Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Behman v Behman [2016] NSWCA 295 Hearing dates: 28 September 2016 Date of orders: 03 November 2016 Decision date: 03 November 2016 Before: McColl JA at [1]; Meagher JA at [2]; Gleeson JA at [20] Decision: 1. Appeal dismissed. 2. Appellant pay the respondent's costs of the appeal. Catchwords: EQUITY – unconscionable conduct and equitable proprietary estoppel – where father and son residing in family home – where respondent son made extensive financial contributions towards cost of holding and maintaining home – where contributions made on basis of shared understanding and intention that respondent had or was entitled to an ownership interest in the home – where appellant subsequently denied respondent had or was entitled to any such interest – whether primary judge erred in finding as to shared understanding and intention – whether primary erred in finding expectation in the respondent to same effect Cases Cited: Baumgartner v Baumgartner (1987) 164 CLR 137 Giumelli v Giumelli (1999) 196 CLR 101 Green v Green (1987) 17 NSWLR 343 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Category: Principal judgment Parties: Tarek Behman (also known as Terry Behman) (Appellant) Daniel Behman (Respondent) Representation: Counsel: P Walsh (Appellant) J Darams with N Simpson (Respondent) Solicitors: Elie Rahme & Associates (Appellant) Eakin McCaffery Cox (Respondent) File Number(s): 2015/371893 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of NSW Jurisdiction: Equity Citation: [2015] NSWSC 1787 Date of Decision: 23 October 2015 Before: Rein J File Number(s): 2014/75321 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. McCOLL JA: I agree with Meagher JA. 2. MEAGHER JA: The appellant and respondent are father and son. In the somewhat unusual circumstances of this case the respondent was held to be entitled to a charge over the appellant's property at Bexley North to secure the repayment of an amount of $120,000. That charge was imposed to satisfy an equity arising in circumstances where the respondent had made significant payments to his father to assist him in meeting his ongoing obligations under a mortgage of that property: Daniel Behman v Tarek Behman [2015] NSWSC 1787 3. From 2002, when the respondent's parents were divorced, the appellant and his four sons, each then at school, continued to live in the family home. The respondent and his twin brother remained there with their two younger brothers until June 2009, when Matthew (the respondent's twin) moved out. The respondent stopped living in the property in January 2013. At that time he was almost 24 years old. From March 2007 when he commenced university, he had been working with an accounting firm, initially on a part time basis and then on a full time basis. Until December 2012 all of the income received from that employment was paid into a bank account operated and controlled by the appellant. The total of that income was $204,000 ([9], [25]). The primary judge (Rein J) held that the amount secured by the charge ($120,000) was in money terms equivalent to 1/5 of the net value of the property ([45]) and a "reasonable reflection" of what the respondent had contributed towards meeting the burden of the mortgage repayments "beyond what could be expected of a son living at home" ([47]). 4. His Honour held that the respondent was entitled to that relief on two bases. The first was an equity founded on his having made those contributions in reliance on a common understanding or intention shared by him and his father that he had an interest in the family home and accordingly was required to contribute to the financial burden of holding and maintaining it. After the respondent left the home following an incident in December 2012, the appellant denied that he had any ownership interest in the property. The primary judge held that to do so was "unconscionable" ([43]). Reference was made to the general equitable principle formulated in Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148. That principle was applied by this Court in Green v Green (1987) 17 NSWLR 343, esp at 353-355. 5. The appellant does not challenge the correctness of the primary judge's formulation or application of these principles. The five grounds in the appellant's notice of appeal are directed to establishing error on the part of the primary judge in finding that there was such a common intention or understanding between the father and his son. 6. The primary judge also held that the respondent was entitled to an equitable proprietary estoppel founded on the appellant's representations as to his having an interest in the property which required and justified the making of the relevant contributions. In support of this claim the respondent relied on the statements of principle in Giumelli v Giumelli (1999) 196 CLR 101 at [10] and Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [2]. 7. This second basis for upholding the respondent's claim was not addressed by the original grounds of appeal. Recognising that to be so, at the commencement of the hearing the appellant sought and was granted leave to amend that notice of appeal to include a further ground challenging the primary judge's finding as to the existence of an expectation in the respondent that he had or would receive a joint interest in the property. 8. The respondent gave evidence that from the time he was about 11 years of age he had numerous conversations in which his father maintained that the family home was owned by the five of them and that he had to "hurry up and start working so that [he could] help to pay for the mortgage". Similar evidence was given by his twin brother: see [7], [20]. In his evidence, the appellant accepted that in the period from 2003 to 2012 he made statements to the respondent and his brothers including that: "This isn't only my home, it's yours and your brother's so everyone needs to help" and "It is not just my money and your money. We all own the house so we all pay for it as a family" ([26]). 9. Notwithstanding that there was evidence of such conversations from 2003, the primary judge rejected the respondent's claim that the relevant common understanding existed and was relied upon from the time he first commenced part time employment at McDonald's, which was when wages earned by him were first paid into a bank account controlled by the appellant. His Honour concluded: [34] I am not satisfied that [the appellant] did tell Daniel [the respondent] that he would use Daniel's earnings to pay the mortgage when Daniel commenced earning money as a teenager. I think it is unlikely that he would say any such thing to an eleven or fourteen year old boy or that if he did say such, it could be expected that Daniel (and Matthew) would understand that to mean that they would have a one fifth (or a one third) interest from the time that they commenced employment. The proposition that merely by commencing employment and the payment of wages into an account controlled by Terry, would confer such an interest is extraordinary, with no detail of how long it was to continue or what would occur if the sons stopped working and how Terry could possibly enforce the continuation of the arrangement after the sons had reached eighteen: see Ashton v Pratt [2015] NSWCA 281; (2014) 88 NSWLR 281 at [84] to [89]. [35] I am unable to accept that merely by telling his children that the house or home was theirs and that any earning they obtained would be used for the family's benefit Terry is to be taken as having agreed that each of the sons would, when they commenced working and contributing to the household, have a one fifth share in the property. The plaintiff was no more than fourteen years of age when the conversation took place. 