Parn v Parn [2003] NSWSC 110

Reported Decision : (2003) DFC 95-270

New South Wales Supreme Court

CITATION : Parn v Parn [2003] NSWSC 110 HEARING DATE(S) : 19 February 2003 JUDGMENT DATE : 28 February 2003 JURISDICTION: Equity Division JUDGMENT OF : Master Macready DECISION : Paragraph 36

CATCHWORDS : Family Law. Application under Property (Relationships) Act 1984 in respect of a 31 year relationship. One party contributes house at commencement of relationship. Assessment of contribution. PARTIES : Beverley Ann Parn v Raivo Parn FILE NUMBER(S) : SC 5477 of 2001 COUNSEL : Mr R.D. Wilson for plaintiff Mr N. Jackson for defendant SOLICITORS : Peninsula Law for plaintiff Symons & Company for defendant

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Master Macready

Friday 28 February 2003

5477/01 BEVERLY ANN PARN v RAIVO PARN JUDGMENT 1 MASTER: This is an application by the plaintiff in which she seeks orders imposing a constructive trust in respect of a property at 22 Golf Parade, Manly. She also seeks an adjustment of the property rights for herself and the defendant pursuant to the Property (Relationships) Act 1984. The parties lived in a de facto relationship for 31 years from January 1970 until May 2001. The defendant also cross-claimed against the plaintiff seeking adjustments under the Act and, surprisingly, a claim for a constructive trust. A Judge of the court has referred the whole of the proceedings to a Master for determination 2 The plaintiff filed an amended statement of claim in which she sought the imposition of a constructive trust as the original claim was the one under the Property (Relationships) Act. No defence has been filed to that amended statement of claim nor has there been any defence to the cross-claim bought by the defendant. The parties are agreed that the plaintiff's constructive trust claim is denied and that the defendant does not pursue the constructive trust claim in his cross-claim. As the parties have proceeded on this basis I will deal with the matter also on this basis. History of the parties' relationship 3 The defendant was born in 1942 and the plaintiff in 1947. The defendant purchased a property at 22 Golf Parade, Manly for $9000 in 1967. He borrowed $4000 from the Commonwealth bank for this purpose. He moved into the property and started doing some renovations to the property. 4 In 1969, the plaintiff first met the defendant and in January 1970 they commenced living in a de facto relationship. At the time both parties were working the plaintiff then working, as a head cashier with Safeways Ltd. In Easter during 1970 they both moved to live at the defendant's property at 22 Golf Parade, Manly. The defendant's mother also lived with them there until September of that year. Because of differences with the defendant's mother the parties moved out of the Golf Parade home pending their purchase of a property at North Narrabeen. 5 In February 1971 the defendant purchased a property at 27 Taiyul Road, North Narrabeen for the sum of $11,000. This was financed by a mortgage of $8000 from the ANZ Bank. The parties moved into the property in March 1971. 6 Between 1972 and 1976 the parties had four children three of them either being stillborn or dying within a few days of their birth. The surviving child Julie was born on the 22nd of February 1976. She is now married and has child. 7 In 1977 the parties moved back to the Golf Parade property where they resided for a period of seven years until 1984. The North Narrabeen property was rented until it was sold in 1981 for $45,000. The sale had enabled the parties to buy a property at 305 Thirlemere Way, Thirlemere in 1982 for $17,500. The property was purchased in the name of the plaintiff. This was decided by the defendant as he wanted the plaintiff to have some security in the event the relationship did not continue. 8 In October 1999 the defendant decided that the property of Thirlmere should be transferred to the parties' daughter Julie. The plaintiff initially opposed it suggesting that they should sell the property and provide some funds to Julie so that she could purchase a home. Ultimately the property was transferred to Julie for no consideration and she, her husband and child have continued to live on the property. The defendant had done a lot of work on the Thirelmere property and had commenced the building of a second dwelling house on the property. 9 In the middle of the year 2000 the parties returned to live at Golf Parade, Manly. Shortly prior to that the plaintiff had received an inheritance of $19,652 from her father. That sum was used as to $14,800 to purchase a 1992 Holden believer station wagon in the name of the parties and the balance namely $4852 was used to buy furnishings for the Manly home. The defendant has retained the car and most of the furnishings. 