New South Wales Supreme Court CITATION : Brandling v Weir [2003] NSWSC 723 revised - 18/08/2003 HEARING DATE(S) : 22/07/03, 23/07/03 JUDGMENT DATE : 12 August 2003 JURISDICTION: Equity Division JUDGMENT OF : Barrett J DECISION : Claims of first cross-claimant dismissed. Claims of second cross-claimant upheld. CATCHWORDS : TRUSTS AND TRUSTEES - constructive trust - properties acquired by marriage partners in separate names - all purchase moneys and mortgage payments sourced from wife's business activities - husband's relatively small contribution to domestic expenses - whether pooling of interests and joint endeavour - whether husband entitled to constructive trust on basis of departure from common intention or other unconscionability - TRUSTS AND TRUSTEES - purchase of property in name of wife alone - whether husband provided part of purchase money - whether presumption of advancement rebutted - MORTGAGES AND CHARGES - prior determination that equitable charge created by loan agreement and caveat - no ground for questioning earlier decision - prior determination cannot be impugned in these proceedings Baumgartner v Baumgartner (1987) 164 CLR 137 Calverley v Green (1984) 155 CLR 242 Carruthers v Manning [2001] NSWSC 1130 Green v Green (1989) 17 NSWLR 343 CASES CITED : Jones v Dunkel (1959) 101 CLR 298 Lloyd v Tedesco (2002) 25 WAR 360 Muschinski v Dodds (1985) 160 CLR 583 Nudd v Official Trustee in Bankruptcy (2002) 11 BPR 20,163 Rodick v Gandell (1852) 1 DeGM&G 763 Troncone v Aliperti (1994) 6 BPR 13,291 Paul Brandling - Plaintiff Pauline Dorothy Weir - First Defendant Vizzini Investments Pty Ltd - Second Defendant The Official Trustee in Bankruptcy - Third Defendant Trevor David Nudd - Fourth Defendant Mervyn Patrick Weir - Fifth Defendant Cross-Claim: PARTIES : Mervyn Patrick Weir - Cross-Claimant Paul Brandling - First Cross-Defendant Trevor David Nudd - Second Cross-Defendant Newcastle Permanent Building Society Limited - Third Cross-Defendant Second Cross-Claim: Trevor David Nudd - Second Cross-Claimant Paul Brandling - First Cross-Defendant Newcastle Permanent Building Society Limited - Second Cross-Defendant Mervyn Patrick Weir - Third Cross-Defendant FILE NUMBER(S) : SC 5250/99 Mr C. O'Connor, Solicitor - Plaintiff COUNSEL : Mr P.J. Menadue - Fifth Defendant/First Cross-Claimant Mr B.J. Skinner - Fourth Defendant/Second Cross-Claimant Thompson Rich O'Connor - Plaintiff Shields Lawyers - Fifth Defendant/First Cross-Claimant SOLICITORS : Watson Mangioni - Fourth Defendant/Second Cross-Claimant Thompson Rich O'Connor - Plaintiff Shields Lawyers - Fifth Defendant/First Cross-Claimant Watson Mangioni - Fourth Defendant/Second Cross-Claimant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J TUESDAY, 12 AUGUST 2003 5250/99 – PAUL BRANDLING v PAULINE DOROTHY WEIR & ORS JUDGMENT The competing claims 1 At issue in these proceedings are competing claims to a sum of more than $366,000 held by Newcastle Permanent Building Society Ltd ("Newcastle Permanent") which has filed a submitting appearance. The moneys represent the balance, after satisfaction of Newcastle Permanent's debt, of the proceeds of the sale of a property at Eastlakes made by Newcastle Permanent in exercise of its power of sale as registered mortgagee. 2 The first claim is that of the plaintiff, Mr Brandling. That claim has been compromised. The second claim is that of Mr Weir, the husband of the first defendant, Mrs Weir (also known by her maiden name, Pauline Dorothy Hinks). She was the mortgagor of the property to Newcastle Permanent. The third claim is that of Mr Nudd. He claims to be a secured creditor of Mrs Weir. 3 Mrs Weir took title to the Eastlakes property and granted the mortgage to Newcastle Permanent in her maiden name, Pauline Dorothy Hinks, in circumstances to which I shall come. The purchase and mortgage occurred in 1994. Mrs Weir became a bankrupt in March 2000. The Official Trustee in Bankruptcy became the registered proprietor of the property by transmission in November 2001 and thereafter remained the registered proprietor until registration of the transfer to the purchasers from Newcastle Permanent exercising power of sale. That transfer was dated 12 August 2002. 4 The basis of Mr Brandling's claim in respect of the balance of sale proceeds held by Newcastle Permanent need not be explored. That claim has been compromised as among Mr Brandling, Mr Weir and Mr Nudd on a basis that recognises an entitlement of Mr Brandling to part of the proceeds in priority to the claims of Mr Weir and Mr Nudd. Leaving to one side the claim of the Official Trustee (which is, of course, clear), that leaves for decision the claims of Mr Weir and Mr Nudd. 5 Mr Weir puts his claim on three alternative bases. He says first that, on the basis of the intentions of himself and his wife as they existed when the property was purchased in her name, the court should find that, although Mrs Weir became the sole registered proprietor, she held the property upon a constructive trust for herself and Mr Weir in equal shares. Secondly, Mr Weir says that, in the circumstances of the case, Mrs Weir was guilty of unconscionable conduct which should cause the court to find that Mr Weir was entitled to an interest in the property by way of remedial constructive trust. The third alternative claim is that he provided part of the purchase moneys for the property and that, from the time of purchase, Mrs Weir, as sole legal owner, held the property in such a way that an undivided interest in proportion to his contribution belonged in equity to Mr Weir pursuant to a resulting trust. 6 Mr Nudd's claim is much more straightforward. He says that he lent various sums of money to Mrs Weir and that she created in his favour a valid and effective equitable charge over the property securing repayment of those moneys together with interest in accordance with the loan agreement made by them. 7 If the court concludes that Mr Weir and Mr Nudd both have equitable interests in the Eastlakes property, it will become necessary to address questions of quantification as well as questions of competing priorities between the respective equitable interests. As will be inferred from what I have already said, the title to the property is under the Real Property Act 1900 and neither of the claimed interests is entitled to any priority by virtue of registration under that Act. I note, however, that each of Mr Weir and Mr Nudd lodged a caveat in respect of the claimed interest. These caveats (as well as a caveat lodged by Mr Brandling) were withdrawn to allow the sale by Newcastle Permanent to proceed. Under an arrangement made at that time, the respective claims upon the property became instead claims upon the balance of sale proceeds in Newcastle Permanent's hands. 