Campbell v Rushton [1997] QSC 150

IN THE SUPREME COURT OF QUEENSLAND TOWNSVILLE BETWEEN: MICHAEL ROSS CAMPBELL AND: BERNICE RUSHTON REASONS FOR JUDGMENT - CULLINANE J. No. 144 of 1995 Plaintiff Defendant DELIVERED THE TWENTY-EIGHTH DAY OF AUGUST, 1997 In this matter, the plaintiff claims to be entitled beneficially to an equal share of a fund held in the name of the defendant and which represents the net proceeds of the sale of some land of which the defendant was the registered proprietor. The claim was based on an alleged common intention of the parties or alternatively on the grounds that it would be unconscionable on the part of the defendant to deny such a beneficial interest. The plaintiff and the defendant first met in the early eighties through a common interest in greyhounds, an interest which was at all times a central feature of the relationship between them. At that time, the defendant was married and lived with her then husband at Black River. A relationship between the plaintiff and the defendant developed. The defendant's then husband left the matrimonial home in the later part of 1986 and the pla'intiff moved in with the defendant. They lived as man and wife in that home with the defendant's two children. The plaintiff was at this This judgment is to be copied for the purpose of research and private study onty. It fs not to be resold or used for republication in any other way without permiSSion. -- 1 of 18 -- 2 time a plumber employed by Queensland Rail. In about 1987 the plaintiff and the defendant jointly purchased a property at Jensen Road, Cordelia which was large enough in their view to train and breed greyhounds. The purchase price was some $50,000-00. The defendant had received a property settlement from her former husband and it would seem that this was in the order of . som~ $32,000-00. She contributed some $28,000-00 towards the purchase price . and the remainder was borrowed from the Bank of Queensland jointly with the plaintiff and secured by a mortgage on the property. The defendant says that she expended some additional monies (she estimates about $4,000-00) on items for the house and the land. The land at Jensen Road was listed for sale on a date which does not, J think, appear in the evidence. The circumstances in which this occurred were the subject of a substantial dispute to which J will return later. In September 1991, before the Jensen Road property was sold, a property at Haynes Road, Black River of some 25 acres was purchased in the name of the defendant a/one. The proceeds of sale of this property are the subject of this application. The purchase price was some $30,000-00. The defendant paid something in excess of $15,000-00 from monies which largely came from her deceased father's estate towards the purchase price and costs. The balance was borrowed from the Bank of Queensland. The bank advanced the monies by way of overdraft and secured by mortgage on the property and the relevant documents -- 2 of 18 -- 3 show that the plaintiff and defendant were jOintly debtors to the bank in respect of these monies. In addition the defendant says that she paid another $6,000-00 for items such as electricity, a bore for water, some clearing and other matters. Initially the plaintiff, defendant and the defendant's daughter resided in a caravan and annex (the plaintiff occupying the later) bought by the defendant on her account for $2,000-00 loaned to her by her mother. The Jensen Road property was sold in late 1991 for $80,000-00. After discharging the liability to the bank, there was a net amount of about $56,000-00. The defendant entered into a contract with a builder to construct a house on the new property for about $58,000-00. There were some P.C. items which cost more than estimated. Two sets of kennels were constructed on the land, as well as a garage. There are some differences between the parties as to the amounts expended on these improvements. According to the defendant, the first set of kennels cost $20,000-00, the second, $8,000-00 - $9,000-00 and the garage $10,000-00 - $12,000-00. The plaintiff says that the first kennels cost $25,000-00 and the second $12,000-00 - $14,000-00 and the garage $20,000-00. The defendant conducted a business of boarding kennels from the first set, whilst the plaintiff used the second set to train greyhounds. These greyhounds included -- 3 of 18 -- 4 greyhounds registered in the name of the plaintiff. The second set of kennels was constructed with the assistance of a friend of the parties, Shane Gallagher who was living on the property at the time and was paid only a very small sum for labour. The plaintiff says that he performed a good deal of the labour on both sets of kennels and erected fencing. The defendant denies that the plaintiff's role in the construction of these improvements was as extensive as he claims. The plaintiff left the Haynes Road property in 1995. The property was sold in 1996 for $217,,500-00. The indebtedness to the bank was almost $53,000-00 leaving the sum the subject of these proceedings. The defendant resided at the property until its sale. I will return to the respective financial contributions of each party to the Haynes Road property. The plaintiff worked as a plumber for