10 The parties separated on 31 May 2001 and the only property in respect of which they seek adjustment is the property Golf Parade, Manly. In the property of the parties at the commencement of the relationship 11 The plaintiff gives no evidence of her property at the time of commencement of the relationship and accordingly I will assume, as the parties have in the running of the case, that she had no such property. 12 Evidence shows that the defendant owned the property in Golf Parade, Manly outright as he had managed to pay off the mortgage prior to the parties entering into a de facto relationship. As I have mentioned the property was purchased for $9000 in 1967 and shortly after the purchase of the property the defendant commenced renovating it. These renovations included replacing internal linings making good surfaces, painting inside and outside and also carpeting the premises. There is no evidence of the value of the property at the time of commencement of the relationship in the 1970 but I will assume that it had increased slightly due to the improvements and the passage of three years. 13 As I have mentioned, the plaintiff was a head cashier for Safeways Ltd when she met the defendant and she earned $52 net per week. The defendant was employed as a storeman and his salary was slightly in excess of that the plaintiff. The plaintiff continued working at Safeways for a while and then obtained employment with another company with whom she continued working till July 1972 when she first became pregnant. During the period of her pregnancies she worked for about five and a half months in a pre-school at North Sydney but does not remember the amount of her wages. It is plain that the plaintiff had contributed the whole of her wages in this time to the relationship either by paying for household requirements or contributing towards repayments of the mortgage on the North Narrabeen property. For the rest of the relationship the plaintiff was not employed and she was engaged full-time in household and parenting duties. The property of the parties at the conclusion of the relationship 14 At the conclusion of the relationship the plaintiff had no assets and her only income was a social security benefit of $369 per fortnight. She now lives with her sister. 15 The defendant's assets consist of the property Golf Parade, Manly, some cash which was not quantified but likely to be in the order of $12,000 and a small amount of superannuation. The parties have not sought adjustment in respect of the superannuation which appears to amount to $1,668. The parties are agreed that the evidence discloses that as at May 2001 the Golf Parade, Manly home was valued at $725,000 and as at 7 February 2003 $850,000. The claims of the parties 16 The plaintiff submitted that in respect of the claims for a constructive trust and adjustment of property interests, the proper conclusion was that she should be entitled to one half of the proceeds of sale of the Golf Parade property. The defendant for his part submitted that the plaintiff should receive 20 percent and that he should receive 80 percent of such proceeds. In Jones v Grech 27 Fam L R 711 the court referred to the necessity of determining interests of the parties in the relevant property at the commencement of the relationship or the acquisition of the property. In the present case there is no doubt that the defendant owned the only property that falls for consideration outright and unencumbered at the time of commencement of the relationship. 17 As can be seen from the recounting of the history of the relationship the parties were involved in the development of two other properties. The first of these was sold and the proceeds used to purchase the property at Thirlmere. The plaintiff eventually gave the property at Thirlemere to her daughter. This was both at the instigation of and the insistence of the defendant. Contributions to that property thus do not fall to be considered except to the extent that they indicate a long and committed relationship between the parties. The plaintiff's constructive trust claim 18 This claim was squarely based upon the principles set out by the High Court in Baumgartner v Baumgartner (1987) 164 CLR 137. It expressly was not based upon any actual or presumed common intention. At 147-148 the majority explained the principle in these terms: "Deane J (with whom Mason J. agreed) reached this result by applying the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. His Honour said (at p 620): "... 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: cf. Atwood v. Maude (1868) LR 3 Ch App 369, at pp 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 ChD 529, at p 531." His Honour pointed out (at p 614) that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention "to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle". See also p 617. In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged (at p 616) that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust."