New South Wales Supreme Court CITATION : Thornton v Hyde [2004] NSWSC 125 HEARING DATE(S) : 6 November 2003 JUDGMENT DATE : 5 March 2004 JUDGMENT OF : Burchett AJ at 1 DECISION : Declaration that defendant's interest in subject land is held in trust for the plaintiff and consequential relief. CATCHWORDS : Resulting trust in relation to home acquired wholly (save as referred to in next point) with the man's money in connection with a de facto relationship between him and a woman - whether position affected by use of a joint borrowing the common intention being that it would be repaid wholly by the man, the woman having decided at the time of the acceptance of the loan that the house would not be her home - circumstances in which the common intention made it unconscientious for the woman to assert a beneficial interest in the property - circumstances in which, the substratum of the relationship having been removed, it would be unconscientious for the woman to enjoy the benefit of the property. LEGISLATION CITED : De Facto Relationships Act 1984 Property (Relationships) Act 1984 Baumgartner v Baumgartner (1987) 164 CLR 137 Hohol v Hohol [1981] VR 221 Kais v Turvey (1994) 11 WAR 357 CASES CITED : Lloyd v Tedesco (2002) 25 WAR 360 Muschinski v Dodds (1985) 160 CLR 583 Rasmussen v Rasmussen [1995] 1 VR 613 Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 Taylor v Johnson (1983) 151 CLR 422 PARTIES : Alan Robert Thornton (Plaintiff) Phyllis Hyde (Defendant) FILE NUMBER(S) : SC 2234/99 COUNSEL : R. W. Tregenza (Plaintiff) No appearance (Defendant) SOLICITORS : Keith Charles Foreman (Plaintiff) No appearance for defendant - 9 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Burchett AJ 5 March 2004 2234/99 Alan Robert Thornton v Phyllis Hyde JUDGMENT 1 His Honour: This matter was heard ex parte, the defendant, though served with process and notified that the plaintiff was pressing on to a hearing, having elected not to appear to contest the issues raised against her. Nevertheless, important and difficult questions between the parties are involved, so I reserved my decision. 2 The evidence shows the plaintiff, Mr Thornton, met the defendant, Ms Hyde, in 1983, when he was on a business trip to New Zealand. They formed a relationship, and it was arranged that he would pay her fare, as well as that of her daughter, to enable them to join him in Australia. As a result, from October 1983 until March 1985, they lived together as de facto husband and wife, along with her school age daughter and his four children of a dissolved marriage, born between 1969 and 1979. 3 From March 1985 to June 1985, she continued to share the same house with him, though occupying a separate bedroom, but in June she departed, taking his car which was worth about $6500. Until the end of the year, Ms Hyde left her daughter in his charge, and he accepted the expense her care involved. 4 When Ms Hyde came to Australia to join him in December 1983 and until December 1984, he was employed at Tumburumba as a production manager of a company in the Conzinc Rio Tinto Group; and the parties lived in accommodation he had leased there, where he and his children had already established their home. The defendant brought only her personal effects with her, and she did not seek employment. He provided for her and her child. 5 In December 1984, the plaintiff was transferred in his employment to Heron's Creek near Port Macquarie, where his employer provided temporary accommodation. He liked Port Macquarie, so he decided to buy his own home. He told the defendant, whom he regarded, with her daughter, as part of his family, and she was involved in the choosing of a suitable house. But they did not discuss long term plans because, I infer, they were, neither of them, ready to commit to the permanent relationship of a married couple. 6 The new house, at 16 Calwalla Crescent, Port Macquarie, was purchased, and they moved into it in February 1985, bringing with them the furniture and household requirements the plaintiff had previously acquired and used. However, almost immediately, later in the same month or in early March, the defendant announced her disinclination to stay in Port Macquarie. She said: "I don't see [it] as a place where I can stay. It's not my social scene". And she referred to the lack of opportunities for work. The relationship between Mr Thornton and Ms Hyde then rapidly deteriorated, and she left for Newcastle in June in order, as she said, "to establish a nightclub cum discothèque with friends". She made no provision for her daughter until December, after the end of the school year, when she asked the plaintiff to send her by bus to Burleigh Heads, where Ms Hyde then was. In the meantime, he had driven with the daughter to Newcastle on two occasions, so that she could see her mother. All this travel was at his expense. 7 At no time after she left did the defendant make any inquiry about the house or offer to pay any outgoing in connection with it. She had been issued a credit card, on the plaintiff's guarantee, in respect of which a sum of about $3,000 was owing as at July 1985. The plaintiff was sued by the bank because she did not pay, so he borrowed $2,500 from his employer and paid off the debt. 8 The plaintiff continued to live in the house until December 1989, when he obtained employment in Zambia. He took his youngest child, Greg, with him, but two of the older children remained in the house until 1994, although part of it was let to meet a portion of the mortgage repayments. In July 1994, the plaintiff returned to Australia with a new wife, Greg and two further children, to live in the house at Port Macquarie for ten months. He and his oldest son carried out a considerable amount of work improving and adding to the house. 