Day v Gould [2006] QSC 252

1 [2006] QSC 252 SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION HELMAN J No 6481 of 2006 JUDITH PARRY DAY and JENNIFER JUDITH GOULD Applicant Respondent BRISBANE ..DATE 31/08/2006 JUDGMENT -- 1 of 11 -- HIS HONOUR: This is an application for an order removing a caveat, No. 709700582, lodged by the respondent over lot 51 on Crown plan FT147, title reference 14776064. The applicant, who is the registered proprietor of the land, also asks for an order that the respondent pay her costs of and incidental to the application. The applicant is the respondent's mother. In the caveat the respondent claimed an equitable interest in fee simple as beneficiary of a constructive trust. The grounds given were these: the constructive trust arises by virtue of the application by the caveator of moneys for the maintenance, development, and construction of improvements, the contribution on the subject land such that the caveator is entitled to an interest in the subject land to the extent of the contribution. In submissions made on behalf of the respondent it was said that reliance could be placed on the principles explained in Muschinski v Dodds (1985) 160 C.L.R. 583. It was said on behalf of the respondent that since that decision the Courts have recognized the potential imposition of a constructive trust over property for the benefit of a contributor to real property. It was submitted that that principle is well established, and what must be ascertained is the minimum equity necessary to assuage the legal owner's conscience of the windfall that would be unconscionably retrained if no order were made. It was further submitted that the evidence supported the application of a constructive trust in favour of the respondent, at least to the extent of her contributions, and perhaps wider. 2 JUDGMENT -- 2 of 11 -- 31082006 T13/PAF23 M/T 3/2006 (Helman J) 3 JUDGMENT 1 10 20 30 40 50 60 To justify the retention of the caveat, the respondent must establish a serious question to be tried and that the balance of convenience favours the caveat's remaining on the register. Before I return to the two issues that arise on this application, it will be convenient if I outline briefly the history of the matter. Before embarking upon that, however, I think it appropriate to mention that some of the evidence put before me on behalf of the respondent is somewhat confused. I shall elaborate that later. In late 1987, within six months of the death of the applicant's husband, she discussed with the respondent and two of her other three daughters at her home in Taroom what use might be made of three cattle properties of which she was the owner. They are: Craiglea, which is the property the subject of this application; another property called Bowie, and also known as Ollies; and a third property called Waterton. According to the applicant, the precise words she used in the discussion have faded from her memory, but she recalled the substance and effect of the discussion to be this: that she had a large number of cattle, approximately 300 head, and was no longer in a position to manage them or to use the three properties; that she would make the three properties available to her three daughters for the agistment of cattle that she would supply to them; that Waterton would be used by one of the daughters called Suan, Bowie by a daughter called Roslyn, and Craiglea, by the respondent. The applicant's suggestion -- 3 of 11 -- 31082006 T14/LM18 M/T 3/2006 (Helman J) 4 JUDGMENT 1 10 20 30 40 50 60 was that the daughters make use of the properties to run the cattle that she would provide to them, together with their own cattle; and in return they were to reimburse her for the rates that she continued to pay on the properties, to arrange that some of the cattle would be sold by each of them in her name to ensure that she kept her status as a primary producer and to supply her with meat, and to maintain the properties upon which they were permitted to agist the cattle. There was nothing, according to the applicant, recorded in writing in relation to the meeting or as to the arrangements suggested. There was, the applicant swears, certainly no arrangement, undertaking, agreement, or any discussion to the effect that the properties would be transferred or otherwise left to the daughters. After the meeting the applicant gave her daughter Suan 150 head of cattle to run on Waterton, Roslyn 50 to run on Bowie, and the respondent 100 to run on Craiglea. The applicant treated the supply of the cattle to the daughters as gifts. The applicant swears that she believes that those arrangements delivered a substantial windfall to her daughters. From her experience she says she believes one could expect to pay approximately $3 per head per week for agistment and that she believes cattle prices have been relatively stable since 1987, so that one could expect to receive about $600 or more per head. The applicant further swears that as a result of the lodging of the caveat that has given rise to this application on the -- 4 of 11 -- 31082006 T14/LM18 M/T 3/2006 (Helman