8 The factual bases for the competing claims of Mr Weir and Mr Nudd are quite different. I deal first with Mr Weir's claim. Factual background to Mr Weir's claims 9 Mr Weir and Mrs Weir were married in 1969. They remain married, although they separated in December 2001. A few weeks after their marriage, Mr Weir and Mrs Weir became the owners as joint tenants of a Crown leasehold property at Philip Bay, being vacant land. They mortgaged the property to the Commonwealth Bank as security for a loan obtained to build a house on it. In 1974 they sold the Phillip Bay property and bought a property at Matraville as joint tenants. This was their home until 1986. A mortgage advance of $12,500 was obtained to assist with the purchase of the property and, in the following years, various refinancings were effected as the overall sum for which the property stood as security was increased. By 1986, the secured debt was over $110,000. The additional borrowings were arranged by Mrs Weir alone. Mr Weir did not know what they were for and merely went along with what his wife wanted to do. The only explanation he offered in the witness box – that the increased borrowings would result in an interest saving – serves to confirm that he did not understand what was going on. 10 Mr Weir and Mrs Weir defaulted under the mortgage of the Matraville property. The mortgagee sold the property in exercise of its power of sale in December 1986. 11 After losing the Matraville home in that way, Mr Weir and Mrs Weir – who by then had three daughters – went to live with Mr Weir's father in the house he owned in a nearby suburb. Mr Weir senior allowed Mrs Weir to obtain finance on the security of his house. This property also became the subject of a mortgagee sale. Mr Weir did not find out about the mortgage of his father's house or the mortgagee sale until later. 12 In 1990, Mr Weir and a friend of his, Mr Hartman, bought a house at Maroubra as tenants in common, with Mr Weir having a one-third share and Mr Hartman a two-thirds share. They together obtained a mortgage loan to finance the whole of the acquisition cost. Mrs Weir made all the arrangements. Mr Weir said that he "signed at the end of the transaction that she arranged through her business, through Mr Hartman and the company that she worked for." Mr Weir also said that he was not able to pay the mortgage instalments himself and that Mrs Weir was "handling the financial side of that." Mrs Weir met the mortgage payments due by Mr Weir since her income was greater than his and sufficient to enable her to do so. 13 The Weir family lived in the Maroubra house after its acquisition by Mr Hartman and Mr Weir in 1990. 14 In 1994, Mrs Weir told Mr Weir that she had found a desirable house property at Eastlakes. Mr Weir gave evidence of having had the following conversation with his wife at that time: "She said:- 'I've found a good home, at 42 Garden Street, Eastlakes … come and have a look at it with me.' I said:- 'There is no point, we will never be able to get a loan if we purchase our new home in our own names.' She said:- 'Come and have a look at it … I think I may be able to get a loan in my maiden name and our bad record will not be a problem … I really need to do something to make it up to you after losing Matraville, your long service leave and superannuation as well as your Dad's place … I will get the loan … we can pay it off and it will be an asset for you and the family.' " 15 Mr Weir referred in cross-examination to discussions with his wife at that time about their future retirement and "that the property would always be there as a superannuation type thing". 16 After the conversation in which Mrs Weir raised the possibility of purchasing the Eastlakes property, Mr Weir sold to Mr Hartman his one-third undivided interest in the Maroubra property for a price of $95,000 which, after an allowance to recognise Mr Hartman's sole on-going responsibility for the continuing mortgage debt, yielded to Mr Weir a net sum of the order of $53,000. Out of this, Mr Weir provided moneys towards the acquisition cost of the Eastlakes property. In fact, Mrs Weir alone had already contracted for the purchase of that property under a contract made on 24 August 1994. Completion of Mrs Weir's purchase took place subsequently, with Mrs Weir (Hinks), Mr Hartman and Mr Weir having, on 5 October 1994, given instructions to Rodney Shields & Co, solicitors, of Randwick by letter as follows: "We refer to our recent discussions and confirm the following: 1. Pauline Dorothy Hinks entered into a Contract of Sale to purchase the property at 42 Garden Street, EASTLAKES from Amilcar Benardino Dorego and Maria Rogerio Dorego on 24th August, 1994. 2. To finance the purchase, Mervyn Patrick Weir sold his 1/3 share of 70 Nagle Avenue, MAROUBRA to Warren James Hartman which amounted to approximately $95,000.00. The proceeds for the purchase of the 1/3 share was provided by Hartman as follows - (a) A payment of $31,200.00 to assist representing the deposit on the purchase by Hinks; (b) A sum of $21,805.44 from the Select Credit Union which you placed in your Trust Account; (c) A taking over of the sum of $41,994.56 representing Weir's 1/3 share of the Mortgage to the Select Credit Union which will now become the responsibility of Hartman. 3. Out of the $21,805.44 which was received by Rodney Shields & Co Trust Account you are to attend to the following: (i) Payment of the Stamp Duty for the Hinks purchase of $9,534.00; (ii) Any other disbursements payable for Hinks, any other disbursements payable for Weir to Hartman and the balance of the money is to be utilised to assist in the Hinks purchase. On completion the balance of funds are to be forwarded to Hinks together with a Trust Account Statement. Hartman will pay our legal costs separately which amount to approximately $360.00." 17 It will be seen from this that $31,200 was to be provided by Mr Weir "to assist representing the deposit on the purchase by Hinks [Mrs Weir]", although the fact that she had, on 24 August 1994, entered into a contract at a price of $312,000 providing for a deposit of $31,200 suggests that that deposit had already been paid by her before the letter of 4 October 1994 was written. I do not think anything turns on this, however, as Mr Weir's evidence is that he provided the $31,200 towards Mrs Weir's purchase of the Eastlakes property and there is nothing calling into question the fact that $31,200 out of the proceeds of the Maroubra disposal was applied in that direction. Nor is it contested that $9,534.00 stamp duty in respect of Mrs Weir's purchase contract came from the same source. Mrs Weir borrowed $284,169 from Newcastle Permanent upon the security of the property. This, with the moneys yielded by the Maroubra disposal, represented more than the full purchase price and stamp duty for the Eastlakes purchase. 18 Mr Weir testified that it was his intention that the Eastlakes property should be the matrimonial home of him and his wife even though it had been bought by her alone in her maiden name. He said that the purchase was arranged in this way because, following the mortgagee sale of the Matraville property, he and Mrs Weir could not obtain finance because of their unfavourable credit rating. How he had nevertheless managed to obtain the mortgage loan in respect of Maroubra, in company with Mr Hartman, was not explained. In cross examination, Mr Weir conceded that it was his age and limited income that made him an unfavourable candidate for a mortgage loan. It was Mrs Weir's idea that she, having some basis for using the surname Hinks, should proceed to make the purchase alone under that name. An intention to appear to be someone other than Pauline Dorothy Weir was behind Mrs Weir's decision to make the purchase and deal with Newcastle Permanent in the name of Pauline Dorothy Hinks. 