Dennett v Ashton [1995] QSC 302

IN THE SUPREME COURT OF QUEENSLAND Writ no. 18 of 1991 Brisbane BETWEEN: MICHAEL DENNETT Plaintiff AND: HELEN DESLEY ASHTON Defendant REASONS FOR JUDGMENT - HELMAN J. Judgment delivered 14 December 1995 It is common ground between the parties to this action that for a little less than four and a half years, from August 1985 to January 1990, they lived together as if they were husband and wife although were not legally married. It is also common ground that while they lived together certain property was acquired, some in the name of the defendant alone and some in the names of the plaintiff and the defendant jointly. The plaintiff, a civil engineer and builder born on 24 November 1936, seeks declarations that the property now standing in the name of the defendant alone is held by her on trust for him absolutely and that property now in the names of the parties jointly - except land at 15 Cromarty Street, Kenmore, Brisbane - is held by them on trust for him absolutely. He seeks a declaration that the Cromarty Street land is held by him and the defendant, an office manager born on 17 May 1946, in the proportion ninety-four to six. In addition, he seeks compensation under various heads and other, consequential relief. The plaintiff abandoned at the trial his claims to compensation in paragraphs 25 to 29 inclusive of the statement of claim, but gave particulars of -- 1 of 14 -- 2 further claims to compensation in a document admitted, for convenience, as exhibit 14. The defendant denies that the plaintiff is entitled to the relief he seeks and counterclaims a declaration that the property standing in the names of the parties jointly or in the name of the defendant alone - except land at 25 Bangalee Street, Jindalee, Brisbane - is held by them for each other, or by the defendant for them, in equal shares. The defendant alleges that the Bangalee Street land is hers and the plaintiff has no interest in it. The defendant seeks other, consequential relief. When the de facto relationship began each party had been divorced from former spouses. The plaintiff was employed by the Queensland Electricity Commission and the defendant was the manager of the Sussan shop at Indooroopilly. The plaintiff remained in his employment with the Commission until about the end of 1987. On 15 January 1986 the defendant left her job with Sussan and on 22 January 1986 began working at the Sportsgirl shop at Indooroopilly. She remained in that employment - mainly full-time but with a part-time interlude - until 9 October 1987. From August 1985 to the beginning of 1988 the parties lived in a home unit owned by the plaintiff at 15 Newcross Street, Indooroopilly, Brisbane. From the beginning of 1988 until later that year the parties lived austerely on land owned by the plaintiff at Lot 6, Sunset Drive, Little Mountain. Neither was in paid employment while they were at Little Mountain. The defendant did not resume paid employment until after the de facto relationship ended, but in July 1988 the plaintiff began working for an employer called Minproc. The parties then left Little Mountain and went to live at Wynnum with the defendant's mother with whom they remained until January 1989 when they moved to -- 2 of 14 -- 3 a house at 33 Hannam Street, Wynnum. They continued living together there until the defendant left in January 1990. On the evidence before me blame for the end of the de facto relationship is not attributable to one party or the other. The property the subject of this action is considerable. It is convenient to deal first with the real estate. There are three parcels of land. In December 1986 the plaintiff purchased the land, on which there was a house, at 25 Bangalee Street (Lot 105 on Registered Plan 101132 in the County of Stanley Parish of Oxley City of Brisbane) in the defendant's name. The defendant executed a mortgage, which has not been registered, in favour of the plaintiff to secure the purchase price and all other outgoings including legal costs. No payment has been made under the mortgage. The house was let while the parties cohabited. The rent was paid into an account with Suncorp but was assigned until early 1990 to a cousin of the plaintiff. In December 1987 the plaintiff and the defendant purchased the land, on which there was a duplex dwelling, at 15 Cromarty Street (Lot 20 on Registered Plan 102191 in the County of Stanley Parish of Indooroopilly City of Brisbane) in their names as joint tenants. The purchase price and associated costs were $114,600.00, of which the plaintiff contributed $107,900.00 and the defendant $6,700.00 - i.e., in the proportion of approximately ninety-four to six. In December 1988 the plaintiff purchased the land at 33 Hannam Street (Lot 197 on Registered Plan 96102 in the County of Stanley Parish of Tingalpa City of Brisbane) in the parties' names as joint tenants. The remainder of the property the subject of the action, apart from money -- 3 of 14 -- 4 referred to in paragraph 14 of the defence and counter-claim which came from an account with Suncorp in joint names into which the plaintiff deposited the proceeds of sale of a block of units called Shelly Lodge, is as follows: 1. Personal Super Bond with Tyndall Life Co. (Policy no. W4202917) in the name of the defendant, acquired in June 1987; 2. Account no. 79-013959-9 with Suncorp Building Society in the names of the parties jointly, opened in or about July 1987; 3. 