J) 5 JUDGMENT 1 10 20 30 40 50 60 21st of June last, it has not been possible for her to deal with Craiglea, about which she swears she has not yet made a final decision. She swears that she previously considered the possibility of dividing the property in half and engaged surveyors to undertake that exercise so that it could be transferred to two of her daughters. She swears it is not her intention, and never has been her intention, to transfer the property solely to the respondent. The respondent in her affidavit filed in support of this application swears that at the meeting in 1987 the applicant said words to the effect, "Dad's not here any more so I can't manage it all. I might as well give one property to each of you girls." She also swears that she accepts that nothing was recorded in writing at the meeting but swears that she felt that "each of us" - referring presumably to her sisters and herself - was left with the impression that the applicant would ultimately have "each respective property" transferred to "us"; it was just that the applicant was not ready to do it at that time. The respondent swears to a discussion with the applicant in 2005 at which the applicant told her that she, the applicant, had told Suan to organize to transfer Waterton to herself, Suan, and that she planned to tell Roslyn to organize to transfer Bowie to her, Roslyn. She swears that the applicant said in the same discussion words to the effect, "We'll organize something for Craiglea, too." -- 5 of 11 -- 31082006 T15/MMV39 M/T 3/2006 (Helman J) 6 JUDGMENT 1 10 20 30 40 50 60 There is evidence from the respondent and her former husband to the effect that improvements have been made to Craiglea, by them. The respondent swears that, had she not expected Craiglea to be transferred to her in the future, she would never have incurred most if not all of the improvement expenses. I mentioned the respondent's former husband. There is before me an affidavit sworn by him in which he gives an account of the meeting in 1987, at which he was also present. He says he recalls that there was an agreement reached between the applicant, the respondent, and the other two daughters to the effect, inter alia, that each property would ultimately be transferred to each of "the girls" - as he put it. He also swears that following that meeting he always believed that the applicant would transfer Craiglea to the respondent before the applicant died. The applicant was made a third party in the proceedings in the Family Court of Australia between the respondent and her former husband, and I have before me a copy of an answer to a third party notice filed in that proceeding and confirmed by affidavit by the applicant. Her affidavit is dated the 15th of December 1993 - so much closer to the meeting in 1987 than the present. In that affidavit the following appears: "The third party did represent to the wife [that is, the respondent] that the real property known as Craiglea would, upon the death of the third party, be bequeathed to the wife only." -- 6 of 11 -- 31082006 T16/PAF23 M/T 3/2006 (Helman J) 7 JUDGMENT 1 10 20 30 40 50 60 In another part of that document the following appears: "At no material time was any action taken or representations made by the third party to the husband and/or the wife that moneys expended by either or both of them on the property at Craiglea would provide them with either a beneficial entitlement in and to the property and/or some form of financial gain to the husband and/or wife at some time in the future." It can be seen, I think, from the account I have given that if the respondent's contention of her having an interest in the land the subject of this application were to rest upon her evidence, she would be on extremely shaky ground. What appears to be her case is that she is entitled to an equitable charge over the property to be measured by the expenditure on improvements, the improvements having been made on the understanding that she would ultimately be the beneficiary of the applicant's bounty in transferring the property to her. Taking into account, however, the evidence of the former husband and the evidence in the document filed in the Family Court proceedings, I conclude the respondent's case for there being a serious question to be tried is stronger. It is not, of course, my responsibility, in determining this application, to determine where the truth lies. But it would appear to me that there is a serious question to be tried as to the existence of the contended-for equitable interest in the land. The next question, then, is whether the balance of convenience favours the retention of the caveat, and here again there is some confusion in the evidence that has been presented on behalf of the respondent. -- 7 of 11 -- 31082006 T17/PCC15 M/T 3/2006 (Helman J) 8 JUDGMENT 1 10 20 30 40 50 60 In her affidavit, the applicant - who is not a valuer, but who is obviously a woman with considerable experience in the cattle industry - estimates that the current value of Craiglea would be approximately $1.9 million. In her affidavit, the respondent - who is also experienced in the cattle industry - swears that she agrees with the applicant's assessment of the approximate value of Craiglea, but adds that she doubts that it would be worth anywhere near $1.9 million if it were not for the substantial improvements undertaken by her over the past 19 years. When it comes to evidence of the improvements and their value, however, one is faced with some difficulty. Attached to his affidavit, the former husband of the respondent has set out a document headed Development Work Craiglea, showing improvements to the value of $71,925. It does not appear to me from that document that there is any precision in the sums that make up that total. The respondent has attached to her affidavit two schedules. One shows invoices which begin in December 1987 and continue until February 2006 and another schedule beginning in December 1987 and ending with an entry in March 2005 for cheque butts. I do not propose to give a detailed analysis of the contents of those schedules but I think it appropriate to mention some matters. They make no distinction between maintenance and capital improvement expenses and there appear to be some expenses that would not fit into either category: chainsaw repairs, a dingo trap, dog food, and work boots, to name some. -- 8 of 11 -- 31082006 T18/LM18 M/T 3/2006 (Helman J) 9 JUDGMENT 1 10 20 30 40 50 60 There are also obvious overlaps between the two lists. No doubt it is obvious why: one list is of invoices, the other of cheque butts, but even there, there are difficulties. For instance, among the invoices is an item dated 28 August 1990 showing the trader in question as G D Sakzewski Holdings and the items billed as transport/boots. The sum involved is $9,985. Among the cheque butts there is an item dated 5 September 1990 showing the payee as G D Sakzewski Holdings Pty Ltd for building dams, the sum in that case is also $9,985. It was submitted on behalf of the respondent that somewhere between $138,058, which is the total of the sum of the invoices, and $300,000 had been spent by the respondent. The figure of $300,000, it was explained, is the sum of the invoices, cheque butts, and the estimates of the respondent's former husband. It is then conceded that there is some duplication so the actual figure could be closer to the $150,000 mark. I am somewhat sceptical of that. It would seem to me the true figure, if one eliminates ordinary items of maintenance and other payments unrelated to maintenance or to capital improvement, may well be closer to the figure given by the respondent's former husband. The result of that is that the respondent is seeking to maintain this caveat in respect of a claim which is probably, -- 9 of 11 -- 31082006 T18/LM18 M/T 3/2006 (Helman J) 10 JUDGMENT 1 10 20 30 40 50 60 on the evidence before me, no more than $75,000 over a property the value of which is $1.9 million. In those circumstances I am not persuaded that the balance of convenience favours the retention of the caveat. There is nothing before me to indicate that the applicant would be unable to meet a claim of the magnitude that the respondent apparently relies upon so that, in my view, the respondent should be left to claim for the sum that she asserts she is entitled to without affecting the applicant's ability to deal with her property at Craiglea. The order then will be that the caveat be removed. ... HIS HONOUR: I will order that the order be stayed until the 4th of September. Just on that subject, I don't know whether you want me to give any further reasons on that but if you look at the head note in Sirtes v Pryer [2005] NSWSC 1082 - and I think it correctly reflects the reasons of Burchett AJ - it is said that the correct approach is to assess the windfall, et cetera, that's (3), then: "(4) The appropriate equitable charge was the difference between the valuation of the property before and after the expenditure, regardless of the fact that this amount was far less than the amount actually expended by the defendant and her then husband." But if it's the other way around, as I read this, if the increase in value is greater than the amount expended, then -- 10 of 11 -- 31082006 T20/PAF23 M/T 3/2006 (Helman J) 11 JUDGMENT 1 10 20 30 40 50 60 it's the amount expended. There's no evidence of the increase in value here, so I've adopted the approach of saying that the best you can do is the value of the improvements. MR PEDEN: Yes. Well, I'm in your Honour's hands. I mean, if your Honour feels that that's----- HIS HONOUR: Oh, no, no, you can have the stay if you----- MR PEDEN: Yes. HIS HONOUR: Perhaps I should've included that in my reasons, but anyway I didn't, so that's that. HIS HONOUR: The orders will be these: that caveat No. 709700582 lodged by the respondent on 21 June 2006 over Lot 51 on Crown Plan FT147 in the County of Fortescue, Parish of Wandoan, title reference No. 14776064, be removed. I order that this order be stayed until 4 September 2006. I order that the respondent pay to the applicant her costs of and incidental to the application, to be assessed. ... ----- -- 11 of 11 --