9 But in early 1995, the plaintiff consulted a solicitor about selling the house. It was then that he learned he could not sell it without the cooperation of the defendant, because the title was in their joint names. Strange though it may seem, I accept his evidence that he had not previously understood this to be the position. After some attempt to reach an arrangement by negotiation, which proved frustrating partly because the defendant had moved from country to country in the meantime, the present proceeding was instituted. 10 The circumstances in which the title had come to be in the joint names of the parties were the following. The purchase price of the house at 16 Calwalla Crescent was $87,000, the deposit being $14,000. Mr Thornton was able to raise $14,200 by selling some shares he held for $1,200 and borrowing $13,000 from his parents. He proposed to obtain the balance of $72,800 from the State Building Society (now St George Bank) on loan secured by mortgage, the term of the loan being 25 years, the effective interest rate (remembering that this was in 1985) being 14% per annum, and the monthly repayments $877. But to obtain this loan, it was necessary to satisfy the Society that the mortgagor had an income exceeding Mr Thornton's income of $555 per week by about a further $200 per week. In order that the required income level might be achieved, Ms Hyde took up casual work for two nights a week in a motel and the application for the loan was made in both names. The casual work was maintained from late February 1985 to about April or May 1985, that is, until very shortly after the loan was approved by the Society on 9 April 1985 and the purchase was settled. From very early February, the parties had occupied the home under a lease, pending settlement. As Ms Hyde was a party to the mortgage, it was inevitable that the house should be in both names, although the plaintiff's evidence is to the effect that he was not consulted about the implications by the solicitor who acted on the conveyancing, and he was unaware that the title showed Ms Hyde and himself as joint tenants. 11 It was in the month before the loan became available that the parties moved into separate bedrooms, and, very shortly after, the defendant left, never to return. I find that, when the loan from the State Building Society was taken up, the mutual intention of the parties was that it should, as between them, be entirely the responsibility of the plaintiff, the defendant's part having been limited to enabling him to obtain a loan on the requisite terms by joining in the application and doing some casual work. She ceased that work almost at once. They must have appreciated, if they thought about it, that she would have a legal liability to the Society, but their mutual intention was that he would discharge the whole of this liability. I am satisfied, on the balance of probabilities, that, for her part, she had no intention of being involved any further in the acquisition of the house, and no intention of accepting any responsibility in relation to it or taking a beneficial interest in it. Nor did he intend she should have such an interest or any obligation in respect of its purchase or maintenance. 12 Subsequent events confirm this view of the situation. All payments related to the house were made by Mr Thornton. Over a period of many years after Ms Hyde left, and until Mr Thornton traced her whereabouts because he had discovered he could not enter into a transfer alone, she made no inquiry about the house, did not seek to take any part in the letting of it, and offered no contribution to insurance, rates or maintenance in respect of it. By contrast, the plaintiff took out a policy of fire insurance (in his own name alone), paid the rates and carried out repairs and improvements at an expense of about $30,000. The plaintiff also made accelerated payments in respect of the mortgage when he was achieving higher earnings overseas. 13 In my opinion, the defendant's failure to make any attempt to repay the plaintiff in relation to the expenses he incurred for her daughter, in relation to the credit card, and in relation to the motor vehicle is relevant, not, of course, upon some such basis as might have been put forward if the separation had occurred at a date attracting the operation of the De Facto Relationships Act 1984 (now the Property (Relationships) Act 1984), but as evidence from which it can be inferred she never intended to accept any significant joint financial responsibility with the plaintiff. This inference, together with her clear concurrence by conduct in his making all repayments and bearing all expenses in respect of the house, enables me to conclude that she thereby admitted Mr Thornton's exclusive beneficial interest in the house: Calverley v Green (1984) 155 CLR 242 at 262 per Mason and Brennan JJ (with whom, on this point, Deane J agreed at 271); Bloch v Bloch (1981) 37 ALR 55 at 64, per Brennan J citing the dictum of Lord Diplock in Gissing v Gissing [1971] AC 886 at 906: "The conduct of the spouses in relation to the payment of the mortgage instalments may be no less relevant to their common intention as to the beneficial interests in a matrimonial home acquired in this way than their conduct in relation to the payment of the cash deposit." Brennan J added, in Bloch v Bloch at 64: "The inference to be drawn from the facts of the present case is that the parties intended their respective beneficial interests to be proportionate to the contributions made to acquire the land and to free it of encumbrance." I accept that mortgage payments "would rarely quantify the interests of parties under a resulting trust of a house property acquired as a home to live in" (Calverley v Green at 263); but this case is quite unusual. The common intention from the beginning was that all the payments should be made by Mr Thornton and at the time of the acceptance of the mortgage loan, Ms Hyde no longer had any firm intention, if she had ever really had an intention of that character, that the house should be "a home to live in", so far as she was concerned. 