New South Wales Supreme Court CITATION : Banks v. Permanent Custodians Ltd. & Anor. [2001] NSWSC 61 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4003/00 HEARING DATE(S) : 19 February 2001 JUDGMENT DATE : 19 February 2001 Michelle Lee Banks - plaintiff PARTIES : Permanent Custodians Limited - 1st defendant Darron Bernard Ashman - 2nd defendant JUDGMENT OF : Hodgson CJinEq at 1 Mr. J. Donnellan, Solicitor, for plaintiff COUNSEL : Mr. K. O'Kane, Solicitor for 2nd defendant The first defendant was not represented at this hearing SOLICITORS : L.W. Williams & Associates, Bankstown Kevin O'Kane & Co., Sydney CATCHWORDS : TRUSTS - Resulting trusts - Property purchased as joint tenants, when parties intended to marry - Whether held equally, or in proportion to contributions. CASES CITED : Muschinski v. Dodds (1985) 160 CLR 583 DECISION : See end of judgment IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORAM: HODGSON, CJ in Eq. Monday 19th February 2001 NO. 4003 OF 2000 BANKS V. PERMANENT CUSTODIANS LTD. & ANOR. JUDGMENT 1 In about the middle of the year 2000, a sum of $36,732.28 was paid into Court by Permanent Custodians Limited. That was the surplus left after a mortgagee sale of the property No.1 Rigney Place, Harrington Park. That property had been purchased jointly by the plaintiff Michelle Banks and the second defendant Darron Ashman in November 1998. In these proceedings, Ms. Banks seeks an order that the money in Court be divided equally between her and Mr. Ashman. Mr. Ashman has contended in effect that he should receive about three-quarters of the money paid into Court. 2 The background to the matter, very briefly, is this. 3 There was a de facto relationship between the plaintiff and the second defendant which commenced in about March 1998. The property in question was purchased in November 1998 for $215,000.00. Taking into account associated expenses, the total spent on the property was about $228,570.00. Of that, $194,000.00 was borrowed from a mortgagee. $13,350.00 was paid on account of mortgage instalments. The parties separated in about the middle of 1999, and the mortgage went into default, and as I have said, the property was sold in about the middle of 2000. 4 It seems to be common ground that the actual monetary contribution made by the plaintiff was about $10,000.00. It seems also that the plaintiff did not make any contribution to the payment of mortgage instalments. However, there is evidence from the second defendant that $7,000.00 of the $13,350.00 paid by way of mortgage instalments was borrowed from relatives of the second defendant. There are in fact District Court proceedings on foot in which these relatives have sued Ms. Banks and Mr. Ashman for these amounts. 5 Mr. Donnellan for the plaintiff has submitted that the property was purchased in joint names with substantial contributions by both parties, including the contribution made by the plaintiff making herself liable for one half of the mortgage. He submitted that whatever contributions had been made by the second defendant, they were tainted because it was apparent that they were the result of cash transactions arising in the course of business carried on by the second defendant in respect of which no income tax had been paid. 6 Mr. O'Kane for Mr. Ashman submitted that of the total of about $48,000.00 actually contributed to this property, the plaintiff had contributed only $10,000.00, and the amount in Court should be divided having regard to those contributions. He referred me to Muschinski v. Dodds (1985) 160 CLR 583, and argued that this was a case where a joint venture had in fact failed because the purchase had been with a view to the parties becoming married, and there had been some loss, and the loss should in fact be shared proportionately. 7 There are a number of ways in which this matter can be approached. I think the preferable way is to treat it as a case where, at the time of the initial purchase, the parties each contributed one half of the mortgage because they both made themselves liable for the mortgage. Of the balance of about $34,500.00, the plaintiff contributed $10,000.00, and the second defendant contributed about $24,500.00. If one adds half the mortgage to each of those contributions, one gets about $107,000.00 from the plaintiff, and $121,500.00 from the second defendant. Although it may have been their intention to share the property equally when it was purchased, I think that intention was conditional to some extent on a marriage taking place, and I think the appropriate result, in the circumstances of the parties' separation, is to treat the property as held on a resulting trust in those proportions, that is, in the proportion of 107,000 to 121,500. 8 Then dealing with the actual payments made on the mortgage, I would propose to treat the whole $13,350.00 as having been provided by the second defendant, but on the basis that he undertakes to make himself fully liable for the claims made by his relatives in the District Court. There may have been some interest accruing on the amount paid into Court, so I cannot work out the final figures, but the method that this approach would suggest would be to deduct $13,350.00, plus I think 10% interest from say 30th June 1999, from whatever amount is in Court now, and then divide the balance of the proportion that I have indicated, that is the proportion of 107,000 to 121,500. As I have said, that is on the basis that the second defendant undertakes to be fully responsible for, and to indemnify the plaintiff against, any liability flowing from the claims made by his relatives which have resulted in the District Court proceedings. 9 That approach is not exactly contended for by either party, and my provisional view is that each party should bear its own costs of this application. 10 One other matter I should mention is that the evidence in this case does suggest that the second defendant has been carrying on a business of buying and selling motor vehicles in respect of which he claims to have had an income of $1,200.00 per week, but in respect of which he has not submitted tax returns or paid any income tax. I think I am obliged to draw this matter to the attention of the taxation authorities, and I will do so. 11 I declare that out of the amount paid into Court, the second defendant is entitled to $13,350.00 plus interest at 10% from 30th June 1999 until payment out, from which he is to make provision to satisfy the loans mentioned below. 12 I declare that of the balance, the plaintiff is entitled to the proportion 107,000 divided by 228,500, and the second defendant is entitled to the proportion 121,500 divided by 228,500. 13 I note that the second defendant undertakes to the Court that he will be responsible for, and will indemnify the plaintiff against, loans made by Dulcie Thompson and Daphne O'Brien referred to in these proceedings, and the District Court proceedings arising out of those loans. 14 I order that each party pay its own costs of these proceedings. 15 The exhibits may be returned. 16 I reserve liberty to the parties to apply to me on one day's notice. 17 I direction that the money paid into Court and interest accrued thereon be paid out in accordance with these declarations. *********** Last Modified: 02/20/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.