CITATION :
HEARING DATE(S) :
JUDGMENT DATE :
Anson v Anson [2004] NSWSC 766
16/8/04 - 18/8/04
10 September 2004
JURISDICTION:
JUDGMENT OF :
DECISION :
CATCHWORDS :
LEGISLATION CITED :
CASES CITED :
PARTIES :
FILE NUMBER(S) :
COUNSEL :
SOLICITORS :
Equity
Campbell J
Express trust concerning land not established - agreement not
to sever joint tenancy not established - Baumgartner trust
prevails over resulting trust - circumstances for Baumgartner
trust made out - appointment of trustees for sale in principle
appropriate - parties to bring in Short Minutes
TRUSTS - whether intention to create a trust - whether
agreement not to sell, or not to sever, jointly owned property whether constructive trust imposed pursuant to Baumgartner v
Baumgartner (1987) 164 CLR 137 prevails over resulting trust
arising from contributions to purchase price - approach to take
to application for imposition of Baumgartner trust in
circumstances where evidence sparse - REAL PROPERTY land in co-ownership - application for appointment of trustees
for sale - type of evidence required - evidence if trustees to be
remunerated - TRUSTS - remuneration of trustees
Conveyancing Act 1919
Crown Lands Consolidation Act 1913
Baumgartner v Baumgartner (1987) 164 CLR 137
Black Uhlans Incorporated v New South Wales Crime
Commission [2002] NSWSC 1060
Commonwealth of Australia v Booker International Pty Ltd
[2002] NSWSC 292
Re Cox's Will (1890) 11 LR (NSW) Eq 124
In re Freeman's Settlement Trusts (1887) 37 Ch D 148
Johnston v Johnston (1903) 4 SR (NSW) 8
In re Keeler's Settlement Trusts [1981] 1 Ch 156
Little v Saunders [2004] NSWSC 655
Marshall v Holloway (1820) 2 Swans 432
Muschinski v Dodds (1985) 160 CLR 583
Nissen v Grunden (1912) 14 CLR 297
Plomley v Shepherd (1896) 17 LR (NSW) Eq 215
Application of Sutherland [2004] NSWSC 798
Re White; Tweedie v Attorney-General (2003) 7 VR 219
David Gordon Anson - Plaintiff/Cross-Defendant
Robert Edward Anson - First Defendant/Cross-Claimant
John William Anson - Second Defendant
Geoffrey Phillip Anson - Third Defendant
Roger Sidney Anson - Fourth Defendant
Constance Joy Martin - Fifth Defendant
Registrar-General - Sixth Defendant
SC 4798/03
C Harris - Plaintiff/Cross-Defendant
D B Studdy - First Defendant/Cross-Claimant
Picone & Co - Plaintiff/Cross-Defendant
Atkinson Vinden - First Defendant/Cross-Claimant
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST
CAMPBELL J
10 SEPTEMBER 2004
4798/03 DAVID GORDON ANSON v ROBERT EDWARD ANSON & ORS
JUDGMENT
Nature of the Litigation
1 HIS HONOUR: This litigation is an unfortunate dispute between siblings about entitlement
to a house at Norah Head, just north of The Entrance. While it is common ground that the house
was acquired on a basis that it would be made available for use by all members of the family to
which those siblings belonged, there is a dispute about the precise legal rights which members
of the family have concerning the house.
The Family Background
2 Sidney Anson and Constance Eleanor Anson had six children who now survive, namely, John
(born 5 June 1928), Robert, (born 23 June 1931), David (born 20 December 1936), Geoffrey
(born 7 January 1940), Roger (born 27 March 1942), and Joy (born 12 July 1944).
3 In March 1956 Constance Anson died, leaving a Will which divided her estate so that oneseventh went to each of her widower and her six children. Her estate (which was substantially a
mortgaged suburban home) had a net balance of a little over £3,000. At the time of her death
both her husband, and their son Geoffrey, were under the protection of the Master in Lunacy,
and were living in a psychiatric hospital. The two-sevenths of the estate to which they were
entitled was paid to the Master in Lunacy. The two youngest children, Roger and Joy, were, in
accordance with the terms of their mother’s Will, sent to England to be cared for by their
mother’s brother. Pursuant to the terms of her Will, the two-sevenths of the estate attributable to
them was paid to the mother’s brother. The three-sevenths of the estate attributable to the three
oldest boys remained in a bank account at Lane Cove.
Acquisition of the Land
4 In February 1966 the Lands Department advertised the availability of some blocks of land at
Norah Head, to be held on the terms of a weekend lease under the Crown Lands Consolidation
Act 1913. Those blocks of land were to be made available by ballot. The three older brothers
agreed to enter the ballot, and that if one of them drew a suitable block, the two others would be
included on the title.
5 The ballot was held on 18 July 1966. In it, John obtained an entitlement to land known as
allotment 3 in section 17, located in Soldiers Point Drive, Norah Head. At the time the annual
rental for that block was $42.50, and its capital value was $1,700.
6 The land in question was vacant. The terms on which the lease was made available included a
requirement for the holder to erect a dwelling on the leased land within one year from the
confirmation of their application, or such further period as the Minister might allow, in
accordance with plans and specifications approved by the Wyong Shire Council.
