm on 6 November 2016 [Mr B Zubcic] (the 2^nd respondent”), file and serve an Application in a Case setting out the orders he seeks and any affidavit evidence upon which he seeks to rely.

   (5)That the husband, wife and 3^rd and 4^th respondents forthwith and within 48 hours direct the purchasers of the property at [H Street Suburb C] in the State of New South Wales to pay the balance of the purchase price as follows:

   (a)     To [N Lawyers] being such sum of money as is necessary to meet the cost of the purchasers pursuant to order 4 made 10 September 2015 and order 3 made 15 June 2016 by Young AJA in the Supreme Court of New South Wales proceedings no … NSW … (“the orders”);

   (b)    To State Debt Recovery in discharge of Charge No … registered over the [Suburb C] property;

   (c)    In payment of any necessary adjustments on settlement; and

   (d)    The balance of the proceeds of the purchase price be paid into the Supreme Court of New South Wales.

   (6)That upon the settlement of the sale of the [Suburb C] property and subject to the discharge of the charge arising by the orders of the husband, wife and 3^rd and 4^th respondents cause the funds held by the Supreme Court of New South Wales to be paid as follows:

   (a)     As to the husband in the sum of $200,000 by way of interim property settlement; and

   (b)    As to the balance into a controlled monies account to be operated by the solicitors for the 3^rd and 4^th respondents.

   (7)That it be noted that one of the issues in the proceedings to be determined by the Trial Judge is which of the husband, wife and / or 3^rd and 4^th respondents is to be held responsible for the liability arising pursuant to order 5(a) hereof.

   (8)That order 6 hereof is stayed for a period of 14 days from the date of settlement subject to the purchasers and [N Lawyers] being given an opportunity to be heard.

   (9)That the 3^rd and 4^th respondents forthwith serve a copy of these orders on [N Lawyers] and the purchaser.

6. At no time on 24 August 2016 did senior counsel for the husband tell the court that the husband would not be in a position to comply with the timetable set for the matter to be heard commencing on 26 October 2016. The purpose of the orders made for interim property settlement was to put the husband in funds so that his lawyers could prepare his case.

7. Senior counsel for the 3^rd and 4^th respondents indicated that their affidavit material had been filed.

8. The wife filed an affidavit in compliance with the Orders.

9. On 25 October 2016, late in the afternoon, the husband filed an Application in a Case and an affidavit in support of that application. The application sought, inter alia, the vacation of the hearing on 26 and 27 October 2016.

10. That application was heard at the commencement of the hearing on 26 October 2016. In the course of submissions, senior counsel for the husband tendered in evidence a Statement of Claim which purported to be in compliance with Order 1 made 24 August 2016.

11. The application for adjournment was dismissed. I indicated that reasons for the dismissal would be included in the Reasons for Judgment. These are the reasons.

THE APPLICATION TO VACATE THE HEARING

1. The husband relied upon an affidavit sworn by him on 25 October 2016. In that affidavit he deposed that on 30 August 2016 he received from the purchasers of Suburb C the sum of $50,000. The husband had negotiated that payment as a partial release of the deposit to provide him with funds to relocate before settlement. He did not pay any portion of the $50,000 to his solicitors to put them in funds to prepare his case.

2. On 1 September 2016 the husband secured alternate accommodation.

3. Settlement took place on 13 September 2016. The husband instructed his solicitors to collect the cheque for $200,000 payable to him on settlement but not to bank the cheque.

4. In his affidavit, the husband deposed:

   I provided instructions for the delivery of the cheque to me personally and did not authorise the cheque to be banked into my account. I believed I could not access those funds until 14 days after the settlement in accordance with Order 8 made 24 August 2016. 

5. That construction of Order 8 might have been available, had it not been for the fact that on 2 September 2016, orders were made in the Supreme Court of NSW which provided, inter alia, that on settlement of the purchase of Suburb C, the husband be paid $200,000 in accordance with the Orders made in this Court on 24 August 2016. The purchasers were a party to the Supreme Court proceedings.

6. There was no impediment to the husband receiving and using the funds immediately upon their receipt by him. That was a fact of which the husband’s lawyers would have been aware.

7. The husband did not instruct his lawyers to prepare his case. Rather, he travelled to Asia on 10 September 2016, returning to Australia on 7 October 2016. It was the husband’s case that he went to Asia for medical treatment that was available more cheaply than in Australia. I accept that the husband had medical treatment while in Asia. What he did not explain was why he could not prepare his case and  go to Asia for treatment once the hearing was completed.

8. It was not until 7 October 2016 that the husband paid $80,000 to his lawyers to put them in funds to prepare his case.

9. In the meantime, he disbursed the sum of $50,000 in various ways.

10. He deposed that he used $5,000 to pay for travel to Asia and to pay for medical treatment there.

11. In August 2016 he paid $17,000 in cash to a person who had lent him money in 2015. There is no evidence that there had been any demand for repayment.