19 Mr Weir, Mrs Weir, their daughters and Mr Weir's father took up residence in the Eastlakes property on 28 September 1994. Mr Weir senior lived there until his death in 1998. Mr Weir and Mrs Weir continued in occupation until their separation in late 2001 after he became aware that she had a gambling problem and was being investigated by the police. The property was, as I have said, sold by Newcastle Permanent as mortgagee, the transfer being dated 12 August 2002. 20 Mr Weir deposes that, soon after the purchase of the Eastlakes property, $8,295.99 was spent from the Maroubra proceeds to furnish it. He says there were also paid from the same source $2,088.15 for mortgage insurance in respect of Newcastle Permanent's mortgage and $1,887.20 for legal fees in connection with the purchase and mortgage. When they went into occupation, Mr Weir and Mrs Weir, according to his account, had a conversation as follows: "I said: 'If you'll pay the mortgage, I'll pay for anything else that we need to run the house, like the food, electricity and other things.' She said: 'OK. Let's do that.' " Mr Weir says that this arrangement was implemented and that he spent about $200 per week on household expenses while Mrs Weir paid approximately $1,200 per month in mortgage payments. 21 Mr Weir was, after acquisition of the property, in substantially continuous employment apart from a period of illness of some ten months. He worked as a warehouse assistant earning about $400 per week. Mrs Weir was an accountant. She conducted a practice in which she provided accountancy and tax agency services to clients. At all material times, Mrs Weir's income substantially exceeded her husband's. In the course of cross-examination, Mr Weir was asked a number of questions about financial transactions – the mortgages to buy various properties, replacement of mortgages, further borrowings and the like – and made it clear that he left all financial matters to his wife and had no knowledge of such matters. Surprisingly, perhaps, he apparently did not probe very deeply into the reasons why first the matrimonial home at Matraville and then his father's house were sold up by the mortgagees. Although upset about what had happened, he was content, it seems, with explanations from his wife about failed investments and other misfortunes. Nor, as I have said, could Mr Weir throw any light on the financing of the co-ownership venture with Mr Hartman in relation to the Maroubra property. He said that everything to do with that transaction was arranged by his wife. She, he said, looked after finances and he did what she asked in relation to properties, borrowings, mortgages and other transactions. 22 I have no evidence on any of these matters from anyone but Mr Weir and, to a very limited extent, Mr Hartman whose evidence, in brief affidavit form, confirms the essential details of the events of 1990 and 1994 involving the acquisition of the Maroubra property by Mr Weir and Mr Hartman and the subsequent purchase of the former's interest by the latter. Significantly, there is no evidence from Mrs Weir. She, although apparently serving a term of imprisonment, must be regarded as an available witness who could have thrown valuable light on her state of mind in relation to the Eastlakes purchase and the events leading up to it. Mr Weir's failure to make any apparent attempt to adduce this evidence should be regarded as an indication that it is unlikely to have been helpful to his case: Jones v Dunkel (1959) 101 CLR 298. 23 Not included in Mr Weir's affidavit but elicited in cross-examination were facts about a subsequent property purchase. In May 1997, Mr Weir and his daughter Alison (then aged 21) became the purchasers of a house at Kiama Downs. This was purchased without the assistance of any mortgage loan. The transaction, and its financing, were wholly arranged by Mrs Weir. She somehow provided the purchase moneys of $192,000. It was she who determined that the title should be taken in the names of Mr Weir and Alison. The property was later mortgaged to Newcastle Permanent to secure a loan of $161,280, which loan (presumably net of costs and fees) was advanced in the form of a cheque for $159,000 in favour of Mrs Weir alone. In 2000, the Kiama Downs property was sold for $247,000 and a surplus of more than $80,000 was received after payment of the mortgage loan. The surplus was divided equally between Mr Weir and Mrs Weir, with Alison apparently consenting. 24 Mr Weir acknowledges that he received and retained more than $40,000 from this sale. He testified that his wife instigated and arranged the purchase, the mortgage and the sale. He believed she was "doing it for me" and referred to her having said, "I'm trying to pay you back for previous problems". He said, with respect to outgoings, "I maintained the same arrangements as I had with the other properties; I pay all incidentals, rates, etcetera". Mr Weir's constructive trust claim 25 To the extent that Mr Weir's claim turns upon the intentions of himself and Mrs Weir at the time the Eastlakes property was purchased, it is necessary for me to come to a conclusion as to what those intentions were. Mr Weir says, in an affidavit sworn more than eight years after the relevant events: "The property at 42 Garden Street, Eastlakes was always intended to be our matrimonial home though it was registered in the name of my wife in her maiden name." 26 Objection was taken to this paragraph and I admitted it as evidence of Mr Weir's separate intention only. As to any manifestation of a joint or common intention of Mr Weir and Mrs Weir, the most the evidence shows is their conversation in 1994, when the possibility of purchasing the Eastlakes property was raised by Mrs Weir, in which Mrs Weir said (and Mr Weir no doubt accepted) that she would obtain the loan and "… we can pay it off and it will be an asset for you and the family." These statements were made by Mrs Weir in the context of her expression to Mr Weir of a desire to "make it up" to him after losing Matraville, his long service leave and superannuation (an apparent reference to $20,000 severance benefits Mr Weir had received on leaving Johnson & Johnson which, it appears, Mrs Weir had lost) and Mr Weir's father's house. 27 The contemporaneous statements must be weighed against other contextual indications provided by the evidence. The decision that Mrs Weir alone should be the purchaser of the Eastlakes property was a calculated decision of hers in which Mr Weir did not participate, although he was told about it after it had been made. It must be accepted that she intended that, by proceeding to purchase and to obtain mortgage finance under her maiden name, she should seek avoid the consequences of any adverse credit rating by appearing to be someone other than Pauline Dorothy Weir. It is clear that part of the acquisition funding came from the sale to Mr Hartman of the one-third interest in the Maroubra property. But Mr Weir did not know how and why the ownership of the Maroubra property had been structured as it was or anything about the transaction and its financing. It must also be accepted, however, that it was in the mind of Mrs Weir when she bought the Eastlakes property that it could be the home of herself, her husband and their family and, as she said to Mr Weir, "an asset for you and the family" and "a superannuation type thing". 28 The circumstances in relation to the Kiama Downs property arose after the Eastlakes acquisition but do, I think, serve to throw light on the nature of the relationship. As with the joint purchase arrangement with Mr Hartman, the Eastlakes purchase and the financing of those two transactions, the sole decision-maker was Mrs Weir. She made Mr Weir and Alison the purchasers of Kiama Downs but Mr Weir did not know where the money came from and, as to the rationale for what was being done, he presumably accepted his wife's statement that she was trying to make amends to him for previous problems – an outcome in some measure realised by his eventual receipt of more than $40,000 when the property was sold in 2000. 29 The evidence in relation to the loss of the Matraville property through mortgagee sale, the acquisition of the interest in the Maroubra property with Mr Hartman, the disposal of that interest, the acquisition and subsequent sale of the Kiama Downs property and the financing of these matters demonstrates that Mrs Weir did as she wished, with no explanation to her husband, and that, although the matter of housing the family played a part in the various moves (except Kiama Downs), Mrs Weir was engaged, by and large, in money making (or, as it so often turned out, money losing) operations. It may be that she felt some remorse for the financial disasters she had visited upon her husband and his father and that she expressed, at the time of the acquisition of both Eastlakes and Kiama Downs, a desire to make amends to her husband. But the conclusion is inescapable that any intention of assembling a family asset base to be enjoyed by both husband and wife played little if any part in her thinking. 30 A common intention as to ownership which is at odds with the way in which title to a property is actually taken may give rise to a constructive trust. The relevant principles, discussed by the Court of Appeal in Green v Green (1989) 17 NSWLR 343, are conveniently stated in the following passage in the judgment of Einstein J in Carruthers v Manning [2001] NSWSC 1130: "A constructive trust will not necessarily arise merely because one partner to a marriage or de facto relationship has made express or implied undertakings to the other to provide support and accommodation: Green v Green (1989) 17 NSWLR 343 at 353 or even to give them an interest in the property: Miller v Sutherland (1990) 14 Fam LR 416 at 423. However, where a party seeks to impose a constructive trust based on actual intention, it is necessary for it to establish two matters. First, there must be a common intention between the parties that both should have a beneficial interest. Second, the claimant must have acted to his or her detriment on the basis of that common intention: Grant v Edwards [1986] Ch 638 at 651; Miller v Sutherland at 423. The question of whether the necessary common intention existed between the parties may be demonstrated in various ways based on the conduct of the parties and can be implied by the Court: Miller v Sutherland at 423. Grant v Edwards was applied by Gleeson CJ in Green v Green (at 355) who discussed this notion of common intention and noted: ....proof of such common intention can be direct, as for example, by evidence of express agreement or the making of admissions, or such common intention can be inferred from the making of contributions to the cost of a property, or meeting expenses in maintaining it. That, however, is merely one of the ways, but not the only way, in which the evidentiary basis for inferring a common intention can be laid...such conduct may also be of considerable factual importance in establishing an acting to detriment, but once again, in that respect its status is evidentiary and is not a matter of legal necessity.' The line of authorities which have imposed a constructive trust in reliance on this reasoning have primarily involved situations where the common intention was expressed at the time of, or shortly following acquisition of the property. However, Nourse LJ in Grant v Edwards (at 651) did add: 'I use the expression "on acquisition" for simplicity. In fact, the event happening between the parties which, if followed by the relevant type of conduct on the part of the claimant, can lead to the creation of an interest in the claimant, may itself occur after acquisition. The beneficial interests may change in the course of the relationship.' As to the question of whether the claimant has acted upon this conduct to his or her detriment, the conduct must be referable to the promise or intention and this will ultimately depend upon the nature of the conduct and of the promise or intention: Grant v Edwards at 652. Nourse LJ in Grant (at 648) held that it must be conduct on which the claimant could not reasonably be expected to embark unless he or she was to have an interest in the house." 31 A recent example of the way in which these principles may operate to justify a finding of constructive trust may be found in the judgment of Jacobson J in Parianos v Melluish [2003] FCA 190. In that case, there was no explanation as to why title to the matrimonial home had been taken in the name of the husband alone, but there was evidence that the wife's mother had given her money towards the purchase of the house and that she, in turn, had passed it on to him for that purpose. There was also evidence of statements by the husband at the time of purchase that it did not matter that the property was in his name only "because it's yours too – what's mine is yours". In addition, the husband referred to the property at the time of purchase as "our home". 32 The facts of the present case fall far short of this. The most that Mr Weir can point to is Mrs Weir's statement that the Eastlakes property was to be "an asset for you and the family" and "a superannuation type thing" and that in purchasing it she was doing "something to make it up to you" after earlier financial disasters for which she apparently felt a need to make amends. I do not regard that, even coupled with the fact that part of the acquisition funds came from termination of the co-ownership venture with Mr Hardman, as sufficient to establish the kind of common intention that can give rise to a constructive trust. I quote from the judgment of Gleeson CJ in Green v Green (above) at 353: "It is clear that the mere existence of a matrimonial or de facto relationship, combined with express or implied undertakings to provide support and accommodation, will not form a sufficient basis for concluding that there is a constructive trust by virtue of which a proprietary interest in the home occupied by the parties is created: see, for example, Pasi v Kamana [1986] 1 NZLR 603; Murray v Roty (1982) 134 DLR (3d) 507; Reeves v La Rose (1987) 8 RFL (3d) 87 and Burns v Burns [1984] Ch 317. In a legal system which does not include concepts of family or community property, and where an obligation on the part of a husband to house