4,000 shares in Maxilink Limited (Certificate no. P000204) in the names of the parties jointly, purchased on 4 July 1987; 4. Another 4,000 shares in Maxilink Limited (Certificate no. 1000178) in the names of the parties jointly, purchased on 4 July 1987; 5. 7,540 units in J.B. Were No. 1 Oil and Gas Trust (Investor no. S2048304A) in the names of the parties jointly, purchased on 10 August 1987; 6. 26,554 units in the Income Link Trust (Certificate no. 16279) in the names of the parties jointly, purchased on 3 September 1987; 7. 2,681 units in Tyndall, formerly Clayton Robard, Gold Fund (Certificates nos. 146484 and 210668) in the names of the parties jointly, purchased on 4 September 1987; 8. 3,309 units in Second J.B. Were Gold and Natural Resources Trust (Investor no. S2048304A) in the names of the parties jointly, purchased on 4 September 1987; 9. 4,419 units in B.T. Split Trust Growth Units (Investor no. ASHTOHE) in the names of the parties jointly, purchased on 21 September 1987; 10. 4,808 units in Growth Equities Mutual Securities Fund Growth Units (Certificate no. G11093) in the names of the parties jointly, purchased on 21 September 1987; 11. 8,334 units in Growth Equities Mutual Securities Fund Income Units (Certificate no. 15926) in the names of the parties jointly, purchased on 21 September 1987; 12. 8,460 units in Fidelity International Strategy Trust - Australian Equity Income Fund (no. DENA000268) in the names of the parties jointly, purchased on 22 September 1987; -- 4 of 14 -- 5 13. 2,392 units in National Mutual Share Market Trust Funds - Professional Investors Leaders Fund no. 1, formerly the Professional Investors Fund No. 3 (Certificate no. 013090) in the names of the parties jointly, purchased on 25 September 1987; 14. 1,463 units in National Mutual Share Market Trust Funds - Equity Imputation Fund, formerly Equity Income Fund (Certificate no. 003381) in the names of the parties jointly, purchased on 25 September 1987; 15. 6,000 units in Tyndall, formerly Clayton Robard, Equity Performance Fund no. 10 (Certificate no. 155352) in the names of the parties jointly, purchased on 29 September 1987; 16. 11,093 units in Estate Mortgage Income Trust No. 1 (Unit Holder no. 136419) in the name of the defendant, acquired in October 1987 and January 1988; 17. National Mutual Personal Super Bond no. 9594197/7 in the name of the defendant, acquired in May 1988; 18. Citibank Cash Management Account no. 352836241 in the names of the parties jointly, opened in November 1988; 19. A.G.C. Money Market Access Account no. 80154112 in the names of the parties jointly, opened in March 1989; and 20. Super Investment Growth Bond with Legal and General Life of Australia (Policy no. 372382) in the name of the defendant, acquired in May 1989. The plaintiff alleges that, with the exception of the $6,700.00 the defendant provided for the purchase of the Cromarty Street land and of the deposit of her share of the rent from that property in the account referred to in 2 above, he provided all of the purchase price of all of the property purchased and all of the funds deposited in all of the accounts opened, and that the defendant made no contribution to any purchase or to any subsequent expenses or to any funds deposited in any account. At the beginning of the trial Mr Carmody, for the defendant, informed me that his client admitted that she did not make any direct, financial contribution - apart, as I understood it, from the $6,700.00 and the deposit of her share of the rent from the Cromarty Street land - but alleges her contributions were by way of maintenance of -- 5 of 14 -- 6 assets. In her defence she alleges she contributed to the acquisition, conservation, and management of the assets by performance of duties in connexion with rental properties, such as painting, cleaning, gardening, rent - collection, etc. The assets of the parties in August 1985 are set out in exhibit 2. That document shows that the plaintiff owned land at or near Caloundra (Sunset Drive to which I have referred, the block of units called Shelly Lodge, a duplex at 25 Hodgen Street, and a house at 17 Doondoon Street), the home unit at Newcross Street, Indooroopilly, accounts with banks and with Suncorp, shares in companies, a motor vehicle, furniture, and other chattels Shelley Lodge, 25 Hodgen Street, and 17 Doondoon Street were all let to tenants. Exhibit 2 shows that the defendant owned a motor car, furniture, and accounts with banks and possibly Suncorp. The plaintiff's assets were substantial and those of the defendant meagre. The defendant's earnings from employment in the year to 30 June 1985 were approximately $16,000.00 before the deduction of income tax, in the following financial year $18,732.00 (including a lump sum payment on termination of $1,351.61) before the deduction of income tax, and in the year ending 30 June 1987 $13,649.00 (including a lump sum payment on termination of $857.64) before the deduction of income tax. I accept the plaintiff's evidence that his chief reason for acquiring property in the name of the defendant and in joint names was for "succession purposes" and that he told the defendant so, explaining to her that she was to hold the property in trust for him. He was concerned that a challenge could be made to the disposition of his property in his will. Another reason for the plaintiff's acquiring property in that way, which was also clearly understood by the defendant, was to keep the taxes to which -- 6 of 14 -- 7 he was liable as low as possible. As she put it in evidence: "Everything we did was to minimize tax, every single solitary thing". The plaintiff did not intend that the defendant should acquire a beneficial interest in any of the property - except in the Cromarty Street land and in the account referred to in 2 above. I accept the plaintiff's evidence that the parties' wages were not contributed to a common pool of assets. The defendant made some, minor contributions to the parties' living expenses, but throughout the period of the de facto relationship the defendant relied chiefly upon the plaintiff for her support. Speaking about her earnings when in employment the defendant said her income was "more or less" hers, but she contributed something to the groceries and to the telephone and electricity bills; if she went to the hotel to buy a carton of beer she paid for it herself. She said that the plaintiff did not ask her for any of the money she received as wages. Living expenses were drawn out of a joint account once a fortnight. Whatever money the defendant needed came out of the joint account. For about seven months before the parties separated they were business partners trading as Building Check. The defendant made no contribution to its assets or running expenses. The partnership came into existence to enable the plaintiff to continue in the employment of Minproc, because Minproc refused to employ individual engineers. The partnership has no bearing on the issues in the case which relate to the private and not the business affairs of the parties. The defendant claims to have contributed to the acquisition, conservation, and management of "various assets" by performance of duties "in respect of rental properties". She said in evidence, however, that when she was living in the unit and when working part-time it did not take up a lot of time, but that in particular after the -- 7 of 14 -- 8 parties moved to Hannam Street - which was, as I have mentioned, in January 1989 - it took up most of her time. The parties separated in the following January so this aspect of the defendant's case is chiefly based on her assertion of having worked for a joint enterprise for about one year. I accept the plaintiff's evidence that the defendant did some painting and gardening at the plaintiff's rental properties, that she collected rent on one occasion but accompanied him at other times, that she made new curtains for the home unit at Newcross Street when the parties were living there and possibly some for Shelly Lodge, that she helped the plaintiff clean and prepare vacant properties for new tenants, that on occasions at the request of the plaintiff she arranged for tradesman to call and made purchases of hardware, and that she inspected properties for sale at the plaintiff's request. The services were performed intermittently, I find, and did not ever occupy most of the defendant's time. There was, I find, no agreement between the parties and no common intention to be inferred from their conduct, that the defendant was, in return for performing those services, to be entitled to a beneficial interest in any property. The general rule that applies to purchases of the kind made when the parties were cohabiting is this: "Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the -- 8 of 14 -- 9 name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the moneys must have been provided by the purchaser in his character as such — not, e.g., as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase moneys . ." (Calverley v. Green (1984) 155 C.L.R. 242 at pp.246-247 per Gibbs C.J.) The presumption of advancement does not apply to the relationship of de facto husband and wife: ibid, at pp.260-261 per Mason and Brennan JJ. and at pp.268-269 per Deane J. Equity will, however, impose the remedy of the constructive trust regardless of actual or presumed agreement or intention to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle: Muschinski v. Dodds (1985) 160 C.L.R. 583 at p.614 per Deane J. The principle that applies when a joint relationship or endeavour has come to an end was explained by Deane J. in that case in this way: ". . 