12. He deposed that $15,000 in cash was stolen from him.

13. He made a $20,000 payment by way of “rent in advance”, and claims to have paid a further sum of $6,000 for “Rent paid to date”. He made a further payment of $4,500 which he deposed was for “bond and rent”. I note that the husband’s lease was for a term of six months at a rental of $750 per week, a total of $19,500.

14. He deposed that $5,000 was paid “for the benefit of my children” and $5,000 was paid “for the benefit of my father”.

15. Of the sum of $250,000 which the husband received by September 2016, only $8,000 remains. Only $80,000 was used for legal fees. In two months the husband has disposed of $242,000.

16. Why the husband’s case was not prepared between 7 October 2016 and the hearing on 26 October 2016 was not explained. His lawyers had time to prepare a Statement of Claim, an Application in a Case and an affidavit of 66 paragraphs and a large volume of unpaginated annexures, roughly about 100 pages in total.

17. The issue before the Court was discreet. It was a question of the beneficial ownership of the Suburb C property. The evidence of the 3^rd and 4^th respondents had been filed in July 2016.

18. If it were the husband’s contention that the 3^rd and 4^th respondents held their legal title in the property on trust for the husband and the wife, the compass of the evidence was very narrow. The only relevant evidence was the circumstances surrounding the acquisition of the interest in the property and the documents which were created, the payment of money and the conversations, said to have given rise to the equitable interest.

19. The principles which are to be considered in the application to vacate the trial are those enunciated by the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 (“Aon Risk Services”).

20. At paragraph 5 Chief Justice French said:

    In the proper exercise of the primary judge's discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU's statement of claim should not have been allowed. The discretion of the primary judge miscarried.

21. The plurality said, at paragraphs 112 – 113:

    A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.

    In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy.  It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

22. The High Court in Aon Risk Services referred to case management rules and the purpose of managing trials. It recognised that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The case management objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering any application for the amendment of pleadings. The same principles must apply to an application for adjournment of a trial. The High Court found that it was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases.

23. The plurality held, at paragraph 114:

    What was a "just resolution" of ANU's claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward. A just resolution of its claim necessarily had to have regard to the position of Aon in defending it. An assumption that costs will always be a sufficient compensation for the prejudice caused by amendment is not reflected in r 21. Critically, the matters relevant to a just resolution of ANU's claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided.

24. The husband’s application to vacate the dates was filed on the afternoon before the commencement of the trial. Because of the lateness of the application, there was no opportunity afforded to the Court to bring another matter on for trial so as to use the days which would have been wasted.

25. There was no explanation for the husband’s delay in bringing the application to vacate the trial.

26. Another aspect of the consequences of vacating the hearing, and thus the delay in finalising the substantive proceedings, is that one of the parties is the Commissioner for Taxation who claims to be owed tax in excess of $1,800,000. Delay in finalising the proceedings deprives the Commissioner, and the public purse, of his money, and results in interest accruing on the tax outstanding.

27. There is no certainty that, if an adjournment were granted, the husband’s case would be any better prepared on the next occasion.

28. The husband’s conduct in the proceedings has some relevance.

29. The wife commenced proceedings in the Family Court of Australia on 28 October 2013.

30. The matter came before the Court on 3 February 2014. In a Response to an Application in a Case, the husband sought an order for the sale of Suburb C to:

    Enable respondant (sic) to receive his rightful share of Tranchs (sic) payments due and recievalbe (sic) soon from the sale of [Suburb C]. Share being 25% of all monies received.

31. Implicit in that application is an acknowledgement by the husband that the 3^rd and 4^th respondents were entitled to receive 50 per cent of the proceeds of sale of Suburb C.

32. On 3 February 2014 the husband was ordered to file a Financial Statement within 30 days. He did not do so.

33. The matter came before the court again on 21 March 2014 and the husband filed his Financial Statement in Court on that day. The matter was adjourned to 7 May 2014 and the husband was ordered to file his response and affidavit within 21 days.

34. When the matter came before the Court on 7 May 2014, the husband had filed no documents. The matter was adjourned to 10 June 2014.

35. The matter was listed for a procedural hearing before a Registrar on 27 May 2014. The husband did not appear.

36. The husband’s response to the wife’s application was not filed until 5 June 2014. In that response, he sought no relief against the 3^rd and 4^th respondents, nor did he seek any orders in relation to Suburb C.

37. On 10 June 2014, the proceedings were adjourned to enable the Commissioner of Taxation to be joined.

38. There were further procedural hearings before a Registrar on 11 February 2015 and again on 13 April 2015. The husband did not appear.

39. On 18 August 2015, the husband filed an Application in a Case in which he sought that:

    All aparties (sic), husband, wife and [3^rd and 4^th respondents] do all things necessary forthwith to cause [Suburb C] to accept the ameded (sic) deed to bring the sale of the property forward to now as currently offered by the buyer and do all things necessaru (sic) to give a payment direction or as required to enable to the buyer to accept the irrevocable Offer constituted in the deed, and that the payemt (sic) direction shall be 25% each to all four owners and sign all documents to enable the immediate release of those monies as offered by buyer.

