Bendall v Tyack [2010] NSWSC 431

New South Wales Supreme Court

CITATION : Bendall v Tyack [2010] NSWSC 431

HEARING DATE(S) : 5 - 6 May 2010

JUDGMENT DATE : 14 May 2010

JUDGMENT OF : Ball J

DECISION : 1. Matter stood over until 13 July 2010 for the making of formal orders under s 66G of the Conveyancing Act 1919 (NSW). 2. Liberty to apply on 3 days' notice.

CATCHWORDS : REAL PROPERTY - Equitable interest - Transfer of interest in property - Whether parties intended transfer to be security for loan on sale of a half share of the property - Orders under s 66G Conveyancing Act 1919 (NSW).

LEGISLATION CITED : Conveyancing Act 1919 (NSW), s 66G

CATEGORY : Separate question

PARTIES : Wayne Charles Bendall (Plaintiff/Cross Defendant) Beverley Fay Tyack (Defendant/Cross Claimant)

FILE NUMBER(S) : SC 2008/278390

COUNSEL : P T Lynch (Plaintiff/Cross Defendant) Ms D E Picker (Defendant/Cross Claimant)

SOLICITORS : WyndhamPrem Commercial Lawyers (Plaintiff) Friedlieb Byrne Solicitors (Defendant)

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

BALL J

14 MAY 2010

2008/278390 WAYNE CHARLES BENDALL v BEVERLEY FAY TYACK JUDGMENT 1 HIS HONOUR: This is an application for the appointment of the Trustees for the sale of two properties which are owned by the Plaintiff and Defendant in equal shares as tenants in common. One property is a cottage located in Dubbo, which I will refer to as the "Dubbo Property". The other is a farm located outside of Dubbo known as "Warren Downs". 2 The Plaintiff and the Defendant are brother and sister. 3 The Dubbo Property was bought from Mr & Mrs Kelliher for $120,000. The Defendant contributed $25,000 to the acquisition of that property. The balance was paid by the Plaintiff from funds which he borrowed from Elders and which were secured by a mortgage over the property. It is agreed between the parties that the amount of $25,000 was a loan by the Plaintiff to the Defendant. Nonetheless, the property was acquired in their joint names in equal shares. That happened as a consequence of instructions given by the Defendant to Mr Graeme Granleese, who was the solicitor acting for both the Plaintiff and the Defendant on the purchase of the property. 4 It is also agreed between the parties that the Plaintiff has repaid $10,000 by giving to the Defendant a Cropland spray rig. 5 The Defendant lived on the Dubbo Property between October 1997 an April 2000 (for part of that time with her husband). She did not pay rent, but she did pay the outgoings on the property. While she was there, the Defendant arranged to have air conditioning installed at the property. The cost of that air conditioning, which the Defendant says she paid, was approximately $5,000. The Defendant says that that amount should be treated as a further loan to the Plaintiff. In my view, there is no basis for this claim. There is no evidence to suggest that the air conditioning was installed at the Plaintiff's request or with his consent. 6 There is no other dispute between the parties in relation to the Dubbo Property. The parties intended that the Plaintiff would be the owner of the property. The Defendant became a registered proprietor to secure the loan owed to her. The amount of that loan is now $15,000. 7 The Warren Downs Property was originally owned by the Defendant and her husband. In July 1999, the Defendant separated from her husband and asked for assistance from the Plaintiff in managing the farm. Following that request, the Plaintiff started travelling periodically from Broken Hill, where he then lived, to Warren Downs to work on the farm. The Defendant continued to live at the Dubbo Property and, on Boxing Day in 1999, the Plaintiff moved his family to Warren Downs. 8 The Plaintiff worked on Warren Downs for the next 3 years. He was not paid any wages and did not receive any income from the farm. However, his family lived there rent free and he grazed some of his stock there and kept the proceeds of sale of them. 9 In about 2003 the Defendant reached a property settlement with her husband. As part of that settlement, she acquired her husband's interest in Warren Downs and became responsible for a mortgage over the property in the amount of approximately $150,000. There is no dispute that she was not in a position to service that mortgage and that she asked for assistance from the Plaintiff in doing so. 10 There is a dispute about the conversation in which that assistance was sought. The Plaintiff says that the Defendant proposed that the Plaintiff take over the debt then owed to Westpac and that, in exchange, she would transfer a half interest in the property to him. The Defendant says that the Plaintiff offered to borrow the amount of the mortgage from Elders and to lend that money to the Defendant. On the Defendant's version of the conversation, the Plaintiff suggested that he needed to be on the title "like you are on [the Dubbo Property]". On this version of the conversation, the parties agreed that the Plaintiff would be repaid when the property was sold. I return to this disputed conversation shortly. 11 Once again, it was the Defendant who approached Mr Granleese to draw up the necessary documents. Mr Granleese prepared a contract for a sale of a half interest in the Warren Downs Property to the Plaintiff. The sale price shown on the contract is $177,500, not $150,000, which it is agreed was the amount referred to in the disputed conversation. The reason for the discrepancy appears to be that the amount of $177,500 was the value of a half interest in the property for stamp duty purposes. Nothing turns on this difference. 12 In connection with the transfer of a half interest in Warren Downs, the Plaintiff borrowed approximately $350,000 from Elders. Part of that loan was used to refinance his existing loan in relation to the Dubbo Property and part of that loan was paid to the Defendant to enable her to discharge the loan she owed to Westpac. The Elders loan was secured over both the Dubbo Property and Warren Downs and was guaranteed by the Defendant. The loan repayments were made by the Plaintiff. 13 It is critical to the Defendant's case that I accept her account of the conversation with the Plaintiff in the first half of 2003. 14 In my view, however, the Plaintiff's version of that conversation is to be preferred. 15 The Defendant's principal submission is that I should draw a parallel between the Defendant's acquisition of a half interest in the Dubbo Property and the Plaintiff's acquisition of a half interest in Warren Downs. In each case, so the argument goes, the half interest was acquired pursuant to a contract of sale in order to secure a loan that was made – in the case of the Dubbo Property, by the Defendant to the Plaintiff and, in the case of Warren Downs, by the Plaintiff to the Defendant. 16 In my opinion, however, the acquisitions are not parallel and, on examination, the differences support the Plaintiff's case, not the Defendant's. 17 In the case of the Dubbo Property the contract of sale was a contract between the vendors of the property on the one hand and the Plaintiff and Defendant on the other. Pursuant to that contract the Defendant acquired a half interest in the property even though she accepts that she was doing no more than lending the Plaintiff the sum of $25,000. It seems clear that the transaction was structured in that way because of instructions that the Defendant gave to Mr Granleese. I accept that the Plaintiff was happy to leave it to the Defendant to arrange the necessary paperwork in consultation with Mr Granleese. In fact, it appears that the Plaintiff had no contact with Mr Granleese in connection with that transaction at all. Importantly, there was no transfer of a half interest by the Plaintiff to the Defendant. 18 In contrast, the transaction in relation to Warren Down involved a sale by the Defendant to the Plaintiff. There are no other documents which record the agreement between them. Once again, it was the Defendant who gave instructions to Mr Granleese to prepare the necessary documents. Having taken considerable care to protect her position in relation to the loan in respect of the Dubbo Property by taking a half interest in that property, it seems implausible that she would have given no instructions at all to document in some way or another an obligation on the part of the Plaintiff to retransfer his interest on repayment of the loan if that is what had been agreed. 19 Apart from the supposed similarity in the two transactions, the Defendant is unable to point to anything which corroborates her version of the conversation. On the other hand, the contract for sale clearly supports the Plaintiff's version of events. 20 There are two other reasons why I do not accept the Defendant's version of the disputed conversation. 21 The first is that I think that the Plaintiff was a more reliable witness. The Plaintiff gave a consistent account of what happened from the time proceedings were commenced. He answered the questions addressed to him in cross examination in a straightforward manner. The Defendant, on the other hand, did not give a consistent account of what happened. In her cross claim and in her affidavit evidence she appears to have taken the position that she was entitled to an interest in the Dubbo Property. It was only later, presumably when she appreciated the significance of that approach to her case in relation to Warren Downs, that she conceded that the money she paid in connection with the acquisition of the Dubbo Property was nothing more than a loan. Moreover, when she gave evidence she was inclined on occasions to be evasive and defensive. 22 Secondly, I find the Defendant's account of what happened inherently implausible. The Defendant had been working at Warren Downs for approximately 3 years and his family lived there for a period. At the time of the disputed conversation, the expectation on the part of both parties must have been that he would continue to work on and take care of the property – which is what he did, although, because of the drought, it turned out that there was not a lot for him to do. The Plaintiff arranged a loan to pay the Defendant $150,000 and took on the obligation to make repayments in relation to that loan. However, no arrangement was made for the Defendant to reimburse the Plaintiff either directly or indirectly for the interest obligations he incurred in respect of that loan. In my opinion, it is implausible that the Plaintiff would agree to do what he did if he had simply been making a loan to the Defendant. 23 The only other reason that the Defendant advances for not making an order under s66G of the Conveyancing Act is that the Plaintiff has not identified the trustees to be appointed by the Court, nor filed affidavits from those trustees indicating their consent to their appointment. I do not think that this provides a reason for refusing the orders sought by the Plaintiff, although clearly those orders cannot be made until acceptable trustees have been identified and consents have been filed by them. In my view, once that matter is resolved, orders should be made substantially in terms of those set out in paragraphs 1 to 7 of the relief claimed in the Statement of Claim. 24 However, what I propose to do is stand the matter over to a suitable date. Unless the parties otherwise agree, and subject to the identification of acceptable consenting trustees, I will make formal orders in those terms at that time. I give the parties liberty to apply on 3 days' notice. **********