Queensland Rail until late 1990. He was then unemployed until 1992, when he obtained a position at the Causeway Hotel. The defendant did some part-time work as a cleaner but was generally during the periods referred to in receipt of unemployment benefits. For some period, she received an additional amount from the Department of Social Securities when the plaintiff was treated as a dependant. I have referred to the boarding kennel business. For a period the plaintiff received unemployment benefits. -- 4 of 18 -- 5 Payments in reduction of the debt to the bank in respect to the Jensen Road property were made from the plaintiffs wages. At all times, the plaintiff and defendant conducted a jOint account into which income from greyhound activities - prize money and training fees - was paid and this was drawn on for various purposes, including some payments towards the overdraft in respect of the Haynes Road property. Some moneys from the boarding kennel business also was applied towards the overdraft. The overdraft was used for other purposes. The plaintiff paid some $19,000-00 into the account. This money came from his mother's estate and was deposited on 8th November, 1994. In the latter part of 1993 a vehicle was purchased in the plaintiff's name for $28,500-00. It would seem that there were some additional items obtained for this vehicle. There is a counter claim by the defendant against the plaintiff for monies claimed to be owing in respect of this vehicle. The plaintiff now has the vehicle and this is to be taken into account in a consideration of the plaintiffs claim. All greyhounds trained by the plaintiff and not owned by other persons were registered in the defendant's name. She kept the greyhoundS registered in tJer name when the plaintiff left. The evidence does not reveal the number of greyhounds or their value. I have evidence of the prize money paid to either the plaintiff or the defendant over the relevant period. This information comes from the Greyhound Clubs in the area. -- 5 of 18 -- 6 In addition some prize money was won when greyhounds taken to Brisbane were successful. There was a substantial dispute between the parties as to the nature of their relationship. It is common ground that they lived as man and wife for a certain time and it is also common ground that the plaintiff did not reside at Haynes Road for some period from some time in 1992 until early 1993. On the one hand the plaintiff says that until his final departure, and with the exception of the period in 1992 and 1993, he and defendant lived in a defacto relationship. On the other hand it was the defendant's evidence that as a result of deteriorating relations between them whilst they lived at Jensen Road, she and the plaintiff agreed that the Jensen Road property would be sold and they would go their separate ways after an accounting of the proceeds between them. On. this accounting, the defendant would be repaid the moneys she advanced and the balance would be shared between them. She says that for some appreciable time prior to leaving Jensen Road, they did not live as man and wife and they at no time did after that. The plaintiff's account is that it became necessary to leave Jensen Road because the local authority threatened to stop the greyhound training activities at that property because they were in breach of the town planning scheme and it therefore became necessary to find another place to carry on these activities. The plaintiff -- 6 of 18 -- 7 says that as a result of some advice he was given by an officer of the local authority,. the Haynes Road property was identified as a suitable place to continue these activities and that he and the defendant moved there prior to the sale of the Jensen Road property. The defendant says that after the agreement to separate and whilst they were waiting for the sale of the Jensen Road property, she and plaintiff were on friendly terms and the plaintiff was providing help and assistance to her with the greyhounds and generally. She describes this as a time when the relations between them, although no longer those of a defacto couple, were at their friendliest. She agreed that the local authority was threatening to stop their greyhound activities at Jensen Road and says that when she became aware of the Haynes Road property being available she thought that this provided a good opportunity to move to an area where she could continue to conduct the greyhound activities (she at all times held an owner trainers license while the plaintiff held a public trainers license) aild she was agreeable to the plaintiff living there and occupying a caravan annex while she and her daughter occupied the caravan until such time as the Jensen Road property could be sold and the plaintiff could receive his share and then go his own way. The property at Haynes Road was purchased in the defendant's name only and the defendant says that this was in accordance with the agreement that they had made to go their separate ways. The plaintiff's account is that the property was placed in the defendant's name only because she told him that she had spoken to an accountant who told her that this would be advisable. According to the defendant, -- 7 of 18 -- 8 the Bank refused to lend her