40. The husband did not appear at the procedural hearing before a Registrar on 30 September 2015.

41. On 7 December 2015, when the matter was listed before me, counsel for the husband stated:

    Your Honour, I’m probably just as new to the case as your Honour is but, your Honour, it would seem the Supreme Court proceedings have completed and that the Supreme Court is a stakeholder for the deposit monies. And I would just say this to your Honour – that my client is present in court and we – the husband does not suggest that the husband and wife are entitled to more than 50 per cent of the proceeds of sale. So ultimately my client sees 50 per cent of the proceeds of sale going to the [3^rd and 4^th respondents].

1. The matter was listed before me for the first day of the trial on 21 March 2016. Senior counsel appeared for the husband. For the first time, senior counsel told the Court that the husband asserted that the 3^rd and 4^th respondents were not entitled to a one-half share of the sale price of Suburb C. The husband was ordered to file an amended response. The parties were ordered to file and serve any affidavits upon which they sought to rely by 9 May 2016 and the matter was listed for call-over on 16 May 2016 with a view to fixing a date for trial provided that all material had been filed.

2. The husband did not file his trial affidavit in accordance with those directions.

3. On 4 April 2016, the husband filed an Amended Response seeking, inter alia, the following order “That it shall be and is hereby declared that the 3^rd and 4^th respondents [named] hold their interest in [Suburb C] beneficially and on trust for the [husband and wife].”

4. The 3^rd and 4^th respondents sought particulars of the husband’s claim against them. None were provided.

5. On 1 June 2016, the time for filing was extended to 4 July 2016 and the matter was placed in the call-over on 25 July 2016. The husband did not file his trial affidavit in accordance with those directions. Rather, the husband filed an Application in a Case seeking an interim property settlement. That application was fixed for hearing on 24 August 2016.

6. The Orders made on 24 August 2016 are set out earlier in these Reasons. Significantly, those Orders required the husband to file a Statement of Claim in relation to his claim against the 3^rd and 4^th respondents. It was at that time quite unclear on what basis the husband asserted that they did not have a beneficial interest in Suburb C.

7. The husband did not file in compliance with those Orders but rather filed the present application to vacate the hearing dates. The Statement of Claim which was tendered in the husband’s case did not include the particulars of his claim.

8. On behalf of the husband, senior counsel asserted that any prejudice to the 3^rd and 4^th respondents could be compensated in costs. I do not accept that submission for a number of reasons.

9. Firstly, there is doubt that, when the proceedings are finally determined, the husband will have sufficient funds to meet an order for costs if the hearing is vacated. It is likely that those costs would be ordered to be paid on an indemnity basis. The 3^rd and 4^th respondents are represented by senior counsel. Costs of two days would be significant. The issue of costs in the Supreme Court proceedings has yet to be determined. The 3^rd and 4^th respondents and the wife will ask the Court to order that the husband pay their costs and the costs of the purchaser. Those costs will be significant. The interest accruing on the sums owed to the Commissioner of Taxation is significant. It is the wife’s case that the husband should be solely liable to pay the tax and the accrued interest.

10. The 3^rd and 4^th respondents, if they are the beneficial owners of half of the sale proceeds, are being kept out of their funds of almost five million dollars. The husband makes no offer to compensate them for loss of interest. Because the application was not filed until the afternoon before the trial was to begin, no opportunity was afforded to the 3^rd and 4^th respondents to file evidence about any hardship which might result from their being denied the use of the funds.

11. Financial hardship is not the only consideration. The 3^rd and 4th respondents are aged 75 years and 70 years. Neither is in good health. The 3^rd respondent has been advised by his doctors that he must keep his stress levels down because he suffers from a heart condition and hypertension and Type 2 Diabetes. He deposed to feeling stressed by the proceedings, “my heart races”. The 4^th respondent deposed that she is depressed, constantly thinking about the proceedings. She has difficulty sleeping and concentrating. She becomes very emotional, has panic attacks and hyperventilates.

12. No amount of costs can compensate the 3^rd and 4^th respondents for the prolongation of the proceedings.

13. The husband has had ample opportunity to run his case and to file the evidence to support his contentions. He has failed to comply with Directions that were made to ensure that his case was properly presented. That he has not done so has been a matter of choice. He chose, most recently, to go to Asia rather than to remain in Australia and instruct his solicitors. He chose to spend the funds he had available on other things rather than put his lawyers in funds.

14. The interests of the public in the administration of justice, and the proper use of scarce court resources and the timely dealing with the claim of the Commissioner of Taxation, cannot be compensated by an order for costs. Neither can the prejudice to the 3^rd and 4^th respondents be so compensated.

15. The matter will proceed.

THE BENEFICIAL OWNERSHIP OF SUBURB C

1. The husband, not having filed a trial affidavit in accordance with Directions, relied on an affidavit sworn by him on 7 April 2015, an affidavit sworn by his father on 3 March 2015 and an affidavit of the wife sworn on 3 July 2015.