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 party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do. ." (p.620) That passage was referred to with approval in Baumgartner v. Baumgartner (1987) 164 C.L.R. 137 and the principle applied: see pp.148-151 per Mason C.J., Wilson and -- 9 of 14 -- 10 Deane JJ. Idiosyncratic notions of what is just and fair have no part to play in the assessment of what is and is not unconscionable in an individual case: Muschinski v. Dodds at p.616 per Deane J. and Baumgartner v. Baumgartner at p.148 per Mason C.J., Wilson and Deane JJ. With the exception then of the $6,700.00 for the Cromarty Street land provided by the defendant and the defendant's share of the rent from it, the plaintiff provided all of the money for the acquisition of the property the subject of this action. There is nothing I find to rebut the presumption that the plaintiff did not intend the defendant to take a beneficial interest in any of the property acquired with his money. Unless the defendant is entitled to the imposition of a constructive trust it follows that the plaintiff will be entitled to the relief which follows from the resulting trust which arises in his favour in relation to each item of the disputed property. Is the defendant entitled to the imposition of a constructive trust? I should mention here that on behalf of the plaintiff Mr Galloway argued then that the issue of a possible constructive trust had not been raised in the defendant's pleading, but in my view it is clearly enough raised in the allegations as to the defendant's contributions. In Baumgartner v. Baumgartner a man and a woman who had lived together in a de facto relationship pooled their earnings in the proportions of fifty-five to forty-five for living expenses and for other expenses including mortgage instalments in respect of land and a house purchased in the name of the man. In assessing the woman's contribution credit was given for a sum she would have earned in three months when she could not work by reason of having and caring for the parties' child: see pp.142, 150. The Court imposed a constructive trust declaring that the man held his interest in the land on trust for himself beneficially as to fifty-five per cent. and for the woman -- 10 of 14 -- 11 beneficially as to forty-five per cent. - subject to adjustments in the interests of justice: see pp.150-151. The man was found to be entitled to an adjustment for contributions made by him before and after the parties were living together and pooling their resources - subject to an offsetting adjusted to reflect any benefit he enjoyed through use and occupation of the property after the separation, and to a further adjustment for furniture taken by the woman when the association came to an end. There are in my view differences of substance between the facts of this case and those of Baumgartner v. Baumgartner. Whereas in the latter case the parties each made substantial financial contributions to a joint undertaking, in this case the only financial contribution came from the plaintiff and the defendant kept her money for her own use except for some small contributions of little consequence. (In this analysis I am of course putting to one side the defendant's contribution to the acquisition of the Cromarty Street land and her deposit of her share of the rent in the account referred to in the list as 2, there being no dispute as to those matters.) Further, although the defendant made contributions of her time and labour of some but, I find, modest value mainly in the last year the parties were together, the plaintiff supported the defendant fully throughout their association. The value of the defendant's contribution cannot be measured by reference to income she might have earned had she continued to work in 1988 and 1989. What she did was in no sense a full-time job: it was rather intermittent attention to minor matters at a time when she had elected to rely fully on the support of the plaintiff. In addition, there is the fact that the defendant's contributions of time and labour were directed more to the upkeep of rental properties acquired