New South Wales Supreme Court CITATION : Harris v Harris [2004] NSWSC 638 HEARING DATE(S) : 14 and 15 July 2004 JUDGMENT DATE : 15 July 2004 JURISDICTION: Equity Division JUDGMENT OF : Windeyer J DECISION : Judgment for the defendant CATCHWORDS : EQUITY - trusts - contributions to mortgage payments - whether gives rise to interest in property CASES CITED : Calverly v Green (1984) 155 CLR 242 Morris v Morris [1982] 1 NSWLR 61 PARTIES : Anthony George Harris (Plaintiff) Paul Anthony Harris (Defendant) FILE NUMBER(S) : SC 4340 of 2002 COUNSEL : Ms J Pentelow (Plaintiff) Mr G Carolan (Defendant) SOLICITORS : Adams and Partners (Plaintiff) Farry & Co (Defendant) - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WINDEYER J THURSDAY 15 JULY 2004 4340/02 ANTHONY GEORGE HARRIS v PAUL ANTHONY HARRIS & 1 ORS JUDGMENT 1 HIS HONOUR: This is a very sad case between father and son. So there should be no undue suspense while I am giving the reasons, I should say at the outset, the plaintiff's claim fails. 2 The dispute revolves around a property at 68 Barton Street, Katoomba. The property was purchased as vacant land by the defendant for $18,000 in 1987. He obtained a mortgage from the St George Building Society to enable him to fund that purchase. 3 At that time, the defendant and his parents were living in a housing commission house at Minto, his parents being the tenants to that commission. 4 It seems from the evidence that there was a suggestion or intention by the government that rentals for housing commission properties should be brought more into line with their real worth. 5 The defendant at this stage was wishing to build a house on the Katoomba land. He approached the National Mutual Royal Bank for a loan for that purpose. At that stage, the bank was offering what could be described as concessional rates of interest to persons who were qualified under the bank rules for such loans. 6 The bank manager told the defendant that his income was not sufficient, apparently because, in his words: He was working in a higher duties position and being paid for that position but the position was not permanent. In any event, the bank manager suggested that his father, namely, the plaintiff, should become a borrower as well. 7 The bank letter of offer on its face has errors in it and whether or not the plaintiff eventually became a guarantor to a mortgage loan or became a co-borrower with the defendant is not clear. 8 What is clear however is he did become liable to the Bank for the repayments due under the loan. And it is probably more likely than not that he became a principal debtor to the bank. In the circumstances, I doubt if it matters. 9 The amounts payable to the bank under the mortgage calculated on monthly payments for principal and interest plus an amount for insurance came to $959 per month, which equates to approximately $221 per week. 10 It was agreed between the defendant and his parents that they would contribute the sum of $110 per week. There is an argument as to whether or not this was a contribution to the mortgage payments of $110 per week, being half their amount, or whether it was board. In the long run, as I will endeavour to explain, I do not think that it matters. 11 The plaintiff's version of events as to how this money was paid seems to me to be quite unlikely. It varied, depending upon which affidavit one could depend upon at the time, and also varied in his oral evidence. 12 The defendant said that the money was paid to him in cash and that all the mortgage monies were paid out of his account. The only bank statement in evidence is in accordance with that version of events. 13 There is only one bank statement, but it is I think, more likely than not, that all payments were made from an account of the defendant into the bank loan account. 14 That in itself does not mean that the plaintiff or the plaintiff's now deceased wife did not make payments into the defendant's account, but I think it more likely than not that the version that they were paid in cash is correct. 15 This arrangement as to the payment of the $110 a week, commenced either in September or December 1989 and continued up to September 1992. 16 During this time, the plaintiff was in regular employment. His wife was well or reasonably well. He was travelling five hours per day from Katoomba to his work which obviously placed some burden on him. And he was well able to make the payments. 17 However, after 1992, a) his work was less regular, b) his wife became ill and he became carer for her. It was agreed that the payments would cease. 18 There is evidence from the plaintiff which I accept that it had been stated that if he was unable to continue the payments for some reason, then either the defendant would have to make all the mortgage payments or the defendant would have to do without them. As once again, whichever way, it does not really matter. 19 The plaintiff and his wife and the defendant lived together in the Katoomba property until 1995. The defendant then moved to England for five years. The plaintiff's wife died in January 1996. After that date the plaintiff lived alone in that house for four years until the defendant returned in 2000. And from the year 2000 until 2002 when the property was ultimately sold, the plaintiff and the defendant lived together until what seems to be the last few weeks. 