De Whalley Farrall v Money (No 2) [2018] QDC 159

DISTRICT COURT OF QUEENSLAND CITATION: PARTIES: FILE NO/S: DIVISION: PROCEEDING: ORIGINATING COURT: DELIVERED ON: DELIVERED AT: De Whalley Farrall v Money (No. 2) [2018] QDC 159 MICHAEL DE WHALLEY FARRALL (plaintiff) v DEBORAH MONEY (defendant) D92/2012 District Court Application District Court at Southport 10 August 2018 Brisbane HEARING DATE: 13 March 2018 JUDGE: Kent QC DCJ ORDER: 1. The defendant’s interest as tenant in common in equal shares with the plaintiff in the property at 45 Skyline Terrace, Burleigh Heads in the state of Queensland, described as Lot 2 on Registered Plan 120975, County of Ward, Parish of Mudgeeraba, Title Reference 14413015 is subject to a charge in favour of the plaintiff to the extent of $32,418.00. 2. The parties can be heard as to costs if necessary; alternatively I am prepared to receive written submissions on that issue and decide it on the papers. CATCHWORDS: REAL PROPERTY – TORRENS TITLE – JOINT TENANCY AND TENANCY IN COMMON – GENERALLY – where pursuant to the previous judgment the defendant holds her interest in the relevant property on trust for herself and the plaintiff as tenants in common in equal -- 1 of 5 -- 2 shares – where there was an imbalance in contributions to the property – where a fair balancing of the parties’ interests requires the imposition of a charge – whether the charge should be in favour of the plaintiff or the defendant REAL PROPERTY – TORRENS TITLE – LEGAL PROCEEDINGS GENERALLY – GENERALLY – where the defendant holds her interest in the relevant property on trust for herself and the plaintiff as tenants in common in equal shares – where there was an imbalance in contributions to the property – where a fair balancing of the parties’ interests requires the imposition of a charge – whether the charge should be in favour of the plaintiff of the defendant COUNSEL: S L Kissick for the plaintiff A P Collins for the defendant SOLICITORS: Browns Lawyers for the plaintiff Craig Ray & Associates for the defendant [1] I previously gave judgment in this matter on 13 April 2017, declaring that the defendant holds her interest in the relevant property on trust for herself and the plaintiff as tenants in common in equal shares. I expressed the view at that stage that, on the material then available, the plaintiff’s interest therein should be subject to a charge in favour of the defendant, reflecting an imbalance in contributions to the property. That was expressed as being quantified in an amount to be agreed or determined. [2] The amount was not able to be agreed, and further proceedings were necessary in order to determine what the relevant balancing process in the interests of the parties should be. [3] Further evidence was assembled and given on the topic of the relative interests, and extensive submissions have been made by the parties. In particular, the plaintiff’s legal representatives commissioned a report from Mr Ian Otto, forensic accountant. His affidavit was sworn on 17 January 2018 and is document No. 61 on the court file. [4] There was a further hearing of the matter on 13 March 2018 where the defendant gave evidence and was cross-examined on the topic and Mr Otto was cross-examined on the contents of his report. -- 2 of 5 -- 3 [5] The further submissions by the plaintiff set out proposed findings and a reasoning process which leads to a conclusion that there should be a charge on the defendant’s interest in favour of the plaintiff in the sum of $84,140.82. Conversely the defendant relies on further submissions and a further tabulation concerning contributions and financial benefits obtained which leads to the contrary conclusion that there should be an adjustment in favour of the defendant of $61,285.77. [6] Both sets of submissions and calculations have been carefully compiled at considerable effort. However, at the end of the day I find the report, reasoning process and evidence of Mr Otto to be most persuasive analysis. [7] Mr Otto sets out the relevant evidence and his conclusions therefrom in considerable detail in his report. The contributions made by the plaintiff under the heading of Renovations/Refurbishments to the Property are in Schedule A to his report. The St George joint bank account is analysed in Schedule C. Schedule D is a summary of the character and performance of the property at 45 Skyline Terrace as a rental property and makes findings as to the distribution of the benefits thereof. Schedule E is an analysis of the loan repayments to one of the St George bank accounts and Schedule F is a similar analysis of the other St George loan account. [8] The crucial findings of Mr Otto are that in the period which was reviewed, the plaintiff has made net financial contributions of $7,887.00 and the defendant has received a net benefit of $56,948.00. In order to balance these contributions an adjustment is required in favour of the plaintiff in the amount of $32,418.00 which results in equal benefits being received of $24,531. Of course, this is the converse of the preliminary view expressed in the original judgment, but as outlined above, the evidence on the point has developed and enlarged significantly since that time. [9] The defendant’s representatives make a number of submissions directed to the argument that Mr Otto’s methodology should not be accepted. One of these is that his application of a notional rental of $350.00 is arbitrary and not supported by the relevant evidence. However in my view this is not a valid criticism. The figure was arrived at by Mr Otto in looking at the rent charged to tenants for the upstairs part of the premises which from 2011 was $440.00 per week. He reduced this to a notional allowance of $350.00 per week to allow for benefits provided by the defendant in managing the property, i.e. in effect being an onsite landlord, which should properly -- 3 of 5 -- 4 result in a discount in rent. I do not find this exercise to be arbitrary, although it necessarily is not something which is capable of absolutely precise quantification. The methodology applied by Mr Otto is reasonable, in my view. [10] It is also submitted by the defendant that the plaintiff has in effect had use of loan monies from the St George Bank in respect of the property without any risk of liability to the lender, because his name was not on the mortgage. This is true, however, fortunately any risk which the defendant was carrying has not crystallized into any sole liability. [11] The defendant also submits that the defendant has incurred further expenses from December 2016 (the conclusion of the trial) to 13 March 2018, and seeks to bring those into account. It would be understandable that those expenses should be equally shared. No opportunity seems to have been given to the plaintiff to contribute to those expenses, despite my judgment on 13 April 2017, which seems not to have been acted on. In any case, no submission is pressed upon me as to the further balancing exercise which may need to take place. If those expenses were accounted for, so would the continued occupation rent of $350.00 per week or $18,200 per year. At the end of the day, I am not persuaded that I should further investigate the matter beyond the scope of Mr Otto’s report which dealt with the position up to 30 June 2017, a period two months beyond the time when my previous judgment was published. [12] The plaintiff advances further submissions, as I have mentioned, dealing with separate aspects of the various contributing factors which are said to produce a significantly larger result in the plaintiff’s favour. These submissions are understandable, however for the reasons I have outlined above, in my view, Mr Otto’s is the most precise and persuasive calculation. Mr Otto is a forensic accountant of some experience. He is a highly qualified, chartered accountant and has worked as a forensic accountant for 20 years. In my view his evidence should be accepted, particularly in the absence of any competing expert evidence. [13] Therefore the further orders are: 1. The defendant’s interest as tenant in common in equal shares with the plaintiff in the property at 45 Skyline Terrace, Burleigh Heads in the state of Queensland, described as Lot 2 on Registered Plan 120975, County of Ward, -- 4 of 5 -- 5 Parish of Mudgeeraba, Title Reference 14413015 is subject to a charge in favour of the plaintiff to the extent of $32,418.00. 2. I will hear the parties as to costs. -- 5 of 5 --