the money on her own as an unemployed woman and because she and the defendant had been joint debtors in respect of the loan on the Jensen Road property, the Bank required that the monies be advanced to the plaintiff and defendant jointly or to the defendant and some other person. She says that because she was unable to obtain assistance from her son in that regard, she agreed to the plaintiff and herself being shown as the joint-debt9rs. The defendant says that when the moneys from the Jensen Road property became available, she spoke to the plaintiff and handed him a cheque made out for one half of the balance a~er the discharge of the bank indebtedness and the repayment to the defendant of the money she had applied to that property. The defendant says that the plaintiff refused this and that he said to her that it should be used to construct a set of kennels that he would use for training greyhounds. According to the defendant, she said she was prepared to allow this to be done given that they were on friendly terms at this time and she could, to use her own words, see no harm in such a venture. These monies represent part of the moneys applied to the improvements on the property. The plaintiff denies that there was any such incident. There is some support provided by the defendant's daughter about such an exchange but, as against that, an examination of the bank statements does not reveal any cheques unaccounted for. When she was cross-examined about this, the defendant was at one time inclined to suggest that she may simply have offered the cheque to him. -- 8 of 18 -- 9 As has already been mentioned there is a dispute as to the extent of the plaintiff's activities in the construction of the improvements. He says that he expended a considerable amount of time and effort in such construction whilst the defendant says that any activity was much less than he suggested. The plaintiff says that he provided moneys that he had received by way of income at the Causeway Hotel and which were paid into an account in his name to the defendant for joint living expenses. The defendant denies this and says that the plaintiff only occasionally expended moneys on groceries which were largely for his own purposes. I have already referred to the vehicle purchased in the plaintiff's name. The defendant says that the plaintiff approached her about purchasing this vehicle which would be used to transport greyhounds and that she agreed, but only upon the basis that he repaid the monies and she said that at all times the vehicle was treated as his. She says that she asked the plaintiff a number of times when the monies from his late mother's estate would be coming through, as the agreement was that when these monies came, they would be applied towards the vehicle. She says there was some considerable delay which caused her to be anxious and to approach the plaintiff. She says that the monies which the plaintiff paid into the account fell far short of the monies the vehicle cost and which had been drawn from the account by way of extension of credit on the overdraft. She claims that the balance is due and owing to her as a debt. -- 9 of 18 -- 10 It is the plaintiffs case that at all times the vehicle was treated as a joint vehicle and used for their joint purposes and there was no agreement that he was to account for its purchase price. Initially, when the plaintiff left the defendant retained the vehicle but subsequently delivered it to the plaintiff. As to the nature of the relationship between the parties, I think that the truth of the matter probably lies with the defendant. There are some aspects of her evidence which have given me concern and I do not accept her evidence where she says she handed the plaintiff a cheque. However, the purchase by the defendant of the land in her own name does I think provide support for the plaintiffs account and I think it a little improbable that if things were as the plaintiff says, that he would simply have accepted this. I think that the explanation that the defendant gives for the fact that the plaintiff and the defendant were shown jointly as debtors is acceptable. Moreover, there is evidence contained in the plaintiff's tax returns which shows that whilst he referred to the defendant as his spouse or defacto spouse in earlier returns, he did not in the later returns. Not all of the returns are available, but the entries made in this regard are not consistent with what the plaintiff says was the position during the years that he does not show any defacto spouse. He says that this is simply an error in completing the forms. It appears the plaintiff and the defendant were the subject of an investigation by the Department of Social Security and that, in the course of this investigation the plaintiff made a declaration that he and the defendant were not living in a defacto relationship at a time when on his account they were. He says that he was asked by -- 10 of 18 -- 11 the defendant to do this, but she denies that. Whilst I recognise that some reserve needs to be used in taking a declaration made in such circumstances at face value, I think, taken with the other evidence it provides some support for what the defendant says. I generally accept the evidence of the defendant in relation to this issue. I am satisfied that the defacto relationship had ceased and that it was intended that the relationship between them would come to an end upon the sale of the Jensen Road property. As events occurred with the move to the Haynes Road property occurring before the sale of the Jensen Road property, the relationship, although different in character to what it had earlier been, continued, or perhaps more accurately, was re-established. It may be that the plaintiff continued in the relationship in the hope of restoring the earlier relationship. From the defendant's perspective it would seem the . relationship continued because of the friendship between them, the assistance which the plaintiff was providing on the property and some sentiment towards the plaintiff because of the previous relationship and perhaps some sympathy on her part but no doubt also because of the role that the plaintiff could play in training greyhounds and as a companion. It would seem she had some sense of responsibility to the plaintiff. She described herself as being "the only person he has on this earth". Following a deterioration in relations between them the plaintiff left but returned in early 1993. He had visited the property and had used various facilities. She suggested he return. At this time he was in employment and I think -- 11 of 18 -- 12 this fact was not without significance in her preparedness to resume the relationship. The evidence does not convince me that there was any substantial surplus generally available from greyhound activities after the payment of expenses although I am satisfied that from time to time there were moneys available which were paid into the joint account and used in the way already described. I accept the plaintiff's evidence that there was no agreement of the kind claimed by the defendant in relation to the vehicle. The parties attended greyhound races together and other places where they presented themselves to observers as a couple. They went on holidays together. The defendant conducted a boarding kennel business and had her own account for this purpose. Some small amounts from this account were from time to time applied towards the overdraft. The defendant provided a home for the plaintiff and attended to the domestic tasks. In addition I am satisfied that she played an active role in the greyhound activities carried out on the property such as the training, breeding and care of the greyhounds. The evidence suggests that the breeding activities were carried out in her name and the dogs registered in her name although the activity I think broadly can be regarded as a joint one. Her income was applied to the needs of the -- 12 of 18 -- 13 household. It is not possible to identify the extent of any profit from the boarding kennels but the defendant's evidence suggested that there would have been little, if any. J It is impossible to establish precisely what each contributed to the property represented upon its sale by the proceeds, the subject of this application. It is plain however that the financial contribution of the defendant, both directly and indirectly far exceeds that of the plaintiff. In addition non-financial contributions are to be taken into account in considering the claim. In this regard I am satisfied that the plaintiff played a significant role in the construction of the kennels and other improvements. The defendant paid something in excess of $15,000-00 towards the purchase price of the Haynes Road property with the balance borrowed on overdraft. Two payments of $25,000-00 each from the proceeds of the sale of the Jensen's Road land were paid for the construction of the house and a sum of $25,000-00 was applied for improvements which included a final payment of the house and kennels. This came from the estate of the defendant's father. The defendant claims that all moneys received from her father's estate were used for the land and improvements. A sum of $44,000-00 paid into an account was identified as representing the balance of the estate. It is accepted that from this sum about $6,000-00 was paid into the joint account. -- 13 of 18 -- 14 It·has not been possible to specifically identify any other amounts and it would appear that amounts withdrawn from this account were not paid into the joint account. I think it likely that at least some of the moneys from this account were used for the purposes of the house and property although as I have said it is not possible to identify specifically what moneys and for what purposes and the defendant has not been able to do so. For the defendant it is contended that something like $116,000-00 can be identified as having been contributed by her to a total expenditure of about $130,000-00. For the defendant it is contended that all that can be identified is $83,229-00 and that of the balance of the monies which were received by her from her father's estate, she is not able to establish that she used these moneys for the purposes of the house or improvements except for an amount of about $6,000-00. Whilst the precise sum might not be identifiable, it is plain that the financial contributions direct and indirect of the defendant greatly exceeded those of the