and provide for his wife is commonly regarded as an incident of the matrimonial relationship, an undertaking of the kind referred to cannot of itself confer upon a wife a legal or equitable interest in the matrimonial home. If the matter is considered in terms of a promise or representation by the husband, and an acting by the wife to her detriment on the faith of that promise or representation, then a claim made on the narrow basis set out above would normally fail at both levels. The acceptance of an obligation on the part of the husband to house his wife would not normally be regarded as an undertaking to give her a proprietary interest in the home in which they live, and wives usually have reasons for living with their husbands other than an expectation that they will increase their assets." I regard this statement of principle as equally applicable with the references to husband and wife reversed, at least in a case such as the present where it is the wife who had the greater income and business and financial knowledge and experience and the husband was content to act in property and financial matters in whatever way the wife suggested and to leave all decision making entirely to her. 33 On the evidence, there has not been shown to have existed any common intention of Mr Weir and Mrs Weir that the property deliberately purchased by her alone for a specific purpose related to obtaining of finance was to be owned beneficially by both of them. The statement by Mrs Weir to Mr Weir that the property would be "an asset for you and the family" or "would always be there as a superannuation type thing" does not warrant any finding of such an intention. Property owned by one marriage partner alone may be regarded as an asset "for" the other partner and the children of the marriage and as "a superannuation type thing" where, in accordance with ordinary family expectations, it is apprehended that the separate estate of one spouse will pass to the other on the death of the first of them to die and eventually to their children. Mrs Weir's statement was quite consistent with an intention of that kind. Likewise, the intention (held by Mr Weir, according to his evidence, and probably also held by Mrs Weir) that the property purchased by Mrs Weir would be their matrimonial home is not sufficient to give rise to the kind of intention from which a constructive trust may be inferred. So much is made very clear by the above passage from the judgment of Gleeson CJ in Green v Green. Mr Weir's claim based on the common intention species of constructive trust therefore fails. 34 The alternative basis on which Mr Weir says that there should be a finding of constructive trust is that it would have been unconscionable for Mrs Weir to retain the benefit of full ownership. While this is put as a separate basis for a finding of constructive trust, it is really no more than a variant of the common intention approach I have already discussed or, more accurately, that common intention approach is but an example or aspect of the application of a wider principle as to the circumstances in which equity will intervene to redress unconscionability. Speaking of such circumstances, Deane J said in Muschinski v Dodds (1985) 160 CLR 583: "Those circumstances can be more precisely defined by saying that 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." 35 In addressing the issue thus posed, the court is to have regard to matters of the kind described by Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner (1987) 164 CLR 137 at 149: "Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant's assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent." (at 149). 36 It is pertinent to quote recent observations of Murray J (with whom Hasluck and Pullin JJ concurred in Lloyd v Tedesco (2002) 25 WAR 360: "The important consideration where a claim for equitable relief is based upon unconscionability said to arise in the context of non-material contributions by one de facto spouse is that such contributions be related, where a declaration of trust is sought, to the particular items of property over which it is said the trust should be declared. It may be that one party to a relationship makes an important contribution to the relationship by performing a role of support, a role as caregiver, homemaker and the like. No doubt contributions of that kind will be referable to the mutual affection and concern for each other which the parties have. But unless the purposes of the provision of a contribution of that kind go further and the court concludes that it is intended to enhance the material wellbeing of both parties, or to provide the contributing party with an interest in specific property, or that it is made upon the basis that that party would have an interest in such property, then it seems to me that equity will not hold to be unconscionable the retention of property in the beneficial ownership of the other party who has directly contributed to the acquisition, maintenance and enhancement of that material wealth or property: see Stowe at 373-374; Green v Green (1989) 17 NSWLR 343 …" 37 In the present case, the evidence shows that Mrs Weir alone kept up the mortgage payments on the Eastlakes property (at least until the default that caused Newcastle Permanent to exercise its power of sale) and that Mr Weir paid family living expenses at the rate of some $200 per week. It is true that $40,734.00 applied towards purchase moneys and stamp duty came from the proceeds of the transaction with Mr Hartman and that other expenditures relevant to acquisition and occupation of the Eastlakes property also came from that source ($8,295.99 for furniture, $2,088.15 for mortgage insurance and &1,887.20 for legal fees). 38 It may well be that, before the eviction from and forced sale of the Matraville property in December 1986, Mr Weir and Mrs Weir had engaged in a pooling of assets and a joint endeavour or relationship in respect of property that was reflective of a common expectation and intention that each should have an ownership interest in the assets that they together owned. The Matraville property, as well as their first home at Phillip Bay, had been owned by them as joint tenants. But the situation had changed by the time the Matraville property was taken away from them by the mortgagee. It was Mrs Weir alone who raised loans on the security of the Matraville property beyond the $12,500 originally borrowed to buy it. Mr Weir agreed to her doing this, even though he did not know why the money was being obtained or how it was to be spent. After the Matraville home was sold by the mortgagee, the nominal purchaser of a one-third interest in the Maroubra property became Mr Weir alone. He did not know how the loan to buy that interest was raised despite his poor credit rating. It cannot be said that Mr Weir contributed anything to the Maroubra purchase as he neither provided any funds at the time of purchase nor met the mortgage payments. They were taken care of by Mrs Weir out of her much more substantial income. By the time of the forced sale of the Matraville property, it seems to me that any "pooled funds" from the earlier years of the marriage had been fully dissipated by Mrs Weir with the consent