1. However, his Honour held that the position changed from about March 2007 and after the respondent had left school. It is those findings which the appellant challenges. At that time, the respondent ceased working at McDonald's and commenced employment at the accounting firm. He attended university full time, working part time at that firm, usually two to three days a week. His wages from that employment were paid directly into the trustee controlled bank account until December 2012. In respect of that period the primary judge held: [36] The situation is, however, altered when Daniel is an adult and has commenced earning a substantial wage. By the time Daniel commenced working for Lawler Partners I think he was intended to and would have understood that by his contributions Terry would be able to pay the various liabilities in respect of the property that had been and were continuing including the mortgage repayments. There was in a sense a joint pooling of resources for the benefit of all family members much as a de facto might contribute their income to the needs of both themselves and their partner. 1. His Honour made a similar finding with respect to the claim to relief on the basis of a proprietary estoppel, concluding: [55] Having regard to the undisputed fact that Terry told him at the time after Daniel had become an adult that "this is everyone's house", "I'm not keeping it for me", "we all own everything" and "it's yours and your brothers", I accept that Daniel understood that he would, by continuing to make his extensive contributions, have an interest in the property which reflected those contributions although the extent of that interest was somewhat vague. In a context where significant contributions had commenced to be made it is not surprising that Daniel should have so understood the words used by Terry and Terry's response when Daniel asked for return of his money was "the house is the family's and since you're no longer part of the family you don't own it anymore" effectively recognising the existence of the interest that Terry denies Daniel ever had. 1. The essence of the appellant's challenge to these findings at [36] and [55] is captured in the following submission made by his counsel in the course of argument. Having referred to the various statements which the appellant accepted were made over the period from 2003 to 2012, counsel's submission continued: For the reasons that the trial judge gives at paras 34 and 35: that these are statements which are not sort of one offs that were made alone and after Daniel had become an adult but, rather, as para 26 shows, these were just a continuing sort of conversation that went on in an informal fashion between the father and his four sons around the kitchen table, and the like, as they're trying to deal with the circumstances in which they find themselves. So those words carry a meaning having been used as part of, as it were, the family dictionary or playbook over the years. They continued to have the meaning as originally understood. They don't get a new meaning just because Daniel gets to his adulthood and is making greater contributions. If those words had only ever been used after Daniel became an adult, then that would be an entirely different state of affairs. … … if words have been used over a long period of time in one circumstance, then, one would expect that they would be understood by the user of the words and the hearer of the words not to have changed their meaning. Really, that's as far as I can take that point. I submit it doesn't materially alter that proposition by a finding that at some later time the respondent was informed that some of the money he was paying was going to be used to pay a mortgage. Really, that's the appellant's argument: … 1. In my view that argument is to be rejected. The evidence on which the primary judge relied included specific conversations which squarely address the basis on which the respondent was being asked and pressed to make monetary contributions to enable the repayment of the mortgage. 2. At [27] the primary judge accepted the respondent's evidence "that at times after he had commenced working for Lawler Partners" the appellant told him that he would use his earnings to pay the mortgage. The evidence to which the primary judge was referring included the following conversations with his father: (Affidavit 29 May 2014, para 82) … I told Dad I wanted to handle my own funds and enjoy my life. However, Dad always became hostile when I made these comments. He would also reiterate that he and my brothers couldn't afford to keep the Family House without my wage and that my "brothers would be out on the street'' if I didn't allow him to use my earnings. Dad would also say that if I left, they couldn't afford to keep the mortgage over the Family House and I would have to explain to Andrew and Mark why I wouldn't help them keep their house. This - me asking Dad if I could handle my own funds and Dad's responses - occurred at least 2 or 3 times a year from approximately 2007, when I first raised the issue of independence and moving out / managing my own funds … 1. The primary judge found at [43] that: … the evidence supports Daniel's contentions that his payment of wages from the accounting firm … enabled Terry to meet Terry's obligations to the Bank in respect of the mortgage either directly or indirectly by enabling other debts to be paid … 1. The primary judge also accepted ([27], [55]), the respondent's evidence as to the following exchange with his father which occurred in January 2013. He had asked his father to include his name on the title to the property. The appellant rejected that request. The conversation continued: (Affidavit 29 May 2014, paras 111, 112) In response, I said to Dad words to the effect of "then repay me the value of my wages since I started working since you told me that you needed it to keep the house, and you said that the house was all of ours and the Family's''. However, Dad refused and said words to the effect of "that's right the house is the family's and since you're no longer part of the family, you don't own it anymore''. 1. As the primary judge observed at [55], the appellant's answer acknowledges the making of the statements giving rise to the common understanding on which the respondent relied. 2. This evidence justified the primary judge's finding that by March 2007 the parties intended and understood that the contributions were made on the basis that the respondent had a joint ownership interest. At that time he commenced university and a new job and made clear that he wanted to be independent, to move out of the home and to manage his own affairs. The appellant persuaded him not to do so because the contribution of his wages was necessary to enable the repayment of the mortgage and retention of the family home in which he had a joint interest. Exchanges to that effect continued over the subsequent period and, as the primary judge found, were a "factor in [the respondent] continuing to provide most of his wages and permitting those wages to pay for the mortgage and related property expenses such as council rates" ([54]). 3. For these reasons the challenges to the findings at [36] and [55] should be rejected and the appeal dismissed with costs. 4. GLEESON JA: I agree with Meagher JA. ********** 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. Decision last updated: 03 November 2016