2. The wife relied on an affidavit sworn by her on 12 October 2016.

3. The 3^rd and 4^th respondents relied on affidavits sworn by them on 11 July 2016.  

THE LAW

1. The creation of interests in land in New South Wales is governed by the Conveyancing Act 1919 (NSW) (“the Conveyancing Act”).

2. Section 54A of the Conveyancing Act provides that:

   (1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.

   (2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.

   (3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act1900 .
   
   

3. Section 23C of the Conveyancing Act provides:

Instruments required to be in writing

(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,

(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,

(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.

(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.

1. Relevantly, s 23C of the Conveyancing Act applies to express trusts. Thus an express trust in relation to an interest in real property, to be given effect, must be in writing.

2. The husband does not assert that any written document exists in relation to the alleged transaction whereby the husband and the wife purchased some or all of the equity of the 3^rd and 4^th respondents in Suburb C.

3. Absent such a document, the husband must prove that he and the wife acquired the interest of the 3^rd and 4^th respondents by the operation of a resulting, implied or constructive trust. Section 23C of the Conveyancing Act does not apply where the only basis for asserting that property rights were created was because equity would decree that a trust has been created.

4. Thus the onus lies with the husband to prove that a trust was created whereby the 3^rd and 4^th respondents held the whole or part of their equity in Suburb C for the husband and the wife.

What trust might have been created?

1. An implied trust arises by presumption of law in two circumstances. Firstly, where the settlor of a trust has transferred property to trustees but has not disposed of the beneficial interest. Secondly, where a purchaser of a property directs that it be transferred into the name of a third party and there is nothing to indicate that the purchaser intended that third party to take the property beneficially. There is no assertion of implied trust in this case.

2. A resulting trust will be presumed where, on a purchase, the legal title to real property is vested in someone other than the person who provided the purchase money. A resulting trust can only arise at the time of the purchase of the property. There is no dispute that, at the time of the purchase of Suburb C, it was the intention of all of the parties that the husband and the wife would own half of the property and the 3^rd and 4^th respondents would own half. The husband and the wife borrowed money from the 3^rd and 4^th respondents to complete the purchase. They agreed to repay the principal sum and to pay interest at the rate of 5 per cent. They paid the interest and they repaid the principal. Their final payment was made by cheque drawn on 2 December 2004. No resulting trust arose at the time of the purchase.

3. A constructive trust is raised by operation of law without reference to the intentions of the parties. The court implies that a trust was actually intended where property was acquired in such circumstances that the holder of the legal title may not, in conscience, retain the benefit of the property. Equity then converts the holder into a trustee. The husband’s assertions, if accepted, could give rise to a constructive trust. Put simply, the 3^rd and 4^th respondents could not, in good conscience, retain the beneficial ownership of a half interest in the property if the husband and the wife had paid them money pursuant to an agreement to purchase that interest from them.

4. It follows that the husband must prove, firstly, that there was an agreement that the husband and the wife would purchase the half share held by the 3^rd and 4^th respondents for a particular sum or sums and, secondly, that the money was in fact paid to the 3^rd and 4^th respondents. 

5. The husband bears the onus of proof.

WHAT WERE THE LEGAL AND EQUITABLE INTERESTS IN SUBURB C AT THE DATE OF PURCHASE?

1. It appears to be implicit in the husband’s case that the 3^rd and 4^th respondents were both the legal and beneficial owners of a half share in Suburb C from the date of the purchase.

2. If that is not a correct statement, then it is necessary to examine the circumstances of the purchase.

3. The only evidence of the husband about the facts surrounding the purchase of Suburb C, is contained in his affidavit sworn 7 April 2015 at Paragraphs 49 to 54.

4. The husband deposed that in early 2000 he and the wife were looking to purchase another property. They were unable to raise funds by way of mortgage. They had three young children and the wife was not working. The wife was anxious to purchase near her parents.

5. The husband deposed:

   It is for this persistence of purchasing a very expensive property that a deal was discussed after a property was located at [Suburb C], ultimate  that we purchased for $1,200,000, on paper (sic). It may be revealed later that we paid more than the stated value.

   My plan was later discussed with [the wife], her parents and my parents was as follows.

   That the property at [Suburb O], in which my parents still had 50% equity would be sold. Their proceeds and that of [the wife] and I would equal $300,000, [the wife’s] parents would contribute $600,000 and lend us another $300,000 for an agreed purchase on paper for $1.2 million for [Suburb C].

6. The husband’s father in his affidavit sworn 3 March 2015 deposed that:

   …in 2000 we agreed to invest our half share of $300,000, being $150,000, in [Suburb O] into a purchase that [the husband] had arranged at [Suburb C] for about $1.2 million.

7. On the husband’s evidence, the 3^rd and 4^th respondents contributed $900,000 towards the purchase of Suburb C. He does not dispute that the 3^rd and 4^th respondents contributed $600,000, being half of the purchase price of the property, as is asserted by them.

8. He deposed that the 3^rd and 4^th respondents lent the husband and the wife $300,000 and the husband and the wife provided a further $300,000 from the sale of the property at Suburb O.

9. The evidence does not support the husband’s contention as to the source of the purchase money.

10. Contracts for the purchase of Suburb C were exchanged on 28 March 2000 and the purchase completed on 11 May 2000. The purchasers named are the 3^rd and 4^th respondents as joint tenants as to one-half share and the husband and the wife as joint tenants as to one-half share. The purchase price was $1,200,000. P Lawyers, solicitors acted for the purchasers.

11. The 4^th respondent deposed that, before the land was purchased, she and the 3^rd respondent had a number of conversations with the wife to the following effect:

    Wife:  “We don’t have the money to pay our half share now. [The husband] and I will sell the property at [Suburb O] and be able to pay you $250,000 plus our share of the stamp duty and legal fees. We will be able to pay you the rest in three years.”

    4^th respondent: “You will have to pay interest. We will only ask for 5%.”

12. The 4^th respondent deposed that the husband was not present at those conversations. However, the basic contention that the husband and wife would be able to contribute the money from the sale of Suburb O was in accordance with the evidence of the husband, as was the contention that the 3^rd and 4^th respondents would lend money to the husband and the wife to complete the purchase.

13. The 3^rd and 4^th respondents withdrew $120,000 from their AGC investment and used those funds to pay the deposit. They also paid the stamp duty and the legal fees.

14. The balance of the purchase price was $1,080,048.52. The 3^rd and 4^th respondents withdrew that amount from their AGC Money Market Access Account on 10 May 2000.

15. The husband’s contention that the husband and the wife contributed $300,000, being the proceeds of the sale of Suburb O to the purchase of Suburb C is not borne out by the evidence. Suburb O was sold by contracts exchanged on 26 April 2000 for $300,000. Settlement took place on 15 June 2000. The sum of $277,387 was deposited into the bank account of the 3^rd and 4^th respondents. That payment represented a repayment of $250,000 of principal and payment of the share of the husband and the wife of the stamp duty and the legal fees on the purchase.

16. The 3^rd and 4^th respondents instructed their solicitor to prepare a loan agreement in relation to the advance of $600,000 plus the half share of stamp duty and legal costs. A document was prepared. They decided that they would not require the husband and the wife to sign the document.

17. Annexed to the affidavit of the 4^th respondent is a schedule of the interest paid by the husband and the wife until 2 December 2004 when the balance of the loan was repaid.

18. The evidence establishes that the 3^rd and 4^th respondents purchased one half of the Suburb C property and the husband and the wife purchased one half. They were each legally and beneficially entitled to one half of the property from the time of the purchase.

Did the beneficial interests in the property change?

1. It is necessary to examine the transactions between the 3^rd and 4^th respondents on the one hand, and the husband and the wife on the other, after the completion of the sale.

THE STATEMENT OF CLAIM

1. On 24 August 2016, the husband was ordered to file a Statement of Claim to particularise his claim against the 3^rd and 4^th respondents.

2. The Statement of Claim was tendered in the course of the husband’s adjournment application and became an exhibit in the proceedings.

3. Relevantly the Statement of Claim pleaded, inter alia:

   Agreement to Purchase One-Half Share of the Property

   9.[The husband] and [the wife] entered into an agreement with the [3^rd and 4^th respondents] that: -

   (a) the [3^rd and 4^th respondents] would sell their undivided one-share shares (sic) in the Property (“the one One-Half Share”) to the [husband and the wife] as joint tenants;

   (b)[The husband] and [the wife] would pay the [3^rd and 4^th respondents] a purchase price of $650,000 for the One-Half Share;

   (c)[The husband] and [the wife] would beneficially hold the One-Half Share on payment of the purchase price of $650,000; and

   (d)[The 3^rd and 4^th respondents] would not transfer the legal title to the One-Half Share to [the husband and the wife] until called upon to do so by [the husband and the wife].

   PARTICULARS OF AGREEMENT

   Particulars to be supplied

   10.In accordance with the agreement referred to in paragraph 10 (sic), [the husband and the wife] paid the purchase price of $650,000 to the [3^rd and 4^th respondents].

   PARTICULARS OF PAYMENT

   Particulars to be supplied

   11.Following the payment of the purchase price by the [husband and the wife], the [3^rd and 4^th respondents] held the One-Half Share on trust for the [husband and the wife] as joint tenants.

   Alternative Payment of Purchase Price

   12.In the alternative to paragraphs 9,10 and 11, [the husband and the wife] paid the sum of $650,000 to the [3^rd and 4^th respondents] for the purpose of and with the intention of purchasing the undivided One-Half Share of the [3^rd and 4^th respondents] in the Property (“the One-Half Share”).

   PARTICULARS OF PAYMENT

   Particulars to be supplied

   13.The [3^rd and 4^th respondents] accepted payment of the sum of $650,000 from the [husband and the wife] for the One-Half Share.