and cooperation, wherever necessary, of Mr Weir and that their joint endeavour in relation to property had come to an end. 39 There was not, in reality, any pooling of assets by Mr Weir and Mrs Weir after the mortgagee sale of the Matraville property. The Eastlakes property was bought by Mrs Weir alone. The subsequently acquired Kiama Downs property was bought in the names of Mr Weir and Alison. Mr Weir does not know where the money for either came from, bearing in mind his ignorance of the source of the funds which went into the Maroubra venture and produced the return it eventually yielded, ostensibly in his name. It must have been generated by Mrs Weir, given Mr Weir's limited earnings, lack of savings and inability to borrow. And when the Kiama Downs property was sold, there was an equal division of the profit between Mr Weir and Mrs Weir, thus confirming that any pooling or joint endeavour there may have been at an earlier stage had already ended. Mr Weir's ongoing contribution to living expenses ("… anything else we need to run the house, like the food, electricity and other things") was referable to his ordinary role as husband and father rather than to any contribution to a pool of wealth or a joint enterprise with respect to property. 40 I therefore conclude that Mr Weir's claim based on an interest in the Eastlakes property by way of constructive trust on the alternative basis also fails. Mr Weir's resulting trust claim 41 Mr Weir's claim based on an interest under a resulting trust affecting the Eastlakes property proceeds on the basis that, although Mrs Weir alone was the apparent purchaser, the purchase moneys were contributed in part by her and in part by Mr Weir, so that there became applicable the presumption thus described by Deane J in Calverley v Green (1984) 155 CLR 242: " … where two or more persons advance the purchase price of property in different shares, it is presumed that the person or persons to whom the legal title is transferred holds or hold the property upon resulting trust in favour of those who provided the purchase price in the shares in which they provided it." Where the apparent purchaser is a wife and the person providing purchase money is her husband, another principle described by Deane J operates: "The third 'presumption', usually called the 'presumption of advancement', is not, if viewed in isolation, strictly a presumption at all. It is simply that there are certain relationships in which equity infers that any benefit which was provided for one party at the cost of the other has been so provided by way of 'advancement' with the result that the prima facie position remains that the equitable interest is presumed to follow the legal estate and to be at home with the legal title or, in the words of Dixon C.J., McTiernan, Fullagar and Windeyer JJ. in Martin v. Martin (1959) 110 CLR 297, at p. 303, that there is an 'absence of any reason for assuming that a trust arose'. 'The child or wife has the legal title. The fact of his being a child or wife of the purchaser prevents any equitable presumption from arising', at p.304, (quoting Ashburner's Principles of Equity , 2nd ed. (1933), p. 110n)." 42 Both these presumptions – the presumption of resulting trust and, if that presumption remains unrebutted, the "presumption" of advancement – may be rebutted by evidence. The first will be rebutted if it is shown that, despite having provided part of the purchase money, the person making the funds available did not intend to become an owner in equity. The "presumption of advancement" operating as between husband and wife will not apply if the evidence shows that the husband did not intend to confer a gratuitous benefit upon his wife. 43 In the present case, there is a threshold question that must be addressed before the intentions of Mr Weir are considered. As has been noted already, Mr Weir did not know how the loan enabling him to participate in the Maroubra venture with Mr Hartman was obtained; and all mortgage payments due by him in respect of that loan were made by Mrs Weir from her own earnings. In those circumstances, I do not think it has been shown that Mr Weir in truth provided, in any relevant sense, to the Eastlakes purchase such of the funds made available to him upon the termination of the venture with Mr Hartman as were in fact applied to that purchase. On that basis, his resulting trust claim fails at its inception. 44 If, however, the moneys in question are properly regarded as having been those of Mr Weir, there remains, from his perspective, the need to show, on the evidence, that he, as husband, did not intend to confer a gratuitous benefit upon his wife and that the "presumption of advancement" is thereby rebutted. It was submitted on behalf of Mr Weir that four circumstances combined to constitute the necessary proof: first, that the Weirs had previously owned properties as joint tenants; second, that Mr Weir did not become a purchaser because he did not expect to be able to borrow money; third, the conversation between the Weirs before the purchase which has already been quoted; and, fourth, Mr Weir's willingness to provide his funds in the way he did. 45 The last of these factors has already been discussed. As I have said, I am not satisfied that it is correct to regard the money in question as having been that of Mr Weir in the relevant sense. As to the third factor, I do not see the conversation – in which Mrs Weir referred to the property as being an asset for Mr Weir and the family – as conveying anything about Mr Weir's intentions in relation to the application of funds coming from the Hartman venture, it being quite consistent with the long term position to which Mrs Weir referred for the property to be in her ownership alone and to be left by her by will to surviving family members. As to the first and second matters related the financing and its difficulties, I think I must infer that Mr Weir intended ownership to be such as would allow Mrs Weir, using her maiden name, to represent herself alone as owner so that she would take title and thereby be put in a position where she could devise the property to her husband and children. 46 In summary, the presumption of advancement is not, in my view, displaced, even if, contrary to my earlier conclusion, it can properly be said that Mr Weir contributed money of his own to the purchase. The resulting trust claim is therefore not made out. Conclusions in relation to Mr Weir's claims 47 Mr Weir has not succeeded in establishing that he had, at any time, an interest in the Eastlakes property. He therefore cannot be regarded as having an interest in or claim upon the balance of proceeds of sale now held by Newcastle Permanent. Factual background to Mr Nudd's claim 48 Mr Nudd was a client of Mrs Weir in her accountancy practice. He was introduced to her by his then fiancée whose hairdressing business was conducted on premises adjacent to Mrs Weir's office. In the course of their professional relationship, Mrs Weir from time to time mentioned to Mr Nudd opportunities to invest money on attractive terms. He made several loans to her and a company controlled by her. The claim Mr Nudd now asserts is a claim as a second creditor by virtue of what he says was an equitable charge upon the Eastlakes property. 