20 While all three were living in the property, the evidence tends to show that parents and son contributed more or less equally to the general outgoings on the home. After the defendant went to England, he provided funds for his father to make the mortgage payments and to pay the rates on the property. His father paid the other outgoings on the property. 21 When the house was constructed, the plaintiff purchased some items which were put into it, such as: screens for doors; some Venetian blinds; a log fire; a letter box, which items were, as I understood the evidence, all new; and also provided some carpets for the house, some at least of which came from the house at Minto. 22 After the parents and son moved into the house, both father and son did work on the garden and grounds and some items for this such as plants, were paid for by the plaintiff. 23 The plaintiff said that he expended considerable monies on this, but there is no evidence of any amount. Nor I think was the work done more than would normally be expected by somebody who was living in a house with his son and expecting to live there at least for an indefinite period. 24 The defendant's work available to him while he was living at Katoomba came to an end. He moved to Alice Springs. He purchased a unit there. He said he purchased one which would be sufficient to accommodate his father and his father's dog if his father wished to go. 25 His father said he did not wish to go there because it was too hot. There were some spasmodic attempts to find what could be described as "cheap country cottages" which might be available for the plaintiff. But these came to nothing, apparently because a bank loan was not available for cottages in those small towns. 26 The plaintiff puts his claim in various ways. First he says that there was a representation made that if he contributed to the improvement and acquisition and maintenance of the land he would acquire an interest in the land, or be able to live on the land for the rest of his life and in reliance on those representations, he carried out the improvements and made the contributions. 27 There is no evidence of that representation and no evidence of reliance on it. The closest the evidence could go to this, as the counsel for the plaintiff I think rightly pointed out, was that the plaintiff and his wife gave up what might have been described as a "secure tenancy" from the housing commission to go to live in Katoomba. That in itself cannot give rise to some implied representation. 28 There is a further claim that it was the common understanding that if the plaintiff contributed to the acquisition, that he would acquire an interest in the land. That is, as I understand it, a claim of conventional estoppel. Once again it is not made out. There is, in effect, no evidence of it nor that the parties acted in accordance with that assumed position. 29 There is a claim that the plaintiff contributed to the improvement, acquisition and maintenance of the property in a joint relationship or endeavour which has failed and that it would be unconscionable for the defendant to retain a benefit from those contributions. That is a claim, as I understand it, based upon Morris v Morris [1982] 1 NSWLR 61 which I will return to, but is otherwise not made out. Particularly so far as the claim of unconscionable conduct in retaining the benefit is concerned. 30 It is necessary now to go to the relief sought by the plaintiff and to determine whether or not any such relief is available. 31 The first claim is for a declaration that the defendant held the property at Katoomba on trust for himself and the plaintiff in shares to be determined by the Court. 32 That claim is made on the basis that the plaintiff has an interest in the property, proportionate to his contribution to the mortgage. This claim, as articulated was based on a Calverly v Green (1984) 155 CLR 242 reference. But that decision relates to interest that joint owners have in a property determined by their contribution to the purchase price of that property. So far as that law is concerned, the property is the land. Improvements that are put on to it later are a separate matter. 33 Nevertheless, and I will return to this, it is clear that the defendant obtained some benefit from the plaintiff by the plaintiff agreeing to become liable under the mortgage whether as borrower or guarantor, and to that extent, at least he obtained the benefit of a favourable rate of interest. 34 However, the trust claim has no basis and thus fails. 35 The second claim is for a declaration that the defendant held the property at Katoomba on trust during the life of the plaintiff to permit him to occupy the land until he died or so long as he desired. That claim is not made out either. 