7 In November 1966 some work was done to clear the land.
8 John made some attempts to have the block he had won in the ballot registered in the names of
the three older brothers, but the Department was not prepared to allow this to happen without
the lease first issuing in John’s name, John then obtaining a Minister’s consent to the transfer of
the lease into the joint names, and formal transfer documents being drawn up, stamped and
lodged with the Department. On 31 December 1966 the Land Board office at East Maitland
wrote to John informing him of this decision, but enclosing an Application for Minister’s
Consent to Transfer form, and saying:
“It is suggested that you enclose a letter setting out the
circumstances and particularly that all three persons will be
financing and ultimately using the dwelling.”
9 On 24 July 1967 Robert executed a statutory declaration, to the effect that he did not hold and
had never held a weekend lease, for the purpose of obtaining consent to a transfer of the lease
into the three names. On 25 July 1967 David executed a statutory declaration in the same terms.
Also on 25 July 1967 John executed a transfer of the lease to himself, David and Robert, as joint
tenants.
10 In connection with the transfer of the lease, John wrote a letter, which bears no date or
addressee, stating:
“Please find enclosed application for permission to transfer
weekend lease held by me at Soldiers Point Drive Norah Head.
When granted the lease at Wyong Court House on 16 July 1996, I
asked the Land Board officer if it would be possible to have the
lease made out in joint names including myself and my two
brothers Robert Anson and David Anson. I mentioned in court
that we had been left a small amount of money by our mother and
the three of us would be financing the erection of the weekender
jointly for the use of ourselves and our families.
I was told that an application could be made for transfer to the
Land Board at a latter date.
The reason we did not originally make joint application in the
Ballot for the Crown Land for weekend lease was because when
picking up our application form we asked the advice of the land
board official and we were advised that we would naturally have a
better chance in the ballot if we submitted 3 separate applications
instead of one.
We have had the land in question cleared and graded by a local
contractor and have the material ready for the erection of a two
bedroom cottage.
Before the plans are stamped by the local council we would like
to have the lease in our joint names.
Hoping this is possible to arrange.”
The transfer of lease was registered soon after. By late 1967 building consent had
been received from the Wyong Council.
11 By March 1969 substantial progress had been made in building a two bedroom dwelling on
the land, but it was not completed. At that time Robert wrote to the Land Board, seeking
consent to an extension of the time for completion of the house.
12 On 17 October 1969 the Department of Valuer General issued a valuation notice, valuing the
unimproved value of the land at $2,000, and its improved value (with an incomplete building) at
$5,800.
13 By January 1971 application had been made by David, on behalf of John, Robert and
himself, to purchase the land the subject of the weekend lease. In March 1971 the Department
agreed to sell the freehold, to the three brothers, for $4,850. The total amount payable, including
stamp duty and fees, was $4,926.73.
14 In September 1971 the Department approved an application which David had made to pay
the purchase money in ten equal annual instalments, with interest at four percent per annum on
the outstanding balance. David made all the payments to enable the purchase of the freehold to
take place.
15 The Department did not permit a Crown grant to issue in relation to the land until the whole
of the purchase price was paid. Such a Crown grant issued on 14 January 1981, to John, Robert
and David as joint tenants. It remains registered in those three names to this day.
This Litigation
16 The present litigation arose because Robert, in the latter part of 2003, lodged a Notice of
Severance of Joint Tenancy at the Registrar-General’s office. David and John thereupon
commenced these proceedings, seeking, initially, to prevent the registration of the Notice from
occurring, and seeking a determination of the rights which existed in the land. John has since
ceased to be a plaintiff, and become a defendant. As well, the three younger siblings have been
added as defendants. Robert is the only active defendant. All the other defendants, except Joy,
have filed submitting appearances. Joy attended the hearing on the first day, so I am satisfied
she is aware of the proceedings.
17 The case as pleaded is somewhat more complex than the case as presented. In these reasons I
deal with the case as presented.
Scope of the Agreement between the Three Brothers
18 It is common ground between David and Robert that there was, in about March 1966, an oral
agreement between John, Robert and David whereby each of them would make application in
the ballot for weekend leases. It is David’s contention that it was also agreed between them that
each such application would be made on behalf of the six siblings, and that if an application
were successful then the three brothers would seek to have the legal interest issued to them as
joint tenants, and they would hold the legal interest in the lease on trust for the six siblings as
joint tenants, and on the basis that none of them would ever be entitled to sever the legal or
beneficial joint tenancies.
19 I am not satisfied that there was an agreement to that effect. The agreement alleged is an oral
one, of which there is no contemporaneous note. That in itself poses significant difficulties of
proof particularly after several decades have passed. It seems to me that it is likely that there
was some discussion between them about whether the land should be held as tenants in common
or joint tenants, because the Department of Lands notification of the land being available
included a requirement that joint applicants should indicate whether they wanted the land held
as joint tenants or tenants in common. Further, I accept that there was a consensus between
them that the title should be held as joint tenants. However, I do not accept that there was an
intention to create a trust in favour of the six siblings as joint tenants, nor any agreement that
none of them would ever be entitled to sever the legal or beneficial joint tenancies.
Intention to Create a Trust?
20 No one says that the word “trust” was actually used by any of the three brothers concerning
how the land would be held. It is, however, possible for the law to recognise that there has been
an intention to create a trust, even if the word “trust” is not used. Authorities concerning that
principle are collected in Commonwealth of Australia v Booker International Pty Ltd [2002]
NSWSC 292 at [33] – [45].
21 However, if one wants to prove that a trust has been created, without using the word “trust”,
it is necessary to satisfy the Court that the person who created the trust has expressed an
intention sufficiently clearly and completely for that intention to be recognised as, in substance,
an intention to create a trust. Among the essential attributes of a trust are that a particular item
of property is held by a person (or group of people) for the benefit of some different person (or
group of people) (which might include some or all of the trustees, or some completely different
person or group of people), or for some purpose which the law regards as a purpose which can
be carried out by a trust. Another (where the trust is for a person or people) is that the
beneficiaries have a right in the property which equity recognises as a right of property rather
than merely a personal right against the trustee.
22 In the present case I am satisfied that it was the common intention of the three brothers that
they should hold the property for the purpose of enabling it to be used by members of the
family. However, that purpose is not one which confers any beneficial right of property on any
particular member of the family. Insofar as it is an intention that property will be used for a
particular purpose, it is a purpose which is not one of the types of purpose which the law
recognises as creating a valid trust (namely, a charitable purpose, or one of a small and
anomalous group of non-charitable purpose trusts for purposes which do not include the present
one).
23 From 1994 onwards, Robert has been endeavouring to obtain a sale of the property. In the
course of that endeavour, he has written various letters to family members. David’s counsel, Mr
Harris, has submitted that some passages in these letters contained significant admissions on
Robert’s part about the basis on which the property would be held.
24 The first such letter is one which Robert wrote to all his siblings on 17 February 1994,
seeking their agreement that the house be sold to him. The letter contained the following
passages:
“… John David and I submitted applications on the basis that if
any of us won we would develop the block as a family weekender.
… The remaining 3 “shares” [in their mother’s estate] languished
in a bank account until we elder 3 brothers decided to look upon
the account as a total family asset and spend the monies in the
development of the Norah Head property which could be used for
common benefit …
The property is registered in John’s David’s and my names but I
think the general consensus is that it belongs to all of us.
I offer the market price of the property less my share, which I
guess would be one-sixth …”
25 David’s response was to reject the suggestion. David said, in a letter dated 9 March 1994,
“My wish is that the property remain in the family for the family use.” He referred to the work
he had done on the property over the years, and said, “any contribution I made was for the
whole family’s benefit”. After questioning whether Robert had mismanaged the letting of the
property, he continued:
“I have no claims over the weekender, other than to be able to use
it from time to time with my family.
If you are as desperate as you say you are, then may I suggest the
following:
(1) Get a valuation on the property as a whole.
(2) Deduct the land value.
(3) Take 1/6 of the remainder as your share.
I will pay you for your share and the property will still remain for
everybody’s use”
26 In a letter which Robert wrote to John on 15 June 1998, he was arguing in favour of an
immediate sale of the property, so that members of the family who needed financial assistance
could obtain it. He referred to a particular need for money which Joy had at the time, and
continued:
“There is no need for any one of us, even if we had the money to
big note ourselves by offering, in some gratuitous fashion, a loan
to see her right. She doesn’t need to be demeaned by some falsely
solicitous, condescending, charitable gesture. It might be ego
serving for the person dispensing the favour but the fact is the
funds to which she is entitled are there and should be made
available to her. No one of has the right to sit in judgement and
determine what is right for her. To condescend to “tide her over”
in a falsely magnanimous way would be the height of hypocrisy.
The money tied up in the weekender doesn’t belong to any one of
us to control by some power of veto. It belongs to others and we
have a duty to release it.
At the time I put forward the proposal to purchase the weekender,
I offered to pay out the 5/6 of the market value. No special deals.
At that time Joy could have done with the money, she was
struggling to get into a house. David vetoed the proposal for his
own reasons and I purchased another property …”
27 The proposal which Robert made in that letter was:
“1 We sell the property as soon as possible and allow the money
to be used now for the immediate need.
2 If David doesn’t agree, let him buy out you and me. That is,
two-thirds of the present value. WE would attend to the
distribution ourselves. What David wished to do about ultimate
distribution of the other third share is up to his conscience.”
28 While Robert’s statements in his two letters just quoted need to be given some weight as
admissions, they are not sufficient to establish that there was, back in 1966, an intention to
create a trust. For a start, they are admissions by Robert alone. In Robert’s letter of 17 February
1994 he mistakes the date when the ballot occurred, suggesting that it was some time in the
1970s. Further, the letter was an offer by him to purchase the property. His proposal was, in
substance, that he should buy it for five-sixths of the market value, and that that price should be
distributed amongst his five siblings. He also said “I would expect we would abide by majority
decision”. He was arguing a case in that letter, and seeking to rally support for it – a situation
not necessarily conducive to accuracy. In the family context, where all six siblings had a basis
for expecting they could use the property, his consulting all six occasions no surprise. His
admission that “it belongs to all of us” is not necessarily using the language of legal property
rights. The proposal which David made in his letter of 9 March 1994, and the proposal which
Robert made in his letter of 15 June 1998, are each inconsistent with all six siblings having a
one-sixth beneficial interest in the land in its improved state.
29 In my view, the subject matter of these letters is an intra-family arrangement concerning the
use of the property, where it was recognised that each had an interest in being able to use it, not
the type of legal relation involved in the existence of a trust.
Agreement Not to Sell, or Sever Joint Tenancy?
30 The highest which David’s own evidence takes this matter is that he gives evidence (in an
affidavit filed in reply, not in chief) of Robert saying “the property should remain in the family
for use of all six family members”, of himself saying “we will put what’s left of Mum’s estate
into the property development as a family asset for all immediate family members”, and of
Robert saying “joint tenancy will give a right of survivorship but a tenancy in common does not.
We don’t want the property being split up”, to which John and David both agreed. Robert
disputes that there was ever any agreement to never sell the property, and John accepted, in
cross-examination, that the property could always be sold. In these circumstances, I am not
persuaded that there was any agreement that it could not be sold, or that there was any
agreement that there would never be any entitlement to sever the legal or beneficial joint
tenancies.
31 Mr Studdy, counsel for Robert, points out that in no letter which David wrote, since the
question of selling the property first arose in 1994, did he say words to the effect of “we can’t
sell the property because we agreed, back in 1966, that we wouldn’t”. That is a further factor
which I take into account in concluding that I am not persuaded that the alleged agreement (not
to sever the joint tenancy) was made.
Lack of Writing
32 In these circumstances I need not consider the submissions which were made about whether
there is any significance in the alleged declaration of trust not being in writing, and the alleged
agreement not being in writing. It is also unnecessary to consider the plaintiff’s argument
concerning part performance of the alleged agreement.
Estoppel
33 David alleges that at the time of making application to purchase the land, and at all
subsequent times when making payments of the purchase price of the land and obtaining the
Crown grant, he intended that the parties would acquire their legal interests in the land as
trustees for the six siblings, he believed that Robert and John had the same intention, and
(somewhat inconsistently) that it was not his intention that Robert and John should obtain a
beneficial interest in the title to the land. He also asserts that Robert and John knew that David’s
intention and belief was as just stated, in consequence of which Robert and John are now
estopped from asserting a beneficial interest in the land. I do not accept that Robert and John
knew those matters. That is sufficient to dispose of this estoppel allegation.
Resulting Trust or Baumgartner Constructive Trust?
34 In the event that his primary contention is not accepted (as it is not) David puts two
alternative positions. One is that, as he paid all of the purchase price for the land, it is held on a
resulting trust for him. The other is that the land should be made the subject of a Baumgartner v
Baumgartner (1987) 164 CLR 137 type constructive trust, to reflect the extent to which each of
John, Robert and David have made contributions to the venture of acquiring and holding the
property.
35 The basis upon which resulting trusts arise is that they provide a means of giving effect to an
intention which is presumed to have existed, at the time property was acquired, about how the
beneficial interest in that property should be held: Black Uhlans Incorporated v New South
Wales Crime Commission [2002] NSWSC 1060 at [128] – [148] and cases there referred to. By
contrast, in Baumgartner at 147-148, the majority explained the type of trust there imposed by
reference to the decision of Deane J in Muschinski v Dodds (1985) 160 CLR 583, namely one
arrived at:
“… by applying the general equitable principle which restores to a
party contributions which he or she has made to a joint endeavour
which fails when the contributions have been made in
circumstances in which it was not intended that the other party
should enjoy them. His Honour said ((1985) 160 CLR, at p.620)
“… 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 the 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: cf. Atwood v Maude (1868) LR 3 Ch App
369, at pp 374-375 and per Jessel MR, Lyon v
Tweddell (1881) 17 ChD 529, at p 531.””
36 The time as at which the Court decides whether or not a constructive trust of this kind exists
is when the joint relationship or endeavour has concluded. It is only then that the Court can tell
whether, given the contributions which the various parties have made to the joint endeavour, it
would be unconscionable to allow the property rights in the assets which were part of the joint
endeavour to be split up in accordance with legal entitlements which exist independently of the
imposition of a constructive trust.
37 Thus, there are different times as at which the Court decides whether these two types of
trusts exist (time of acquisition of the property, and time when the joint endeavour has
concluded), and different purposes sought to be achieved by recognition of the two different
types of trust (giving effect to a presumed intention concerning beneficial ownership, and
prevention of unconscientious holding of legal rights). These differences lead to a conclusion
that, if the factual circumstances are such as to give rise to both a presumption of a resulting
trust, and the imposition of a constructive trust on Baumgartner principles, and the application
of these two different sets of principles leads to different results, then it is the result arising from
the Baumgartner principles which prevails. In Baumgartner at 148 the majority approved a
statement of Deane J in Muschinski v Dodds (1985) 160 CLR 583 at 614, to the effect that:
“the constructive trust serves as a remedy which equity imposes
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.”
That statement has implicit in it a recognition that even a beneficial ownership of
property (such as can be derived from application of a presumption of resulting
trust) can be altered by the imposition of a constructive trust.
38 As the passage quoted from Baumgartner at para [35] above shows, a constructive trust will
not be imposed to alter legal property rights which were specifically intended, or specially
provided to apply at the end of the joint relationship or endeavour. That is because if the parties
have specifically considered how the ownership of the property should lie at the end of their
relationship, and intend that the ownership should be in accord with the legal interests in that
property, there would be nothing unconscionable about the ownership being as they had
intended, regardless of what contributions each of them had made to the property (cf Little v
Saunders [2004] NSWSC 655 at [37] – [39]). However, a merely presumed intention
concerning the proportionate beneficial ownership, of the type which can give rise to a resulting
trust, is not enough to show that there is nothing unconscientious in one party seeking to keep a
legal proportionate interest which is greater than the total proportionate contribution which that
party made to the acquisition of the property.
39 In the present case, the acquisition of the title proceeded in two stages – first by acquisition
of the lease and keeping it on foot through payment of rentals, then by the acquisition of the
freehold. Concerning the acquisition of the lease, John paid the first four of the six-monthly
instalments of rental which fell due, totalling $92.36. The rental payments made by John were
made on 8 September 1966, 11 January 1967, 20 July 1967, and 10 July 1968. He also paid a
transfer fee of $6 in connection with the Department’s consent to the transfer of the lease into
the names of the three brothers. Robert paid all other rental instalments, down to the time that
David undertook the obligation to purchase the land. The payments so made by Robert include
five he can specifically identify (which he identifies as on 20 January 1969, 6 August 1969, 3
August 1970, 12 January 1971 and 7 February 1971) totalling $111.29. It might be that there is
a typographical error in his affidavit, so that the reference to 12 January 1971 should be to a
date in January 1970, but that possibility does not affect the outcome of the case. As well,
Robert paid a transfer fee on 17 April 1969 to the Lands Department, of $8. Insofar as there are
rental payments which I have not so far accounted for, (January 1968 is one) it is likely that they
were paid by Robert, and were of an amount of $21.25 each.
40 The total amount paid by David to acquire the freehold, inclusive of interest, was $6,286.29.
41 I make at this stage of the judgment these findings about the amounts which could arguably
be said to be contributions to the purchase price in case this matter receives the attention of the
Court of Appeal. However, in my view, those findings should not be used to lead to any
conclusion about the beneficial ownership of the property, on the basis of contributions to
purchase price by way of a resulting trust. Rather, they should be subsumed in a larger enquiry
about overall contributions to the joint venture, for the purpose of ascertaining the respective
interests of John, Robert and David pursuant to a Baumgartner constructive trust.
Basis for a Baumgartner Trust
42 In the present case, there is, in my view, the basis for the imposition of a Baumgartner
constructive trust. There was a joint endeavour between the three registered proprietors of the
land, to acquire the land, construct a house on it, and keep that house available for use by
themselves and members of their family. They all made contributions to that joint endeavour,
both in money and in kind. No contributions were made by anyone else. I will deal later with
the detail of the contributions by the three registered proprietors, insofar as the evidence permits
it. The basis of their joint endeavour has been removed by the lodgement of the Notice of
Severance of Joint Tenancy. Further, given that it is an inherent attribute of a joint tenancy that
it can be severed, and my finding that there never was an agreement that the joint tenancy would
not be severed, the substratum of their joint endeavour has been removed without attributable
blame. The three brothers never gave a thought to how the benefit of the various contributions
which they made to the venture should be divided if that venture came to an end. At the time
they were going through the acquisition of the land and construction of the house, it did not
occur to them that the venture would end. To say this is, of course, vastly different to saying that
they actually agreed that it would not end.
43 The extent of any adjustment which needs to be made, to the respective proportionate
interests in which the legal title is held, is dependent upon the Court reaching a positive
conclusion that allowing the beneficial interests to be divided in the same way as the legal
interests would be unconscionable. The relevant principle of unconscionability here, though, is
that, when the parties have not together foreseen and provided for the way in which the asset
committed to the joint enterprise should be disposed of when the enterprise comes to an end, it
would be unconscionable for it to be divided up in a way which results in the proportion
received by any party being materially greater than the proportion which that party contributed.
The application of that principle is tempered by the requirement laid down by the majority in
Baumgartner, at 150, that:
“The court should, where possible, strive to give effect to the
notion of practical equality, rather than pursue complicated factual
inquiries which will result in relatively insignificant differences in
contributions and consequential beneficial interest.”
Problems with Establishing Relative Contributions
44 The evidence in the present case presents some particular difficulties about establishing the
relative contributions of the three registered proprietors to the joint enterprise. One is that the
joint enterprise has been on foot for 38 years, with contributions being made of different types,
and at different times, by different people. So far as monetary contributions are concerned, any
proper assessment of the respective proportions in which the equity in the property is now held
would need to take into consideration the effect of inflation. Yet there is no evidence of how the
Consumer Price Indices have moved over that period, and only very slight evidence how
another, possibly more relevant, measure of changing monetary values, namely land values in
the Norah Head area, have moved in that time. There is evidence that the house is now worth
somewhere between $550,000 and $679,000. That evidence itself is based on real estate agents’
appraisals, not on proper valuations. While one knows the purchase price of the land, one does
not know the cost of construction of the house on it, so even the imprecise evidence about the
present value of the house does not enable any calculations to be done of present value of
expenditure occurring many years ago. The problem concerning inflation is exacerbated by the
fact that there have been contributions made to pay outgoings of the property, and for repairs
and maintenance, over the whole 38-year period.
45 Another problem with the evidence is that, while there are some items of expenditure which
have been proved to the last cent, the records of the total expenditure are incomplete.
46 A third problem is that there were very significant contributions in kind. All three registered
proprietors did work in connection with the construction and maintenance of the property, but
that work is described in fairly general terms in the evidence, and no attempt is made to value it
with any precision, either as to its value at the time it was performed, or in terms of present-day
dollars.
47 A fourth problem is that there were some periods when the house was rented, either
commercially, or to friends of the family. There is no full account of the amount of rents
received. However, as it is likely that all receipts of rent were spent on outgoings of the
property, that lack of evidence is unlikely to complicate making findings about what amounts
actually were contributed by the three brothers.
48 Notwithstanding these difficulties in the evidence, counsel for both David and Robert
submitted that I ought not order an inquiry before the Master, but rather should do the best I
could, on the basis of the evidence now before me, to ascertain the various entitlements of the
parties. I can, with respect, see the sense in this submission – at an inquiry before the Master
some greater precision might be obtained concerning some of the evidence, but large areas
would be likely to remain imprecise.
49 It follows from this that it is only at the level of broad impression that a conclusion can be
arrived at about what has been established concerning the proportionate contributions made to
the present value of the property. In arriving at even those broad impressions, I bear in mind that
it is only to the extent to which it is established that it would be unconscionable for the
proportionate beneficial interests to lie in accordance with the legal title that a constructive trust
should be imposed at all. Thus, any room for doubt in the estimation process should be resolved
by choosing the end of the spectrum of doubt which lies closer to a one-third, one-third, onethird division.
Contributions to Acquisition of the Land
50 These are identified at para [39] [40] above.
Contributions to Construction of the House
51 Each of the registered proprietors contributed the money to which he was entitled from his
mother’s estate towards the construction costs. This was of the order of $700 each.
52 At the time building commenced David was a plumber, who was able to do a significant
amount of building work himself, and arrange for other building work to be done by contacts in
the building industry. He paid for the following materials and costs:
· All plumbing, drainage, gas, roof gutters and downpipe materials to complete the project,
including bath, two toilets, two basins, kitchen sink and cabinets, laundry tub, taps spouts and
drains, external wall cladding, paint, tiles, cement and adhesives, grout, bathroom fittings, light
fittings, staircase materials, 2,000 face bricks, steel reinforcing, formwork, sandfilling material,
building inspection fees, and the wages of his employees on the occasions they worked there.
53 David carried out significant building work himself (detailed in paragraph 4 of his affidavit
of 22 July 2004), and exchanged his own labour as a plumber for the work of tradesmen in other
trades. He has identified, in an affidavit, an incomplete list of expenditure which he made on the
property, up to 1979, as totalling $4,590.57. His estimate of the total value of his contribution to
the building, up to 1979, including the value of work done or traded, is $10,000. He was not
challenged on that estimate. At the trial he was able to produce an additional schedule of
expenditure supported in part by a file of invoices and other vouchers, which added up to
($9,016.18 minus duplicated items and those not vouched for, of $3,657.46 equals) $5,358.72. I
accept his estimate of $10,000.
54 Robert is able to identify expenditure of the order of $4,000 made by him in connection with
construction costs of the house. That amount is, as I understand it, inclusive of his contribution
from his mother’s estate. He did some physical work towards construction of the house, but its
precise extent is not made clear by the evidence.
55 Apart from the rent and transfer fee totalling $98.96 identified in para [39] above, payments
by John, in the period from 1966 to 1968, can be identified of $287.30. Robert and David also
accept that he did some work concerning construction, although the nature and extent of that
work is also unclear on the evidence.
56 I conclude, however, that the amount of work done by each of Robert and John on
construction was less than the amount of work done by David.
Property Outgoings and Maintenance
57 There have been some sporadic attempts to rent the property over the years. Insofar as rent
has been received, it appears to have been expended on the periodical costs of paying the
outgoings connected with the property, and in maintaining the property. However, the outgoings
and maintenance costs connected with the property have significantly exceeded rentals earned.
It has largely been Robert who has paid those outgoings and maintenance costs. Over the years,
he can identify specific expenditure he has made of around $35,000 on rates, taxes, electricity
and insurance, and around $10,000 on repairs, maintenance and capital improvements. These
items are part of a list, in Exhibit 2, of identifiable expenses he has made totalling $49,826.69.
58 Since 1998, David has carried out various repairs and maintenance also, at a cost of around
$8,000. He has been able to produce vouchers for nearly $2,200 of this.
59 In 1989 Robert, after a change in his marital circumstances, began to take an increased
interest in the property. On visiting it, he found it in a poor state of repair. He set about
renovating it during 1989 and gives affidavit evidence that he:
“had flooring replaced, replaced gas bottles and an instant gas
heater with an electric hot water system, installed a new electric
stove, carpeted it, had kitchen flooring, new light fittings, plate
glass mirrors in the bathroom plus other fittings, fly screens and
blinds installed, and repainted the inside.”
He also gives evidence that he installed two large sheds in a carport to store
various of his possessions in. I accept that evidence.
60 Robert occupied the property himself between 1990 and 1994. During that time he was
working in Sydney, and so did not occupy the property on a full-time basis – he had rented
accommodation in Sydney in which he lived several days a week. He did various items of work,
with his own labour, to improve and maintain the property during that time. He details these in
paragraphs 34–38 of his affidavit of 25 November 2003.
61 This period of occupation of the property came to an end several months after the proposal
he had made to buy the property, in his letter of 17 February 1994, was not accepted.
62 The period when Robert was in occupation of the premises was the only time that any of the
six siblings, or any of their offspring, were in occupation of the property for an extended period
of time. During that period, Robert paid no rent. I accept the submission which Mr Harris makes
for David, that an allowance should be made, in any eventual adjustment of beneficial interest,
for the fact that Robert had sole occupation of the property over this period. There is no
evidence of the rental value of the property during the period for which Robert had exclusive
occupancy of it. Mr Harris’s submission about how this should be done is by treating
expenditure which Robert made in 1989 in repairing and restoring the property, and in the 199094 period on any account whatever, as being expenditure substantially for his own benefit, and
thus a reasonable proxy for a rent allowance. I accept that, with two exceptions. The first
exception is that in 1992 Robert paid the council an amount of $1,357.52 for kerbing and
guttering. The second is that in September 1993 he paid a roofing company $3,130 for the reroofing of the premises. Those are both expenditures of a type which constitute a permanent
improvement to the property. While there were some other items of expenditure during that
period for items which last a long time, making such expenditure periodically is part of the
ordinary cost of owning a property. I shall not exclude them. In the result, I shall exclude from
the amounts allowed to Robert as contributions all those items appearing in Exhibit 2
commencing from the payment on 1 April 1989 to BBC Hardware for flooring of $100, and
ending with the payment on 17 July 1994 to NRMA Insurance of $187.75, apart from the two
exceptions I have mentioned. The amount so excluded is $13,899.71.
Deprivation of Opportunity to Earn Rent?
63 By 1999 relations between David and Robert were at a very low ebb. Robert had written to
David on several occasions, seeking to get David to agree to sell the property. David had not
replied. On 13 April 1999 Robert had gone to the property and found some workmen there who
said they were engaged by Lorraine Anson (David’s ex-wife) to do some work. He smelled
paint. He told the workmen to leave.
64 The next day he wrote to both David and John, saying:
“Until we have some agreement between the three of us as to the
disposal of the property I explicitly withhold any agreement to do
any further work on the property other than to keep it secure and
also do not agree to it being let.”
65 On 18 June 1999 David engaged a real estate agent to let the property. By 23 June 1999
Robert had found out about this, and wrote to the real estate agent pointing out that he was a
joint owner, and that the property could not be let without his permission. He put a sign on the
door of the property saying, in large capitals:
“AGENTS NOTE
THIS PROPERTY IS NOT FOR LEASE OR RENT
LEGAL IMPLICATIONS
APPLY”
followed by his name and telephone number.
66 Mr Harris submits that Robert should not, following these incidents, be entitled to claim as a
contribution to the joint enterprise, any expenses he has incurred since mid-April 1999, because
he has frustrated the earning of rental income which could have paid those expenses. I accept
that submission, at least so far as the time from June 1999 (an estimate of when a tenant might
actually have been obtained) to lodgement of the Notice of Severance is concerned. I recognise
that for the property to be used as a commercially let property was outside the scope of the
originally contemplated joint enterprise. However, refusing to allow the property to be rented
was part of a campaign which Robert was conducting to try to persuade David and John to sell
the property. From 1 July 1998 to March 1999, Robert sent to David monthly “Statements of
Account” for his one-third share of expenses incurred in connection with the property. Those
“Statements of Account” asserted a right to recover interest at five percent per annum on
amounts outstanding beyond three months from the date of transaction. In March 1999 David’s
daughter sent Robert a cheque for both John and David’s share of some outstanding expenses.
Robert returned that cheque. David’s daughter thereupon sent two separate cheques, one for
David’s share of the expenses, and one for John’s share. Under cover of a letter of 15 June 1999
to David, Robert said that he had returned his cheque for John’s share of the expenses,
“as the accounts have already been paid. John and I have had
numerous conversations on the matter and the acknowledgment is
that one way his share of the cost involved can be recovered is on
the sale of the property.”
67 While Mr Studdy submits, correctly, that there never was a later request to Robert to have
the property let, it seems to me that Robert had made his attitude perfectly clear: he was not
going to agree to the property being let. In these circumstances, I would not regard it as
unconscionable for contributions which Robert made to expenses of the property from June
1999 to the time of lodgement of the Notice of Severance of Joint Tenancy on 27 August 2003
to not be taken into account. I therefore exclude from consideration in Robert’s contributions,
entries in Exhibit 2 commencing with a payment of $24 to Energy Australia on 26 July 1999,
and ending with a payment to NRMA Insurance on 25 July 2003 for $203.10. The amounts so
excluded total $7,706.06. The total amount excluded from Robert’s contributions listed in
Exhibit 2, both on this account and as identified in para [62] above, is therefore $21,606.77.
This reduces Robert’s total identifiable monetary contributions taken into account to
$28,219.92. This expenditure has been made over the full period from November 1966 to
August 2004.
Conclusion Concerning Respective Proportions
68 I sought submissions from Mr Harris and Mr Studdy as to what they contended was the
appropriate proportionate division of the beneficial interest in the property if the Court were to
decide that a Baumgartner constructive trust should be imposed. Mr Harris submitted that the
division between John, Robert, and David respectively, should be ten percent, twenty percent
and seventy percent. Mr Studdy submitted that the corresponding proportions should be five
percent, fifty percent and forty five percent.
69 Considering the various contributions which Robert has made over the years towards the
acquisition and maintenance of the house, of a kind which I have held ought be taken into
account, and bearing in mind that monetary contributions earlier in the period of ownership
need to be accorded significantly greater weight than monetary contributions of the same
number of dollars later in the period of ownership, I am not persuaded that there is anything
unconscientious about Robert’s proportionate beneficial ownership being equal to his
proportionate legal ownership, namely, thirty three and one third percent.
70 John’s identifiable contributions are comparatively small in monetary value, and the
evidence about the amount of work he did is hazy. One important item of value which he
contributed to the enterprise was that it was he who won the ballot for the land, and, as agreed,
made it available for the joint enterprise. He has chosen not to take an active role in the
proceedings. I am satisfied that it would be unconscionable for him to end up with a
proportionate beneficial interest of greater than ten percent. I have considered whether a figure
of less than ten percent would be appropriate, but, when considering any figure less than ten
percent, I have some doubt about whether that might not be too hard on him. In accordance with
the principle I have identified in para [49] above, I will declare a constructive trust whereby
John’s beneficial interest is ten percent.
71 If Robert’s beneficial interest were thirty three and one third percent, and John’s ten percent,
that would leave David with a beneficial interest of fifty six and two thirds percent.