49 Mr Nudd lodged a caveat on the title to the Eastlakes property in respect of the claimed interest as equitable chargee. Following Mrs Weir's bankruptcy, Mr Nudd instituted proceedings in this Division seeking a declaration that he held an equitable charge over the property. Those proceedings were heard by Bergin J in May 2002. Her Honour decided that Mr Nudd was entitled to the relief he sought: Nudd v Official Trustee in Bankruptcy (2002) 11 BPR 20,163. Two main issues arose, first, whether Mrs Weir, as registered proprietor, had intended to grant an equitable charge to Mr Nudd; and, second, whether the requirement for writing under the Statute of Frauds provisions of the Conveyancing Act 1919 had been satisfied. Both questions were answered favourably to Mr Nudd. 50 The factual background was stated by Bergin J as follows: "The plaintiff loaned $366,000 to Pauline Weir in various amounts over the period late 1996 and early 1997. By late 1997 the plaintiff had become concerned that the loan was not being repaid. In early December 1997 the plaintiff telephoned Ms Weir and said 'I want to discuss repayment of the loans'. Ms Weir said 'I will come and see you about it. I will give you a caveat over my home to secure you. That will be my personal guarantee. There is no risk that you will not be repaid'. On 5 December 1997 Ms Weir visited the plaintiff at his home at 776 Botany Road, Mascot and said: 'I will write out a Loan Agreement which records the amount owing at this time'. That Loan Agreement was in the following terms: 5/12/97 Loan Agreement between Trevor Nudd And Pauline Weir. This acknowledges a loan made today of $366,000 from Trevor Nudd to Pauline Weir repayable on 5th December 1998, interest to be paid monthly at a rate of 10% in the amount of $3050. After the Loan Agreement was completed and signed by Ms Weir and the plaintiff, Ms Weir informed that plaintiff that she had brought with her a Caveat form. Ms Weir said, 'Here is the Caveat to secure the borrowings'. The plaintiff said, 'I have been advised that I need to insert the words "charge to secure loan advance"' to which Ms Weir responded, 'That's fine. Whatever you want'. SCHEDULE 1 Estate or interest claimed Nature of the estate or interest in the Land/Registered Dealing: Charge to secure loan advance of $366,000. By virtue of the instrument referred to below/facts stated below: Nature of Instrument Date Parties Loan Agreement $366,000 5/12/97 Pauline Dorothy Weir (Hinks) Trevor David Nudd The italicised words are in handwriting. The words 'Charge to secure loan advance of $366,000' were written by the plaintiff. The words under the headings, nature of instrument, date and parties had been written by Ms Weir prior to her handing the form to the plaintiff. After the plaintiff wrote the words in Schedule 1 he handed the form back to Ms Weir. Section '(L)' of the Caveat form entitled 'Consent of Registered Proprietor (s74F Real Property Act 1900)' provides 'I, the Registered Proprietor named above, for the purposes of s74F(6) of the Real Property Act 1900 only, consent to this Caveat' underneath which there is a line and underneath that line the words 'Signature of Registered Proprietor'. When the plaintiff handed the form back to Ms Weir she then signed this section as 'P Hinks' and handed the form back to the plaintiff. The Statutory Declaration in section '(K)'was not completed on 5 December 1997. The loan was not repaid on 5 December 1998 and on 16 December 1998 the plaintiff completed the Statutory Declaration and lodged the Caveat with the Land Titles Office." 51 In the present proceedings, it was submitted on behalf of Mr Nudd that his claim upon the funds in the hands of Newcastle Permanent was conclusively determined by the judgment of Bergin J. It was submitted on behalf of Mr Weir that this was not so and that her Honour had been in error in deciding that the writing requirement had been satisfied. The decision of Bergin J 52 Bergin J held that the signature of Mrs Weir upon the caveat under the statement "I, the Registered Proprietor named above, for the purposes of s.74F(6) of the Real Property Act 1900 only, consent to this Caveat", taken in conjunction with the written "loan agreement" signed by Mr Nudd and Mrs Weir immediately beforehand, satisfied the need for writing to create an interest in land. In doing so, her Honour applied to a slightly different fact situation the principles recognised by the Court of Appeal in Troncone v Aliperti (1994) 6 BPR 13,291 where a loan agreement itself stated that the borrower authorised the lender to lodge a caveat on any property owned by the borrower to protect the lender's interest. Mahoney JA, with whom Priestley and Meagher JJA agreed, said: "It is a fundamental principle of construction that 'Whoever grants a thing is deemed also to grant that without which the grant itself would be of no effect' (' Cuicunque aliquis quid concedit concedere videtur et id sine quo res ipsa esse non potuit '): Broome's Legal Maxims (9th ed) at 307. The principle is said to go back at least to Shepherds Touchstone 89. A caveat cannot be entered against land unless the caveator has the relevant proprietary interest in the land: see Real Property Act 1900, s74F(1) ('a legal or equitable estate or interest in land'). Therefore, unless there be evident an intention to the contrary, the grant to the creditors of an authority to lodge a caveat on the relevant property carried with it by implication such an estate or interest in land as was necessary to enable that authority to be exercised. There was, in the present case, no intention to the contrary. Indeed, it might be thought to involve deception or worse if Mr Aliperti had intended to authorise the lodgment of a caveat but to withhold the creation of the interest in the land necessary for that to be done." 53 Mahoney JA did not characterise the interest created. Priestley and Meagher JJA, in separate judgments, held that an equitable charge was created – a view entirely consistent, it seems to me, with the basic proposition in cases such as Rodick v Gandell (1852) 1 DeGM&G 763 that an equitable charge arises whenever a property owner creates a right to resort to his property to satisfy a debt. 54 The circumstances considered by Bergin J differed in that the land owner's authority to lodge a caveat was not contained in the loan agreement itself but formed part of the caveat document which, in the description of the caveator's estate or interest in the land, referred to "Charge to secure loan advance of $366,000", the two documents being signed consecutively in the course of one meeting. Her Honour was content, in the circumstances, to regard the two documents as evidencing a single or composite transaction: "The question that arises is whether the two documents, the Loan Agreement and the form of Caveat, completed and signed on 5 December 1997, properly construed, gave rise to an interest in the land. Contrary to Mr Muddle's submissions I am satisfied that the form of Caveat completed on 5 December 1997 may be read in conjunction with the Loan Agreement in deciding whether there is sufficient writing, signed by the person creating the interest, so as to satisfy the Act: Tonitto v Bassal (1992) 28 NSWLR 564 ; Balaglow per Priestley JA at [98]-[99]." 