Sweeney v He [2022] NSWSC 655

Supreme Court New South Wales

Medium Neutral Citation: Sweeney v He [2022] NSWSC 655 Hearing dates: 24, 25, 26 November, 3 December 2021 and 11 March 2022; written submissions 25 February and 2, 4, 10 March 2022 Decision date: 24 May 2022 Jurisdiction: Equity Before: Kunc J Decision: Plaintiff's case not established; no constructive trust over real property Catchwords: EQUITY – Trust and trustees – Constructive trusts – Common intention Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 Ramsden v Dyson (1866) LR 1 HL 129 Re estate of the late Doolan; Shepherd v Doolan [2005] NSWSC 4 Woods v McKinlay (No 2) [2021] NSWSC 1510 Category: Principal judgment Parties: Michael Howard Sweeney (Plaintiff) Leah Ying He (First Defendant) Yu Xiang Wang (Second Defendant) Representation: Counsel: Lishan Ang (Plaintiff) Kim Boettcher (First Defendant) Ruth Ferguson (Solicitor) (Second Defendant)

Solicitors: Maspero Legal (Plaintiff) Legal Aid NSW (First Defendant) Venus & Smart (Second Defendant) File Number(s): 2020/68692 Publication restriction: No

Judgment

Summary 1. These proceedings concern a property at Fuchsia Crescent in Bomaderry, NSW (the Property). The registered proprietor and mortgagor of the Property is the second defendant, Mr Yu Xiang Wang (known as Kevin). The plaintiff, Mr Michael Howard Sweeney, was married to Kevin's mother, Ms Ying He, who is the first defendant. With no disrespect intended, in this judgment the parties will be referred to by their given names. 2. The Property was purchased by Kevin in September 2013 largely (but not completely) with funds advanced to him as a loan by Suncorp. Michael and Ying resided in the Property together from the time it was purchased until their relationship broke down in May 2017 and Ying moved into crisis accommodation. Throughout their occupancy, Ying made regular, fortnightly payments to Kevin. It was hotly contested between the parties whether these payments represented rent or mortgage repayments. 3. After Ying vacated the Property, Michael continued to reside there. This caused Kevin to bring an application against Michael in the NSW Civil and Administrative Tribunal (the Tribunal) to terminate Michael's tenancy. Michael denied there was ever any lease agreement to be terminated. 4. The Tribunal conducted a hearing on 4 July 2017 in Michael's absence. Kevin's application was granted, and orders were made to terminate Michael's tenancy. Michael sought, unsuccessfully, to set aside the orders of the Tribunal. 5. On 19 August 2017, a warrant for possession of the Property was issued to enforce Michael's removal from the Property and he subsequently vacated the premises. Ying moved back to the Property in September 2017 where she continues to reside. 6. Further court proceedings have since occurred between the parties, including an application by Kevin to recover unpaid rent from Michael (with Ying later added as a respondent) in August 2017 and appeal against that decision by Michael in 2018; an application by Michael against Ying in the Small Claims Division of the Local Court to recover $2,577.46 in September 2017 for alleged damages to a vehicle; proceedings related to Apprehended Domestic Violence Orders by Ying against Michael and, later, by Michael against Ying in 2017 and 2018; and divorce proceedings between Michael and Ying in 2018. 7. Michael has now brought the proceedings before this Court, alleging that the Property was at all times held on trust by Kevin for himself and Ying in equal half shares in accordance with an oral agreement between them. He asserted there was never any tenancy agreement and all payments made to Kevin were mortgage repayments and not rent. He also claimed to have made a number of improvements to the Property for which he was entitled to be reimbursed. 8. Ying and Kevin's defences were to the same effect. Mother and son both alleged that no agreement that the Property would be held on trust ever existed. The Property was always intended to be an investment for Kevin. Any payments made to Kevin were for rent and were not mortgage repayments. Michael's contributions in the form of improvements were also disputed. 9. Michael sought this relief: "1. A declaration that the Second Defendant holds the Property at [redacted] Fuchsia Crescent, Bomaderry … on constructive trust for the Plaintiff and the First Defendant in the proportion of 50% or some other amount that the Court may determine. 2. An account as taken to the amounts paid and received by the other parties with respect to the Property. 3. An order that any parties pay to the other parties by way of contribution any amount in excess of their entitlement determined on the basis of the respective ownership interests and the account taken. 4. An order pursuant to s 66G of the Conveyancing Act that a trustee for sale be appointed to the Property. 5. In the alternative to orders 1-4 above, the Defendants pay the amount of $41,428.66 by way of restitution …" 1. The Court is not satisfied that any agreement existed between the parties in the terms alleged by him. The Court finds that the Property was always intended to belong to Kevin and he holds both the legal and beneficial interest absolutely. 2. The reasons why the Court has determined that Michael has failed to establish his case may be summarised as: 1. The conversations that supposedly formed the basis for the agreement between the parties attributed language to Ying that was not credible. She was not a native speaker of English and, having had the benefit of observing her give evidence, I am satisfied she would not have used the words ascribed to her by Michael. 2. The agreement was never recorded in writing despite qualified solicitors allegedly being aware of the arrangement. Nor, on Michael's case, did the solicitors ever suggest to him that it should be put in writing. This is so unlikely that the Court finds that there was no such arrangement. 3. The costs of the Property borne by each party accorded with an arrangement in which Michael resided as tenant only. He paid utilities and made some (unauthorised and authorised) alterations but contributed nothing to the council rates or home insurance. The latter costs were exclusively Kevin's responsibility. 4. All of the costs associated with the purchase – deposit, stamp duty and solicitors' fees – were borne by Kevin. Michael acted only as intermediary in the purchase process. 5. While fortnightly payments by Ying were sufficient to cover the mortgage repayments, the Court is satisfied that these payments were for the purpose of rent. This is an example of a common situation: an owner of property applying rental payments to meet the owner's mortgage obligations. 6. Ying and Kevin gave consistent accounts of the critical matters, particularly with regard to how the Property was to be held (in Kevin's name and for his benefit), payment of rent and other contributions supposedly made by Michael. On the other hand, Michael's account suffered from a degree of implausibility. There were also concerns related to inconsistencies with prior evidence he had provided at Local Court proceedings about mortgage repayments which reflected poorly on his credit. 1. Mr Lishan Ang of Counsel appeared for Michael. Ms Kim Boettcher of Counsel appeared for Ying. In a departure from usual practice, Ms Ruth Ferguson, who was the original solicitor on record for both defendants, took on a role as advocate for Kevin. This was in spite of the fact that the defendants were in the same interest. Nevertheless, the plaintiff raised no objection to this course of action and the matter proceeded with Ms Ferguson appearing for Kevin.