plaintiff, although the latter's were not insignificant. It was accepted that the vehicle which the plaintiff now has, had a value of . $20,000-00 in early 1997. There was, It is clear, no express agreement as to the sharing of property. The only common intention of the parties which I think can confidently be identified was that their relationship and the arrangement between them that I have already described, would continue indefinitely with the parties residing in the house and using the -- 14 of 18 -- 15 improvements in such a way. It is true that the plaintiff played a role in identifying the property at Haynes Road as suitable and was a joint-debtor to the Bank in respect to some of the monies borrowed for its acquisition. However, I think the relationship and the concomitant arrangement should largely be regarded as postdating the acquisition of the land. Ultimately, I have not been convinced that it would be appropriate to infer a common intention that each would hold a beneficial interest in the property. The relevant principles are to be found in the judgments of the High Court of Australia in Baumgartner -v- Baumgartner (1987) 164 C.L.R. 137 and Muschinski -v- Dodds (1985) 160 C.L.R. 583. Judgments of the Queensland Court of Appeal in Dunne -v- Turner (Appeal No 196 of 1995 20/8/96 Unreported) and Brown -v- Manuel (Appeal No 95 of 1995 22/3/96 Unreported) provide examples of the application of such principles. However, the circumstances justify the conclusion that it would be unconscionable for the defendant to deny the plaintiff a beneficial interest. The nature of the relationship and the circumstances as they have been outlined in th.ese reasons fall in my view squarely within what Deane, J said in Muschinski v Dodds (supra) at p. 619-620: "The prima facie rules respectively entitling a fixed term partner to a proportionate refund of his or her premium and a contractual joint venturer to a proportionate repayment of his or her capital contribution on the premature dissolution of the partnership or collapse of the joint venture are properly to -- 15 of 18 -- 16 be seen as instances of a more general principle of equity. That more general principle of equity can also be readily related to the general equitable notions which find expression in the common law count for money had and received (cf. Moses v. Macferlan (5); J. & S. Holdings Ply. Ltd. v. N.R.M.A. Insurance Ltd. (6)) and to the rationale of the particular rule of contract law to which reference has been made: ct. Fibrosa (7). Like most of the traditional doctrines of equity, it operates upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct: cf. Story, Commentaries on Equity Jurisprudence, 12th ed. (1877: Perry ed.), vol. 2, par. 1316; Legione v. Hateley (8). The circumstances giving rise to the operation of the principle were broadly identified by Lord Cairns L.C., speaking for the Court of Appeal in Chancery, in Atwood v. Maude (9): where 'the case is one in which, using the words of Lord Cotten ham in Hirst v. Tolson (10), a payment has been made by anticipation of something afterwards to be enjoyed [and] where ... circumstances arise so that future enjoyment is denied". Those circumstances can be more precisely defined by saying that the 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 -- 16 of 18 -- , , 17 party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do: cf. Atwood v. Maude (11), and per Jessel M.R., Lyon v. Tweddell (12)." The extent to which the funds should be impressed with a trust is not an easy matter. I have already referred to the difficulty in identifying precisely what financial contributions were made by each. Non-financial contributions are to be taken into account. It is however, obvious that it would be unjust to the defendant to give the plaintiff a half-share in the funds. The fund represents the proceeds of the sale of property of which the defendant was a registered proprietor and to which she has made financial contributions which greatly exceed those of the plaintiff. The plaintiff has received the vehicle that I have referred to. The defendant has retained some dogs of an indeterminate number and it is impossible to ascribe any particular value to them. In addition it is I think probably correct to conclude that the defendant at all times asserted an ownership to such dogs although the activities of the parties in relation to all aspects of greyhound activities could be regarded as joint. The extent of the beneficial interest which is to be afforded to the plaintiff cannot involve anything other than a broad approach consistent with the facts which I have outlined and the relevant principles contained in the authorities referred to earlier. I think that the justice of the situation is met by declaring the defendant holds the -- 17 of 18 -- 18 said fund on trust for herself and the plaintiff with the plaintiff having a beneficial interest in the fund of $164,131-16 to the extent of some $35,000-00 and the defendant having the beneficial interest in the balance. There will be a declaration that the plaintiff is beneficially entitled to an interest in the said fund in the sum of $35,000-00. I dismiss the defendant's counter-claim a~ainst the plaintiff. -- 18 of 18 --