ARAS and ANOR v SCHMUTZ and ANOR [1997] NSWCA 25

ARAS and ANOR v SCHMUTZ and ANOR

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY and POWELL JJA, and BROWNIE AJA 15 May 1997, 9 December 1997 [1997] NSWCA 25

EQUITY TRUSTS — EXPRESS TRUST — CONSTRUCTIVE TRUST — ESTOPPEL — CORRECTNESS OF INFERENCES DRAWN FROM PRIMARY FINDINGS OF FACT

The parties were members of a family who lived in a house in Mosman (the Prince Street house) registered in the name of Vytautas Aras, the father of the family. The respondents had been asked by the father (one of the appellants) to live in a separate part of the house, extended and made self-contained for them, on the basis of various promises then made to them, on the faith of which they expended money and otherwise acted to their detriment as also did the father's first wife, Onas. After Onas died, the father married again, and after some time family relations broke down. The father persuaded the respondents to give up possession of their part of the house by promising to pay them $100,000 out of the proceeds of its sale. The house was sold and the proceeds used to buy a home for the appellants (the father and the second wife) in Balgowlah Heights (the Scales Parade house). The father refused to pay anything to the respondents. Bryson J at first instance found that the part of the Prince Street house occupied by the respondents had been held upon an express trust for them and the other part on an express trust for the father during his life and after his death for the respondents; he ordered the appellants to pay to the respondents equitable compensation of $100,000 and interest, and declared that the appellants held the Scales Parade house upon trust for the appellants during the life of Vytautas Aras, and after his death, for the respondents in remainder. In the alternative, constructive trusts to the same effect should be imposed.