New South Wales Supreme Court CITATION : Bilson v Rogers [2008] NSWSC 469 HEARING DATE(S) : 14 May 2008 JUDGMENT DATE : 16 May 2008 JURISDICTION : Equity JUDGMENT OF : Jagot AJ CATCHWORDS : TRUST - resulting trust - purchase of property - unequal contribution of plaintiff and first defendant to purchase price - whether plaintiff and first defendant had common intention that beneficial interest would vest wholly in plaintiff - declaration that first defendant held the whole of his interest in property on resulting trust for plaintiff and consequential orders CATEGORY : Principal judgment Bloch v Bloch (1981) 180 CLR 390 Buffrey v Buffrey [2006] NSWSC 1349 CASES CITED : Calverley v Green (1984) 155 CLR 242 Muschinski v Dodds (1985) 160 CLR 583 Thornton v Hyde [2004] NSWSC 125 PLAINTIFF Sandra Gai Bilson PARTIES : DEFENDANT Stephen Peter Rogers FILE NUMBER(S) : SC 2148 of 2007 COUNSEL : Mr C D Freeman - plaintiff No appearance - defendant SOLICITORS : Cooke & Corry - plaintiff No appearance - defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Jagot AJ 16 May 2008 2148 of 2007 SANDRA GAI BILSON v STEPHEN PETER ROGERS JUDGMENT 1 HER HONOUR: By summons filed on 5 April 2007 the plaintiff (Sandra Gai Bilson) sought a declaration that the first defendant (Stephen Peter Rogers) held his interest in a property at Therese Circuit, Baulkham Hills on trust for the plaintiff, and consequential orders for the transfer of the defendant's interest in the property to the plaintiff. 2 The plaintiff's claims against the second defendant (Lumley General Insurance Limited) were settled by consent orders made on 25 March 2008. 3 The first defendant did not appear when the matter was called. The first defendant was served with the summons and entered an appearance through a solicitor on 17 April 2007. He filed two affidavits dated 27 August and 2 October 2007 respectively. On 12 December 2007 the proceedings were fixed for hearing. The first defendant was represented at the mention on 12 December 2007. His solicitor filed a notice of ceasing to act on 18 December 2007. 4 By reason of the matters recorded above, I am satisfied that the first defendant must have been aware of the hearing and has elected not to appear. Accordingly, the matter proceeded ex parte. Facts 5 The plaintiff met the first defendant in September 2004. The plaintiff was then living with her daughter from an earlier marriage in a property she owned at Rydalmere (purchased in late 2001). She and the first defendant started a relationship, with the plaintiff staying at the first defendant's apartment about three nights a week from November 2004. They decided to rent out the plaintiff's Rydalmere property and rent a new place together. They found a rental property at Oatlands and resided there until November 2005. They paid the rent equally except the plaintiff paid all personal expenses for her daughter and all expenses (including the mortgage) on the Rydalmere property (which the plaintiff had rented out). 6 By May 2005 their relationship had progressed. They decided to sell the plaintiff's Rydalmere property and look for a property to purchase in order to stop renting. The plaintiff listed the Rydalmere property for sale. They met with a mortgage broker. The plaintiff told the broker she expected to get about $150,000 from the sale of her Rydalmere property and was looking to purchase another property in the range of about $500,000 to $550,000. The broker said he thought she would be able to borrow that amount but that if both of them went on the mortgage she could borrow more as the first defendant's income would also be taken into account. The first defendant said he would be happy to go on the mortgage if it would help get the property for the plaintiff and her daughter but that he knew it was the plaintiff's property. 7 The plaintiff sold the Rydalmere property on 19 August 2005 for $506,000. After discharge of the mortgage and other expenses the plaintiff received $193,184.79 from the sale. The plaintiff then located the property at Therese Circuit, Baulkham Hills. She inspected it without the first defendant and spoke to the agent. The property was listed for $675,000. She told the first defendant about the property and they inspected it together. The defendant said he did not like the property as it needed work. The plaintiff said they would be getting it cheaply and it would be worth more when renovated. The first defendant replied, "Well, it's your money and it's your house anyway so if that's what you want then we will go ahead". The plaintiff thought about it for a few days and decided to go ahead with the purchase. Contracts were exchanged on 11 August 2005 for a purchase price of $675,000. The contract settled on 31 August 2005 after the settlement of the sale of the plaintiff's Rydalmere property. The total purchase price of the Baulkham Hills property (including stamp duty, loan fees and legal costs) was $722,442.88. The plaintiff paid the deposit, stamp duty, loan fees, and legal costs (totalling $114,942.88) from the proceeds of the sale of the Rydalmere property. A first mortgage was taken out in the names of the plaintiff and first defendant at settlement for $540,000. The plaintiff also paid the remaining balance of $67,500. 8 The plaintiff also paid the insurance on the Baulkham Hills property ($519.72 per annum) and purchased new carpet ($13,700). She spent various other moneys on renovations before they moved into the property. She also carried out improvements to the property herself. The first defendant did not assist with any of this work. 9 The mortgage repayments were $3680 per month starting 1 October 2005. The plaintiff made all the mortgage repayments. 10 They moved into the Baulkham Hills property in November 2005. 11 Since the date of purchase the plaintiff paid all rates, mortgage instalments and other expenses for the Baulkham Hills property. 12 While they lived together the plaintiff paid all the bills and the first defendant paid the plaintiff $1800 per month. Of this amount the electricity bill was in excess of $900 per month and the internet access $100 per month. The reason for this was that the first defendant ran three computers and the television continuously in connection with his share trading activities, and also ran the air conditioning continuously to maintain a constant temperature of 21 degrees. The bill for the cable television was $110 per month. The first defendant used this to obtain share information. After these deductions the plaintiff was left with $690 per month of the first defendant's money for food and other costs. This was barely enough. 13 By June 2006 the relationship had deteriorated. They slept in separate bedrooms. The first defendant stopped paying the $1800 per month. The plaintiff told the first defendant that he needed to go. The first defendant told the plaintiff that his solicitor had advised him he was entitled to half the property. She did not seek legal advice and believed him because he was on the certificate of title. On at least two occasions the plaintiff said to the first defendant that he had always told her that it was her life savings that had bought the property and it belonged to her and her daughter. The first defendant made no reply either time. 14 In late June 2006 the first defendant told the plaintiff he was moving to Queensland and he needed some money to get there. He asked her for $10,000. She said she did not have $10,000 but could give him $5000. He said that he wanted $5000 and 10% of the proceeds of sale and he would move out. She said she would draw up an agreement. The plaintiff was scared the first defendant would not move out and thus drew a cheque in his favour for $5000 and had the first defendant sign a document. This document, signed by the plaintiff and the first defendant and dated 27 August 2006, provides as follows: 1. I, Steven Peter Rogers hereby acknowledge that on 27th August 2006, I received the sum of $5,000 being part payment of monies owing to me by Sandra Gai Bilson. 2. I understand that a Deed of Property Settlement is being prepared and in that Deed I understand I will receive an additional sum of monies being 10% of the net amount (being the gross sale price less the disbursements to pay out any mortgages, legal costs, selling costs, and associated costs) being payable on the sale of the property located at 7 Therese Circuit, Baulkham Hills, New South Wales. 3. The property located at X Therese Circuit, Baulkham Hills, New South Wales is to be listed for sale twelve months from the date of the signing of the Deed of Property Settlement. 15 The first defendant left the Baulkham Hills property on 27 August 2006 and has not returned since. The plaintiff continues to make all payments on the property. 16 In October 2006 a letter arrived at the property for the first defendant. It was from the Department of Lands so the plaintiff opened the letter. It contained a notice of caveat lodged for the second defendant. The caveat related to a deposit bond for $65,280 in connection with the purchase of an apartment by the first defendant before his relationship with the plaintiff started. The bond arrangement included a charge on real property owned "now or hereafter" by the first defendant and, thereby, founded the second defendant's lodgement of the caveat over the Baulkham Hills property. The plaintiff had no knowledge of the deposit bond or associated charge. 17 On 25 March 2008 Hamilton J made orders by consent as between the plaintiff and second defendant by which the plaintiff discontinued the proceedings against the second defendant on the basis that, on payment by the plaintiff to the second defendant of the sum of $10,000, the second defendant would remove its caveat over the Baulkham Hills property. Plaintiff's submissions 18 The plaintiff referred to the summary of applicable principles in Buffrey v Buffrey [2006] NSWSC 1349 at [14] and submitted that the starting point was the unequal contribution to the purchase price by the plaintiff and the first defendant. The total purchase price paid was $722,442.88. The plaintiff paid $182,442.88 and was responsible for 50% of the mortgage of $540,000 (or 62.64% of the total). The first defendant was responsible for 50% of the mortgage (or 37.38% of the total). Accordingly, the presumption that the equitable title followed the legal title was rebutted. A resulting trust arose in favour of the plaintiff at the time of purchase so that the parties held beneficial interests in the property in proportion to their respective contributions. There could be no presumption of advancement as between the plaintiff and first defendant (noting that they were not married and lived together for about 19 months in total). Without proof of a common intention at the time of purchase the beneficial interests would reflect the parties' proportional contributions to the purchase price. However, a common intention at the time of purchase that the plaintiff would beneficially own the whole of the property ought to be inferred on the evidence. 19 The plaintiff relied on the following factors to support the existence of this common intention at the time of purchase: - (i) the plaintiff paid all of the direct acquisition costs, (ii) the plaintiff paid all of the furniture and renovation costs, (iii) the plaintiff paid all mortgage instalments, rates, insurance, and other expenses related to the property, (iv) the plaintiff carried out all works around the property on her own, (v) the contemporaneous statements of the parties indicate that it was not intended that the first defendant have any beneficial interest in the property, (vi) as a settlement the first defendant wanted $5000 and 10% of the net resale price, being inconsistent with an assertion of a beneficial interest proportional to his contribution to the purchase price by way of the mortgage, (vii) the first defendant was legally represented until 18 December 2007 but has never filed any process by which he asserted any beneficial interest in the property or sought to enforce the agreement of 27 August 2006, (viii) the first defendant had chosen not to appear at the hearing to contest the plaintiff's claim, and (ix) the first defendant left the property in August 2006 and has never returned. 20 The plaintiff identified Thornton v Hyde [2004] NSWSC 125 as involving circumstances analogous to the present case. In Thornton v Hyde Burchett AJ decided that the defendant held all of her interest in a property on trust for the plaintiff as that reflected the common intention of the parties at the time of purchase. 21 With respect to discretionary considerations the plaintiff observed that: - (i) the first defendant had effectively received $15,000 from the plaintiff (the $5000 payment and the $10,000 the plaintiff paid to the second defendant to remove the caveat), (ii) the agreement of 27 August 2006 remained, (iii) the plaintiff proposed an order in which she indemnified the first defendant for any liability under the mortgage, and (iv) the first defendant ceased making any payments in June 2006 and left the property in August 2006 with the plaintiff continuing payment of all expenses related to the property. Discussion 22 There is no real issue about the first stage of the plaintiff's submissions. The unequal contributions to the purchase price of the property bought in the names of the plaintiff and first defendant, in the absence of a presumption of advancement, gave rise to a presumption that they hold the property in trust for themselves as tenants in common in the proportions in which they contributed the purchase money (Calverley v Green (1984) 155 CLR 242 at 246 – 247 and 266 – 267). 23 The real issue in this matter relates to the second stage of the plaintiff's submissions, namely, that the parties had a common intention at the time of purchase that the whole of the beneficial interest in the Baulkham Hills property vest in the plaintiff. The principles discussed in Calverley v Green include matters relevant to this issue. 24 First, the presumption of a resulting trust in proportions equal to contributions is rebuttable including by reference to a common intention of parties at the time of purchase that one party hold their proportional interest (in whole or part) on trust for the other (Calverley v Green at 251, 258, 261, and 271). 25 Secondly, any common intention must exist at the time of purchase and is to be inferred from what parties do or say and not their "uncommunicated state of mind" (Calverley v Green at 261). Hence, acts and declarations at the time of purchase or as part of the transaction are admissible but subsequent declarations are admissible only as admissions against interest (Calverley v Green at 262). 26 Thirdly, in contrast to a resulting trust arising at the time of purchase, a constructive trust might arise from circumstances after the purchase overriding the beneficial interests acquired (Calverley v Green at 263). 27 On the facts in Calverley v Green it was decided that there was no evidence of a common intention that the respondent's beneficial interest be held in trust for the appellant. Their understanding, if anything, was that the appellant would pay the mortgage and the respondent the household living expenses (at 267 and 271). The possibility of a constructive trust was not argued. 28 On the facts in Thornton v Hyde Burchett AJ found that the defendant never had any intention of accepting any liability under the mortgage (in contrast, for example, to the observations in Calverley v Green at 252). This, together with the defendant's clear concurrence in the plaintiff making all repayments and bearing all expenses in respect of the house, led Burchett AJ (at [13]) to conclude that the defendant had admitted the plaintiff's exclusive beneficial interest (citing Calverley v Green at 262 and Bloch v Bloch (1981) 180 CLR 390 at 402). Burchett AJ (also at [13]) acknowledged that mortgage repayments "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 the facts of Thornton v Hyde were unusual. It was always the common intention of the parties that the plaintiff make all repayments and, at the time of purchase, the defendant did not really intend that the house be "a home to live in". Accordingly, while Burchett AJ acknowledged that the joint mortgage would usually produce a resulting trust in shares proportional to contribution, the facts found led to the conclusion that the plaintiff was beneficially entitled to the whole of the property subject to indemnification of the defendant with respect to the mortgage (at [15] – [16] citing Muschinski v Dodds (1985) 160 CLR 583 at 589 – 590). In the alternative Burchett AJ found that, in the circumstances, it would be unconscientious for the defendant to assert any beneficial interest in the property (at [17] – [18]). 29 The facts of the present case are close to those considered in Thornton v Hyde. The first defendant appeared on the mortgage solely for the purpose of obtaining the required loan. He made statements at the time consistent with his intention that he should have no responsibility for the mortgage on the basis that the Baulkham Hills property would belong to the plaintiff. His actions were consistent with this intention at the time of entry into the purchase. He did not like the property but did not think that mattered because it was intended to be the "plaintiff's house anyway". This is not inconsistent with the fact that the first defendant intended to live in the property for the duration of his relationship with the plaintiff. It indicates that the first defendant did not, at the time of purchase, consider that he would have any right, title or interest in the property despite being named on the mortgage and title documents. His capacity to live there would depend wholly on his relationship with the plaintiff. 30 Further, the plaintiff decided to go ahead with the purchase on her own without any further discussion with the first defendant. The plaintiff made all the direct monetary payments associated with the purchase. The fact that the first defendant accepted the plaintiff making all payments associated with the property is an admission of his intention, shared with the plaintiff at the time of purchase, that the property would belong to her. In contrast to Calverley v Green, this was not an arrangement whereby the plaintiff intended to pay the mortgage and the first defendant the household living expenses. The evidence supports the inference (which I draw) that the parties intended that the plaintiff would pay the mortgage and all household expenses (including house upgrades and renovations) other than the first defendant's business expenses and his essential expenses (for food and the like). That, moreover, was in fact what occurred. This reflected their common position on purchase that the Baulkham Hills property belonged to the plaintiff. 31 The first defendant's subsequent acts and declarations may constitute admissions against interest. There are a number of such admissions. The first defendant did not deny the plaintiff's assertion that he had always said that the property belonged to the plaintiff and her daughter. If his intention at the time of purchase had been otherwise he could reasonably have been expected to so assert. His assertion that his solicitor's advice was that he was entitled to half the property is different. Such an assertion is itself capable of supporting the inference that the first defendant's intention at the time of purchase was that he would not be entitled to any interest in the property. His offer to move out for a payment of $5000 and 10% of the net proceeds of sale is equivocal but, on one view, inconsistent with any claim to a beneficial interest in the property. Similarly the fact that the first defendant left the property, never returned, and never asserted in these proceedings any such beneficial interest, nor sought to deny the plaintiff's beneficial ownership of the whole property by appearing at the hearing, are all consistent with the parties' common intention at the time of purchase in fact being as asserted by the plaintiff. 32 In these circumstances, and consistent with the result in Thornton v Hyde, the facts support the finding that at the time of purchase the plaintiff and first defendant intended his interest in the Baulkham Hills property, arising from the circumstances of the purchase in their joint names, to be held in trust for the plaintiff. It follows that the plaintiff is beneficially entitled to the whole of the property. Accordingly, the orders sought by the plaintiff should be made, including the order for the plaintiff to indemnify the first defendant with respect to the mortgage. Orders 33 I make the following orders: (1) Declare that the first defendant holds the whole of his interest in the property known as X Therese Circuit, Baulkham Hills in the State of New South Wales being the whole of the land contained in certificate of title folio identifier XXX/XXXX43 (Baulkham Hills property) upon a resulting trust in favour of the plaintiff. (2) Order that the first defendant execute a transfer in registrable form of all his right, title and interest in the Baulkham Hills property in favour of the plaintiff within 7 days of the date of this order. (3) Order that should the first defendant omit, neglect or fail to comply with order (2) herein within 7 days after the date of the order, the Registrar in Equity be empowered to do all things and execute all documents on behalf of the first defendant. (4) Order that the plaintiff, on the first defendant's compliance with order (2) or the giving effect to order (3), indemnify and keep indemnified the first defendant in respect of RAMS Mortgage Corporation Limited Loan Account No XXXXX89. (5) Order the first defendant to pay the plaintiff's costs of the proceedings, as agreed or assessed. **************************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.