36 There is no doubt that the parties went to Katoomba together assuming they would live happily there together. That does not give rise to some trust in the nature of a right in the plaintiff to occupy the property for as long as he wished, whether he made any payments towards it or not. 37 The third declaration sought is one that the plaintiff is entitled to a share of the proceeds of sale. That, as I understand it, is no different from the other claims made but the share is said to be determined in some way by taking the proportionate contributions made towards the mortgage by the plaintiff and his son. 38 There are some figures put forward in a report of Mr Dryza which, for the most part I think, should not have been admitted into evidence. But as it was admitted into evidence, it must for the large part be disregarded, apart from the mathematical calculations. There are many reasons for this, one being that the witness took into account unestablished assumptions, and that he did not take into account the value of the land as originally purchased. There are other problems with it. It has no value as an expert's report. 39 The fourth claim however is for a declaration that the plaintiff is entitled to a charge on the land to secure payment to him of some sum which the Court should determine. 40 It is accepted of course now that the property has been sold, that if the plaintiff is entitled to one of the declarations sought, then, as those declarations cannot be given effect, it would be possible for the court to make some award of equitable compensation which would give the same benefit to the plaintiff as he seeks under those orders. 41 I should also say that the property was sold for $240,000 and that there is an amount of approximately $50,000 retained in trust and pending the outcome of the proceedings. 42 If the money, namely the $110 per week, was paid to the defendant by way of board, and I think it more likely than not that it was, although the amount was obviously calculated having regard to the mortgage payments, then it is quite clear that the plaintiff's claim for any relief must fail. 43 It would have to be borne in mind in any event, that from 1993 until 2002, no payment of board was made. 44 If however, contrary to that conclusion, the plaintiff and his wife did make payments of $110 per month towards the monthly mortgage repayments, then the amount which they so contributed was either about $17,300 or about $15,500. 45 The date on which the payments were commenced is not entirely clear, but I am prepared to work on a figure of $16,500 as being a reasonable determination of the amounts paid by them on the basis of $110 per week. 46 It should not be thought that this actually would have covered the mortgage payments as the rate of mortgage did increase. But I accept that it probably would have covered about one half of those mortgage payments up to the time those payments ceased. 47 On that basis, in some circumstances, it would be proper to impose a charge over the monies held in trust for that figure, together with interest from the date on which the plaintiff went out of possession when he lost the benefit of those monies that he had paid. As I explained just before adjourning prior to delivering this judgment, that in my view, was the most that the plaintiff could achieve in these proceedings as it would represent a proper amount of compensation to him for the fact that he did enable the defendant to obtain the mortgage on the favourable terms and may have, although this is not clear, enabled the house to be built. 48 The question though is assuming and accepting that these payments were made directly to satisfy part of the monthly mortgage payments, whether the fact that the payments ceased in 1993 is a matter that in equity must be taken into account. 49 While it is probably true that the parties accepted that if the plaintiff and his wife were not able to make the payments, then that was a position which would be accepted, that does not necessarily mean that it is not a matter which has to be taken into account in determining whether equity should impose the charge which the plaintiff seeks to have imposed now on the proceeds of sale. 50 In my view, it is a matter which must be taken into account. It could not possibly be thought that nine years occupation of the property without payment of the $110 per week, was not something which balanced out favourably against the $16,500 to which the plaintiff might otherwise be entitled to a charge. 51 The other matters put forward by the plaintiff in the same way cannot give rise to any entitlement. There is no evidence of the value of the items which he and his wife provided for the house. But when taken over a period from 1989 to 2002, this must be regarded as an ordinary contribution to joint living in the same way, any work done on the gardens and around the house for maintaining it, could not be matters which would give any entitlement to the proceeds of sale. Those matters are ordinary incidents of living in houses and the work is work which can reasonably be expected to be done by people who have the benefit of living in a house. 52 The sad result of this case is that the plaintiff's claim must be dismissed, and I will so order. 53 The orders are as follows: 1. Judgment for the defendant. 2. Order that the summons and statement of claim be dismissed. 3. Order that the plaintiff pay the defendant's costs; 3. Exhibits may be returned; 4. Order that Farry & Co be released from the undertakings give to the Court on 5 September 2002, to the intent, the monies referred to be paid to the defendant. ********** Last Modified: 08/03/2004 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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