   14.Following the payment of the sum of $650,000 by [the husband and the wife], the [3^rd and 4^th respondents] held the One-Half Share on trust for [the husband and the wife].

4. As can be seen from the Statement of Claim no particulars are given as to when the alleged agreement is asserted to have occurred, the terms of the agreement, or the terms of the payment.

5. The husband’s alternate position enunciated in paragraph 12 of the Statement of Claim appears to be that the sum of $650,000 was paid to the 3^rd and 4^th respondents without any agreement between them as to the purpose of the payment and that it was the intention of the husband and the wife (albeit not communicated to the 3^rd and 4^th respondents) that the payment of the money would be for the purpose of purchasing a one-half share in the property.

6. The Statement of Claim is completely silent as to when the alleged agreement and the alleged payments took place.

WAS THERE A CONCLUDED AGREEMENT?

1. It is difficult to ascertain how, or when, the alleged agreement to pay $650,000 might have been concluded.

2. The property was purchased for $1.2 million in 2000 and sold in 2015 for $10 million.

3. The husband tendered a loan application to the Commonwealth Bank of Australia in February 2004. The wife in cross-examination said that she had not signed the loan application and the husband had provided the information to the bank. In that application the value of the Suburb C property is given as $2,500,000. On 6 February 2004, the loan application records:

   I refer to your approval conditions and have discussed these with the customers. I refer to condition number 5 and have been advised by the customer that because it was all within the family that they registered the property in equal shares whilst acknowledging a private agreement between themselves that applicants only own 40%. Therefore there will not be a copy of a transfer to provide as per your conditions. The payment of $350,000 to obtain more of a share of the property is only a private agreement. Customers will show us proof that the title is registered in equal shares therefore showing the customers already have a 50% share.

1. That document demonstrates that as at February 2004, the husband believed that Suburb C had a value of $2.5 million and that the parties had not, at that time, repaid the whole of the principal lent to them by the 3^rd and 4^th respondents. In fact the amount of $350,000 was borrowed and used to repay the principle to the 3^rd and 4^th respondents in December 2004. On that basis it is not clear when it is asserted that the 3^rd and 4^th respondents would have agreed to sell their half share of the Suburb C property to the husband and the wife for $650,000. Certainly, by the time the husband and the wife had paid in full for the half share to which they were legally entitled, in December 2004, the value of the half share held by the 3^rd and 4^th respondents far exceeded the amount of $650,000.

2. It was not clear from the questions asked by the husband when he asserted that the relevant agreement was concluded.

3. He did not suggest to the 3^rd and 4^th respondents that there had been any discussion about their selling any of their interest in Suburb C to the husband and the wife.

4. The husband did not put to the 3^rd and 4^th respondents that there was a particular discussion or discussions, on a particular date or dates, to the effect that the 3^rd and 4^th respondents would sell specified equity in Suburb C for a specified amount.

5. In cross-examination the husband put to the 3^rd respondent that, in December 2013, there had been a conversation between them in relation to the property. The 3^rd respondent said, in answer to the husband’s questions, that in that conversation, the husband offered to sell his share in the property to the 3^rd respondent for $2.4 million. The 3^rd respondent said that the husband told him that the property was worth $10 million but that he would take $2.4 million. The 3^rd respondent refused that offer.

6. The husband asked the wife in cross-examination about that conversation and the wife said that although she did not hear the whole of the conversation, she heard the husband say words to the effect of “2.5 or I’ll take 2.4”.

7. That conversation would appear to establish that, at least by December 2013, the husband, and perhaps all four parties, were of the view that the property was worth $10 million.

8. The 3^rd and 4^th respondents and the wife all denied that there had been any agreement or any payment.

9. The husband, in cross-examination, did not suggest to them that any particular conversations had occurred on any particular dates.

10. There is no evidence from which it is possible to conclude that there was an agreement between the husband and the wife on the one hand, and the 3^rd and 4^th respondents on the other, that the 3^rd and 4^th respondents would sell their interest in Suburb C to the husband and the wife.

DID THE HUSBAND AND THE WIFE PAY $650,000 TO THE 3^RD AND 4^TH RESPONDENTS?

1. In cross-examination, the husband put to each of the 3^rd and 4^th respondents the proposition that large amounts of cash, in excess of $10,000 at a time, were given to them by him or the wife. They each flatly denied that proposition.

2. Rather, the cross-examination by the husband seemed to infer that there was a completely informal arrangement whereby, from time to time, unspecified amounts of cash were given to the 3^rd and 4^th respondents and the husband assumed that an interest in Suburb C was acquired in consequence of those payments.

3. The 3^rd and 4^th respondents denied any suggestion that there was any payment to them on account of equity in Suburb C.

4. The wife denied that she had given cash to her parents except after separation when she withdrew about $10,000 from her accounts and transferred those funds to her parents’ accounts.