14 Not only did the defendant not contribute to the payments made to acquire and maintain 16 Calwalla Crescent; she did not contribute financially to the household during her cohabitation with the plaintiff, except during the period of three months when she was doing some casual work, earning an average of about $150 per week. She did use these earnings, or part of them, for food, groceries etc. That contribution to the household, which included her daughter, was, of course, far outweighed, not only by Mr Thornton's contribution, but also by the value of the car, the credit card debt and the expenses related to her daughter to which I have referred. 15 In Muschinski v Dodds (1985) 160 CLR 583 at 589 – 590, Gibbs CJ said: "The equitable rules relating to the creation of a resulting trust in a case such as the present were recently considered by this Court in Calverley v Green . For present purposes, it is sufficient to state them as follows. Where, on a purchase, a property is conveyed to two persons, whether as joint tenants or as tenants in common, and one of those persons has provided the whole of the purchase money, the property is presumed to be held in trust for that person, to whom I shall, for convenience, refer as 'the real purchaser'. However a resulting trust will not arise if the relationship between the real purchaser and the other transferee is such as to raise a presumption that the transfer was intended as an advancement, or in other words a presumption that the transferee who had not contributed any of the purchase money was intended to take a beneficial interest. It was held in Calverley v Green that no presumption of advancement arises where a man puts property into the name of a woman with whom he is living in what is commonly called a 'de facto relationship'… ." 16 Unless the joint nature of the mortgage produces the result, as it would generally, that Ms Hyde contributed one half of that portion of the purchase price which was paid by the loan obtained from the State Building Society, this principle would lead to the conclusion that the plaintiff is beneficially entitled to the entirety of the property. In my opinion, on the facts as I have found them, that is the appropriate conclusion notwithstanding the terms of the mortgage, subject to the qualification that the plaintiff is bound to indemnify the defendant against any liability which may remain pursuant to the mortgage. 17 Alternatively, the common intention which I have found was formed by the parties, upon which the plaintiff clearly acted to his detriment in a relevant sense, created a situation in which it would be unconscientious for the defendant to assert a beneficial interest in the property: Rasmussen v Rasmussen [1995] 1 VR 613 at 615 – 617. Coldrey J in Rasmussen cited a passage from the earlier decision Hohol v Hohol [1981] VR 221 at 225 where, instead of the word "unconscientious" or its synonym in such a context "unconscionable", the word "fraud" is used; but in Taylor v Johnson (1983) 151 CLR 422 at 431, Mason ACJ, Murphy and Deane JJ explained that the word "fraud" may be used "in the wide equitable sense which includes unconscionable dealing". 18 Finally, if I were wrong in both these conclusions, the case would be one where the plaintiff arranged for the defendant to have an interest in property paid for by him, which it was always intended should be paid for only by him, on the basis and for the purposes of the relationship between the parties, where the substratum of the relationship has been removed without blame being attributable to him, and where the defendant, unless equity intervenes, would enjoy the benefit of the property in circumstances in which it was not specifically intended or specially provided she should enjoy it. That she should do so in this situation would be unconscientious: Muschinski v Dodds at 620; Lloyd v Tedesco (2002) 25 WAR 360 at 363, 368 – 369; Baumgartner v Baumgartner (1987) 164 CLR 137 at 148-149; Kais v Turvey (1994) 11 WAR 357 at 364; Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 at 525, 555, 557. 19 Accordingly, I hold that the plaintiff is entitled to the relief claimed, and I make the following declaration and orders: (1) That it be declared that the defendant holds all her interest in the land and premises situated at and known as 16 Calwalla Crescent, Port Macquarie being the whole of the land in Folio Identifier 24/238552 upon trust for the plaintiff. (2) That it be ordered that the defendant do all acts and things and execute all documents to transfer to the plaintiff all her right title and interest in the property situated at and known as 16 Calwalla Crescent, Port Macquarie being the whole of the land in Folio Identifier 24/238552. (3) That it be ordered that the plaintiff indemnify the defendant and keep the defendant indemnified in respect of the mortgage given by the plaintiff and defendant to the St George Bank (Loan No. S2117825152). (4) That it be ordered that should the defendant fail or refuse, within seven days of written request to do so, to execute any document or documents required by the plaintiff to implement the above orders, the Registrar of this Court be appointed to execute such document or documents on behalf of the defendant, and to do all such acts and things as may be necessary for the said purpose. (5) That the plaintiff have liberty to apply without notice should he have any difficulty in communicating with the defendant for the purposes of any of these orders. ********** Last Modified: 03/10/2004 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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