55 Bergin J then dealt with the point on which, according to the submissions made to me on behalf of Mr Weir, she fell into error. Her Honour held that the two documents together had had the effect of creating an equitable charge even though the section of the caveat form Mrs Weir signed said that the consent to the caveat conveyed by the signature was "for the purposes of s.74F(6) only". After reviewing the terms and purpose of s.74F(6), Bergin J held that the presence of the words in question – particularly the word "only" – did not detract from the proposition for which Mr Nudd contended: "I am satisfied that the insertion of the word 'only' in the caveat form reinforces the positive aspect of the condition of the consent. That is that the registered proprietor has consented that the Registrar General does not have to serve a notice on the registered proprietor notifying 'the estate or interest affected by the caveat'. It is not the fact of the lodgement of the caveat that the Registrar General would otherwise have to serve but the 'estate or interest affected' that has to be notified. A registered proprietor may be able to mount a successful argument that a signature on this section of the caveat cannot be taken to create an interest that is otherwise not provided for in writing in the caveat itself or in the 'instrument' by virtue of which the interest is said to arise. It would be argued that the 'consent' is only to the Registrar General's actions, or more precisely, his lack of action in respect of notices. However this case is different. The two documents, the Loan Agreement and the Caveat form, read together are not dissimilar to the facts in Troncone v Aliperti . In that case the clause provided that 'the Debtor authorises the Creditors to lodge a Caveat on any property owned by the Debtors (sic) to protect his interest'. These are the words construed and must have been the words to which Cummins J referred as 'charging words'. The circumstances of this case are also not dissimilar to what the parties wrote in Coleman v Bone . In that case the words were 'I shall want to put a caveat on the property'. 56 Given the decision of the Court of Appeal in Troncone v Aliperti, I see no reason at all to think that Bergin J was in error in the way suggested because of the words "for the purposes of s.74F(6) only". The terms of that section make it clear, as her Honour noted, that a registered proprietor's consent "for the purposes of" s.74F(6) is, of its nature, a consent that excuses the Registrar General from notifying the registered proprietor, after lodgment of the caveat of "the estate or interest affected by the caveat". By indicating, in effect, that he or she does not wish to be notified of the estate or interest the caveator claims, the registered proprietor must be taken to have expressed awareness of the estate or interest. Importantly, the section is concerned with estate or interest as such, not merely with the caveator's claim to it. Effect of prior adjudication 57 The judgment of Bergin J must, in any event, be regarded as having conclusively determined, as between the parties to those proceedings (Mr Nudd and the Official Trustee in Bankruptcy, standing in the place of Mrs Weir), the existence and nature of the interest of Mr Nudd in the land of which Mrs Weir was the registered proprietor, being an interest to which the land was subject when the Bankruptcy Act 1966 (Cth) caused Mrs Weir's interest to devolve upon the Official Trustee. 58 Because equity acts in personam, Mr Nudd's interest as equitable chargee, confirmed by her Honour's judgment, probably cannot be regarded, in a strict sense, as the product of a judgment in rem and thereby as subsisting against the whole world. But it is shown to have subsisted as against Mrs Weir and accordingly against the Official Trustee whose rights cannot rise above hers. It may be that someone else can show a separate and competing equitable interest that takes priority over the interest of Mr Nudd established by the earlier judgment. If that is done, the result will not be that Mr Nudd's established interest becomes non-existent but that it is postponed. But neither proceedings by a competing claimant nor attempts by that claimant to argue the non-existence of the interest confirmed by the earlier judgment by which the land owner became bound can be effective to undermine the prior determination as between Mr Nudd and the Official Trustee as the statutory successor to Mrs Weir where the Official Trustee is not a party to those proceedings. Conclusion in relation to Mr Nudd's claim 59 Mr Nudd's interest as equitable chargee has been established by judgment against the registered proprietor of the land. There is no scope for that interest to be impeached in these proceedings. An application by Mr Nudd to have the Official Trustee joined as a party was opposed by Mr Weir and was unsuccessful. Disposition of proceedings 60 The claims in paragraphs 1, 2 and 3 of the cross claim filed on behalf of Mr Weir on 31 October 2002 must be dismissed. 61 Given the basis on which Mr Brandling's claim was compromised and my findings and conclusions in relation to Mr Nudd's claim, the following declaration and orders seem to me to be appropriate upon the second cross claim filed on behalf of Mr Nudd on 19 December 2002: 1. Declare that the equitable charge found by Bergin J in proceedings 1484 of 2002 to be held by Trevor David Nudd in respect of the property at Eastlakes referred to in folio identifier 1/82242 subsisted, until transfer of that property by Newcastle Permanent Building Society Limited in exercise of power of sale as mortgagee pursuant to transfer 8925055N, so as to rank, in point of priority, after the interest of Paul Brandling recognised by order 1 of orders made herein by consent on 22 July 2003. 2. Order that Newcastle Permanent Building Society Limited pay to Trevor David Nudd, out of the balance of funds the subject of the undertaking of Newcastle Permanent Building Society Limited dated 9 August 2002 remaining after the making of the payment required by order 1 made herein by consent on 22 July 2003, the sum which is $366,000 together with interest thereon at the rate of $3,050 per month from 5 December 1997 to the date of payment or, if that sum is greater than that remaining balance, the whole of that remaining balance. 3. Order that any part of the remaining balance of funds referred to in order 2 that is not paid to Trevor David Nudd in accordance with order 2 be paid by Newcastle Permanent Building Society Limited to the Official Trustee in Bankruptcy as trustee of the bankrupt estate of Pauline Dorothy Weir. 62 In case the parties see some need for refinements or other elements, I shall defer the making of orders and direct that agreed short minutes be filed by delivery to my Associate within fourteen days. Such submissions as the parties wish to make on the matter of costs should be put in writing and delivered within the same period. ********** Last Modified: 08/18/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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