5. In cross-examination by the husband, the wife thought that there may have been an occasion when they lent a sum of money, drawn from their Viridian Line of Credit, to the 3^rd and 4^th respondents for a short period of perhaps a month and the money was paid back. It was her recollection that about $128,000 was advanced in July 2006 and repaid in August 2006. No document was tendered to either confirm or contradict the wife’s recollection. 

6. The husband tendered a number of documents evidencing cheques being written by him between 2009 and 2011. The cheques total $275,800. He suggested in cross-examination of the 3^rd and 4^th respondents that this was money he gave to the 3rd respondent to bet at the races. They both denied that suggestion. The assertion is, in any event, inconsistent with the husband’s case that the 3^rd and 4^th respondents are very wealthy and had access to large amounts of cash from their own enterprises.

7. The husband did not produce any document which supported his contention that a large sum, such as $650,000, had been paid to the 3^rd and 4^th respondents.

8. To the contrary, the husband put to the wife that when the parties sold a property they owned in Suburb Q, they discussed using the proceeds of the sale to purchase the equity of the 3^rd and 4^th respondents in Suburb C. The wife denied that conversation had taken place.

9. However, the significance of that cross-examination is that the property in Suburb Q was sold in 2011 and, according to the propositions put by the husband to the wife; it was in 2011 that they discussed purchasing the interest of the 3^rd and 4^th respondents in Suburb C. This would seem to indicate that they had not already completed the transaction. It is unlikely that the 3^rd and 4^th respondents would have agreed, in or after 2011, to sell their interest in Suburb C for $650,000.

10. The purchase of Suburb C, the loan of $600,000, the payment of interest and the repayment of the principal were meticulously documented by both the wife and the 4^th respondent.

11. There is a significant inconsistency between the manner in which that transaction was recorded and the completely informal, not to say haphazard, manner in which the alleged acquisition of the purchase of the second half of Suburb C is alleged by the husband to occur.

12. No explanation was offered by the husband.

13. It is not likely that the 4^th respondent, who conducted their financial affairs on behalf of the 3^rd respondent using solicitors and meticulous record keeping, would have conducted the sale of their interest in Suburb C in such an informal and undocumented manner.

14. I am not satisfied that $650,000 or any other sum was paid by the husband and the wife to the 3^rd and 4^th respondents to purchase their interest in Suburb C.

15. I am bolstered in that conclusion by the representations made by the husband throughout the proceedings until March 2016 which were entirely inconsistent with the case he now presents.

THE HUSBAND’S ACTIONS INCONSISTENT WITH HIS CASE

1. The husband’s response to the wife’s Initiating Application filed on 5 June 2014, did not seek any orders in relation to the Suburb C property.

2. In his affidavit sworn 7 April 2015, the husband does not give any evidence of any payments made to the 3^rd and 4^th respondents after 2 December 2004 and neither does he suggest that they acquired any further equitable interest in Suburb C after that date.

3. On 19 November 2012, the husband sent an email to the 4^th respondent which read, relevantly,

   [The purchasers] have released the first tranche of the Irrevocable Offer fee. $25K…

   Did you and [the 3^rd respondent] want to start splitting it now or wait till its (sic) all over in a few years.

   Either way solicitors will deduct their fees from it first.

   Let me know asap.

4. The 4^th respondent replied on the same day asking that the deposit be split and this occurred.

5. On 29 November 2012, each of the 3^rd and 4^th respondents and the husband and the wife received the sum of $11,907.90 being one half of the first payment from the purchasers.

6. The second payment from the purchasers was received on 4 June 2013, and that payment was equally split between the husband and the wife and the 3^rd and 4^th respondents.

7. When the matter came before the Court on 3 February 2014, in response to an Application in a Case, the husband sought an order for the sale of the Suburb C property to:

   Enable respondant (sic) to receive his rightful share of Tranchs (sic) payments due and recievalbe (sic) soon from the sale of [Suburb C]. Share being 25% of all monies received.

8. Implicit in that application is an acknowledgement by the husband that the 3^rd and 4^th respondents were entitled to receive 50% of the proceeds of sale of Suburb C.

9. On 6 March 2014, the solicitor for the husband sent an email to the solicitor for the purchasers stating (emphasis in original):

   We have now received directions from our client that he agrees that the balance of the third tranche payment is to be paid to [the 3^rd and 4^th respondents] … Please note that any future tranche payments are to be paid in a manner that is only as agreed by all 4 parties to the above Deed (being [the husband, the wife and the 3^rd and 4^th respondents]) or as otherwise ordered by a court.

10. The husband’s response to the wife’s application was filed on 5 June 2014. In that response, he sought no relief against the 3^rd and 4^th respondents, nor did he seek any orders in relation to the Suburb C property.

11. On 23 June 2015, the solicitors for the purchasers wrote to the solicitors for the 3^rd and 4^th respondents indicating that the purchaser intended to accept the irrevocable offer for the purchase of the property and inquiring where the balance of the deposit was to be paid. The solicitors wrote:

    Given [the husband] is not represented by a lawyer and does not operate a trust account, please confirm by return email that your clients agree to vary the contract such that we will hold [the husband’s] share of the deposit in our trust account pending completion. We have also asked [the husband] if he agrees to this variation.