Consideration of his contributions, and the time at which they were made, does not lead to a
conclusion that fifty six and two thirds percent would be an unconscientiously large
proportionate beneficial interest for him to have. Further, consideration of the respective
contributions of all three brothers does not lead me to a conclusion that it would be
unconscionable, on the part of John and Robert, to allow a situation to arise where David’s
beneficial interest was no larger than fifty six and two thirds percent.
72 I conclude that the property should be held on a constructive trust, pursuant to which the
proportionate beneficial interests of John, Robert and David respectively are ten percent, thirty
three and one third percent, and fifty six and two thirds percent.
Robert’s Cross-Claim – Evidence for Appointment of Trustees for Sale
73 Robert has filed a Cross-Claim seeking the appointment of trustees for sale of the land.
When I have rejected the submission that there was an agreement that the joint tenancy not be
severed, and no discretionary reason is put forward why it would be inappropriate to make such
an order, it is in principle appropriate to make it.
74 Usually, before the Court appoints trustees for sale, evidence is needed of the consents of the
proposed trustees for sale, and of the fitness of the proposed trustees for sale (which might
sometimes be appropriately proved by proving that they were registered liquidators): Nevill &
Ashe, Equity Proceedings with Precedents (New South Wales) para [1016].
75 As well, if an order for remuneration of the trustees is to be sought at the same time as they
are appointed, evidence to justify that order will be needed. Trustees for sale appointed under
section 66G, like all trustees, are not entitled to remuneration for their time and trouble in
executing the trust, unless (a) all beneficiaries agree, or (b) a person, or people, agree to pay the
trustees from their own money, or (c) a case is made for the Court to authorise, in the exercise
of its inherent jurisdiction over trusts, the payment of remuneration to the trustee. If the Court
grants authorisation of this lastmentioned kind, the remuneration of the trustees is treated as an
expense of administration of the trust and hence can be recouped from the trust property.
76 The sort of circumstances where a court has been prepared to exercise its inherent
jurisdiction to allow remuneration to trustees include situations where the duties are extensive
and the trustee can perform them only by seriously sacrificing his own interests (Marshall v
Holloway (1820) 2 Swans 432 at 452-3, 36 ER 681 at 689; Re Cox’s Will (1890) 11 LR (NSW)
Eq 124), where the trustees are not prepared to act without being remunerated and no alternative
trustees can be found (In re Freeman’s Settlement Trusts (1887) 37 Ch D 148), or where it is
otherwise advantageous to the trust estate to allow the remuneration (Plomley v Shepherd
(1896) 17 LR (NSW) Eq 215; Johnston v Johnston (1903) 4 SR (NSW) 8 at 11-12). Under this
inherent jurisdiction the Court can authorise trustees to retain from the trust property
remuneration for work to be done in the future, as well as past work done: Nissen v Grunden
(1912) 14 CLR 297 at 307-8; In re Keeler’s Settlement Trusts [1981] 1 Ch 156 at 161-2; Re
White; Tweedie v Attorney-General (2003) 7 VR 219 at 233. See also generally Application of
Sutherland [2004] NSWSC 798.
77 If a plaintiff seeking appointment of trustees for sale of land wanted to have those trustees
remunerated from the trust property, and no application was made at the time of seeking
appointment of the trustees for them to be remunerated, then (a) it would be necessary for an
application for remuneration of the trustees to be brought in separate proceedings, and (b) there
is a risk that that application might not succeed. Both of these consequences are ones that the
plaintiff might well find unattractive. Hence a plaintiff seeking appointment of trustees for sale
sometimes also seeks an order empowering the trustees to charge, on a specified basis, for
acting as such, and authorising those charges to be paid out of the proceeds of the sale of the
land.
78 However, if such an order is to be made, the plaintiff must notify the defendant (most
conveniently, though not necessarily, in the initiating process) that it proposes to seek such an
order, and of the evidentiary foundation on which the order is sought. That evidentiary
foundation will include evidence that circumstances exist which warrant the Court making an
order, under its inherent jurisdiction, for remuneration of the trustees, the basis of charging
which the trustees propose to adopt, and that that basis is a reasonable one. If the defendant is
notified that the order is to be sought, and the basis on which it is sought, it will then be open to
the defendant to file its own evidence on that topic, if it wishes. It might happen, for instance,
that the plaintiff cannot find suitable trustees who are prepared to act without remuneration, but
the defendant can find suitable trustees prepared to act without remuneration, or suitable trustees
prepared to act for a lesser remuneration than that which the candidates of the plaintiff would
charge.
79 In the present case, Robert has not yet filed any evidence to support appointment of specific
people as trustees for sale. I informed counsel during the trial that I regarded it as appropriate
for the trial to be conducted leaving such evidence in abeyance, so that the questions of
principle could be decided. It will now be necessary for it to be filed, if an order under section
66G Conveyancing Act 1919 is to be made rather than the parties agreeing, in light of these
reasons for judgment, to adopt some less expensive alternative.
Orders
80 I direct the parties to make an appointment with my Associate, within fourteen days of the
date of handing down these reasons for judgment, for a date on which the matter is to be relisted for the purpose of bringing in Short Minutes of Order to give effect to these reasons for
judgment. At the time the matter is re-listed, it would be appropriate for any supplementary
evidence concerning the appointment of trustees for sale to be considered (after the defendants
have had the opportunity to consider any evidence of the plaintiff on that topic, and to respond
to it), and any argument concerning costs to be heard.