by the plaintiff before the parties began living together than to the acquisition of new property - although if the income from those previously- -- 11 of 14 -- 12 acquired properties was increased by her efforts an indirect contribution could be said to have been made. But at all events her contributions were I find more than offset by the support the plaintiff gave her. In those circumstances I conclude that this is not a case which calls for a departure for the application of the ordinary rules explained by Gibbs C.J. in Calverley v. Green. It is not unconscionable for the plaintiff to rely on the application of those rules, in my view. The plaintiff is then entitled to the declarations he seeks and to an order that the defendant transfer to him all her right, title, and interest in the disputed property - subject of course to special provision for her interest in the Cromarty Street land and in the fund to which she contributed her share of the rent from it. The final orders should also include provision for certain further adjustments which I shall now explain. The plaintiff claims $27,000.00 which was retained by the defendant under an agreement between the parties made in 1992 pending completion of this action: see exhibits 5, 6, and 7. In my view the plaintiff is entitled to the $27,000.00 because it was part of a fund to which he was the sole contributor and to which he was and is beneficially entitled. The plaintiff claims $37,380.00 less an allowance for land tax for lost profits on the land at 25 Bangalee Street which the defendant has occupied since July 1990 without the plaintiff's permission. The plaintiff's calculation of his loss is in exhibit 4. He says that the applicable weekly rents are $148.00 in 1990, $152.00 in 1991, $155.00 in 1992, and $160.00 from and including 1993. The plaintiff has allowed for rates and insurance in various sums and has then arrived at the $37,380.00. The defendant says that if a sum is allowed for lost rent it should be at the -- 12 of 14 -- 13 lower rate of $130.00 per week, and should allow $3,000.00 for land tax, $5,870 for rates and insurance, $16,210.00 for maintenance, and $978.25 for stamp duty. The figure urged on me by Mr Carmody was $7,221.75 which was based on a total sum for rent of $33,280.00 from which the sums I have mentioned were deducted. There was probably a degree of exaggeration in both calculations. The plaintiff based his on, I think, an over-optimistic estimate of the rents obtainable and left out of account periods between tenants, maintenance, defaults in rent, and other possible outgoings such as agents' commissions and cleaning charges. The defendant on the other hand probably included in her maintenance figure, which was based on sums I accept she had spent on the property during her occupation, expenditure that was not strictly on maintenance - just alterations which may or may not have been necessary, or enhanced the value of the property. In addition to the difficulties in accurately assessing the plaintiff's loss brought about by the matters I have mentioned, there was the fact that no letting agent was called to give evidence of the likely return from the property in the relevant period. Doing the best I can on the evidence before me, I arrive at $25,000.00 for compensation to now for this item. I should add that, as I have said, the plaintiff put this part of his claim on the basis of its being for lost profits. In Baumgartner v. Baumgartner an offsetting adjustment in favour of the woman was made to reflect any benefit enjoyed by the man through use and occupation of the property after the separation. It seems to me that whether one treats the $25,000.00 as an award for lost profits or as an adjustment for the use and occupation of the property by the defendant after the parties ceased to live together the measure is the same and is calculated in the way I have explained. -- 13 of 14 -- 14 Finally there is a claim by the plaintiff arising from the removal and retention by the defendant of the bedroom furniture from 33 Hannam Street. There was no dispute that she did so, but there was a dispute as to who paid for the furniture. I find that the plaintiff contributed $750.00 to its purchase when a payment was made from a fund to which he was the sole contributor to meet that sum in the defendant's Bankcard account. The furniture cost more than $750.00 but the defendant contributed the rest I find. Accordingly an adjustment of $750.00 should be made in favour of the plaintiff. The final orders should then include an adjustment in favour of the plaintiff of $52,750.00. It follows from the conclusions I have reached that the defendant's counter- claim should be dismissed. I shall invite further submissions on the form of the orders, interest, and costs. -- 14 of 14 --