    Your client’s share of the deposit would be paid to your trust account.

12. The solicitors for the 3^rd and 4^th respondents replied to the solicitors for the purchasers in the following terms:

    We have been instructed to direct you to apply the deposit as follows:

    1.Invest 50% in a controlled money account held by your firm in trust for [the husband and the wife], pending further order of the Family Court.

    2.Pay the other 50% for [the 3^rd and 4^th respondents] into our Trust Account.

13. On 25 June 2015, the husband sent an email to the solicitors for the purchasers advising that he did not consent to the deposit being in accordance with the proposal of the 3^rd and 4^th respondents. The husband stated:

    I do however consider (sic) to the following,

    The each owner, being 4, each receive 25% of the deposit, and my portion released to me, in my nominated bank account, not a trust account. Released funds meaning, liquid funds without conditions, and free to use (sic).

14. On 28 June 2015, an email was sent to the husband with the following proposal by the solicitors now acting for the 3^rd and 4^th respondents and the wife. The solicitors stated, inter alia:

    We are attempting to deal with the deposit issue raised by [the solicitors for the purchasers]. Our clients seek your response to the following options and invites (sic) you to select any one. In view of the impending Court action by [the purchasers], our client requires an immediate response. If no response is received by you in selecting any one of the three options below, we are instructed that our clients will immediately make application (sic) to the Family Court for the whole of the proceeds of the balance of the deposit to be paid into the Family Court to be held at interest pending Family Court orders.

    We look forward to your immediate response. The options are as follows;

    Option 1

    A mortgage is signed by all four and the monies are paid;

    Half to [the 3^rd and 4^th respondents]

    Half in reduction of the [Zubcic] Commonwealth Bank Mortgage over [B Street, Suburb C].

    Option 2

    A mortgage is signed by all four and the monies are paid;

    Half to [the 3^rd and 4^th respondents]

    Half into a solicitor controlled monies trust account … under instructions that no amount be paid from the account to any party without the written instructions of [the husband and the wife] or by Court orders.

    Option 3

    A mortgage is signed by all four and the monies are paid;

    Half to [the 3^rd and 4^th respondents]

    Half into the Family Court to be held at interest pending Family Court orders.

    Please let us have your response no later than 12:00 midday tomorrow otherwise our clients will seek the Family Court to become the holder of the monies.

15. On 29 June 2015, the husband responded to the email of the previous day in the following terms:

    Considering all 4 parties are named as either applicants and or respondents in the family law proceedings, I will under no circumstances consent to half the funds placed in trusts and the other half released to [the 3^rd and 4^th respondents]. I can only consent to identical conditions for all parties. Ie all funds released at equal shares of 25%. This would appear fair and equitable.

    I continue to support the sale of the property subject to funds being released equally at this stage. Failing any release of funds to myself I retain my right to oppose the sale in its current format.

    Any application to the Family Court or Supreme Court, to hold half or all of the funds and release the other half to the [3^rd and 4^th respondents] will be strongly opposed, as [the 3^rd and 4^th respondents] are now named as respondents in the FLC proceedings, upon [the wife’s] previous application, and the issue of equity in [Suburb C] may be raised if you do propose that course of action.

    If the matter proceeds to Family Court, I would again seek my funds to be released, and raise the issue of the value and proportion of my equity, that I have forwarned (sic) in a recent affidavit. At this stage [Suburb C] is not the subject of any applications before the FLC.

16. The husband’s email continued:

    I will only consider at this stage any proposal you may have, conditional to including the following.

    # A mortgage to be signed by all 4 parties (as is the common theme in all 3 of your options) so that funds can be released as indicated.

    # Half to [the 3^rd and 4^th respondents]

    # Quarter to [the wife]

    # Quarter to [the husband]

17. The husband concluded:

    The release of the funds to all parties independently and equally seems both fair and equitable, and would greatly ... [a]ssist in the prevention of additional lengthy and costly litigation, both in the Supreme Court and FLC.

18. In the husband’s Application in a Case filed on 18 August 2015, he sought orders that Suburb C be sold and that the proceeds be disbursed “25% each to all four owners”. The order as sought is extracted in full earlier in these Reasons.

19. On 7 December 2015, when the matter was listed before me, counsel for the husband indicated that he was not suggesting that the husband and the wife were entitled to more than 50 per cent of the proceeds of sale of Suburb C. The relevant excerpt of the transcript has already been extracted above in these Reasons.

CONCLUSION

1. The husband has not established, on the balance of probabilities, that the 3^rd and 4^th respondents have sold their interest in Suburb C to the husband and the wife.

2. Accordingly, the equitable interests in Suburb C are identical to the legal title.

3. A declaration will be made accordingly.

I certify that the preceding one hundred and fifty-seven (157) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 2 November 2016.

Associate: 

Date:  2/11/2016